Grab Your Ankles

From Jim Moran of Virginia:

We have been guided by a Republican administration who believes in the simplistic notion that people who have wealth are entitled to keep it and they have an antipathy towards redistributing wealth and they may be able to sustain it for a while but it doesn’t work in the long run.

Remember, though, calling them socialists is racist.  Video here.


Posted on November 9, 2008 at 10:32 PM | Permalink | Comments (14)

For Those Who Doubted Me When I Said We Are Heading Towards A European-Style Corporate State

I predicted it here.  Now see it here:

House Speaker Nancy Pelosi said Wednesday that Congress is considering bailing out Detroit’s Big Three automakers.

"We may need to make a statement of confidence in our auto industry," Pelosi told NPR this afternoon. "We’re not saving those companies, we’re saving an industry. We’re saving an industrial technological and manufacturing base... It’s about jobs in America."

Pelosi held a meeting Monday with Democratic leaders to consider a request from Detroit’s Big Three automakers for another $25 billion in "bridge financing" to help them survive a huge downturn in auto industry.

I wrote why its better to let GM fail.

So what if GM dies?  Letting the GM's of the world die is one of the best possible things we can do for our economy and the wealth of our nation.  Assuming GM's DNA has a less than one multiplier, then releasing GM's assets from GM's control actually increases value.  Talented engineers, after some admittedly painful personal dislocation, find jobs designing things people want and value.  Their output has more value, which in the long run helps everyone, including themselves.

The alternative to not letting GM die is, well, Europe (and Japan).  A LOT of Europe's productive assets are locked up in a few very large corporations with close ties to the state which are not allowed to fail, which are subsidized, protected from competition, etc.  In conjunction with European laws that limit labor mobility, protecting corporate dinosaurs has locked all of Europe's most productive human and physical assets into organizations with DNA multipliers less than one. 

Posted on November 6, 2008 at 11:37 PM | Permalink | Comments (8)

Socialism in One Picture

I don't often pass on the cartoons that cross my desk, but I thought this was pretty good:

Socialism_explained

Posted on November 5, 2008 at 09:30 PM | Permalink | Comments (18)

The Silver Lining

TJIC has the silver lining nailed for libertarians:

Let us not forget the good news from the election: one statist, speech limiting, freedom-agnostic candidate lost.

I'm kind of ambivalent this morning -  I knew in advance that freedom was going to lose again in this election, no matter what the outcome.

If I am depressed this morning, it is more about propositions and side issues than about the President and Congress.  Had this been a leftward shift in the county, I could have been satisfied that at least losses in freedom in one area might be substituted by gains in others  (though for me personally, changes in economic freedom tend to have far more direct and immediate impact than changes in social freedoms). 

But the only pattern I could see yesterday was not leftward but government-ward.  In the same states where Democratic candidates won with economic interventionist messages, Constitutional bans on gay marriage also won by sizable majorities.   In Arizona, gay marriage was banned, an initiative to limit future tax increases was defeated, an initiative to protect health care choice was defeated, an initiative to soften last year's anti-immigrant legislation was defeated, and a payday loan ban was confirmed.  The voting in some way defies a traditional left-right explanation and is only consistent in that it was almost all the reverse of the libertarian position.  And to make the results even more irrational, nearly the biggest defeat of any ballot initiative in Arizona was for a pay increase for state legislators -- the voters seem to like government but don't trust or respect the individuals employed there.

After the last Bush election, a number of leftish folks claimed they were moving to Canada or France or wherever.  But that's the problem for libertarians in this country -- there is not place to run.  Those who want to run away to a country with a more controlling government have 180 or so choices.  Those of us who seek more freedom have approximately none. 

Update:  This slight paraphrase from the movie Zoolander encapsulates my thought on this election:

They're the same! Doesn't anybody notice this? I feel like I'm taking crazy pills!

I am actually less frightened by the candidates than by people who seem to get so excited by one or the other of them.

Posted on November 5, 2008 at 08:31 AM | Permalink | Comments (16)

So Wrong, I Almost Wish It Would Pass

Sometimes a proposed law is so wrong and so destructive, but so typical of a certain philosophical bent, that I almost wish it would pass, if for no reason than to have an Atlas Shrugged-type object example of disastrous results.  Such is the case for a California ballot initiative that has qualified for the signature-gathering stage.  The initiative, in part:  (full text linked here)

  • Imposes one-time tax of at least 55% on property exceeding $20 million of a California resident or held in California by nonresident.  [note that this is an asset tax, not an income tax]
  • Imposes one-time tax (between 36.5% - 54.3%) on income exceeding $10 million when resident dies or leaves California.
  • Imposes additional 17.5% tax on total incomes of taxpayers with income exceeding $150,000 if single, $250,000 if married; 35% if incomes exceed $350,000 if single, $500,000 if married.
  • The proceeds of this money will be used to:
    • To purchase 30% to 51% of the outstanding shares of stock in ExxonMobil, Chevron, General Motors, Ford, Goldman Sachs, JP Morgan Chase, and Citigroup, in order to ensure California has an uninterrupted source of energy and financial capital.
    • To drain and restore the Hetch Hetchy Valley to it’s condition at the beginning of the 20th century.
    • Use any Surplus funds to combat Global Warming, make infrastructure repairs and improvements, and to research alternative energy sources.

Beyond the unbelievably Marxist confiscation going on here, it begs the question of just what supply of energy and financial capital that California is not getting today that this will somehow ensure.  The implication seems to be that ExxonMobil, GM, and Citigroup are too fair-minded, selling their wares too even-handedly, and that California would prefer their attention tilted towards California.

Of course this initiative is profoundly immoral, so I can't do anything but deride it, but it would make for a spectacular object lesson (though one would have thought the Soviet Union's experience to be sufficient to this task, but apparently not).  I am sure GM's troubles would be greatly helped by replacing its board of directors with the California State Legislature  (the only American organization running a bigger deficit than GM) and replacing Citigroup's credit analysists with California social services beauracrats.  I would kind of like to see this in the same way I would love to see what happens if I threw a crate of flourescent tubes off a 10th-floor roof  -- I would never actualy do it, because it would be unsafe and destructive, but I can still dream about how compelling the disaster would be.

Postscript: One could probably label this the Arizona and Nevada economic stimulation act and probably not be far off the mark.

Posted on September 2, 2008 at 11:09 AM | Permalink | Comments (15)

Proletarianization of the Middle Class

Marxism holds that the middle class will eventually disappear, as the world is polarized between a few large business owners and the masses of the proletariat.  Small and independent businesses would disappear, and most of the middle class would be pedestrianized.  The middle class was always a sticking point for Marx, and there is some question whether this is really prediction or wishful thinking.  I say wishful thinking, because Marx knew that he could not achieve his socialist end-state with a middle class in place -- he had to drive the middle class into the proletariat.

In a large sense, that is what was are seeing at the Democratic Convention -- the effort to convince the middle class that, against all reason and reality, they are actually not well-off, that they are marginalized victims.  It is an attempt to pedestrianize the middle class.  Thus we get this classic quote from Rahm Emanuel, via Matt Welch:

The truth is, the Bush crowd has been giving the middle class a thumping. This November, the middle class is going to give it right back. This election comes down to a simple question: do we want four more years of Bush-McCain or do we want the change we need?

There is only one candidate from the middle class, that understands the middle class, and that can deliver the change the middle class needs: Barack Obama. A strong economy depends on a strong middle class. But George Bush has put the middle class in a hole and John McCain has a plan to keep digging that hole with George Bush's shovel.

Posted on August 27, 2008 at 08:55 AM | Permalink | Comments (10)

Statists in Libertarian Clothing

Everyone is a libertarian when it comes to his or her own choices:

  • My speech should be legal (though those other guys are over the line)
  • My choices, diet, lifestyle should be legal (though those other guys need to be protected from themselves)
  • My personal interactions are fine (but those other guys are all racists, threats to children, indecent, etc)
  • My business is great (but those other guys are all evil exploiters)

The hard part about defending freedom is not defending it for oneself.  The hard part is defending other people's right to be free.  TJIC makes this point quite well in response to a Boston Globe editorial.

Posted on July 17, 2008 at 10:22 AM | Permalink | Comments (9)

Who Knew We Libertarians Were Such Calm, Quiet People

Neil Boortz (via Maggies Farm) did a Yahoo news search on a variety of terms, counting results for various terms, with this result:

Democrats Outraged

45,600 hits
Muslims Outraged 35,600 hits
Republicans Outraged 13,800 hits
Catholics Outraged 11,500 hits
Christians Outraged 2,990 hits
Jews Outraged 2,060 hits
Libertarians Outraged 57 hits
Buddhists Outraged 24 hits

He seems to have an agenda at the top of the list, but what about us libertarians at the bottom?  I know we are outraged, so I supposed we need a better PR agent.  I mean, no outrage here.

Posted on July 3, 2008 at 01:53 PM | Permalink | Comments (11)

Encore!

It is an indicator of the power of the state that most CEO's of public companies feel the need to pay lip service to every politically correct trend that comes along and to engage in outright sycophancy every time they meet with politicians.  The reason, unfortunately, is that morons like Maxine Waters have been granted nearly unlimited powers over commerce.  Some CEOs unfortunately go even further, going beyond just humoring politicians to play the game themselves, engaging in outright rent-seeking for themselves and their shareholders.

So it is in this context that it is nice to see the CEO of Exxon-Mobil continuing in that company's traditions of not rolling over to populist political pressure:

Rex Tillerson, chairman and chief executive of Exxon Mobil Corp., the world’s largest oil-and-gas company, came out swinging Wednesday against the environmental movement, arguing the science of climate change is far from settled and that his company views it as its “corporate social responsibility” to continue to supply the world with fossil fuels....

Avoiding the political correctness that many oil executives are now showing on global warming, Mr. Tillerson called for a continuation of the debate, rather than acceptance that it is occurring, with the potential consequence that governments will implement policies that put world economies at risk.

“My view is that this is so extraordinarily important to people the world over, that to not have a debate on it is irresponsible,” he said. “To suggest that we know everything we need to know about these issues is irresponsible.

“And I will take all the criticism that comes with it. Anybody that tells you that they got this figured out is not being truthful. There are too many complexities around climate science for anybody to fully understand all of the causes and effects and consequences of what you may chose to do to attempt to affect that. We have to let scientists to continue their investigative work, unencumbered by political influences. This is too important to be cute with it.”

Mr. Tillerson said Exxon Mobil, despite its reputation as a staunch climate change denier, is in fact close to the issue as the only oil company that is a member of the United Nations Intergovernmental Panel on Climate Change.

Exxon Mobil came under repeated attack during the rowdy meeting for not showing leadership to combat global warming, with some arguing it is putting shareholders’ capital at risk by not moving into greener energy.

Among the many critics who stood up in the city’s Morton H. Meyerson Symphony Centre, where the meeting was held, was Neva Rockefeller Goodwin, the great-granddaughtger of John D. Rockefeller, who founded Exxon’s predecessor 125 years ago.

But her proposal to have Exxon Mobil prepare a report on the impact of climate change on emerging countries and to embrace greener energy was backed by only 10.4% of shareholders.

The Exxon shareholder meeting is a zoo.  LIttle serious work gets done.  There are about a zillion people who buy one share of stock so they can show up and flog whatever political hobby horse they have.  I do wish I had been there, though, so that in response to Ms. Goodwin's proposal I could have in turn asked for a report on how alarmist-proposed 80% reductions in fossil fuel consumption would have impacted poverty and progress in developing countries. 

A while back I had observed that Wal-Mart had passed Exxon as the left's #1 Satan.  It is good to see Exxon back on top. 

Posted on May 29, 2008 at 07:22 AM | Permalink | Comments (3)

We Are All Terrorists Now

In the future, we may or may not each get our 15 minutes of fame, but it appears will we all be on the terrorist watch list.  According to Kevin Drum, the GAO reported 755,000 records in the the terrorist watch list.  Drum helpfully graphs the growth of the list and extrapolates to 2008:
Blog_gao_no_fly

I had a fleeting warm fuzzy feeling, thinking "well, at least the GAO is on their case."  But in fact, they are not.  Here is the summary paragraph from the report:

GAO recommends several actions to promote a comprehensive and coordinated approach to terrorist-related screening. Among them are actions to monitor and respond to vulnerabilities and to establish up-to-date guidelines, strategies, and plans to facilitate expanded and enhanced use of the list.

The departments that provided comments on the report generally agreed with GAO’s findings and recommendations.

No discussion about the size of the list - the sole recommendation is around using the list in more places for more purposes.  The report, while discussing a number of times the number of people detained for matching the list, does not even mention the false positive issue.  This is just criminally stupid, and these numbers underestimate the true cost.  First, there is no way that 755,000 or even 75,000 people traveling in this country are terrorist threats, so the list is dominated by false positives.  But in addition, if every name on the list is shared, on average, by 10** people who have no relation to the suspect but the name, then the results are insane.  Five or ten thousand (at most) truly dangerous people are sharing the list with 10 million innocents.  That's a false positive rate over 99.9%.

**UPDATE: This seems conservative.  This site tells me that Warren Meyer, not a particularly common name, is shared by 80 people in the US.

HowManyOfMe.com
Logo There are
80
people with my name
in the U.S.A.
How many have your name?

Posted on May 5, 2008 at 11:15 AM | Permalink | Comments (13)

The Profit Motive Rocks

This post from TJIC, which is really about something entirely different, mentions that the price of cocaine has been dropping sharply over the last 10 years.  This is something I have heard police officials lament as well.

Does the profit motive rock or what?  The largest and most powerful government in the world stations armed men and ships around the country.  It has a legal system in place with huge penalties that has of late been nearly entirely dedicated to drug enforcement.  The US has even subverted 200 year old Constitutional restrictions on searches and property seizures (the Patriot Act is mostly used for drug, not terrorism, actions).  All to stop the importation of certain valuable substances.  And even so, the human mind is powerful enough to subvert all of these restrictions and bring in so much supply that the price continues to drop.

Al Gore believes that alternative energy efforts in the US are being subverted by the oil companies:

Apparently, according to Gore, the oil companies drive up prices reducing supply and then depress them in a telling pattern. As soon as the political will swells to a light boil, the companies reduce prices/increase supply.

Really?  Independent drug traders are able to subvert a million government officials with guns to keep cocaine prices low, but Exxon, with a 5% market share (at most) in oil, is able to hold the line on oil supply?

Sure.  In 1972 and 1978 there were a series of oil price shocks (to real levels about where they are today) that convinced everyone that oil prices would keep going up and up and that oil would run out within a few decades.  Of course, in about 1984 oil prices crashed, and stayed down for almost 20 years.  Depending on how you date it, it took oil supply development between 6 and 12 years after the price signal to flood the world with oil, and that was in an environment with price controls and windfall profit taxes that reduced development incentives. 

Right now, we are about 5 years in to the current oil price spike.  Go long at your own risk.

More on supply and demand vs. price manipulation in oil here.  More on Al Gore, including a fisking of his solar plan, here.

Update: Of course, the Democrats in Congress are doing everything possible to keep oil prices up.  If I wanted to ensure high oil prices, I would 1.  Kill incentives to increase supply, perhaps with a "windfall" profits tax and 2.  Put the most promising potential new exploration areas off-limits to new development.  Congressional scorecard:  #2 is in place, and both Obama and Hillary and Pelosi are proposing #1.

Update #2:   Another thought on Gore's statement:  The boom-bust patterns in oil are characteristic of nearly every other commodity out there, which therefore presupposes that if oil prices are the result of manipulation, then every other commodity must be as well since their prices demonstrate the same patterns.  We see these patterns in commodities that politicians have never even heard of and in which they have never thought to exercise their "political will."  (political will in this context defined as use of government force against a segment of the populace).

A reasonable person might suppose that the surge in prices followed by a drop a number of years later is better explained by the time delay in increasing oil production after oil prices spike. In many ways, Al's theory is simply delusional.  If your friend started trying to tell you, in all seriousness, that every action Microsoft takes is actually aimed at thwarting him personally, you would think him insane.  But this is effectively Gore's argument, showing the immensity of the politician's ego.  Oil prices move not because of supply and demand, but because of us politicians.  Every tick up and down is carefully managed to thwart us brave Congressmen!

When a politician describes price signals as mainly influencing political actions, rather than the actions of free producers and consumers, they are probably a socialist.

Posted on May 4, 2008 at 10:56 AM | Permalink | Comments (8)

Know Your Enemy

I want to thank Tom Nelson for the pointer, because I usually don't hang out much at the Socialist Unity site.  But I thought that this post was telling.

While it may be urgent that we create a red green alliance to strengthen radical social action to stop climate change, our collective problem is how are we going to do that?

The Climate Change Social Change Conference held in Sydney Australia during April tried to tackle that challenge.This was a bold attempt to bring together left and green activists in order to locate a shared perspective around which we could begin more consciously organize....

Foster and Perez urged the conference’s participants to consider socialism as the only viable solution to the climate emergency. This was a persistent theme discussed throughout the three day event as speakers were drawn from a range of environment movements and organisations (such as the Australian Greens and Friends of the Earth) as well as academic specialists — who preferred solution packages which were not consciously committed to a socialist transformation of society..

Posted on May 1, 2008 at 09:42 AM | Permalink | Comments (5)

Progressives Hate The Poor

Yeah, I know they seem to care so much, but nearly every policy they actively advocate turns out to be a disaster for the poor.  Here is a great example:

In May 2002, in the midst of a severe food shortage in sub-Saharan Africa, the government of Zimbabwe turned away 10,000 tons of corn from the World Food Program (WFP). The WFP then diverted the food to other countries, including Zambia, where 2.5 million people were in need. The Zambian government locked away the corn, banned its distribution, and stopped another shipment on its way to the country. “Simply because my people are hungry,” President Levy Mwanawasa later said, “is no justification to give them poison.”

The corn came from farms in the United States, where most corn produced—and consumed—comes from seeds that have been engineered to resist some pests, and thus qualifies as genetically modified. Throughout the 90s, genetically modified foods were seen as holding promise for the farmers of Africa, so long as multinationals would invest in developing superior African crops rather than extend the technology only to the rich. When Zambia and Zimbabwe turned away food aid, simmering controversy over the crops themselves brimmed over and seeped into almost every African state. Cast as toxic to humans, destructive to the environment, and part of a corporate plot to immiserate the poor, cutting edge farming technology is most feared where it is most needed.

This is simply awful, and is driven by progressive politics in Europe that abhor GM food, despite reams of scientific evidence and years of experience that it has no demonstrable health effect.  (It is particularly ironic that GM corn should be the target, since corn as we know it is a man-made genetically modified food, albeit by the slow process of cross-breeding.  The very existence of corn is one of the great triumphs of pre-Columbian agriculture.)

A key element of progressive politics is to apply western middle class perspectives to Third World problems.  In this case, Europeans who are wealthy and well-fed have time and capacity to worry about problems at the margin, such as "might GM corn somehow have a negative health effect on one in a million people?"  I believe this concern is absurd even at the margin in western society, but it becomes criminally insane when applied to countries beset with abject poverty and starvation.  So we would rather let a million people starve than have one person face some hypothetical health risk?

This same approach can be seen in a myriad of other instances.  For example, progressive wish to prevent Nike from building factories in the Third World that hire locals for fifty cents a day.  Again, the middle class western perspective:  I would never take a job that paid $5 a day for ten hours of labor, so they should not either.  But this is in countries where more than half of the population makes less than $1 a day performing subsistence farming for perhaps 12-14 hours a day, and even then risk starvation when the crop fails.  The Nike factory represents incredible salvation for many.  Do we all hope they will do even better economically in the future?  Sure, but you can't step from unskilled subsistence farming for a dollar a day to middle manager at GE all in one step.

And then there is climate.  The climate change hysteria, and the associated calls for reductions 80% or higher in CO2 output, is the greatest threat to the world's poor that has existed since the bubonic plague.  And yes, I mean the hysteria, not climate change itself.  Because if the world gets warmer because of man's CO2  (an iffy proposition), the poor might or might not be worse off.  After all, it was during warm periods of the past that the poor thrived, such as the population boom in Europe during the Medieval warm period.  But if the world's governments agree to shut down fossil fuel production and reduce the size of economies, over a billion people who are set to emerge from poverty over the next few decades will instead be doomed to remain poor.  Progressive environmentalists are not even subtle about what they want -- they are seeking a poorer, lower-tech worldThey are selling poverty.

Brendan O'Neil writes in this vein:

In these various scandalous schemes, we can glimpse the iron fist that lurks within environmentalism’s green velvet glove. ‘Cutting back carbon emissions’ is the goal to which virtually every Western politician, celebrity and youthful activist has committed himself. Yet for the poorest people around the world, ‘reducing carbon output’ means saying no to machinery and instead getting your family to do hard physical labour, or it involves collecting cow dung and burning it in an eco-stove in order to keep yourself warm.... Carbon-offsetting companies have encouraged Kenyans to use dung-powered generators and Indians to replace kerosene lamps with solar-powered lamps, while carbon-offsetting tree-planting projects in Guatemala, Ecuador and Uganda have reportedly disrupted local communities’ water supplies, led to the eviction of thousands of villagers from their land, and cheated local people of their promised income for the upkeep of these Western conscience-salving trees....

Carbon offsetting is not some cowboy activity, or an aberration, or a distraction from ‘true environmentalist goals’ - rather it expresses the very essence of environmentalism. In its project of transforming vast swathes of the developing world into guilt-massaging zones for comfortable Westerners, where trees are planted or farmers’ work is made tougher and more time-consuming in order to offset the activities of Americans and Europeans, carbon offsetting perfectly captures both the narcissistic and anti-development underpinnings of the politics of environmentalism. Where traditional imperialism conquered poor nations in order to exploit their labour and resources, today’s global environmentalist consensus is increasingly using the Third World as a place in which to work out the West’s moral hang-ups....

Carbon-offsetting also shines a light on the dangerously anti-development sentiment in environmentalism....

In the near term, countries are already using global warming as an excuse for protectionism, and in particular are cutting off imports from poorer countries that are trying to make some economic progress:

There is little that angers me more than disingenuous attempts to employ ‘global warming’ as an argument against trade, especially against trade from the developing world. More often than not, blatant self-interest - that is, old-fashioned protectionism by another name -  is being masked beneath self-righteous, middle-class gobbledygook.               
               
Such a case is brilliantly exposed today by Dominic Lawson writing in The Independent [‘Food miles are just a form of protectionism. Middle-class neurosis is being exploited to protect an archaic form of agriculture’ (April 1)]:
               
“Was Prince Charles’ chum Patrick Holden, director of the Soil Association, expecting the Kenyan High Commissioner to fall to his knees in gratitude? It rather sounded like it yesterday morning, when the two of them met in a BBC radio studio.
               
They were there to discuss the Soil Association’s proposals to discriminate against the ‘organic food’ which is air freighted into this country, mostly from East Africa. ‘One option was to ban it altogether,’ declared Mr Holden, but instead he and his colleagues had decided that such food would only be banned if it was ‘not produced ethically’ - whatever that means....

“On the whole it is a ‘lifestyle choice’ limited to middle-class mothers in the South-east of England who are neurotic enough to believe the insinuations of the Soil Association that little Henry and Caroline are more likely to get cancer if mummy doesn’t buy organic (at twice the price).    
Now another largely middle-class neurosis - we are all doomed unless everybody stops flying! - is being exploited to protect an archaic form of agriculture which could never feed this country, still less the world. It is, at best, an exercise in self-delusion. At worst, it is a way of using food as the instrument of a deliberate policy of racial discrimination.”

Maxed Out Mamma has more on the global warming excuse for protectionism:

I am genuinely concerned that environmental concerns are being used as a proxy for protectionist economic legislation and may have severe consequences. I would like to discuss this article from a Canadian source about carbon taxation:

Imposing carbon tariffs on emerging economies with low manufacturing costs and high greenhouse gas emissions could drive some manufacturers back to Western countries, according to two economists.

Jeff Rubin, chief strategist and economist at CIBC World Markets, thinks such tariffs could emerge quickly. Countries in Europe are already becoming publicly intolerant of emissions elsewhere and the next president of the United States is expected to institute a cap on greenhouse gas emissions alongside the trading of carbon credits.

...Europe is in an extremely protectionist mood, and I believe one of the reasons for the non-scientifically based focus on carbon is that it serves as a justification for tariffs. If the next president does institute carbon tariffs, the result will have a real impact on world trade.

I believe that many politicians are being deeply dishonest about their "environmental" concerns. I also believe that instituting a carbon tariff will cause Asian growth to slow remarkably and further destabilize the world economy. The rise in food prices is very dangerous because it has an impact on the ability of emerging market countries to support consumption increases necessary to rebalance trade. If you add to the situation by doing something like this, you could recreate the conditions which caused the Great Depression.

Posted on April 1, 2008 at 09:11 AM | Permalink | Comments (8)

AMEN

David Boaz, on the Hillaries and the Huckabees.

Posted on March 26, 2008 at 02:16 PM | Permalink | Comments (3)

Just What We Need

It has already been reprinted around most of the freedom-loving portions of the blogosphere, but in case you have missed this quote from Hillary Clinton:

We need a president who is ready on Day 1 to be commander in chief of our economy.

Also revealed by Hillary:  John Galt has been captured and has been offered Wesley Mouch's job.

Posted on March 25, 2008 at 12:41 PM | Permalink | Comments (4)

The Division of Labor

The joy of free exchange, and the law of comparative advantage, are explained quite well by Jeffrey Tucker.

Many seem to think of economics and capitalism as sterile or even ugly.  This article helps get at the real beauty of free exchange and capitalism, which I would boil down to the following:

  1. Every exchange between free and uncoerced people increases the well-being of both parties (by each individual's definition of their own well-being).  It has to or there would be no transaction. 
  2. Point #1 can and does occur even when one party to the transaction has no absolute advantage in any type of labor or production over the other party

Posted on March 25, 2008 at 11:12 AM | Permalink | Comments (5)

Capitalism is Proving Too Dynamic For Progressives

Those of us with long memories, say back to the 1970's, can remember that the Left constantly complained about manufacturing and assembly-line work as "dehumanizing."  Their goal was for workers to transcend this Tayloristic "hell" into clean, white collar office work.  Well, now that we have done so by replacing many assembly-line workers with machinery programmers and service workers, the Left now makes the argument that assembly-line work was the Nirvana of all employment, and the only possible road to the middle class for many Americans.  If I was an academic with time on my hands to do an in-depth research project, I would love to go back to records of leftish complaints about the economy form the 1960s and 1970s.  Because in large part, they have gotten everything they were asking for and more, but now they complain about the change. 

One of the explanations of this paradox is that progressives, despite their name, are extremely conservative (little c) in that they fear change in the economy and in work patterns more than anything else.  Changing trade patterns, changes in economic mix, changes in work relationships -- these all send progressives into a tizzy.  I know that in some sense I am answering a paradox with a greater paradox.  Rather than repeat the argument, here is my argument in depth that capitalism is too dynamic for progressives.  An excerpt from that post:

Beyond just the concept of individual decision-making, progressives are hugely uncomfortable with capitalism.  Ironically, though progressives want to posture as being "dynamic", the fact is that capitalism is in fact too dynamic for them.  Industries rise and fall, jobs are won and lost, recessions give way to booms.  Progressives want comfort and certainty.  They want to lock things down the way they are. They want to know that such and such job will be there tomorrow and next decade, and will always pay at least X amount.  That is why, in the end, progressives are all statists, because, to paraphrase Hayek, only a government with totalitarian powers can bring the order and certainty and control of individual decision-making that they crave.

Progressive elements in this country have always tried to freeze commerce, to lock this country's economy down in its then-current patterns.  Progressives in the late 19th century were terrified the American economy was shifting from agriculture to industry.  They wanted to stop this, to cement in place patterns where 80-90% of Americans worked on farms.  I, for one, am glad they failed, since for all of the soft glow we have in this country around our description of the family farmer, farming was and can still be a brutal, dawn to dusk endeavor that never really rewards the work people put into it.

Postscript:  I still argue that the "decline" of American manufacturing is a chimera of how statistics are gathered.  As I wrote here:

The best way to illustrate this is by example.  Let's takean automobile assembly plant circa 1955.  Typically, a large manufacturing plant would have a staff to do everything the factory needed.  They had people on staff to clean the bathrooms, to paint the walls, and to perform equipment maintenance.  The people who did these jobs were all classified asmanufacturing workers, because they worked in a manufacturing plant.  Since 1955, this plant has likely changed the way it staffs these type jobs.  It still cleans the bathrooms, but it has a contract with an outside janitorial firm who comes in each night to do so.  It still paints the walls, but has a contract with a painting contractor to do so.  And it still needs the equipment to be maintained, but probably has contracts with many of the equipment suppliers to do the maintenance.

So, today, there might be the exact same number of people in the factory cleaning bathrooms and maintaining equipment, but now the government classifies them as "service workers" because they work for a service company, rather thanmanufacturing workers.  Nothing has really changed in the work that people do, but government stats will show a large shift from manufacturing to service employment.

Posted on January 22, 2008 at 09:19 AM | Permalink | Comments (3)

Good Old Microsoft

I tried to open a complicated Excel file today and Excel told me that it was corrupted and that it would try to rebuild it.  Having tried to rebuild it, Excel reported the file was beyond repair.  Now I have a backup somewhere, but I tried an experiment.  I fired up the Open Office freeware clone of Excel (I think it is called Calc).  It opened the Excel file that Excel itself could not open or rebuild.  I re-saved the file using Open Office and now all is working fine and Excel can now read the worksheet again.  The $0 clone succeeds where the $400 original fails. 

Posted on January 4, 2008 at 10:27 AM | Permalink | Comments (7)

Update on Kwanzaa

A few posts ago I wrote my annual rant against Kwanzaa as a seven step program to socialism.  I concluded that if blacks in America wanted to stay poor and under the power of others, they could take no better step than to pursue the seven values in Kwanzaa. 

In a stunning gap in my reading, I have never read PJ O'Rourke's "Eat the Rich."  However, David Boaz reports this interesting snippet from the book:

In Tanzania he gapes at the magnificent natural beauty and the appalling human poverty. Why is Tanzania so poor? he asks people, and he gets a variety of answers. One answer, he notes, is that Tanzania is actually not poor by the standards of human history; it has a life expectancy about that of the United States in 1920, which is a lot better than humans in 1720, or 1220, or 20. But, he finally concludes, the real answer is the collective “ujamaa” policies pursued by the sainted post-colonial leader Julius Nyerere. The answer is “ujaama—they planned it. They planned it, and we paid for it. Rich countries underwrote Tanzanian economic idiocy.”

For those not familiar with Kwanzaa, Ujamaa is one of the seven principals celebrated in Kwanzaa.

Posted on December 26, 2007 at 10:59 AM | Permalink | Comments (3)

Everyone Would Be Burying Nuclear Waste

Dave Barry used to joke that whenever he would argue for a free society, the first objection people would have is "but people would all have sex with dogs." ** Now, Barry is just being funny (as usual) but as in all humor, there is a strong core of truth in his observation.  For years, when I argued that private property rights should be absolute, folks would argue "but then everyone would trash their land."  It in fact became incredibly predictable that someone would ask "how would you stop people from burying nuclear waste on their property?"

Um, why would they?  Would you bury nuclear waste in your backyard?  Well, No.  Why not?  Because it would be dangerous to my kids, and it would reduce my resale value.  OK, so why would anyone else?  No answer.

I call this the "you can't give people freedom because they will do malicious things even if it is against their own self-interest" argument, and George Will observes that it is alive and well in the Democratic Party:

Speaking ill of lenders began when homo sapiens acquired language, hence it is unsurprising that many people who until recently were criticizing lenders for not making money available to marginally qualified borrowers are now caustic about lenders who complied. Clinton is fluent in the language of liberalism, aka Victimspeak, so, denouncing "Wall Street," she says families were "lured into risky mortgages" and "led into bad situations" by those who knew better. So, lenders knew their loans would not be fully repaid?

Jesse Jackson speaks of "victims of aggressive mortgage brokers." But given that foreclosure is usually a net loss for all parties to the transaction, what explains the "aggression"? Who thought it was in their interest to do the luring and leading that Clinton alleges? While granting that "borrowers share responsibility," her only examples are those "who paid extra fees to avoid documenting their income" and "speculators who were busy buying two, three, four houses to sell for a quick buck." Everyone else has been victimized.

This is exactly the point I made back in April, when I said that the mortgage market was about to become a capitalism Rorschach test, acting a a catalyst to reveal everyone's core beliefs and biases about free markets.  Which it certainly has with Hillary.  But we already knew where she stands, didn't we?

** You wouldn't believe the Google hits I get since I made this post. 

Posted on December 17, 2007 at 09:16 AM | Permalink | Comments (18)

I Think We've Won the War on Poverty

One of the things I have observed in the past is that our poorest 20% would be upper middle class in most countries of the world, and would be far richer than 99.9% of people who have ever lived.  Somehow the following burning concern in the LA City Hall seems to bring this message home quite clearly:

To protect the character of neighborhoods being dwarfed by the construction of oversized homes, Los Angeles officials are weighing a law that would radically limit the square-footage of new or remodeled houses across the city's flatlands.

The proposed anti-mansionization measure would stem a trend fueled by the meteoric rise in home values and address a backlash from residents who complain that the spread of large, boxy homes is spoiling the architectural flavor of established single-family neighborhoods.

Somehow, I don't thing "mansionization" is a major problem in most countries of the world.

Posted on December 11, 2007 at 11:58 AM | Permalink | Comments (0)

Why I Love America

Today I was in Times Square and, unsurprisingly, was approached on the street by a young huckster attempting to get me to check out his establishment.  However, I was floored to see what was in the building.  In an attempt to meet a strong public need (the city of New York has been debating the lack of public restrooms for years to no effect) and to gain some marketing exposure, P&G has leased out storefront space in Times Square to open a Charmin-branded public restroom.  It is truly an odd experience, a cross between a bathroom and a Disney attraction.  There are games and entertainers and a gift shop, and, of course, twenty very nice private bathrooms that are cleaned by the staff after each use.  All my son and I could think to say when we were done was "We love America."

Here is more on the bathrooms and the promotion, open just for the holidays.

Someone has also posted a Youtube video of the entire experience:

Update:  After visiting again, I can't shake the parallel (despite the fact that these bathrooms are free) to the public restroom company in Snow Crash.  I know there are a lot of folks who rebel against the cyberpunk genre, and I have always been more of a space-opera traditionalist (Foundation, Mote in Gods Eye, Louis McMaster Bujold, Hyperion, etc.) but over time Snow Crash may well become my favorite Sci-fi book.

Posted on November 22, 2007 at 08:45 PM | Permalink | Comments (5)

I am a Crank

As defined by Kevin Drum:

Well, since you asked, the reason I think Ron Paul is a crank is because he wants to repeal the 16th amendment, eliminate the personal income tax, abolish the minimum wage, deep six the Federal Reserve, and return the United States to some kind of weird quasi-gold standard.

Posted on November 12, 2007 at 09:14 PM | Permalink | Comments (14)

Most Pathetic Interview Ever

I don't know if this has made the blog rounds yet (I have been out of touch and have not gotten through me feed reader today) but this is perhaps one of the most ridiculous things I have ever heard.  It's a 40 second interview with a woman named Geri Punteney in Iowa about Barrack Obama on the left of this page  (ironically, NPR makes you listen to a brief commercial before you hear the clip).

You really, really need to take the time to listen.  I will include an excerpt below, but you won't get the full effect of the woman absolutely in tears through the statement, crying because she had gotten to touch someone she had seen on TV.

A few weeks ago, at the home in Oelwein, Iowa, she shares with her mother, Punteney said she'd been inspired to see Obama when he came to the area.                        

"I'd seen the commercials," she said. "And he just seemed sincere, like he's for people like my mom, my brother and me."                        

Many people feel politicians may not be the first place to turn when in dire need of help. But Punteney said she was confident Obama could do something to make her feel better.                     
"I never had anyone pay attention to me and my needs — and he held my hand," she said.

He can do something to make me feel better?  Barf.  Can it really be that my future freedom and prosperity depend on how this woman votes?  Have we really given this woman so much power over the rest of us?  Have we really throttled back the most productive in society so this woman can feel like she is keeping up?  Have I really become the sacrificial lamb to this woman's need to feel better?

And, oh by the way, in case I have not gone off on this rant in the last five minutes or so, Obama can care because he can promise you whatever you desire, and then he can force me to pay for it.  Unlike people in private life who really do care, politicians don't actually pay for their promises because they can force other people to do it for them.  Worse, politicians like Obama reap the praises of women like this for being caring, while vilifying people like me who are productive and make his caring possible.  It just makes me sick.

Oh, and how much did Obama really care?  Not much, it seems:

I brought a tape recorder to Punteney's house and played her moment with Obama back for her — and his suggestion that he'd write her brother a note. He never did.                        

"He didn't have time, I guess," she said. "I understand. You know, he was bombarded by so many people. But just knowing he knows — that's more important than a note."

So here it is:  Cares enough to spend Coyote's money:  Yes.  Cares enough to actually expend some effort himself:  No way.

Indeed, Punteney seemed to get just what she wanted from Obama. She got noticed.

How about a trade, Ms. Punteney?  If I promise to get you to an Oprah show, will you promise not to ever vote?

Update: Yeah, I know, her brother has leukemia, which is sad.  The lack of portability of his health insurance is also pain, a result of WWII wage control policy and subsequent tax policy that encouraged the practice.    Sorry, but this need to be touched and noticed by a second or third term Congressman is pathetic. 

Posted on November 8, 2007 at 07:13 PM | Permalink | Comments (7)

Chanelling Milton Friedman

For years I have tried to find the right words to express my frustration with the notion that the problems encountered with government planning and technocratic meddling was merely the fault of having the wrong humans in charge, rather than of the system itself.  For example. I wrote:

Today, via Instapundit, comes this story about the GAO audit of the decision by the FDA to not allow the plan B morning after pill to be sold over the counter. And, knock me over with a feather, it appears that the decision was political, based on a conservative administration's opposition to abortion.  And again the technocrats on the left are freaked.  Well, what did you expect?  You applauded the Clinton FDA's politically motivated ban on breast implants as a sop to NOW and the trial lawyers.  In establishing the FDA, it was you on the left that established the principal, contradictory to the left's own stand on abortion, that the government does indeed trump the individual on decision making for their own body  (other thoughts here). Again we hear the lament that the game was great until these conservative yahoos took over.  No, it wasn't.  It was unjust to scheme to control other people's lives, and just plain stupid to expect that the machinery of control you created would never fall into your political enemy's hands.

Well, it turns out that Milton Friedman said it better decades ago.  Megan Mcardle reminded me of this passage from Free to Choose:

The error of believing that the behavior of the social organism can be shaped at will is widespread. It is the fundamental error of most so-called reformers. It explains why they so often feel that the fault lies in the man, not the "system"; that the way to solve problems is to "turn the rascals out" and put well-meaning people in charge. It explains why their reforms, when ostensibly achieved, so often go astray.

Posted on October 29, 2007 at 10:09 AM | Permalink | Comments (2)

The Cold, Cruel Marketplace

Travis has more patience than I do in responding to a bit of anti-market silliness

Posted on October 21, 2007 at 09:18 AM | Permalink | Comments (1)

Roosevelt and Mussolini

I have elaborated a number of times on the parallels between the National Recovery Act and Mussolini-style fascism, as well as the frank admiration Roosevelt had for what Mussolini was doing in Italy.

David Boaz goes into much more detail

Roosevelt himself called Mussolini “admirable” and professed that he was “deeply impressed by what he has accomplished.” The admiration was mutual. In a laudatory review of Roosevelt’s 1933 book Looking Forward, Mussolini wrote, “Reminiscent of Fascism is the principle that the state no longer leaves the economy to its own devices.…Without question, the mood accompanying this sea change resembles that of Fascism.” The chief Nazi newspaper, Volkischer Beobachter, repeatedly praised “Roosevelt’s adoption of National Socialist strains of thought in his economic and social policies” and “the development toward an authoritarian state” based on the “demand that collective good be put before individual self-interest.”

Posted on September 28, 2007 at 01:59 PM | Permalink | Comments (0)

Capitalism Can't Win

It is often said that capitalism won over socialism in the late 20th century, with the fall of the Berlin Wall and the rise of powerful Asia market economies.  Be that as it may, this statement certainly does not apply to American university campuses.  In the ivory tower, capitalism is still the number one whipping boy. 

An interesting illustration of this is Jacob Sullum's review of a pair of books that attempt to debunk the myth that being mildly overweight is deadly.  This is a rich topic, given some of the really bad science that has gone into trying to make being overweight the next smoking, and the review is worth a read.  However, this part caught my eye:

Both he and Campos blame the unjustified obsession with weight and the cruel vilification of fat people on capitalism, which, they say, prizes self-discipline and stigmatizes those seen as lacking it. To be fair, Campos more specifically blames a pro-capitalist Protestant asceticism that encourages the pursuit of wealth but frowns on those who enjoy it too much. There’s an element of truth to this analysis; a similar ambivalence regarding pleasure helps explain American attitudes toward sex, drugs, and gambling.

But wait!  Aren't most of the folks like the food nazis who are launching government obesity campaigns leftists?  They are, and Sullum makes this point:

But it does give you pause when you consider that the obesity obsessives also blame capitalism, for precipitating the current crisis by making food plentiful, inexpensive, appealing, and convenient. New York University nutritionist Marion Nestle, for example, blames America’s adiposity on “an overly abundant food supply,” “low food prices,” “a highly competitive market,” and “abundant food choices,” while Kelly Brownell claims restaurants exploit consumers when they give them more for less, since “people have biological vulnerabilities that promote overeating when large portions are available, a strong desire for value, and the capacity to be persuaded by advertising.”

Great.  So capitalism causes obesity as well as anti-obesity.  You can't win.

Posted on September 11, 2007 at 08:23 AM | Permalink | Comments (7)

Communism, West Virginia Style

Cyd Malone shares a historical story with which I was not familiar, Eleanor Roosevelt's attempt to create a government-supported back-to-the-earth commune in West Virginia.  It's quite a fascinating tale, with several elements that seem stolen right out of an Ayn Rand novel.  Her goal seems to have been to reverse the division of labor:

As projected, Arthurdale was to be immune from the ups and downs of the business cycle, with its citizens farming their five-acre plots part time and working part time in a local factory; a perfect combination of town and country floating through life as just the happiest little autarkic bubble you ever did see.

I will let you read the whole story if you are interested, which is pretty interesting.  I suppose you can guess how it all turned out:

Sadly, despite all the money, tough love, removal of their "mental and physical impediments," and grafting on of "the things that help," the people of Arthurdale weren't displaying the attributes of the New American Man, or at least not the type the planners planned for. Instead, they behaved like dirt-poor coal miners and part-time farmers who had become accustomed to living off of other peoples' money.

They displayed what we now call "dependency." Nancy Hoffman writes that "there were times they depended too much on her [Mrs. Roosevelt's] help and not enough on their own resources," leading Eleanor to lament that "they seemed to feel that the solution to all their problems was to turn to government" (Hoffman 2001, p. 85). In one defining moment, the town's school bus broke down and the good people of Arthurdale, rather than fixing it themselves, had it towed over two hundred miles to the White House garage for repairs.[16]

Posted on August 21, 2007 at 12:56 PM | Permalink | Comments (10)

New Orleans, Progressive Paradise

From the USA Today:

In working-class areas here, homes for sale have begun to move briskly. But in the ritzy Uptown district and other well-to-do neighborhoods, the picture is bleaker. "New Price" and "Reduced" signs adjoin grand Victorian homes — symbols of a struggling upscale housing market.

They're the lingering effects of Hurricane Katrina. In coastal Louisiana and Mississippi, a glut of higher-end homes points to soaring property insurance costs that are pricing many people out of the market. It also speaks to the legions of doctors and other professionals who have left the area and have yet to return. The price of their exodus could be severe: Economic development experts warn that if these professionals stay away en masse, it could cripple the region's recovery.

For anyone with a stake in the region's recovery, the loss of higher-income residents — and their job skills — is alarming. The problem is compounded by the shortage of upper-income buyers willing to put down stakes to replace those who have left.

So what is the problem?  I thought this would make New Orleans a progressive paradise.  No rich to get richer and create envy in the working classes.  No issues with income distribution.  Just a worker's paradise with no capitalist oppressors.  Huge portions of the populations dependent on the government and refusing to rebuild until they get government handouts to do so.  This sounds like everything Progressives are working for.  But...

Doctors, bankers and other professionals are "the backbone of the community," says William H. Frey, a demographer at the Brookings Institution, a Washington think tank. "They're the people who will help the tax base. If they leave, they are going to be very hard to replace."

Oh, I see.  We don't really want them around, but we need milch cows we can tax so we can have handouts for everyone else.  It must be a hard tightrope for progressives to walk -- they hate rich people but need them to pay for their schemes.

Posted on July 25, 2007 at 11:11 AM | Permalink | Comments (12)

The Individual Responsibility Bomb

Yesterday I saw Live Free or Die Hard, and I must say that it was an unexpectedly enjoyable film.  Good action from earlier movies combined with an unlikely buddy movie element.  I was disappointed only with one bit towards the end that overtaxed my suspension of disbelief.

Anyway, not to spoil too much, a mysterious group has hacked into government computers to shut down most public functions - air traffic control, traffic lights, emergency response.  They've also messed with communications and stock market computers. 

In pushing their terrorist attack, the message was interesting.  I can't remember the exact words, but it was stuff like "what if you called the government and no one was there to answer.  What if you needed help and government agencies could not help you.  You are all alone"  This struck me as a thoroughly modern form of attack -- the terrorists cut the welfare state off from the government, forcing them to take responsibility for their own lives, and everyone panics in response.

I remember one line where Bruce Willis says "Surely the government has departments full of people to deal with this kind of thing" and the other character says "it took the government five days after Katrina to get water to the Superdome."  Again, the assumption is that as the tools of civilization fail, only the government could put things together again, and they were undermanned.  But after Katrina, Wal-Mart and Home Depot had extra inventory in their local stores, with a focus on plywood and generators and the like, in hours rather than days.  FEMA on the other hand spent more time after Katrina keeping individuals from helping in New Orleans of their own initiative than doing anything themselves.   Civilization was built by individuals, not the government, and if it ever comes to rebuilding it, the same will be true.

Posted on July 16, 2007 at 03:16 PM | Permalink | Comments (4)

I'll Accept This Description

David Boaz:

Maybe libertarians should try to describe their philosophy by saying “libertarians believe in the free speech that liberals used to believe in, and the economic freedom that conservatives used to believe in.”

Posted on June 26, 2007 at 10:42 AM | Permalink | Comments (2)

Worst of Both Worlds

Those who support a strong regulatory state argue that only the government has the power and the incentives to make sure products are safe.  Anarcho-capitalists like myself argue that where consumers demand high-quality or assurances of safety, the market will provide it as competitors, always alert for ways to differentiate themselves, will seek out ways to create a brand around safety or security (see Volvo, for example).  If those competitors gain market share, then others will have to emulate them.

The Bush Administration has, at least for mad cow disease, chosen to take the worst of both of these worlds, resisting calls for the government to test more than 1% of the beef while actually barring private firms from competing on the basis of better testing.

The Bush administration said Tuesday it will fight to keep meatpackers from testing all their animals for mad cow disease.

The Agriculture Department tests less than 1 percent of slaughtered cows for the disease, which can be fatal to humans who eat tainted beef.

But Kansas-based Creekstone Farms Premium Beef wants to test all of its cows.

Larger meat companies feared that move because, if Creekstone tested its meat and advertised it as safe, they might have to perform the expensive test, too.

Basically, Creekstone's competitors are asking to be protected from having to respond to innovation by their competitors.  Their response is roughly equivalent to Barnes and Noble saying in 1998, "Amazon should be banned from selling books on the internet because if they do so, we may have to bear the cost of doing the same."  No shit.  Deal with it.

Again, regulation is being used to protect companies from the cost of full competition.

Posted on May 31, 2007 at 02:49 PM | Permalink | Comments (6)

Socialism in an Engineering Article

I am writing a paper on climate models, and an important part of that discussion is on positive feedback (most climate models get large changes in future climate through the liberal use of positive feedback assumptions).  I was looking around the Internet for a nice pithy explanation of positive feedback.  This one on Wikipedia was fine, until I got wacked in the face with the last line (emphasis added)

The end result of a positive feedback is often amplifying and "explosive." That is, a small perturbation will result in big changes. This feedback, in turn, will drive the system even further away from its own original setpoint, thus amplifying the original perturbation signal, and eventually become explosive because the amplification often grows exponentially ( with the first order positive feedback), or even hyperbolically (with the second order positive feedback). An intuitive example is "the rich get richer, and the poor get poorer."

Wow, intuitive?  How can a statement that is wrong in at least two major ways be intuitive?  First, the poor generally do not get poorer.  In fact, the poor in the United States are in many ways better off than the richest men of the mid-nineteenth century (particular example linked is for the middle class, but many of the same arguments hold for the poor), and better off than the middle class of many nations.  Second, while it might be arguable that there is a positive feedback loop that helps the rich get richer, no such loop is even possible with the very poorest.  Without going into too much detail, the simplest explanation is that with income you can't go below zero.  What people really mean by this statement is that the poor get poorer relative to the rich, rather than on an absolute scale.  Which of course has little to do with positive feedback.  By the way, the rest of the article is equally bizarre, giving more examples of social phenomena that are only weakly linked to positive feedback (Internet echo chamber effect?) rather than physical processes.  It looks like a physics article written by a politics major.

Here are some alternative non-socialist examples of positive feedback from the physical world that actually have the virtue of being true:  Nuclear fission, some exothermic chemical reactions, and acoustic feedback.  In actuality, since positive feedback reactions are so explosive and unstable, they are very uncommon in nature, which is part of the argument against how climate models are constructed.

If you don't know the connection between climate models and positive feedback, see here

Posted on May 30, 2007 at 12:48 PM | Permalink | Comments (5)

Introducing Obama to Capitalism

Via TJIC:

In his commencement speech at Southern New Hampshire University this morning, Obama - like most commencement speakers - delivered a call to public service; unlike many, however, he also warned against the charms of doing what most college graduates set out to do: Make money.

“In a few minutes, you can take your diploma, walk off this stage and go chasing after the big house and the large salary and the nice suits and all the other things that our money culture says you should buy.

“But I hope you don’t. Focusing your life solely on making a buck shows a poverty of ambition. It asks too little of yourself. And it will leave you unfulfilled,” he told the crowd.

This statement would certainly be true in 18th century European monarchies, in Soviet Russia, in third world Kleptocracies, in Cuba, and in Chavez's Venezuela.  Because making money in these environments is a zero-sum game, and the only way to get rich is to loot it from some poor schmuck who is actually creating the value.

But here in America, we (mostly) have this cool system called capitalism.  In capitalism, all interactions are based on the voluntary self-interest of the parties involved.  This means that one only can "make a buck" by doing something or making something that is of value to another person.  And only by successfully serving the needs of a LOT of people does one get really rich. 

TJIC's conclusion is wonderful:

Far better that they spend their life

  • majoring in political “science”
  • working for a meaningless non-profit
  • trying to register more people to vote so that the negative-sum game of politics can have more credibility
  • helping political partisans redrawn electoral district boundaries in the same negative-sum game of politics
  • being a senator, pushing for more regulations and tax increases

That, clearly, is a fulfilling life.

Let the suckers create value.

The best and brightest should just steal it, and move it around (while taking some portion of it for themselves, and destroying another portion of it).

Beware of people who try to demonstrate how much they "care" using other peoples' money.

Posted on May 20, 2007 at 09:06 AM | Permalink | Comments (7)

We Know How You Should Be Living

TJIC has a nice post on the arrogant paternalism inherent in urban planning.

The Party is making decisions about how we should live, and then, eventually, telling us about them.

The aim is to have 80 percent of new housing and new jobs in cities and larger municipal centers such as Framingham, Peabody, Norwood, and Marlborough. That would enable more people to walk or use mass transit and thereby reduce traffic and pollution, according to the plan.

So, of the million possible variables, the ones they’ve chosen to optimize are the minimization of the average distance one has to drive to get to work.

Things they have implicitly then de-prioritized:

  • open space per family
  • privacy per family
  • floor space per family
  • minimal overall commute time per individual
  • noise abatement
  • etc.

I liked this bit:

The problem is, the statists don’t really care about green space per se. They care about government owned (or at least government controlled) green space. Which is better? 20 acres of land lumped into a government owned wetland sanctuary that no one ever visits, or 20 houses, each on 1 acre lots, covered with gardens, yards, trees, and tree-houses? The government employee doesn’t get to meddle in the individual lots, so he’s always going to say that the government owned patch is better.

Posted on May 5, 2007 at 09:27 PM | Permalink | Comments (6)

Moratorium on Brains

For years, socialists (and some sloppy capitalists) have operated under the assumption that production only requires labor and capital.  Socialists assume that if a government steals both, it can produce just as well as any of those greedy private companies.  Hugo Chavez has been operating under this assumption, but he has run into a problem:

The companies ceding control included BP Plc, ConocoPhillips, Exxon Mobil Corp, Chevron Corp, France's Total SA and Norway's Statoil ASA. All but ConocoPhillips signed agreements last week agreeing in principle to state control, and ConocoPhillips said Tuesday that it too was cooperating.

While the state takeover was planned well ahead of time, the oil companies remain locked in a behind-the-scenes struggle with the government.

Chavez says the state is taking a minimum 60 per cent stake in the Orinoco operations, but he is urging foreign companies to stay and help develop the fields.

They have until June 26 to negotiate the terms.

The companies have leverage with Chavez because experts agree that Venezuela's state oil company, Petroleos de Venezuela SA, cannot transform the Orinoco's tar-like crude into marketable oil without their investment and experience.

In other words, beyond their workers and plant and equipment, he needs their brains.  And I hope the American companies refuse to give in to him.

I made this point earlier in this critique of socialism:

Hanging out at the beach one day with a distant family member, we got into a discussion about capitalism and socialism.  In particular, we were arguing about whether brute labor, as socialism teaches, is the source of all wealth (which, socialism further argues, is in turn stolen by the capitalist masters).  The young woman, as were most people her age, was taught mainly by the socialists who dominate college academia nowadays.  I was trying to find a way to connect with her, to get her to question her assumptions, but was struggling because she really had not been taught many of the fundamental building blocks of either philosophy or economics, but rather a mish-mash of politically correct points of view that seem to substitute nowadays for both....

I picked up a handful of sand, and said "this is almost pure silicon, virtually identical to what powers a computer.  Take as much labor as you want, and build me a computer with it -- the only limitation is you can only have true manual laborers - no engineers or managers or other capitalist lackeys"....

She replied that my request was BS, that it took a lot of money to build an electronics plant, and her group of laborers didn't have any and bankers would never lend them any....

I told her - assume for our discussion that I have tons of money, and I will give you and your laborers as much as you need.  The only restriction I put on it is that you may only buy raw materials - steel, land, silicon - in their crudest forms.  It is up to you to assemble these raw materials, with your laborers, to build the factory and make me my computer.

She thought for a few seconds, and responded "but I can't - I don't know how.  I need someone to tell me how to do it"

And that is the heart of socialism's failure.  For the true source of wealth is not brute labor, or even what you might call brute capital, but the mind.  The mind creates new technologies, new products, new business models, new productivity enhancements, in short, everything that creates wealth.  Labor or capital without a mind behind it is useless.

I offered more critiques of state-run companies here and here.  My more complete post on this topic his called wealth creation and the zero-sum fallacy.

Posted on May 5, 2007 at 09:22 PM | Permalink | Comments (4)

Capitalism Rorschach Test

The current failures in the subprime mortgage market, both of borrowers and lenders, has become one of those classic Rorschach tests where people self-identify by what description they apply to the market fallout.  Views on capitalism, free interchange, and individual responsibility are all tied up in the choice between:

  1. Businesses recognized an opportunity to expand the mortgage market by offering mortgages to poorer, riskier borrowers and managing the risk by securitizing these loans and reselling them in the increasingly robust institutional market for such loan packages.  While certainly in it for the profit, this move was consistent with the long-term trend in the US to wider home ownership.  It turned out, however, that almost everyone involved were working off some poor assumptions.  Borrowers over-estimated their ability to pay and counted too much on the continued upward trajectory of real estate values.  Lenders made a number of bad credit decisions, something not wholly surprising in a new market.  And institutions and other investors under-estimated the risk in these packages, particularly the systematic risk associated with falling housing prices.   The sub-prime market will likely re-emerge, but with everyone smarter the next time around.  Huge losses give lenders and institutions all the incentive they need to change their behavior in the future.
    -- OR --
  2. Unscrupulous lenders created the sub-prime market as a way to make a quick buck off of naive and inexperienced borrowers.  They tricked these borrowers into taking on more debt than they could handle in order to get large up-front fees.  Institutions were not arms-length investors, but were explicitly knowledgeable and "in on" this con.  Their goal was to sell worthless bonds to unsuspecting investors.  The fact that the lenders and institutions are taking the biggest losses in the market collapse is not a sign that they are innocent, but that the market fell apart faster than they expected, so they had not had the chance to unload the securities on duped individual investors.  Without regulation, lenders and institutions will continue committing these same crimes and poor people have proven that they need outside help to make good decisions with their money.  Congress needs to step in and prevent poorer borrowers from being offered mortgages in the future, and institutional investors need to be held financially accountable when borrowers take on more debt than they can handle.

Update:  There are several comments that say "can't it be both?"  Surely there can be simultaneous examples of both in the same market, but, as an example, proponents of #2 talk as if theirs is the dominant explanation, and are proposing legislation on that basis. 

Recognize that you have to really believe #2 all the way to even consider some of the draconian measures that Congress is entertaining.  There is legislation that is being seriously considered at this moment that will fundamentally change the entire mortgage market, not just the sub-prime piece, for the worse.  In particular, Congress is considering making financial institutions that invest in securitized batches of mortgages liable for any illegal lending practices of the originator.  This will effectively kill the securitization process.  Many of you younger folks won't know what that means, but in effect it will send us back to the mortgage process of the 1970's, which I promise you really, really sucked.  This will make it much harder for everyone to get mortgages.  Since securitization, there are an order of magnitude more mortgage competitors, the mortgage approval and application process take about 1% of the time it used to, rates are lower, and there is much more flexibility in mortgage design. 

Posted on April 26, 2007 at 10:25 AM | Permalink | Comments (7)

Proletarianizing the Middle Class

I have been reading and studying Karl Marx in the last week as a part of a European History course I am taking that focuses on the 19th century.  In the context of Marx, it was interesting reading the NY Times recent article on income inequality (the newspaper is not comfortable unless it has visited this topic at least once every week or so).  You might think that I would latch onto this quote from the Times (HT: TJIC)

The top 0.1 percent of earners… now brings in 11 percent of the nation’s total income, triple the share that they did just a generation ago.

And indeed, I have written on the implied zero-sum fallacy any number of times, including just yesterday.  Implied in this one sentence from the Times is what I call the "bubbling spring" theory of wealth, where wealth and income just sort of magically appear, like a spring out of the ground, and the rich are all those piggy people up front taking more than their fair share of the water.  Of course this is ludicrous, because it implies that if the wealthy made less money, then the poor would make more.  In fact, the reality is that if the wealthy made less money, then the nation's total income would be lower.

But this is not what caught my attention.  What was new to me in my recent study of Marx was his writing on the tactics of socialist revolution.  Specifically, he spent a lot of time talking about the need to "proletarianize the middle class."  He knew that to have a successful socialist revolution, the middle class had to be made to feel marginalized and put upon by the system.  If he had lived long enough, he would have said that socialist revolution failed to occur in countries like Britain because the middle class became too large and too successful.

In this context, then, I found this quote from the Times most interesting:

There is now a big push in both Washington and state capitals to come up with policies that can alleviate middle-class anxiety.

The author himself editorializes:

There is now a big push in both Washington and state capitals to come up with policies that can alleviate middle-class anxiety. That’s all for the good. In fact, it is overdue.

What middle class anxiety?  The middle class is doing better than ever, except that there has been a concentrated media campaign by the Times and others, abetted by various politicians on the left, to try to make the middle class feel anxious and marginalized.  To the author's credit, he observes that while "Layoffs seem to happen more frequently than they once did," the actual evidence for increased volatility is really not there:

Only later do you come to the surprising part: there is the same amount of variability now that there was in the 1980s and 1990s. In journalism, this is known as burying the lead.

“Intuitively, you would think volatility is increasing,” said Senator Charles E. Schumer, Democrat of New York, who along with Senator Jim Webb of Virginia requested that the study be done. “But it isn’t, which I guess shows that the American economy has always been very flexible.”

What the author does not explain is, if the increase in volatility is not real, then why do so many people believe it to be true?  The answer, of course, is that his employer, among others, have been pushing a PR campaign for years to convince the middle class that their lot sucks.  Why?  Well, read your Marx.

Posted on April 24, 2007 at 07:46 PM | Permalink | Comments (2)

Wealth Creation and the Zero-Sum Fallacy

This is an update of an article I post every year or two around tax day.  I was going to skip this year, but tomorrow is the premiere of a show (which I have not seen yet) called the Ultimate Resource which seems to be named after Julian Simon's great book, and looks to be focused on many of the same issues I address in this post.

One of the worst ideas that affect public policy around the world is that wealth is somehow zero sum - that it can be stolen or taken or moved or looted but not created.  G8 protesters who claim that poor nations are poor because wealthy nations have made them that way;  the NY Times, which for years has flogged the idea that the fact of the rich getting richer in this country somehow is a threat to the rest of us; Paul Krugman, who fears that economic advances in China will make the US poorer:  All of these positions rest on the notion that wealth is fixed, so that increases in one area must be accompanied by decreases in others.  Mercantilism, Marxism, protectionism, and many other destructive -isms have all rested on zero-sum economic thinking.

The (Incorrect) Physics Analogy

My guess is that this zero-sum thinking comes from our training and intuition about the physical world.  As we all learned back in high school, nature generally works in zero sums.  For example, in any bounded environment, no matter what goes on inside (short of nuclear fission) mass and energy are both conserved, as outlined by the first law of thermodynamics. Energy may change form, like the potential energy from chemical bonds in gasoline being converted to heat and work via combustion, but its all still there somewhere. 

In fact, given the second law of thermodynamics, the only change that will occur is that elements will end in a more disorganized, less useful form than when they started.  This notion of entropic decay also has a strong effect on economic thinking, as you will hear many of the same zero sum economics folks using the language of decay on human society.  Take folks like Paul Ehrlich (please).  All of their work is about decay:  Pollution getting worse, raw materials getting scarce, prices going up, economies crashing. They see human society driven by entropic decline.

Wealth Is Demonstrably Not Zero-Sum

So are they wrong?  Are economics and society driven by something similar to the first and second laws of thermodynamics?  I will answer this in a couple of ways.

First, lets ask the related question:  Is wealth zero sum and is society, or at least the material portions of society, always in decline?  The answer is so obviously no to both that it is hard to believe that these concepts are still believed by anyone, much less by a large number of people.  However, since so many people do cling to these false notions, we will spend a moment or two with it.

The following analysis relies on data gathered by Julian Simon and Stephen Moore in Its Getting Better all the Time:  100 Greatest Trends of the Last 100 Years. In fact, there is probably little in this post that Julian Simon has not said more articulately, but if all we bloggers waited for a new and fresh idea before we blogged, well, there would not be much blogging going on. 

Lets compare the life of an average American in 1900 and today.  On every dimension you can think of, we all are orders of magnitude wealthier today (by wealth, I mean the term broadly.  I mean not just cash, like Scrooge McDuck's big vault, but also lifespan, healthiness, leisure time, quality of life, etc).

  • Life expectancy has increase from 47 to 77 years
  • Infant mortality rates have fallen from one in ten to one in 150.
  • Average income - in real dollars - has risen from $4,748 to $32,444

In 1900, the average person started their working life at 13, worked 10 hours a day, six days a week with no real vacation right up to the day they died in their mid-forties.  Today, the average person works 8 hours a day for five days a week and gets 2-3 weeks of vacation.  They work from the age of 18, and sometimes start work as late as 25, and typically take at least 10 years of retirement before they die. 

But what about the poor?  Well, the poor are certainly wealthier today than the poor were in 1900.  But in many ways, the poor are wealthier even than the "robber barons" of the 19th century:  Just check out this comparison!  Today, even people below the poverty line have a good chance to live past 70.  99% of those below the poverty line in the US have electricity, running water, flush toilets, and a refrigerator.  95% have a TV, 88% have a phone, 71% have a car, and 70% have air conditioning.  Cornelius Vanderbilt had none of these, and his children only got running water and electricity later in life.

To anticipate the zero-summer's response, I presume they would argue that the US somehow did this by "exploiting" other countries.  Its hard to imagine the mechanism for this, especially since the US did not have a colonial empire like France or Britain, and in fact the US net gave away more wealth to other nations in the last century (in the form of outright grants as well as money and lives spent in their defense) than every other nation on earth combined.  I won't go into the detailed proof here, but you can do the same analysis we did for the US for every country in the world:  Virtually no one has gotten worse, and 99.9% of the people of the world are at least as wealthy (again in the broad sense) or wealthier than in 1900.  Yes, some have slipped in relative terms vs. the richest nations, but everyone is up on an absolute basis.

The (Correct) Physics Analogy

Which leads to the obvious conclusion, that I shouldn't have had to take so much time to prove:  The world, as a whole and in most of its individual parts, is wealthier than in was in 1900.  Vastly more wealthy.  Which I recognize can be disturbing to our intuition honed on the physical world.  I mean, where did the wealth come from?  Out of thin air?  How can that be?

Interestingly, in the 19th century, scientists faced a similar problem in the physical world in dating the age of the Earth. There was evidence all around them (from fossils, rocks, etc) that the earth had to be hundreds of millions, perhaps billions of years old. The processes of evolution Darwin described had to occur over untold millions of years.  Yet no one could accept an age over a few million for the solar system, because they couldn't figure out what could fuel the Sun for longer than that.  Every calculation they made showed that by any form of combustion they understood, the sun would burn out in, at most, a few tens of millions of years.  If the sun and earth was so old, where was all that energy coming from?  Out of thin air?

It was Einstein that solved the problem.  E=mc2 meant that there were new processes (e.g. fusion) where very tiny amounts of mass were converted to unreasonably large amounts of energy.  Amounts of energy so large that it tends to defy human intuition.  Here was an enormous, really huge source of potential energy that no one before even suspected.

The Human Mind Has Huge Potential Energy

Which gets me back to wealth.  To balance the wealth equation, there must be a huge reservoir out there of potential energy, or I guess you would call it potential wealth.  This source is the human mind.  All wealth flows from the human mind, and that source of energy is also unreasonably large, much larger than most people imagine.

But you might say - that can't be right.  What about gold, that's wealth isn't it, and it just comes out of the ground.  Yes, it comes out of the ground, but how?  And where?   If you have ever traveled around the western US, say in Colorado, you will have seen certain hills covered in old mines.  It has always fascinated me, how those hills riddled with shafts looked, to me, exactly the same as the 20 other hills around it that were untouched.  How did miners know to look in that one hill?  Don Boudroux at Cafe Hayek expounded on this theme:

I seldom use the term “natural resource.” With the possible exception of water, no resource is natural. Usefulness is not an objective and timeless feature ordained by nature for those scarce things that we regard as resources. That is, all things that are resources become resources only after individual human beings creatively figure out how these things can be used in worthwhile ways for human betterment.

Consider, for example, crude oil. A natural resource? Not at all. I suspect that to the pre-Columbian peoples who lived in what is now Pennsylvania, the inky, smelly, black matter that oozed into creeks and streams was a nuisance. To them, oil certainly was no resource.

Petroleum’s usefulness to humans – hence, its value to humans – is built upon a series of countless creative human insights about how oil can be used and how it can be cost-effectively extracted from the earth. Without this human creativity, oil would objectively exist but it would be either useless or a nuisance.

A while back, I published this anecdote which I think applies here:

Hanging out at the beach one day with a distant family member, we got into a discussion about capitalism and socialism.  In particular, we were arguing about whether brute labor, as socialism teaches, is the source of all wealth (which, socialism further argues, is in turn stolen by the capitalist masters).  The young woman, as were most people her age, was taught mainly by the socialists who dominate college academia nowadays.  I was trying to find a way to connect with her, to get her to question her assumptions, but was struggling because she really had not been taught many of the fundamental building blocks of either philosophy or economics, but rather a mish-mash of politically correct points of view that seem to substitute nowadays for both.

I picked up a handful of sand, and said "this is almost pure silicon, virtually identical to what powers a computer.  Take as much labor as you want, and build me a computer with it -- the only limitation is you can only have true manual laborers - no engineers or managers or other capitalist lackeys".

She replied that my request was BS, that it took a lot of money to build an electronics plant, and her group of laborers didn't have any and bankers would never lend them any.

I told her - assume for our discussion that I have tons of money, and I will give you and your laborers as much as you need.  The only restriction I put on it is that you may only buy raw materials - steel, land, silicon - in their crudest forms.  It is up to you to assemble these raw materials, with your laborers, to build the factory and make me my computer.

She thought for a few seconds, and responded "but I can't - I don't know how.  I need someone to tell me how to do it"

The only real difference between beach sand, worth $0, and a microchip, worth thousands of dollars a gram, is what the human mind has added.

The economist Julian Simon is famous for his rebuttals of the zero summers and the pessimists and doom sayers, arguing that the human mind has unlimited ability to bring plenty our of scarcity.

"The ultimate resource is people - especially skilled, spirited, and hopeful young people endowed with liberty- who will exert their wills and imaginations for their own benefit, and so inevitably benefit not only themselves but the rest of us as well."

A Framework For Wealth Creation

As a final note, it is worth mentioning that the world still has only harnessed a fraction of this potential.  To understand this, it is useful to look back at history.

From the year 1000 to the year 1700, the world's wealth, measured as GDP per capita, was virtually unchanged. Since 1700, the GDP per capita in places like the US has risen, in real terms, over 40 fold.  This is a real increase in total wealth, created by the human mind.  And it was unleashed because the world began to change in some fundamental ways around 1700 that allowed the human mind to truly flourish.  Among these changes, I will focus on two:

  1. There was a philosophical and intellectual change where questioning established beliefs and social patterns went from being heresy and unthinkable to being acceptable, and even in vogue.  In other words, men, at first just the elite but soon everyone, were urged to use their mind rather than just relying on established beliefs.  In this formulation, I use "beliefs" in its broadest possible meaning, encompassing everything from the belief that the earth is the center of the universe to the belief that music has to be sold in stores on physical media
  2. There were social and political changes that greatly increased the number of people capable of entrepreneurship.  Before this time, the vast vast majority of people were locked into social positions that allowed them no flexibility to act on a good idea, even if they had one.  By starting to create a large and free middle class, first in the Netherlands and England and then in the US, more people had the ability to use their mind to create new wealth without the encumbrance of artificial state-imposed class limits or mind-numbing regulatory barriers.  Whereas before, perhaps 1% or less of any population really had the freedom to truly act on their ideas, after 1700 many more people began to have this freedom. 

So today's wealth, and everything that goes with it (from shorter work hours to longer life spans) is the result of more people using their minds more freely.

The problem (and the ultimate potential) comes from the fact that in many, many nations of the world, these two changes have not yet been allowed to occur.  Look around the world - for any country, ask yourself if the average person in that country has the open intellectual climate that encourages people to think for themselves, and the open political and economic climate that allows people to act on the insights their minds provide and to keep the fruits of their effort.  Where you can answer yes to both, you will find wealth and growth.  Where you answer no to both, you will find poverty and misery.

Even in the US, regulation and the inherent conservatism of the bureaucracy slow our potential improvement.  Republicans block stem cell research, Democrats block genetically modified foods, protectionists block free trade, the FDA slows drug innovation, regulatory bodies of all stripes try to block new business models.

All over the world, governments shackle the human mind and limit the potential of humanity.

Postscript:  From the press release for the Ultimate Resource, showing why the show has me interested:

Free Market incentives are spectacularly changing lives over much of the
world. In the last 25 years, hundreds of millions of people-- 400 million in China alone--
have climbed out of the dire poverty of living on less than $1 per day. It is the largest
movement out of poverty in human history.

Yet, two thirds of the world’s population-- four billion people-- still does not have the
tools to thrive in free markets. Forced to operate outside the rule of law, they have little
education, no legal identity, no fungible property, no credit, no capital, and thus few ways
to prosper.

This documentary is the story of what can happen when ordinary people around the world
are given the tools to help themselves. “The Ultimate Resource” is people-- skilled,
spirited and hopeful people, who are using their wills and imaginations for their own
benefit, and, inevitably, they will benefit the rest of the world, as well.

Posted on April 23, 2007 at 09:20 PM | Permalink | Comments (3)

I Can Fix the Water "Shortage" in Five Minutes

Apparently the next "crisis" is that America is running out of water.  This is mostly an issue in the west, where growth is high and fresh water is rarer than in the east.  Here is one example of the brewing panic:

The growing human population is creating cities where desert or scrub land used to be. Rainfall always has been and always will be in short supply. Only so much water can be diverted from rivers to satisfy the water needs of these desert dwellers. The aquifers are being drained. Soon there will be demands to divert water from large inland lakes like the Great Lakes which would put those bodies of water in peril.

Oh my god, I can see it now - fish flopping on the muddy exposed bottom of Lake Michigan.

Look, the problem is not lack of water.  The problem is lack of market sanity.  Water in the west is regulated and sold in a hodge-podge of complex arrangements and negotiations.   The whole system is too complex to describe here, but at least one general conclusion can be safely drawn about the whole system:  Water is under-priced.   

For reference, lets look at my home city.  If building cities in the desert is the new evil, then I live in that great Satan called Phoenix.  And while my electricity charges are enough to get my attention (higher efficiency AC: check; compact fluorescent bulbs: check; solar: still too expensive), my water bill seldom grabs my focus.   

And now I know why.  Check out this analysis, conducted apparently by the city of Austin but which I found on the Portland Water Bureau's web site:

City Monthly cost for water service of 8,500 gallons
Memphis, Tennessee $14.16
Phoenix, Arizona $16.27
Charlotte, North Carolina $17.52
Dallas, Texas $20.04
Austin, Texas $23.15
Portland, Oregon $23.44
Louisville, Kentucky $23.47
Houston, Texas $26.49
Milwaukee, Wisconsin $27.86
East Bay MUD, Oakland, California $31.13
Atlanta, Georgia $33.60
San Diego, California $37.52
Seattle, Washington $39.75

Can you believe it?  We here in Phoenix, out in the middle of the largest desert on the continent, during a multi-year drought (yes you can still have a drought in the desert), while everyone laments that Lake Powell and other reservoirs are getting sucked dry, Phoenix has one of the lowest water prices of any city in the country.  Can you get over the irony of Seattle having some of the highest priced water in the country and Phoenix the lowest?

And you know what - I have not seen a single article in any of our local media that has once mentioned this fact.  Look here -- the articles blame global warming and lack of conservation and development and too many lawns and not enough low-flow faucets and talk about the need for government rationing, but never once mention PRICE.  We have the scarcest water in the country and one of the lowest prices for water.  Talk about ignoring the elephant in the room.  I should have just labeled this post "Duh!"

And these are the consumer water prices.  The situation actually gets worse when you look at agriculture.  In most of the southwest, farmers get water prices subsidized below the rates paid by ordinary consumers.  When you combine these water subsidies with massive subsidies already rich groups get for growing crops in the desert from farm programs, you get an enormous distorted incentive to grow water-hungry crops that are totally inappropriate for the desert.

So here is my five minute plan:  We may be a ways away from creating an actual market in water, but in the mean time, the quasi-governmental agencies providing it need to raise the prices (to everyone) up to a level that demand matches supply.  More conservation will occur, and marginal commercial, residential, and agricultural development will disappear.  If the price goes high enough, someone may even go out and find a new, innovative source of water for the area. 

Unfortunately, this is just too dang easy, and, from reading recent articles in the media, not even in the menu of options being considered.  Government bureaucrats are much more comfortable with rationing and limitations on development, because it gives them more power and creates a new set of winners and losers who will donate more to future political campaigns.

Update: Daniel Mitchell at Cato has similar thoughts, based on water shortages in Florida of all places:

So here we are, in the spring of 2007, with rain below average, with a low lake level, little else in the way of reservoirs, and a water shortage. What is the response? Well, a rational response might be to price a scarce commodity such that people will use it only as they need it, and not frivolously. …Instead, we get the response of the local commissars. So, not allowing the market to work, and not allowing prices to provide signals to the participants, they have decided to run our lives for us.

…I live at an odd numbered address. That means that if I want to water my lawn, I can only do it on Monday, Wednesday and Saturday mornings, from four to eight AM. I can water my plants with a hose on the same days, but only between five and seven PM. My neighbors across the street, and behind my house on the next block, get Sunday, Tuesday and Thursday.

…Over thirty years ago, in the first OPEC oil embargo, the government, rather than allowing prices to rise to account for the reduced supply, told people when they could purchase gas based on the parity of their license plate — even one day, odd the next. My recollection was that this did nothing to alleviate the shortage — the lines remained. The problem was only solved when Nixon-era price controls on oil were lifted, the market was allowed to work, and oil prices eventually (and it didn’t take all that long) fell to historical lows.

…[H]ere’s a radical concept. How about pricing the commodity to the market? Maybe, if people had to pay more for water to water their lawn, they’d use less of it? Yes, I know that it’s hard to believe, but there really are some people out there who buy less of something if the price is higher.

Update #2: The more I think of it, the more this situation really ticks me off.  In their general pandering and populism, politicians are afraid to raise water prices, fearing the decision would be criticized.  So, they keep prices artificially low, knowing that this low price is causing reservoirs and aquifers to be pumped faster than their replacement rate.  Then, as the reservoirs go dry, the politicians blame us, the consumers, for being too profligate with water and call for ... wait for it ... more power for themselves, the ones whose spinelessness is the root cause of the problem, to allocate and ration water and development.

Posted on April 17, 2007 at 09:55 AM | Permalink | Comments (32)

State-Run Companies and Investment, Part 3

One of the urban legends of the civics world is that is some project really requires investment for the long-term, the government needs to do it since private companies are too short-term profit focused. 

Over a series of posts, I have been showing just how terrible state run companies are at making long-term investments compared to private companies.   I showed the Mexican state oil company eschewing investment in favor of bloated patronage-based payrolls and social spending, and the nationalized Venezuelan companies doing the same thing.  What you see in both cases is that the state run oil companies are particularly bad at making investments to maintain production, investments that can be huge in the oil business.  Leftists have convinced themselves that oil companies make a fortune with little or no work, that oil extraction is kind of like clipping coupons.  But the maintenance of any infrastructure is hugely expensive, and takes a discipline and focus that the state does not have.  Belatedly, some of them are learning that producing oil takes real work and constant re-investment.  It bizarrely reminds me of Carl talking to Vernon in the Breakfast Club: "You took a teaching position, 'cause you thought it'd be fun, right? Thought you could have summer vacations off...and then you found out it was actually work...and that really bummed you out"

But I don't want to imply that this is just a poor-country, banana republic problem.  Defenders of big government in the US will say that government can do all these things just fine, if only you have the right people in charge.  But under-investment in public assets, particularly in refurbishment, is a constant problem in the US as well.  Every Senator likes to get his name on building a new facility, but you don't get your name on a maintenance contract, so lots of things get built by the government but few get maintained.  Disney would never let its parks get as run down as the government allows its public parks to get.  Wal-Mart (like most retailers) virtually rebuilds its stores every twenty years, and would never let its infrastructure get as run down as, say, the average US post office.

So I take as my example the Washington Metro system, one of the highest-profile public infrastructure projects in the country:

The Metro Rail system was built with federal dollars, with the understanding that local governments would pay for its operation. But no one was prepared to pay for rail reconstruction, which is needed every 30 years or so and which costs a substantial fraction of the original construction cost. Now, some of the system is approaching 30 years of age and is breaking down with increasing frequency.

The article, by Randal O'Toole of Cato, goes on to show another example of this same mindset:

Meanwhile, everyone is trying to ignore the gorilla in the corner, which is that VTA’s board wants to spend $4.7 billion to connect the San Francisco BART system to San Jose. The agency only has enough money to build to the edge of San Jose, but even if it had all the money for construction, its general manager admits “we clearly do not have the money to operate the system.” Nevertheless, the board recently voted to spend $185 million — more than half of VTA’s annual operating budget — on preliminary engineering.

Meanwhile, VTA is still short on operating funds, so it is contemplating “eliminating or consolidating” service on more than a quarter of its remaining bus lines.

Posted on April 15, 2007 at 09:02 AM | Permalink | Comments (10)

I Didn't Get the Memo

John Tamny in TCS Daily:

In a recent Los Angeles Times op-ed, "Overselling Capitalism," University of Maryland Professor Benjamin Barber wrote of the "crisis" in the capitalist mindset, where the "'Protestant ethos' of hard work and deferred gratification has been replaced by an infantilist ethos of easy credit and impulsive consumption that puts democracy and the market system at risk."

Wow, I must not have gotten the memo.  Here I have been plugging negative numbers into my 1040 for three or four years in an attempt to build a business and some future wealth, and it turns out that deferred gratification is out of style.   (TJIC also did not get the memo)

Here is a big reality check for professor Barber:  The fact that a few mortgage companies got overly generous in extending mortgage credit does not mean that the work ethic and entrepreneurship is dead.  In fact, they are virtually unrelated topics.  If the price of something is reduced, more is going to be consumed.  Suppliers of credit reduced the price of credit, too far as it turned out to make a profit, and more was consumed.  This does not represent so tragic change in the human makeup, it is just supply and demand at work, like normal, and some bad business judgement. 

In fact, I can't get over the class-based condescension that seems to fill every nook and cranny of the commentary on the mortgage bubble bursting.  When in the late 1990's, rich VC's provided too much money too cheaply to yuppies running Internet companies, I don't remember anyone lamenting a shift in human motivation or a failure of capitalism.  But when banks provided too much capital too cheaply to lower income people for home mortgages, suddenly all those lower-income people are representative of the failure of capitalism and the work ethic.

Posted on April 13, 2007 at 08:46 AM | Permalink | Comments (6)

Why Does Socialism Sometimes Seem to Sort of Work, At First?

Sometimes industries get nationalized, and they seem to do OK, at least for a while.  Sometimes when countries go socialist, and they appear to function well, at least at first (Sweden, for example, was held up as a model for a while).  I had a couple of thoughts on this topic as we seem to be at the precipice of nationalizing the health care industry in this country:

  • Among some, the work ethic dies hard.  Medicine is a great example.  Because of how difficult it is to become a doctor in this country, the medical profession attracts very few people with poor work ethics.  One can see these folks continuing to work hard, even under socialized medicine where many of the incentives to do so have been taken away.  It can take a whole generation for socialism to kill the work ethic in an industry, but when it finally does so, the effect is dramatic.  For example, doctors in the US see 60% more patients in a day than doctors in countries with socialized medicine (ie everywhere else).  Eventually, though, the highest talent, most motivated people move on to other industries or occupations where their hard work is rewarded, and are replaced by a new generation of workers who are attracted to a job where only attendance (and sometimes not even that) is required.
  • Incentives can work quickly, or they can take a while to operate.  Some incentives can work quickly -- for example, if on any given day, the government were to decide to cap gasoline prices twenty percent below the market level, we would see gasoline lines in less than a week.  On the other hand, the welfare program of the late 1960's provided incentives for out-of-wedlock births that took 20+ years to reach its peak.  Beyond the moral failures of socialism, one** of its practical failures revolves around incentives.  Customers get subsidized products or services, forgetting that that this will cause people to use more than is available.  Employees don't get rewarded for merit or hard work, but the system is constructed such that it won't work without these.
  • Assets and capital equipment act like a storage battery.  Businesses that are purely human, like a restaurant, you can screw up in a week.  I think everyone has had the experience of going to a service business under new management and being really disappointed.  Capital-intensive businesses, particularly extractive ones, can be looted for decades by kleptocratic governments.   Even so, the game can't go on forever.

What drives me most crazy is when socialism's advocates answer criticisms about socialism's consistently dismal long-term results by saying "but it will work if only we can get the right people in charge" (usually this means the speaker and his/her cronies).  If you are a Star Trek fan, you will understand why I call this the "John Gill Fallacy."  As I wrote before:

Technocratic idealists ALWAYS lose control of the game.  It may feel good at first when the trains start running on time, but the technocrats are soon swept away by the thugs, and the patina of idealism is swept away, and only fascism is left.  Interestingly, the technocrats always cry "our only mistake was letting those other guys take control".  No, the mistake was accepting the right to use force on another man.  Everything after that was inevitable.

** Other failures of socialism include this.  And this:

You can't make better decisions for other people, even if you are smarter, because every person has different wants, needs, values, etc., and thus make trade-offs differently.  Tedy Bruschi of the Patriots is willing to take post-stroke risks by playing pro football again I would never take, but that doesn't mean its a incorrect decision for him.

Posted on April 12, 2007 at 12:46 PM | Permalink | Comments (6)

Conservatives are Lost, Part 324

For those who still can't accept that the current ruling conservatives have shed any last remnants of their libertarian / small-government allies, here's this (sorry, I am a little late on this one):

The latest property rights case to hit the U.S. Supreme Court is a doozy. Quick background: Harvey Frank Robbins bought a piece of land in Wyoming. The previous owner had agreed in principle to give the federal government an easement over the land. But the government agents neglected to record the easement, so Robbins obtained the land without it. The federal government came back to reclaim the easement, and Robbins refused.

In the Legal Times  Tim Sandefur explains what happened next:

“The federal government doesn’t negotiate,” one official told him. Instead, they promised that Robbins’ refusal would “come to war” and that they would give him a “hardball education.” Then they began a vendetta against him that would last to the present day.

They cancelled his right of way over government-owned land, repeatedly harassed the guests at his ranch, cited him for minor infractions while letting similar violations by his neighbors go unnoticed, and brought him up on criminal charges of interfering with federal agents during their duties. The jury acquitted him after deliberating for less than 30 minutes.

After enduring years of such treatment, Robbins sued, arguing, among other things, that the BLM agents had violated his Fifth Amendment right to exclude others from his property.

The 10th Circuit ruled for Robbins, but the federal government appealed. Conservatives in particular should take note of the stunning argument from U.S. Solicitor General Paul Clement:

“No court,” said Solicitor General Paul Clement in his brief, has “ever recognized a constitutional right against retaliation . . . in the context of property rights.”

Posted on April 5, 2007 at 02:26 PM | Permalink | Comments (4)

Libertarian Plea to the Left

My Princeton college roommate Brink Lindsey, now of Cato, has been raising a moderate rumpus by arguing that the traditional libertarian-Right coalition is stale and that libertarians should look for allies on the left as well.  He called it liberaltarianism.  Fair enough.   I will take a shot at the same plea.

I will use this map of the teaching of evolution in schools by state as a jumping off point.  I can't validate whether it is accurate or not, so I won't reproduce it here, but let's accept it as a fair representation of the diversity of approach to teaching evolution by state, even if you don't agree with the implicit value judgments embedded in the chart.  I will use it to reflect on two points I have made in the past to try to interest the left in libertarianism.

1.  Building complex machinery of state may feel good at first, when "your guys" are in control, but your opposition, or outright knaves, will eventually co-opt the system. As I wrote here:

I am reminded of all this because the technocrats that built our regulatory state are starting to see the danger of what they created. A public school system was great as long as it was teaching the right things and its indoctrinational excesses were in a leftish direction. Now, however, we can see the panic.  The left is freaked that some red state school districts may start teaching creationism or intelligent design.  And you can hear the lament - how did we let Bush and these conservative idiots take control of the beautiful machine we built?  My answer is that you shouldn't have built the machine in the first place - it always falls into the wrong hands.... 

Today, via Instapundit, comes this story about the GAO audit of the decision by the FDA to not allow the plan B morning after pill to be sold over the counter. And, knock me over with a feather, it appears that the decision was political, based on a conservative administration's opposition to abortion.  And again the technocrats on the left are freaked.  Well, what did you expect?  You applauded the Clinton FDA's politically motivated ban on breast implants as a sop to NOW and the trial lawyers.  In establishing the FDA, it was you on the left that established the principal, contradictory to the left's own stand on abortion, that the government does indeed trump the individual on decision making for their own body  (other thoughts here). Again we hear the lament that the game was great until these conservative yahoos took over.  No, it wasn't.  It was unjust to scheme to control other people's lives, and just plain stupid to expect that the machinery of control you created would never fall into your political enemy's hands.

2.  As public school boards come under sway of the Christian Right, the left should learn to embrace school choice, just as the Christian Right did a generation ago.  As I wrote here:

After the last election, the Left is increasingly worried that red state religious beliefs may creep back into public school, as evidenced in part by this Kevin Drum post on creationism. My sense is that you can find strange things going on in schools of every political stripe, from Bible-based creationism to inappropriate environmental advocacy. I personally would not send my kids to a school that taught creationism nor would I send them to a school that had 7-year-olds protesting outside of a Manhattan bank.

At the end of the day, one-size-fits-all public schools are never going to be able to satisfy everyone on this type thing, as it is impossible to educate kids in a values-neutral way.  Statist parents object to too much positive material on the founding fathers and the Constitution.  Secular parents object to mentions of God and overly-positive descriptions of religion in history.  Religious parents object to secularized science and sex education.  Free market parents object to enforced environmental activism and statist economics.   Some parents want no grades and an emphasis on feeling good and self-esteem, while others want tough grading and tough feedback when kids aren't learning what they are supposed to.

I have always thought that these "softer" issues, rather than just test scores and class sizes, were the real "killer-app" that might one day drive acceptance of school choice in this country.  Certainly increases in home-schooling rates have been driven as much by these softer values-related issues (mainly to date from the Right) than by just the three R's.

So here is my invitation to the Left: come over to the dark side. Reconsider your historic opposition to school choice.  I'm not talking about rolling back government spending or government commitment to funding education for all.  I am talking about allowing parents to use that money that government spends on their behalf at the school of their choice.  Parents want their kids to learn creationism - fine, they can find a school for that.  Parents want a strict, secular focus on basic skills - fine, another school for that.  Parents want their kids to spend time learning the three R's while also learning to love nature and protect the environment - fine, do it.

Yes, I know, private schools to fit all these niches don't exist today.   However, given a few years of parents running around with $7000 vouchers in their hands, they will.  Yes, there will be problems.  Some schools will fail, some will be bad, some with be spectacular (though most will be better than what many urban kids, particularly blacks, have today).   Some current public schools will revitalize themselves in the face of competition, others will not. It may take decades for a new system to emerge, but the Left used to be the ones with the big, long-term visions.  The ultimate outcome, though, could be beautiful.  And the end state will be better if the Left, with its deep respect and support of publicly-funded education, is a part of the process.

Of course, there is one caveat that trips up both the Left and the Right:  To accept school choice, you have to be willing to accept that some parents will choose to educate their kids in a way you do not agree with, with science you do not necessarily accept, and with values that you do not hold.  If your response is, fine, as long as my kids can get the kind of education I want them to, then consider school choice.  However, if your response is that this is not just about your kids, this is about other people choosing to teach their kids in ways you don't agree with, then you are in truth seeking a collectivist (or fascist I guess, depending on your side of the aisle) indoctrination system.  Often I find that phrases like "shared public school experience" in the choice debate really are code words for retaining such indoctrination.

In other words, are you OK if Bob Jones high school or Adam Smith high school exist, as long as Greenpeace high school exists as well? Or do you want to make everyone go to Greenpeace high school exclusively?

Posted on April 3, 2007 at 10:14 PM | Permalink | Comments (7)

"Privilege" to Conduct Commerce

Almost every piece of government waste paper I have to fill out has the power to irritate me  (and doing business in 13 states, I get a lot of such garbage).  But the one thing that sets me off more than any other is when I get forms from a state government that say I owe a tax for the "privilege" of conducting commerce.  Arizona calls their sales tax a "transaction privilege tax" and Texas calls their franchise tax a "privilege" tax.  In fact, the Texas form is covered with the word "privilege" -- for example, the form I am looking at covers the "privilege period" of January-December 2007.

By calling commerce, and by extension property, a privilege that can only be exercised with a license from the government, the government is saying that the right to trade and make transactions with other people flows not from our humanity, but from the government.  These "privilege" taxes and licenses are based on the theory that man does not have any inherent right to trade freely with other men, and that ability can only be granted (or taken away) at the whim of our masters in the state government. 

The Supreme Court is acknowledged to have the power to strike down laws it deems to be in conflict with our Constitution.  But what about laws that violate something more fundamental than the Constitution?  What about laws that violate the very theory of government on which the United States was founded?    We often think about the Constitution as the top of the legal hierarchy, but I would suggest that sitting even higher than the words of the Constitution is the idea that our rights flow from God, or in a more secular interpretation, from the very fact of our humanity, and what power government has is given to it (and can be taken away) by its citizens, NOT THE OTHER WAY AROUND.

The more correct statement, then, would be that we citizens have given government officials the privilege of regulating and taxing commerce  (a privilege, I might add, that they have abused and we should take away).

Update: 

“Freedom is not a gift bestowed upon us by other men, but a right that belongs to us by the laws of God and nature.”  --- Ben Franklin

Posted on April 3, 2007 at 08:54 AM | Permalink | Comments (2)

Idustrialization, World Trade, and the Division of Labor

I am not sure I have ever seen a better parable about the virtues of industrialization, world trade, and the division of labor than this experiment documented in Wired Magazine (via L. Rockwell at Mises):

When educator and designer Kelly Cobb decided to make a man's suit only from materials produced within 100 miles of her home, she knew it would be a challenge. But Cobb's locally made suit turned into a exhausting task. The suit took a team of 20 artisans several months to produce -- 500 man-hours of work in total -- and the finished product wears its rustic origins on its sleeve.

"It was a huge undertaking, assembled on half a shoestring," Cobb said at the suit's unveiling one recent afternoon at Philadelphia's Institute of Contemporary Art.

"Every piece of the suit took three to five pairs of hands to make," Cobb added. "Every garment you wear took three to five pairs of hands to make too, but you don't know whose hands or where."

Cobb's suit (see photo gallery) is a demonstration of the massive manufacturing power of the global economy. Industrial processes and cheap foreign labor belie the tremendous resources that go into garments as simple as a T-shirt.

"It definitely makes you think for a minute before you buy that $10 skirt," said Jocelyn Meinhardt, a New York City playwright who sews many of her own clothes. "It didn't just grow on the rack at Forever 21. It's too easy to forget that people made it."

Posted on April 2, 2007 at 02:41 PM | Permalink | Comments (1)

A Zero-Sum Wealth Quiz

One of the really bad ideas that drive some of the worst government actions is the notion that wealth is somehow fixed, and that by implication all wealth is acquired at someone else's expense.  I am working on my annual tax-day post on the zero sum fallacy, but in the mean time here is a brief quiz.

The quiz consists of matching a description to the owners of these two houses:

House1a House2b

One house has hot and cold running water, central air conditioning, electricity and flush toilets.  The other does not.  One owner has a a computer, a high speed connection to the Internet, a DVD player with a movie collection, and several television sets.  The other has none of these things.  One owner has a refrigerator, a vacuum cleaner, a toaster oven, an iPod, an alarm clock that plays music in the morning, a coffee maker, and a decent car.  The other has none of these.  One owner has ice cubes for his lemonade, while the other has to drink his warm in the summer time.  One owner can pick up the telephone and do business with anyone in the world, while the other had to travel by train and ship for days (or weeks) to conduct business in real time.

I think most of you have guessed by now that the homeowner with all the wonderful products of wealth, from cars to stereo systems, lives on the right (the former home of a friend of mine in the Seattle area).  The home on the left was owned by Mark Hopkins, railroad millionaire and one of the most powerful men of his age in California.  Hopkins had a mansion with zillions of rooms and servants to cook and clean for him, but he never saw a movie, never listened to music except when it was live, never crossed the country in less than a week.  And while he could afford numerous servants around the house, Hopkins (like his business associates) tended to work 6 and 7 day weeks of 70 hours or more, in part due to the total lack of business productivity tools (telephone, computer, air travel, etc.) we take for granted.  Hopkins likely never read after dark by any light other than a flame.

If Mark Hopkins or any of his family contracted cancer, TB, polio, heart disease, or even appendicitis, they would probably die.  All the rage today is to moan about people's access to health care, but Hopkins had less access to health care than the poorest resident of East St. Louis.  Hopkins died at 64, an old man in an era where the average life span was in the early forties.  He saw at least one of his children die young, as most others of his age did.  In fact, Stanford University owes its founding to the early death (at 15) of the son of Leland Stanford, Hopkin's business partner and neighbor.  The richest men of his age had more than a ten times greater chance of seeing at least one of their kids die young than the poorest person in the US does today.

Hopkin's mansion pictured above was eventually consumed in the fires of 1906, in large part because San Francisco's infrastructure and emergency services were more backwards than those of many third world nations today.

Here is a man, Mark Hopkins, who was one of the richest and most envied men of his day.  He owned a mansion that would dwarf many hotels I have stayed in.  He had servants at his beck and call.  And I would not even consider trading lives or houses with him.  What we sometimes forget is that we are all infinitely more wealthy than even the richest of the "robber barons" of the 19th century.  We have longer lives, more leisure time, and more stuff to do in that time.   Not only is the sum of wealth not static, but it is expanding so fast that we can't even measure it.  Charts like those here measure the explosion of income, but still fall short in measuring things like leisure, life expectancy, and the explosion of possibilities we are all able to comprehend and grasp.

More, coming soon...

Update:  An example of why this topic is always timely:

Paul Krugman foresees an increasing left-leaning electorate. The cause?

The main force driving this shift to the left is probably rising income inequality. According to Pew, there has recently been a sharp increase in the percentage of Americans who agree with the statement that “the rich get richer while the poor get poorer.”

Russel Roberts goes on to tear into this red meat.  Read it all.

 

Posted on April 1, 2007 at 09:00 PM | Permalink | Comments (8)

Chicken Contact Lenses

Jane Galt makes a case against industrial animal husbandry, a position which she argues is not inconsistent with being a libertarian or classical liberal.  While I don't get as worked up about such practices as cruel, I don't think it is inconsistent for a libertarian to be so concerned.  And I don't rule out that I would be just as worked up if I were more informed about what was going on.

However, what really caught me eye was this:

This is an approximate description of what happens to industrially farmed chickens . . . lifted, mind you, from a business school case aimed at helping industrial farms be more efficient, by using rose coloured chicken contact lenses to cut down on the need for debeaking 'em.

I can attest that this was indeed a real case that we studied at Harvard Business School*.  In fact, it so freaked me out at the time as a concept that I included it in my most recent novel.  From BMOC [warning, profanity lurks ahead]:

Poor, boring, earnest Julian was always prepared, because he was always terrified, scared to death that one night slacking off might somehow destroy his future Career (always with a capital-C), and therefore future Life, much like the fear of catching AIDS from a one night stand.  Julian participated (unfortunately) all too much in class, droning on in that irritating voice of his, advocating positions as spectacularly expected as Susan’s were non-conformist.

Julian, therefore, was not really a candidate to get cold-called to open the class discussion, particularly this late in the year.  However, it was clear to everyone in the room, particularly the professor, that Julian longed to open a case.  Every day Julian would look at the professor with this hopelessly wistful expression, only to be followed by a look of desolation when someone else was chosen.

So today, letting Julian open was in the same spirit as the homecoming queen giving a pity-fuck on the last day of high school to the geek who has been mooning and sighing over her for four years.  And right at this moment, Julian had the same surprised and ecstatic look on his face that the geek would have.

But it was not just the site of Julian creaming all over himself at his chance to open that had Susan longing for the piranha button.  Some satanic twist of fate had Julian Rogers earnestly and painstakingly laying out a strategy and plan for the new product roll out of ... contact lenses for chickens. Contact fucking lenses for Christ-sake chickens.  Right this very second he was outlining his sales pitch to chicken farmers, explaining how putting contacts in chicken’s eyes will somehow reduce the number of chickens that have to have their beak cut off. Did she hear that right?  This had to be a joke – but no, everyone seemed to be taking it seriously, and certainly Julian was taking it deadly seriously.

* I know those anti-capitalists out there will be using this as evidence that business school is crafted to keep us cold and heartless.  HBS consisted of studying 2-3 cases per day for about 200 days a year, which means that over two years one might read a thousand business cases.  This case was more in the spirit of breaking the monotony of yet another case on brass vs. plastic water meters rather than part of a consistent attempt to make us cold and heartless.

Posted on March 28, 2007 at 11:24 AM | Permalink | Comments (0)

It's Hard To Be A Libertarian

Sometimes, it is difficult to figure out what the libertarian position on an issue should be, because it is so muddled with a history of government interference.

One such issue is the bill that passed the House (but is unlikely to become law) called the "Employee Free Choice Act."  The bill eliminates the requirement for secret ballot elections for forming unions, in favor of card checks (basically similar to signing a petition).  On its face, it is easy to laugh at the hypocrisy of Democrats, who are the first to claim voter intimidation even in secret ballot elections.  In no other context would the Democrats ever support such a voting change, but many in the party are convinced unions need a boost, and this is their solution.

This is the second pay-off to unions the Democrats have put forward. Yesterday the House passed HR 800, the curiously misnamed "Employee Free Choice Act" by a margin of 241-185. This act approves the use of the very public card check method of certifying a union instead of using a secret ballot.

As I mentioned here, that opens the entire process to intimidation - on both sides. A secret ballot was how it was formerly done and should have been preserved. I can’t imagine how anyone can make the argument, with a straight face, that the card check system

But wait!  What is the individual rights position here?  Freedom of association means the government should not dictate to a group of people on how they organize.  If a group of even two people want to get together at GM and call themselves a "union" and approach management to negotiate, they should be able to have at it.  Of course, they'll probably get laughed out of the room, but it is odd the government should dictate how they can organize.  In a free society, this is how things should work -- any number of employees should be able to organize themselves.  If they get enough people, then they will have enough clout, perhaps, to be listened to by management.

Unfortunately, we don't live in a free society, and the term "union" comes with a lot of legal baggage.  Recognized unions are granted certain legal powers and rights that an average group of self-organized folks don't.  For example, they are the only private organizations in this country that I know of that have taxation power, and the power to demand absolutely that certain monies be withheld from employee paychecks (even of employees not in the union) and given to them.  Perhaps more importantly, companies can't ignore them - they have to negotiate with a recognized union.  Unions also have informal powers.  For example, the legal system tends to tolerate a lot of violence and physical intimidation by union members (in strikes and such) that it does not tolerate in other contexts  (seventy-five years ago, the situation was reversed and the system tolerated a lot of company violence against workers).

So what do you do?  I have the same problem with immigration policy -- I think a free society would allow free immigration, but we are not a free society and have a myriad of government handouts we just can't afford to give to everyone who shows up at the door.  Anyway, in the case of this bill, given the power we have granted to unions, I don't think the secret ballot election requirement is too unreasonable.  Or maybe we could offer a compromise:  Democrats can get card-check voting in unions as long as they allow the same system for presidential voting in Florida and Ohio.

Posted on March 2, 2007 at 10:29 AM | Permalink | Comments (10)

Is Jury Nullification Libertarian?

A while back, at our local libertarian discussion group, we spent an evening discussing centralization vs. decentralization of government, and whether one or the other better protects individual liberties. 

Many libertarians argue for decentralization.  The anarchists in the room will argue for the ultimate decentralization, all the way to the individual level, essentially voiding the concept of government altogether.  Others who are more amenable to some government argue for decentralization because it tends to allow for competition, with citizens voting with their feet and wallets for more favorable tax and regulatory regimes.

On the other hand, the US provides historical examples of the benefits of federalism in protecting individual rights.  Certainly the abolition of slavery and later of Jim Crow laws were a positive outcome from the feds, as are the enforcement of Bill of Rights protections on the states.  I would personally love to see a federal system like our own with all legislative power held as locally as possible, but with a federal government whose main purpose domestically was not taxation/regulation/legislation but instead enforcement of a more robust Bill of Rights and nullification of state and local law that violated protected individual freedoms.

Anyway, one topic related to decentralized authority was jury nullification.  Jury nullification is the ability for juries to rule on the law, rather than guilt or innocence.  An example might be "the jury thinks Joe is guilty of smoking pot, but we don't think smoking pot should be illegal, so we are going to let Joe go."  Most state law technically does not allow juries to rule on the law itself, but as a practical matter there is no way juries can be prevented from doing so  (Prosecutors really go non-linear over jury nullification -- I remember Patterico had a long series inveighing against it.)

Anyway, as you might imagine, the libertarians in the room mostly love jury nullification.  Despite being a good anarcho-capitalist, I disagreed. I understood that most of the examples people brought up did indeed demonstrate that jury nullification could be a tool for protecting individual rights.  However, I believe that nullification could equally be a tool of oppression.  For example, in criminal law, take the Enron-Skilling trial.  I am not saying this happened, but one could certainly imagine a properly inflamed jury saying "well, we don't think he is technically guilty beyond a reasonable doubt on the charges based on the evidence here in court, but he's rich and Enron failed and people lost money and we're pissed off, so we will find him guilty.  They would be saying "what he did was not a violation of the law, but it should be, so we are sending him to jail." This is just as much jury nullification as my previous example.

I don't think this kind of anti-individual-rights jury nullificatin happens often in criminal court, but I do think it is happening a lot in civil court.  In fact, I think one way you could summarize what is wrong with torts and litigation in this country is that we are seeing rampant jury nullification in favor of wealth redistribution.  Juries are ignoring the law, the facts of the case, and all reason for one and only one consideration:  "One guy in the room is rich, one guy is not, and I have a chance to take money from the rich guy and give it to the poor guy."  For while it may be hard in America to get 51% of the voters to support substantial increases in wealth distribution, smart lawyers like Peter Angelos and Jon Edwards have figured out that it is not that hard through voi dire to get at least seven or eight such votes in a room of twelve people.

Particularly if you are good at venue-shopping:

In Race, Poverty and American Tort Awards (and here), Eric Helland and I show that tort awards increase strongly with county poverty rates especially with minority poverty.  A 1% increase in black poverty rates, for example, can increase tort awards by 3-10 percent with a similar increase in Hispanic poverty rates.   Careful forum shopping can easily raise awards by 50-100%.

Anthony Buzbee, a famed plaintiff's attorney, inadvertently let the cat out of the bag recently when talking about Starr county in Texas.

"That venue probably adds about seventy-five percent to the value of the case," he said. "You've got an injured Hispanic client, you've got a completely Hispanic jury, and you've got an Hispanic judge. All right. That's how it is."

In other parts of Texas, Buzbee went on, a plaintiff may have the burden of showing "here's what the company did wrong, all right? But when you’re in Starr County, traditionally, you need to just show that the guy was working, and he was hurt. And that's the hurdle: Just prove that he wasn't hurt at Wal-Mart, buying something on his off time, and traditionally, you win those cases."

The problem with letting juries write law in the jury room is that there are no Constitutional protections at all.  If they want to make the law, at least for that day, read that homeowners are liable for injuries suffered by burglars trying to break into their house, then that is what the law becomes, fair or not.  If they want to make the law read that drug companies shouldn't sell painkillers that have any risk at all, then that is what the law is, and the rest of us 300 million minus twelve people have to live with fewer choices for managing our migraines. 

Posted on March 1, 2007 at 11:00 AM | Permalink | Comments (8)

Arizona's Sometime Libertarianism

Arizona has a pretty strong libertarian streak, and we done some pretty good stuff, like electing Jeff Flake to Congress.  But from time to time, this weird code-of-the-wild-west streak comes out, and we elect a ridiculously self-promoting sheriff.  Or we give someone 200 years in jail for having for possessing (not producing) child pornography.  Or we take away the free speech rights of academics.  As to the latter:

The bill, whose chief sponsor is the Republican majority leader in the Senate, would ban professors at public colleges and universities, while working, from:

  • Endorsing, supporting or opposing any candidate for local, state or national office.
  • Endorsing, supporting or opposing any pending legislation, regulation or rule under consideration by local, state or federal agencies.
  • Endorsing, supporting or opposing any litigation in any court.
  • Advocating “one side of a social, political, or cultural issue that is a matter of partisan controversy.”
  • Hindering military recruiting on campus or endorsing the activities of those who do.

Posted on February 28, 2007 at 03:27 PM | Permalink | Comments (2)

Entertaining Libertarian Voice

One of the problems with us libertarians is that we all sound like a bunch of academic dweebs when we talk.  Well, thanks to YouTube and Human Advancement, I saw Mike Lee, who I found unpolished but curiously entertaining as a defender of individual rights (though he's bit hawkish internationally for my tastes).  Anyone who can, in about 2 minutes, shift from Duke Lacrosse to North Korea to jury nullifaction has got to be interesting to listen to.

By the way, it is increasingly clear that Google and YouTube don't really want to be a free speech outlet, as they seem to be banning stuff as fast as it can be posted.  They are private concerns, and so can do whatever they like, and I can understand from their perspective why they want to avoid controversy  (though if they ban everything the RIAA wants banned and political groups of every stripe want banned and end up with just home videos of pet tricks, I am not sure it will remain as popular).  This in turn got me thinking about Neal Stephenson  (and I accused Mike Lee of rambling?)

In Cryptonomicon, one of the plot lines is a group of guys trying to create an offshore data haven free from threats by government censors, tax inspectors, and, I presume, copyright enforcers from the RIAA and the NFL.  While such a comprehensive haven may be out of reach, I do think there could be a great role for an offshore blogging/podcasting/video haven that would protect identities and be immune or out of reach from third party censorship.  The problem is that as an officer of such an endeavor, you would likely be subject to immediate arrest in many countries once you landed there.  Oh, that would never happen in a free country like the US would it?  Yeah, right.

Posted on February 23, 2007 at 10:50 AM | Permalink | Comments (1)

Same Event Inspires Across the Political Spectrum

The other night our local libertarian discussion group had a presentation by Larry Reed of the Mackinac Institute.  Mr. Reed discussed why he thought that individuals who are lone voices in the wilderness should not give up hope (a topic particularly relevant to us libertarians) and he used the William Wilberforce story as one example.  Wilberforce, who is profiled in the movie Amazing Grace, fought a nearly fifty year battle in the British Parliament first against slave trading, and then against slavery itself.   (Mr. Reed, who has written and spoken about the Wilberforce story for years, said he had seen the movie three times and highly recommended it).

Not surprisingly, the libertarians in the room found the story inspiring -- here was a man who successfully fought for protection of individual rights against great odds.  The Wilberforce story is part of the great 19th century liberal tradition that is bedrock for libertarians today.

However, what is interesting to me is how other parts of the political spectrum also look to the Wilberforce story as an essential part of their own history.  Conservatives see the Wilberforce story as an example of the beneficial effects of an activist religious fundamentalist (which Wilberforce was) bending law to fit his religious beliefs.  At the same time, progressives on the left can look to the story as an early example of the central government looking out for a downtrodden group, a precursor to modern "social justice" legislation.

In other words, libertarians see a direct line from Wilberforce to, say, fighting Kelo-type government takings or indefinite detainments at Gitmo.  Religious conservatives see a direct line from Wilberforce to reducing violence on TV and preventing gay marriage.  Progressive see a direct line from Wilberforce to universal health care and affirmative action. 

I'm not really sure I have a point here, except that Amazing Grace may find a pretty good audience if everyone thinks it is "their" movie.  The only other thing I would observe is that it is nice to know that for all our differences today, there are some things we can agree on.  Which causes me to wonder why modern slavery, which is still all-too-prevalent, does not get more attention (except perhaps because certain folks are so invested in the Westerners-as-bad-guys view of history that they are blind to exploitation from other directions).

Posted on February 23, 2007 at 09:15 AM | Permalink | Comments (0)

I Do Not Think That Word Means What You Think It Means

The EU has an odd definition of the term "free trade."  Apparently, low taxes, in the EU's world, are irreconcilable with free trade.

In a move that is both remarkable and disturbing, the European Commission plans to file a complaint - and threaten protectionist trade barriers - because attractive Swiss tax policies are supposedly a violation of a free-trade accord. The bureaucrats in Brussels are not arguing that Switzerland is imposing barriers against EU products. Instead, the Commission actually is taking the position that low taxes are attracting businesses that might otherwise operate in high-tax nations. The implications of this radical assertion are breathtaking. It certainly is true that a nation with more laissez-faire policy will attract economic activity from neighbors with more burdensome levels of government. But if this migration of jobs and investment is a “distortion” or trade, then the only “solution” is complete and total harmonization of all taxes (and regulations, spending, etc). If the Euro-crats succeed with this argument at the European level, it will be just a matter of time before similar cases are filed at the World Trade Organization.

Posted on February 12, 2007 at 10:28 AM | Permalink | Comments (3)

Pro-Business, Not Pro-Free Market

It is always worth reinforcing this distinction, Via Cato-at-Liberty:

Representatives of the business community frequently are the worst enemies of freedom. They often seek special subsidies and handouts, and commonly conspire with politicians to thwart competition (conveniently, they want competition among their suppliers, just not for their own products). Fortunately, most business organizations still tend to be - on balance - supporters of limited government. But as the Wall Street Journal notes, some state and local chambers of commerce have become relentless enemies of good policy

Posted on February 12, 2007 at 09:55 AM | Permalink | Comments (1)

Repeat After Me ... Its Not Just One Party

Kevin Drum opines:

What happens when you combine "fast track" procurement, minimal oversight, pork-based contracting, and a comprehensive lack of responsibility for results? Well, you get the Bush administration, of course. More specifically, you get the Coast Guard's disastrous Deepwater program. Nadezhda runs through the grim details.

This is perhaps the single greatest fallacy that props up big government.  Specifically, the notion that corruption, inefficiency, and stupidity are failures in government related to certain individuals.  The implication is that if only "our party" was in control, big government would be great.  Except that both parties have had their chances in alternating fashion for 70 years (what I would call the era of really big government) and government has been a mess regardless of who has been in control. 

People like Hayek and Friedman have written who books about it, so I want try to elucidate the whole theory, except to summarize that the nature of incentives in government, particularly the big sacrifice-one-group-for-another government we have today, will ALWAYS lead to massive failures.  Period.

I wrote over a year ago that statism always comes back to bite its creators, because no matter how beautiful the machinery of government control, you can never control for the human beings who get behind the levers.  At that time I pointed to three fallacies, of which the third is particularly relevant to this post:

  • You can't make better decisions for other people, even if you are smarter, because every person has different wants, needs, values, etc., and thus make trade-offs differently.  Tedy Bruschi of the Patriots is willing to take post-stroke risks by playing pro football again I would never take, but that doesn't mean its a incorrect decision for him.
  • Technocratic idealists ALWAYS lose control of the game.  It may feel good at first when the trains start running on time, but the technocrats are soon swept away by the thugs, and the patina of idealism is swept away, and only fascism is left.  Interestingly, the technocrats always cry "our only mistake was letting those other guys take control".  No, the mistake was accepting the right to use force on another man.  Everything after that was inevitable.

Posted on December 8, 2006 at 09:58 PM | Permalink | Comments (5)

I hope this is True

It would be nice to think that we are this numerous:

These federal intrusions are especially scorned by independent voters in the Western states where Republicans have been losing ground, like Colorado, Nevada, Arizona and Montana. Western Democrats have been siphoning off libertarian voters by moderating their liberal views on issues like gun control, but Republicans have been driving libertarians away with their wars on vice and their jeremiads against gay marriage (and their attempt to regulate that from Washington, too).

Libertarian voters tend to get ignored by political strategists because they’re not easy to categorize or organize. They don’t congregate in churches or union halls; they don’t unite to push political agendas. Many don’t even call themselves libertarians, although they qualify because of their social liberalism and economic conservatism: they want the government out of their bedrooms as well as their wallets.

They distrust moral busybodies of both parties, and they may well be the most important bloc of swing voters this election, as David Boaz and David Kirby conclude in a new study for the Cato Institute. Analyzing a variety of voter surveys, they estimate that libertarians make up about 15 percent of voters — a bloc roughly comparable in size to liberals and to conservative Christians, and far bigger than blocs like Nascar dads or soccer moms.

I am not sure I believe it - many of the people who claim to be small government turn into statist technocrats when the right issue comes up.

I will say that the Internet and blogging in particular has really brought many libertarians to the surface.  I wrote about the phenomena of libertarians and blogging here.

Posted on October 31, 2006 at 09:01 AM | Permalink | Comments (4)

The Statist Trap

David Boaz of Cato makes this comment in the context of an article on suppressing speech in modern South Africa:

In the last days of apartheid, some libertarians pointed out to South Africa’s rulers that if they left a government broadcasting operation in place, they would one day regret the way a different government would use it. Looks like that day has come.

This is a point I make time and time again.  When statists push their policies, it is always with the assumption that they themselves will be in control of the government machinery they create.  In contrast, the miracle of the US Constitution was that the government was constituted with the assumption that rogues and scoundrels would take control, and the founders put protections in place to limit the damage these scoundrels could do to our individual liberties.

As I said previously
:

I am reminded of all this because the technocrats that built our regulatory state are starting to see the danger of what they created. A public school system was great as long as it was teaching the right things and its indoctrinational excesses were in a leftish direction. Now, however, we can see the panic.  The left is freaked that some red state school districts may start teaching creationism or intelligent design.  And you can hear the lament - how did we let Bush and these conservative idiots take control of the beautiful machine we built?  My answer is that you shouldn't have built the machine in the first place - it always falls into the wrong hands.  Maybe its time for me to again invite the left to reconsider school choice.

Today, via Instapundit, comes this story about the GAO audit of the decision by the FDA to not allow the plan B morning after pill to be sold over the counter. And, knock me over with a feather, it appears that the decision was political, based on a conservative administration's opposition to abortion.  And again the technocrats on the left are freaked.  Well, what did you expect?  You applauded the Clinton FDA's politically motivated ban on breast implants as a sop to NOW and the trial lawyers.  In establishing the FDA, it was you on the left that established the principal, contradictory to the left's own stand on abortion, that the government does indeed trump the individual on decision making for their own body  (other thoughts here). Again we hear the lament that the game was great until these conservative yahoos took over.  No, it wasn't.  It was unjust to scheme to control other people's lives, and just plain stupid to expect that the machinery of control you created would never fall into your political enemy's hands.

As I concluded before, even Star Trek figured out this whole technocrat losing control of the fascist state thing 40 years ago.

Posted on October 25, 2006 at 07:47 PM | Permalink | Comments (0)

Awesome Statement of Principles

From Arnold Kling, one of those articles so good I have trouble excerpting it to do it justice.  Here is just a small taste of some of the principles he puts forward:

1. Liberty is important for its own sake. People are entitled to make their own choices.

2. There are other values in addition to liberty. However, many noble causes end up infringing on liberty without achieving their desired ends. Government policies should be evaluated on the basis of their consequences, not on the basis of how they make us feel. It may feel good to set a minimum wage, to impose rent control, or to declare a war on drugs, but the evidence is that such policies tend to work to the detriment of their intended beneficiaries.

3. I value relieving the suffering of others. However, compared with liberals, I have considerable humility when it comes to advocating taking other people's money in order to satisfy my urge to alleviate poverty.

4. Corporate power is adequately checked by market forces. Competitors are the main force protecting consumers. Alternative job opportunities are the main force protecting workers. For corporate power to be a threat, it must be allied with government power.

Please, go enjoy the whole post.

PS- OK, if you really aren't going to read the whole thing, here is another taste:

I believe that in reality what has helped the less fortunate is economic growth. Today's elderly are affluent not because of Social Security, but because of all of the wealth created by private sector innovation over their lifetimes. Government involvement in health care and education is an impediment to progress in those fields. Job training and welfare are demonstrable failures.

Posted on October 23, 2006 at 08:15 PM | Permalink | Comments (0)

Dave Barry was Right about Having Sex with Dogs

In a really funny interview, Dave Barry lamented that the first argument he always heard against being a libertarian was that in a free society, "everyone would have sex with dogs."  Among other funny stuff, he said:

I got a few letters, mostly pretty nice. One or two letters saying, "Here's why it wouldn't work to be a libertarian, because people will have sex with dogs." Arguments like, "Nobody would educate the kids." People say, "Of course you have to have public education because otherwise nobody would send their kids to school." And you'd have to say, "Would you not send your kids to school? Would you not educate them?" "Well, no. I would. But all those other people would be having sex with dogs."

He was right!  Here is Sean Gleeson, via Glen Reynolds, arguing that libertarians are wrong, because they ... wait for it .. will allow people to have sex with animals.

These pro-bestial arguments are disarming to any honest and consistent libertarian. Even Instapundit Glenn Reynolds allows that he’s “got nothing against” bestiality, explaining “since I’m happy to eat animals it’s hard for me to consider people having sex with them to be, you know, more exploitative.”

That’s because libertarianism is fundamentally wrong.

The worthiest argument against bestiality is not that it is “cruel,” nor that it is “exploitative.” It is that it is a violation of human dignity.

Bestiality is so very wrong not only because using animals sexually is abusive, but because such behavior is profoundly degrading and utterly subversive to the crucial understanding that human beings are unique, special, and of the highest moral worth in the known universe–a concept known as “human exceptionalism.”

Within the narrow blinders of libertarianism, laws can only be justified by appeal to an unconsenting victim. Human dignity has no place in the libertarian worldview, and the libertarian is left with no basis to outlaw what he calls “victimless crimes.” Prostitution, polygamy, pornography, incest, drug abuse, bestiality, and a host of other crimes, being consensual, must be legal, and that’s that.

And this is libertarianism’s greatest failing. The libertarians happen to come to the right conclusions on a great many issues of policy, and I am happy to ally with them on those issues. But libertarianism is not an adequate theory of governance.

By the way, just so all of you can think less of me, I have no problem legalizing prostitution, polygamy, pornography, incest, drug abuse, and bestiality involving consenting adults (kids, who by definition are not legally capable of making adult decisions, are a different legal matter).  Here for example is my rant on legalizing prostitution.  Here is my favorite ode to Polygamy.  Here is my summary post on letting individuals run their own damn life.

When people come to tell you that it is OK for them to use coercion and force against you, but only to protect you from yourself, or even more nebulously to protect your "human dignity," run away screaming.  Here is a bet:  Give me absolute dictatorial powers but limited only to things I could justify as "protecting human dignity" and I would have a full-bore fascist state built by the end of the week.  Because that phrase can freaking mean anything at all.  And it is always, always, always the person who makes such statements who envisions themselves (not you our me!) defining the terms.

I am not sure what my "dignity" is or where it rests, but please, as long as I am not hurting anyone else, leave the protection of it to me alone.

Posted on October 23, 2006 at 11:30 AM | Permalink | Comments (3)

Kos is not Tempting

Leading "progressive" blogger Markos Moulitsas is trying to tempt libertarians to the progressive cause.  He tries to convince libertarians that growing corporate power should scare them more than government power.  Uh, no.  Hammer of Truth has a good rejoinder:

Moulitsas still cites corporate power over people as a problem, and still fails to recognize that corporations gain their undue power from government. Government is the enabler, empowering corporations to step on individuals and small businesses through both regulations and subsidies. It’s only by restraining government that corporations can be held in check, and it’s unfortuate that Moulitsas hasn’t figured this out yet.

Nearly every government law, from anti-trust to trade law to licensing, generally is written to benefit incumbents who make campaign contributions against upstart competition.  Also, by the way, corporations can't send people with guns to your house if you don't cooperate with their will. 

I have in the past been at the executive level of several Fortune 50 companies, and this notion of corporate power is hilarious.  In each case, our situation seemed like that of a wounded, lumbering elephant, trying to stay just ahead of a back of small but swift predators.  Sure, our very size meant that sometimes we did damage from our thrashing around, but to somehow call this power is absurd.  We were constantly fighting against our own size to try to hold on to what market we had.

Finally, with corporations, including the current great Satan Wal-Mart, I can always choose not to shop or work there.  The IRS and the US Congress offer me no similar protection from their control.

More good stuff along the same lines from Catallarchy
.

In this older post, I went into more depth on why progressives never will like capitalism, because they are too conservative (little-c).  At the end of the day, progressives like Kos want to reduce risk, variability, unpredictability and general "messiness".  These goals carry too high a price in terms of lost freedom and lost upside for humanity.

Posted on October 5, 2006 at 11:32 AM | Permalink | Comments (1)

Some Advice for the Local Libertarian Party

For lack of a better term, I call myself a libertarian with a small-l.  I do not, despite this term, feel much allegiance to the formal Libertarian Party.  I tend to like their platforms more than those of the major parties, but many of their candidates seem unserious to me.

Today I got my first press release from the local LP candidate for Governor.  And what is it about?  The LP candidate jumps into the fray on the Arizona 9/11 Memorial:

Libertarian nominee for Governor, Barry Hess weighs in on the only thing Democrat Janet Napolitano and Republican Len Munsil can find to disagree about - the great Arizona 9-11 memorial debate.

When asked for his input, Mr. Hess replied, "It doesn't surprise me that this is all they can come up with to distinguish themselves as a reason to vote for them.  The problem is that neither one of them ever seems to posses the ability to go to the root of the issue.  The very first thing they should have determined is, what is it?  Is it a tribute to the innocent lives lost on 9-11, or is it a memorial of the event?
                
If it is a tribute to the innocent dead, then the politically-charged slogans are clearly misplaced and should be removed.  If it is a monument memorializing a tragic event that is surrounded by a multitude of dubious official explanations of what actually happened when innocent lives were caught up in something bigger than them and lost in a politically-induced inevitability, then the outrage expressed in the slogans is well, and rightfully placed.
                
Why didn't the Republican or the Democrat first establish what it is supposed to be?  Because they are both just using it as a soapbox, and it's shameful they would each use it in an attempt to garner votes. The public really should reflect on the fact that if these are the best candidates the Republican & Democrat parties could come up with, maybe neither is their best option for Governor."

When I read the first line, I thought Mr. Hess was going to rightly criticize the major party candidates for focusing on trivia.  But no, he jumps right in himself.  I'm not a big fan of how the memorial turned out, but while the memorial was officially sanctioned by the governor, it was at least all privately funded.  We seem to have many other issues in a state where the government is building the new Berlin Wall that I would think a good libertarian would be more concerned about.

Here would have been my response:

"While the major party candidates focus all their attention on the content of a single piece of privately-funded sculpture in downtown Phoenix, Warren Meyer criticized both candidates for their support of a government-funded half-billion dollar monument to mediocre football and corporate welfare out in Glendale."

Postscript:  By the way, this government-funded facility is used for its core purpose just 11 days out of the year  (Fiesta Bowl, 2 pre-season games, 8 regular season games) which gives it an occupancy  of 3%.  Supporters will argue that it is used for other events (e.g. a home and garden show) but these events could be held at existing facilities costing 1/10 the amount of Glendale Stadium.  To somehow take credit for these other events is disingenuous, because their move to Glendale likely cannibalizes the revenue of some other government facility, like the convention center.  Most of the cost of the stadium -- visitor amenities, locker rooms, sliding roof, sliding grass floor, seats, etc -- are for football only.  More about why I hate the public funding of stadiums here.

Posted on October 2, 2006 at 08:57 AM | Permalink | Comments (1)

False Dichotomy

This is one of the oddest false dichotomies I have seen in a long time:

Since 1992, the National Election Study has asked respondents four questions that collectively make up an "authoritarian index." The four questions ask you to specify which of two attributes you value more in children:

  1. Independence vs respect for elders

  2. Self-reliance vs. obedience

  3. Curiosity vs. good manners

  4. Being considerate vs. being well behaved

The first item in each pair marks you as less authoritarian and the second item marks you as more authoritarian. After you've answered all four, the scores are added up and normalized on a scale from 0 to 1, with 1 being the most authoritarian.

It will come as no surprise that authoritarians tend to vote Republican. What may surprise you, though, is that this has only become true in recent years.

I am sure this does not "surprise" Kevin Drum's leftish readers, since they so want to think of themselves as freedom- and individual-rights-loving vs. the mean old Republicans, whom I certainly have no desire to defend on this score.

But are these weird false dichotomies or what? 

Why is independence the opposite of respect for elders?  Isn't this like saying Kleenex is the opposite of pudding?  Isn't the opposite of "independence" actually "the desire to mooch off other people"?  Why isn't the opposite of "self reliance" in fact the "desire to have the government run your life for you?"  I mean, I personally have strived (striven??) to have my kids simultaneouly be both curious and have good-manners. 

And is Drum really trying to argue that Democrats are all about the stuff on the left side while Republicans are for all the stuff on the right?  Who in the world is going to believe that the folks who, for example, support Social Security because they think individuals can't be trusted to manage their own retirement savings, are the spokesmen for "independence" and "self-reliance."  As I said in my comments to the post:

As a libertarian, I am thrilled to see you championing the cause of anti-authoritarianism and self-reliance.  I am sure that this means that we will soon see your opposition to telling people what wages are acceptable, what features their car must have, where they can and can't smoke, who they can or can't hire and fire, where they can get their health care, what schools they are forced to fund, how much fat can be in their diet, what drug risk trade-offs are acceptable, how steep their wheelchair ramps have to be, how energy efficient their appliances have to be, what minimum percentages of minorites must be at their school in their workforce, why they shouldn't be allowed to shop at Walmart or buy from Chinese manufacturers, what lisence they need to braid hair or to sell caskets, etc.

Posted on September 24, 2006 at 09:06 PM | Permalink | Comments (4)

New Deal and Fascism

On a number of occasions, I have pointed to the strong echos of Italian-style fascism in Roosevelt's New Deal, particularly in the National Recovery Act, which was practically a copy of Mussolini's political-economic model.  David Gordon reviews a new book called the Three New Deals which delves deeper into this parallel development on matters of state control of the economy between Roosevelt, Hitler, and Mussolini.

Roosevelt never had much use for Hitler, but Mussolini was another matter. "'I don't mind telling you in confidence,' FDR remarked to a White House correspondent, 'that I am keeping in fairly close touch with that admirable Italian gentleman'" (p. 31). Rexford Tugwell, a leading adviser to the president, had difficulty containing his enthusiasm for Mussolini's program to modernize Italy: "It's the cleanest … most efficiently operating piece of social machinery I've ever seen. It makes me envious" (p. 32, quoting Tugwell).

Why did these contemporaries sees an affinity between Roosevelt and the two leading European dictators, while most people today view them as polar opposites? People read history backwards: they project the fierce antagonisms of World War II, when America battled the Axis, to an earlier period. At the time, what impressed many observers, including as we have seen the principal actors themselves, was a new style of leadership common to America, Germany, and Italy.

Once more we must avoid a common misconception. Because of the ruthless crimes of Hitler and his Italian ally, it is mistakenly assumed that the dictators were for the most part hated and feared by the people they ruled. Quite the contrary, they were in those pre-war years the objects of considerable adulation. A leader who embodied the spirit of the people had superseded the old bureaucratic apparatus of government.

He also gives us a good hint as to why so many people on the left today are trying to find way to paint the American economy as somehow broken or at some historical low point:

He concludes the book by recalling John T. Flynn's great book of 1944, As We Go Marching.

Flynn, comparing the New Deal with fascism, foresaw a problem that still faces us today.

But willingly or unwillingly, Flynn argued, the New Deal had put itself into the position of needing a state of permanent crisis or, indeed, permanent war to justify its social interventions. "It is born in crisis, lives on crises, and cannot survive the era of crisis….

Posted on September 22, 2006 at 08:25 AM | Permalink | Comments (3)

Katrina, General Patton, and Individual Responsibility

How can you resist that title?  I took this from Stephen Ambrose's wonderful Citizen Soldiers:

Patton entered the town [of Bitburg, Germany] from the south while the fighting was still going on at the northern edge of town.  "In spite of the fact that the shells were falling with considerable regularity, I saw five Germans, three women and two men, re-roofing a house.  They were not even waiting for Lend-Lease, as would be the case in several other countries I could mention [including France]."   Dozens of GIs make the same point:  in Italy and France, the residents left the rubble in the streets, waiting for someone else to clean it up, while in Germany the residents were cleaning up as soon as the battle passed their villages.

Does this make anyone else think of Katrina and New Orleans?  I guess they don't call it the French Quarter for nothing.

Posted on September 22, 2006 at 12:45 AM | Permalink | Comments (4)

What are People Afraid Of?

I just don't know why conservatives are so afraid to let folks like Khatami speak in the US.  Sure, he is a lying dictatorial human-rights-suppressing scumbag, but so what?  Its good to let people like this speak as much as they want.  They always give themselves away.  There were counter-protests and lots of debate about Iran in the news and on the nets, and that is as it should be.

I suppose conservatives real fear is that the press will, as they sometimes do, throw away their usual skepticism and cynicism and report his remarks as if they were those of a statesman rather than a thug on a PR mission.  But that's a different problem, and not a good enough excuse to suspend free speech, even for a man who granted it to no one else in his own country.  (I have never bought into the "media bias" critique, either conservative or liberal, in the press, because this seems to imply some active conspiracy exists to manage the news to some end.  Rather, I think it is more fair to say that reporters tend to apply too little skepticism to stories with which they are sympathetic.  For example, many reporters think homelessness is a big problem, so they were willing to uncritically accept inflated and baseless numbers for the size of the homeless population, numbers they would have fact-checked the hell out of if they had come from, say, an oil company to whom they are unsympathetic or skeptical of.)

On the same topic, I don't know why conservatives are so worried about this story of an increase in students from Saudi Arabia.   It used to be that we had confidence that people from oppressive countries would have their eyes opened by living in the US.  We have always believed that intellectually, freedom was more compelling than dictatorial control, and would win over hearts and minds of immigrants.  Our foreign policy with China, for example, is counting on engagement to change China.  Have we given up on this?

Posted on September 10, 2006 at 11:38 PM | Permalink | Comments (2)

Free Market Does Not Mean Pro-Business

I hate the term "pro-business."  In my mind, it helps to define what is wrong with the political choices we are presented with in this country.  All of us in civics class were taught the statist "heads I win, tails you lose" political spectrum from left to right.  On this spectrum, everyone is in favor of government intervention and the sacrifice of one group of people to another.  The only thing that varies across the scale is who is the beneficiary of the plunder and the targeted areas of intervention.  For years, most of the politicians who have called themselves "pro-business" were not free market capitalists -- they spent much of their time in office sending their businessman-buddies slices of pork, zoning variations, special permission to trash other people's property (e.g. via pollution) etc.

Beyond the fact that we small government libertarians and anarcho-capitalists are given no spot on the civics class political spectrum, I have always been frustrated at being lumped together with "pro-business" politicians, and have been asked to defend (which I won't and can't) various subsidies and corporate welfare.  An example of my attacks on this type of corporate welfare crap are here and here.

So, without further comment, I present this great except from an article by Gary North of the Mises Institute:

The idea that businessmen are strong defenders of the free enterprise system is one which is believed only by those who have never studied the history of private enterprise in the Western, industrial nations. What businessmen are paid to worry about is profit. The problem for the survival of a market economy arises when the voters permit or encourage the expansion of government power to such an extent that private businesses can gain short-term profits through the intervention into the competitive market by state officials. Offer the typical businessman the opportunity to escape the constant pressures of market competition, and few of them are able to withstand the temptation. In fact, they are rewarded for taking the step of calling in the civil government.

The government's officials approve, but more to the point, from the point of view of the businessman's understanding of his role, shareholders and new investors also approve, since the favored enterprise is initially blessed with increased earnings per share. The business leader has his decision confirmed by the crucial standards of reference in the market, namely, rising profits and rising share prices on the stock market. No one pays the entrepreneur to be ideologically pure. Almost everyone pays him to turn a profit.

This being the case, those within the government possess an extremely potent device for expanding political power. By a comprehensive program of direct political intervention into the market, government officials can steadily reduce the opposition of businessmen to the transformation of the market into a bureaucratic, regulated, and even centrally-directed organization. Bureaucracy replaces entrepreneurship as the principal form of economic planning. Bureaucrats can use the time-honored pair of motivational approaches: the carrot and the stick. The carrot is by far the most effective device when dealing with profit-seeking businessmen.

Those individual enterprises that are expected to benefit from some new government program have every short-run financial incentive to promote the intervention, while those whose interests are likely to be affected adversely — rival firms, foreign enterprises, and especially consumers — find it expensive to organize their opposition, since the adverse effects are either not recognized as stemming from the particular government program, or else the potential opponents are scattered over too wide an area to be organized inexpensively. The efforts of the potential short-run beneficiaries are concentrated and immediately profitable; the efforts of the potential losers are dispersed and usually ineffective.

Posted on August 31, 2006 at 09:20 AM | Permalink | Comments (0)

Advertising Backfire

Many marketing analysts will argue that the famous Pepsi challenge advertisements helped Coke as much as Pepsi, by defining it in consumers minds as the standard to which other beverages should be compared, and by giving it nearly as many mentions to support name recognition as Pepsi gave itself.   The GAO reports that anti-drug advertising may be encountering the same type failure:

A Government Accountability Office report on research tracking the impact of the federal government's $1.2 billion anti-drug ad campaign concludes that "the evaluation provides credible evidence that the campaign was not effective in reducing youth drug use, either during the entire period of the campaign [1998 to 2004] or during the period from 2002 to 2004 when the campaign was redirected and focused on marijuana use." The GAO adds that "exposure to the advertisements generally did not lead youth to disapprove of using drugs and may have promoted perceptions among exposed youth that others' drug use was normal....Westat's evaluation indicates that exposure to the campaign did not prevent initiation of marijuana use and had no effect on curtailing current users' marijuana use, despite youth recall of and favorable assessments of advertisements." In fact, during some periods and for some subgroups, exposure to the ads was significantly associated with an increased tendency to smoke pot.

Posted on August 29, 2006 at 09:30 PM | Permalink | Comments (1)

Great Moments in Muddled Thinking: I

I was excited this week to find a copy of the original 1968 version of Paul Ehrlich's "The Population Bomb."  I have been itching to find such a copy so I can demonstrate just how wrong and wrong-headed his zero-sum limits-to-growth thinking is. 

Now, one may ask, why even bother?  You could argue that thoughtful folks have dismissed Paul Ehrlich and his ilk for years, particularly after Julian Simon owned him in their famous bet.  However, I find two compelling reasons to take the time to fisk a forty-year-old book:

  • Paul Ehrlich and his brethren actually have not been disowned by much of the intelligentsia.  The media still breathlessly reprints Ehrlich's and his cohorts' predictions of disaster, despite the fact that all their past predictions have utterly failed to come true.
  • The fundamental mistakes he makes in his analysis are constantly repeated today.  These mistakes include:
    • Static analysis - blind projection of trendlines without any allowance for individuals actually doing something to alter those trends, particularly in response to pricing signals.  This leads not only to predictions of disaster, but to the consistent conclusion that only governments coercing individuals on a massive scale can avert dire consequences for humanity
    • Zero confidence in humanity - every analysis implicitly contains the assumption that we will never know how to do more than we know how to do today.  Kind of an anti-Kurzweil mentality
    • Zero-sum economics - the common misconception that wealth can only come at the expense of poverty elsewhere.

I have not had a chance to dig into it, but I will leave you with this tasty teaser from the back cover:

MANKIND'S INALIENABLE RIGHTS

  1. The right to eat well
  2. The right to drink pure water
  3. The right to breathe clean air
  4. The right to decent, uncrowded shelter
  5. The right to enjoy natural beauty
  6. The right to avoid regimentation
  7. The right to avoid pesticide poisoning
  8. The right to freedom from thermonuclear war
  9. The right to limit families
  10. The right to educate our children
  11. The right to have grandchildren

Well, that seems to cover it.  Anyone want to bet I don't find anything about property rights in this book?  Gotta go read the book now, since I have so many questions now:  Is it OK if someone kills me with a conventional bomb rather than a nuclear one?  Can I sue McDonald's on the basis that yesterday's lunch was a violation of my right to eat well?  And just how do I force my kids to have sex and procreate?  I can't wait to find out.

Posted on January 27, 2006 at 09:35 AM | Permalink | Comments (6)

Carnival of Liberty

I am way overdue promoting the Carnival of Liberty.  This week it is hosted by Target Centermass, and it has a nice selection of posts related to free markets and individual rights.  As the Carnival of the Capitalists has shifted more towards investing and personal finance submissions, this newer carnival has lots of good posts on fundamental issues of Life, Liberty, and Property.

Posted on December 29, 2005 at 11:26 PM | Permalink | Comments (0)

Political Party as Fashion Statement

A while back I lamented that so few people actually strive to maintain a consistent personal philosophy, rather than a hodge-podge of isolated political views.  In this context, I thought the profile of "progressive" Markos Moulitsas Zuniga (the Daily Kos) by the sympathetic progressive-liberal Washington Monthly was interesting.  For example:

The younger-than-35 liberal professionals who account for most of his audience seem an ideologically satisfied group, with no fundamental paradigm—changing demands to make of the Democratic Party. They don't believe strongly, as successive generations of progressives have, that the Democratic Party must develop more government programs to help the poor, or that racial and ethnic minorities are wildly underrepresented, or that the party is in need of a fundamental reform towards the pragmatic center—or at least they don't believe so in any kind of consistent or organized manner. As this generation begins to move into positions of power within the progressive movement and the Democratic Party, they don't pose much of a challenge on issues or substance. So the tactical critique takes center stage. Moulitsas's sensibility suits his generation perfectly. But it also comes with a built-in cost. Moulitsas is just basically uninterested in the intellectual and philosophical debates that lie behind the daily political trench warfare. By his own admission, he just doesn't care about policy. It's here that the correlation between sports and politics breaks down. In sports, as Vince Lombardi is said to have put it, “Winning isn't everything, it's the only thing.” When the season is over, you hang up your cleats and wait for the next season. But in politics, that's not the case—you have to govern, and if you don't govern well, you won't get reelected. So while tactics and message are crucial, most voters will ultimately demand from politicians ideas that give them a sense of what a party is going to do once in power. Wanting to win very badly is an admirable and necessary quality in politics, and Moulitsas is right that Democrats have needed it in greater quantity. But it is not really a political philosophy.

This article tends to reinforce a notion I have had of late, that is a trend toward political party as fashion statement.  For example, I get the impression that many of Kos's audience call themselves Democrats more because of the statement they think it makes about themselves rather than a thought-out comparison of the various party's positions and how they stack up vs. their own thought-out philosophy.  I am starting to sense that people choose parties for their brand-image rather than for the actual positions or people who represent them.  Democrat might mean "I am smarter than you", "I am with-it and cool", "I am dynamic" while Republican might mean "I am patriotic", "I am moral", "I am level-headed".  By the way, don't send me mail for the wrong reasons -- I am not saying the parties actually consistently meet these images, I am just saying that a large number of people seem to adopt their party to make these kind of statements about themselves.

Postscript:  If you think I am exaggerating, then someone needs to explain to me how a Democratic president can send us to war in Bosnia with Republicans opposing and then have a Republican president send us to war in Iraq with Democrats opposing when at the 40,000 foot level they are the same freaking war (US intervention to unseat a genocidal dictator with at best unclear UN mandate and opposition from key European nations).  I keep coming back to the simplistic explanation that the default political position is "I got my guy's back no matter what, and you guys suck no matter what", which I admit effectively compares the current political discourse to the chants at a Michigan-Ohio State football game, but I'm going to go with it.

PPS-  As a good libertarian, though, I am happy to know that young progressives are not necessarily pushing for more state control.

Posted on December 23, 2005 at 02:31 PM | Permalink | Comments (3)

Streaming Music, Plus A Blogger Vanity Toy

I wanted to stream digital music from my main computer in my home office to my main stereo system in the den.  After some research, I chose version 3 of Squeezebox from Slim Devices.  They have taken an open architecture approach that I like, and have a proven history of steadily improving their product.  Most true audiophiles I sought advice from use this device (this is an audio-only device, no video or jpegs streamed).  I am currently converting my entire CD collection to lossless FLAC format audio files using EAC, which seems to be the audiophile favorite for ripping (and it is free).  FLAC compression seems to result in albums 250-450 meg, meaning my 400 CD's will need about 140 gig, which I have available.  I will ditch most of my mp3 files, saving only a subset for iPod rotation.  New mpg files, or whatever rules in the future, can be made directly from the FLAC.

The box itself is small and well-designed.  Setup was a breeze, once I fixed a setting on my firewall.  Now I can point my remote at this box and scroll easily through my music collection (along with a number of Internet radio stations).  No flipping through CD's or yelling at the kids for not alphabetizing them right.  You can browse or search by title, artist, or album.

In addition to controlling it with a remote, I can control it with any computer on the network.  Right now, I choose songs on a laptop in the kitchen, which sends music from the computer in the office to the amp and speakers in the den.  Awesome.  Their web site says that you can also browse your music and choose what's playing from a web enabled PDA, but I have not tried it yet.

Here is the blogger vanity part:  In addition to an array of other screensavers, you can have the device connect to any online RSS feed and scroll the contents marquee-style across the screen.  All day I have had my blog feed scrolling across the device, interspersed with NY Times and ESPN headlines.

Posted on December 8, 2005 at 11:22 PM | Permalink | Comments (1)

Socialist Casinos

OK, I confess, I enjoy Las Vegas.  I mean, after a while, the smoke and the noise and the weirdness make me ready to go home, but I do enjoy an evening walking up and down the strip, checking out the sites and the people, followed by a long night of blackjack and free drinks.

Vedran Vuk looks at the government run casinos in Canada in comparison with their US counterparts, and is unimpressed.

A policy so offensive resides in Niagara Falls' casinos that I shiver at the thought of it. Of course, I speak of the policy of no "free" alcoholic beverages. Free drinks in casinos is something that we have come to take for granted in our free-market-driven casino industry.

Many people go to casinos exclusively for the free drinks. But of course we can't have anything enjoyable in socialism. One beer is US$7. Furthermore, the classic cheap and delicious casino buffet was nowhere to be seen. The buffet had few choices, tasted like roasted nutria, and cost about US$12....

This can be most seen at the Texas Hold 'Em Poker tables at which I had the pleasure of waiting an hour and a half before being permitted to play. There are ten tables, seven dealers, and four people managing the waiting list.

An inefficiency such as this would never go on long in a real casino. What is the purpose of the four managers when all the casino needs is dealers?! Is there even a need for one manager of the waiting list? God forbid that the commie casino would do anything that might be efficient and profit maximizing.

With no shareholders to answer to and no real competition, there is no incentive to get more dealers instead of waiting-list managers. The bloated staff of Canada's commie casinos is typical of the kind of patronage schemes that infect all government enterprises. The end result is me waiting for ninety minutes, during which time the casino is making no money from me.

Posted on November 21, 2005 at 09:24 AM | Permalink | Comments (0)

Libertarians Adrift

While it comes as no surprise to me, Republicans are making it official:  After dallying with small government notions in the eighties and nineties, under George Bush they are refocusing themselves on statism.  Going forward, Republicans see themselves locked in an arms race with Democrats over who can spend more and advocate more statist controls.

This news comes to us via conservative David Brooks, via Volokh:

[Brooks] rejects Bartlett's charge that Bush has betrayed conservatism. According to Brooks, "Bush hasn't abandoned conservatism; he's modernized and saved it." As Brooks tells the story, "conservatism was adrift and bereft of ideas" until President Bush came along.

Almost single-handedly, Bush reconnected with the positive and idealistic instincts of middle-class Americans. He did it by recasting conservatism more significantly than anyone had since Ronald Reagan. He rejected the prejudice that the private sector is good and the public sector is bad, and he tried to use government to encourage responsible citizenship and community service. He sought to mobilize government so the children of prisoners can build their lives, so parents can get data to measure their school's performance, so millions of AIDS victims in Africa can live another day, so people around the world can dream of freedom.

"Government should help people improve their lives, not run their lives," Bush said. This is not the Government-Is-the-Problem philosophy of the mid-'90s, but the philosophy of a governing majority party in a country where people look to government to play a positive but not overbearing role in their lives.

Barf.  The last sentence contains a pure contradiction:  There is no way for government to play any role, positive or negative, without being overbearing, at least to some.  There is no way for the government to improve some lives without running others.

Despite what politicians may argue, the government has only one unique quality no one else can match.  They are not uniquely smart, or uniquely capable, or uniquely compassionate, or uniquely efficient, or even uniquely able to run large organizations.  Their only unique capability is to deal with people by force, and to use force and the threat of force and imprisonment to compel individuals to do things they would no choose to do themselves.

This unique ability to use force is necessary to the government in fulfilling its core roles of protecting us from the use of force from outside our borders (military) and protecting its citizens from the use of force or fraud by other citizens (police and courts).  When the government uses its unique ability to coerce in other spheres, there are always winners and losers.  That is because by definition the government is using force to cause an outcome or a decision that people would not have made on their own, based on their own self-interest and of their own free will.  So when politicians blithely say things like "help people improve their lives", what they ALWAYS mean is using force to compel someone to do something they would not have to do in a free society.   

For this reason, there is no such thing as having the government "play a positive but not overbearing role in their lives".  The best you can hope for with such an activist government system is to hope that the government plays a net-positive role in your life, while being overbearing to others.  Which pretty much sums up why politics are so high stakes today - if government is about sacrificing one group to another, I want my guy in there so he can be overbearing to some other group for the benefit of mine.

I dealt with these same themes a couple of days ago in this post, where I said "the entire Republican and Democratic platform each boil down to 'we support government intervention except where our major donors oppose it'".  My summary statement on the full range of government interference with free individual decision-making is here.

Update:  While Marginal Revolution is still optomistic for libertarians, they point out that "progressives" see the opportunity now for real expansion of socialism in this country

Democrat Matt Yglesias writes:

If you did have a progressive president, there's no longer a particularly large amount of popular resistance to expanding the activist state. Even most Republicans don't especially care about small government.

Posted on October 27, 2005 at 09:23 AM | Permalink | Comments (3)

Politics without Philosophy

It may surprise some readers to know that I am a conflict avoider when it comes to arguing politics in social gatherings.  There are a variety of reasons for this, not the least of which is often a desire to escape substantive issues in the off-hours of my life. 

However, one important reason I don't like discussing current events or other weighty issues with people (particularly in groups) is that many of the people I meet don't really have an underlying philosophy, but rather a hodge-podge of political positions stitched together from a variety of sources.  This makes it almost impossible to have a substantive conversation with them.

When I have a disagreement with someone on matters of politics or economics or whatever, there are really only two satisfying outcomes:

  1. To discover that we share the same basic premises and philosophy, but have reached different conclusions from these premises.  Trying to figure out where we diverge is an interesting and generally informative exercise
  2. To discover that we have very different fundamental premises or assumptions about the nature of existence.  While perhaps not satisfying, this can at least save a lot of useless discussion.  For example, if you believe that we are all born with an obligation or requirement, kind of like original sin, to provide our fellow man with material comforts, while I do not, there is not a lot of point in the two of us arguing about redistributive taxation.

Unfortunately, it is impossible to reach either of these conclusions with people who have no underlying philosophy that drives their ethics and political positions.  I remember one discussion with a woman who was taking all all comers over abortion, defending a woman's right to choose for her body.  So I asked her if she was therefore opposed to the government ban on breast implants.  "No, that's different, those are totally frivolous.  Women shouldn't have breast implants, its demeaning".  But, I asked,  isn't the FDA telling women what they can and can't put in their bodies.  "But its necessary, she says, because people don't always know enough to make the right decisions".  So, I follow-ed up, its part of the FDA's job to hold up drugs like the morning-after pill?  "No, that's just christian-right bullshit".

How can you argue with this, when there is no consistent underlying philosophy?  Essentially her position boils down to "I support government intervention except when I oppose it".  And this is not unusual.  In fact, the positions she took are entirely consistent with the positions on these same issues taken at the NOW web site.  Hell, the entire Republican and Democratic platform each boil down to "we support government intervention except where our major donors oppose it".

The reason for this brief, really tangential rant was this morning when I was reading through some recent emails from a trade group I belong to called the NACS, or the National Association of Convenience Stores.  Because of changes in the market, the NACS represents a large percentage of the gasoline retailers in this country.  In the last two weeks, the NACS has:

  1. Opposed government "price gouging" regulations aimed at how gas stations price their product.
  2. Advocated government intervention in the pricing of credit card processing services, arguing that gas stations are getting gouged by banks today

Could anything be more stark?  There are no values here, no philosophy, no core assumptions about the nature of man and man's existence.  Just a bald desire to be left alone yourself, but have the government intervene in your favor with everyone you do business with.

PS:  Credit card processing rates piss me off as well, but you don't see me asking for the government to intervene.

Posted on October 25, 2005 at 09:20 AM | Permalink | Comments (8)

My Urban Plan for New Orleans

Cafe Hayek points out that Rep. Earl Blumenauer wants to make sure that New Orleans is rebuilt with a strong urban planning vision.  Since Mr. Blumenauer represents Portland, Oregon, the city beloved of planners that has been planned into having some of the highest priced housing and worst traffic of any city of its size in America, I presume he wants something similar for New Orleans (Portland was also the city that thought it had solved global warming).

Here is my urban plan for New Orleans:  Every person who owns property can build whatever the hell they want on it.  If other people want something else built on that property, and value this outcome enough, they can buy the property from its owner.  This novel concept is called "private property rights" and falls under the broader category of what are called "constitutionally protected individual rights" or even more broadly, "freedom".  It is a concept that used to be taken for granted in this country and but now is seldom even taught in schools. 

For the property owned by the government, well, they are going to build whatever dumbshit thing they want to on it anyway, so I'll just root for their choice to be fairly inexpensive.  We here in Phoenix built a half-billion dollar stadium for the for-god-sakes Arizona Cardinals that is used for its core purpose 3 hours a day for 8 days a year.  It couldn't be worse, could it?

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Posted on September 20, 2005 at 05:55 PM | Permalink | Comments (4)

Another Take on Disasters and Government

I gave my take on why this Katrina disaster does not somehow validate statist technocracy, as has been argued, here and here.  I am willing to admit that Colby Cosh says it better:

So let's just recap briefly, shall we? We've got a million or so human beings living in a low-lying area created in the first place by government engineers. The local government of New Orleans, apprised of an approaching storm, summarily orders everybody out of the city about 36 hours too late without lifting a finger to provide the means to do so. At the last minute it occurs to somebody to herd those left behind into a large government-built structure, the Superdome; no supplies are on hand for its inhabitants, and the structure itself is rendered--according to the government's assessment--permanently useless. Even though the storm misses the city, government-built levees fail in unforeseen and catastrophic ways. Many of the New Orleans cops opportunistically quit their jobs, many more simply fail to show up for work, others take the lead in looting supplies from storm-stricken neighbourhoods, and just a few have the notable good grace to shoot themselves in the head. The federal government announces that assistance is on its way, sometime; local and state authorities--who have the clear-cut burden of "first response" under federal guidelines nobody seems to have read--beg for the feds to hurry up while (a) engaging in bureaucratic pissing-matches behind the scenes and (b) making life difficult for the private agencies who are beating the feds to the scene. Eventually the federal government shows up with the National Guard, and to the uniform indignation and surprise of those who have been screaming for it, the Guard turns out to have a troubling tendency to point weapons in the general direction of civilians and reporters. I'm not real clear on who starts doing what around mid-week, but the various hydra-heads of government start developing amusing hobbies; confiscating guns from civilians, demanding that photographers stop documenting the aftermath of America's worst natural disaster in a century, enforcing this demand by seizing cameras at gunpoint, shutting down low-power broadcasting stations in shelters, and stealing supplies from relief agencies and private citizens. In the wake of all this, there is probably no single provision of the U.S. Constitution left untrampled, the Posse Comitatus Act appears destined for a necktie party, and the 49% of Americans who have been complaining for five years about George W. Bush being a dictator are now vexed to the point of utter incoherence because for the last fortnight he has failed to do a sufficiently convincing impression of a dictator.

Posted on September 14, 2005 at 09:22 PM | Permalink | Comments (0)

Hurricanes and Big Government

So, unsurprisingly, Paul Krugman and others are arguing that Katrina is a vindication for large-government liberals  (One would think we would love GWB, who has been a better large-government builder than Clinton, but that is another topic).  Anyway, I think it is worth thinking for a second about the federal government and hurricanes.  I will divide the post into two parts:  Preparedness and Response, and show that in fact, large central-government thinking is at the heart of many of the problems that are being faced.

Disaster Preparedness
I cannot come up with any justification for the US Government taking the lead role in local disaster preparation or protection.  The types of disasters are just too wide and varied:  Tidal waves in Hawaii, earthquakes in LA, mudslides in San Diego, fires in the west, tornados in the plains, hurricanes on the gulf coast, blizzards in the north, etc. etc.  And why would anyone want the feds taking over their local disaster plans anyway?  Do you really want to rely on the hope that a national organization has the same priority on your local risks that you do?  The resources, the knowledge, and the incentive to prepare for emergencies are all local, and such preparation should be done as locally as possible.

The only reason locals would even tolerate federal involvement in disaster preparedness is $$$.  Every local politician loves federal dollars.  And even a hardcore libertarian like myself is probably willing to admit that some of the preparedness investments truly are public goods.  Take levees for example.  I am willing to have them as public goods.  However, no one can convince me that levees whose sole purpose in life is to protect New Orleans are federal public goods.  Why do I need to pay for them?  Why don't New Orleans people bear the full cost of their choice to live below sea level?  My family chooses to live in a place that is relatively free of disasters (though if the Colorado River dries up you can come visit our bleached bones as we are consumed by the desert).  Why should I subsidize people's choice to live in a location that sits in mother nature's cross-hairs?

But beyond my cantankerous libertarian desire not to subsidize you, those of you who live in disaster areas should demand to take responsibility for your own preparedness.  The feds are never going to value your safety the same way you do (as evidenced in part by the 40-year ongoing fight for levee funding in New Orleans) and are never going to understand your local problems like you do.  In fact, the illusion of federal responsibility for disaster preparedness is awful.  It gives irresponsible local authorities an excuse to do nothing and a way to cover their ass.  It creates a classic moral hazard and sense of false security.

I have resisted saying this for a week or so out of respect for the plight of individuals still struggling in Louisiana and Mississippi:  If one divides the world into the ants and the grasshoppers (per the classic fable), New Orleans and Louisiana would make the consensus all-grasshopper team.  They have lived in a stew of bad and corrupt government for years, mixed with a healthy dose of Huey Long-style patronage that created expectations that "you would be taken care of".  Their state officials have for years not only been grasshoppers, but have demanded that they be supported by the ants, and seem lost and confused that the ants didn't protect them somehow from Katrina.

Disaster Response
Its probably good to have a national body that can help focus resources from around the nation onto local regions that have been devastated by some disaster.  But here is the key point.  The federal government itself is never, ever going to have the resources stockpiled somewhere to handle a disaster of this magnitude.  They can't have the doctors on staff, the firemen waiting around, the medical supplies in a big warehouse, a field full of porta-potties ready to deploy, etc. etc.  There is just too much needed, and the exact needs are too uncertain.

What they can do, though, is understand that in an emergency, Americans from all over the country are always willing to help, to volunteer their time or skills or money to aid the victims.  More than anything, the Fed's role needs to be to remove barriers from these resources gettting to the the right places as fast as possible, and to backstop these private efforts with federal resources like the military.  Take the example of refugees.  There are over a million from this hurricane.  Of those, at least 90% will be helped privately, either from their own funds or friends or family or private generosity.  Probably more like 95+%, if you include resources offered by local governments.  The feds role then is to help the remaining 5% find food and shelter.  Note, though, that the problem is not dealing with 100% of the problem, it is dealing with the 5% the leaks through bottom-up efforts, while removing barriers that might stand in the way of bottom-up efforts helping the other 95%.

Unfortunately, the feds don't think this way.  Most feds, including Krugman type large government folks, distrust private and bottom up efforts.  They are top-down technocrats, putting an emphasis on process and control rather than bottom-up initiative.  I wrote much much more about the failed technocratic response to Katrina here.  I think one can argue the reason that the refugee situation for 95% of the people worked well is that these folks quickly got out of the sphere of influence of the FEMA folks -- in other words, they got far enough away to escape FEMA control.  Can you imagine what a total disaster would be occurring if FEMA tried to control the relocation of all 1 million people?  But on the LA and MS gulf coast, FEMA is exercising total control, actually preventing private initiative from helping people, and everyone is the worse for it.  I encourage you to read more in this post about valuing control over results, but I will leave you with this one anecdote that sums up the big government technocratic top-down world Mr. Krugman longs for:

As federal officials tried to get some control over the deteriorating situation in New Orleans, chaos was being replaced with bureaucratic rules that inhibited private relief organizations' efforts.

"We've tried desperately to rescue 250 people trapped in a Salvation Army facility. They've been trapped in there since the flood came in. Many are on dialysis machines," said Maj. George Hood, national communications secretary for the relief organization.

"Yesterday we rented big fan boats to pull them out and the National Guard would not let us enter the city," he said. The reason: a new plan to evacuate the embattled city grid by grid - and the Salvation Army's facility didn't fall in the right grid that day, Hood said in a telephone interview from Jackson, Miss.

"No, it doesn't make sense," he said.

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Posted on September 8, 2005 at 10:41 AM | Permalink | Comments (3)

Technocrats

Preface:  Over the years, technocrats have always had a distaste for capitalism.  Their desire has always been the curb to bottom-up disorder and inherent chaos of succesful capitalism with top-down order and control.  In the early half of the 20th centruy, the leading economic argument against capitalism was technocratic-fascist:  That capitalism and competition were wasteful and disorderly and should be replaced with a more orderly state control.  The ultimate legislative result of this thinking was FDR's National Industrial Recovery Act, his emulation of Mussolini-style corporate fascism which was fortunately struck down by the Supreme Court.

While numerous large-scale failures of state economic control have mostly beaten back the technocratic argument, we can still see the fundamental failure of this approach in the last few weeks with the government's handling of the Katrina recovery:

A few days ago I had thoughts on top-down vs. bottom-up approaches to hurricane relief.  After watching the relief effort over the last couple of days, I am more convinced than ever that part of the problem (but certainly not all of it) with the relief effort is the technocratic top-down "stay-in-control" focus of its leadership.  Take stories like this:

Lots of people including yours truly have volunteered to bring (including food, generators, food, etc., to be self sufficient for a week or so) the most important thing which is a boat but have been told NO under no uncertain terms. "My" town is under water, people are in critical condition, and I have skill sets and assets - including a boat which will come out of the hole in 14 inches of water - and we are being denied the opportunity to help. And quite frankly, that REALLY PISSES ME OFF.

And this:

A visibly angry Mayor Daley said the city had offered emergency, medical and technical help to the federal government as early as Sunday to assist people in the areas stricken by Hurricane Katrina, but as of Friday, the only things the feds said they wanted was a single tank truck.
[...]
Daley said the city offered 36 members of the firefighters' technical rescue teams, eight emergency medical technicians, search-and-rescue equipment, more than 100 police officers as well as police vehicles and two boats, 29 clinical and 117 non-clinical health workers, a mobile clinic and eight trained personnel, 140 Streets and Sanitation workers and 29 trucks, plus other supplies. City personnel are willing to operate self-sufficiently and would not depend on local authorities for food, water, shelter and other supplies, he said.

While turning down offers to help, when everyone agrees not enough is being done, may seem unthinkable, these are actually predictable outcomes from a bureaucracy of technocrats.  Technocrats value process over results, order and predictability over achievement.  More important than having problems fixed is having an ordered process, having everything and everyone under control.  In this context, you can imagine their revulsion at the thought of having private citizens running around on their own in the disaster area trying to help people.  We don't know where they are!  We don't know what they are doing!  They are not part of our process!  Its too chaotic! Its not under control!

Nearly everyone who is in government has a technocratic impulse - after all, if they believed that bottom up efforts by private citizens working on their own was the way to get things done, they would not be in government trying to override those efforts.  But most emergency organizations are off the scale in this regard.  99% of their time, they don't actually have an emergency to deal with - they are planning.  They are creating elaborate logistics plans and procedures and deployment plans.  Planners, rather than people of action, gravitate to these organizations.  So, once a disaster really hits, the planners run around in circles, hit by the dual problem of 1) their beautiful plans are now obsolete, since any good general can tell you that no plan ever survives first contact with the enemy and 2) they are by nature still planners, trying to get order and process underway and create a new updated plan, rather than just getting every possible resource out there fixing the dang problem.

The army has had to deal with this conundrum for years.  How do you have soldiers who are good planners before a battle, but men of action and initiative once the battle is underway?  How do you run a fundamentally top-down organization such that when it matters, individuals will take the initiative to do what needs to be done?  Its a really hard problem.

Unfortunately, I fear that the lessons from this hurricane and its aftermath will be that we need more top-down rules and authority rather than less.  It is the technocrats on the sidelines who are most appalled by the screw-ups, and will demand more of whatever next time.

Here is an example of what I think we should do instead.  Let's accept that we can't plan for everything, can't have every resource stockpiled for an emergency, and that our biggest resource is our private citizenry.  Let's provide rules of engagement for 3rd parties to come into the disaster area and help with minimum supervision.  There might be different rules for trained rescue people and untrained private citizens.  Here is an example of the type of thing that might work better:

Every private citizen with a boat larger than X and a draft less than Y who would like to help can bring their boat and three days food and clothing to such and such boat ramp.  All municipal firefighters and rescue teams that want to help, come to such and such building, check in, and we will assign you a sector.  Rescue crews need to bring their own food, equipment, and waterproof paint to mark the buildings you have searched.  Then, go out to the boat ramp, find a boat and driver in the pool there, and go.  FEMA will bring in a fuel truck to refuel boats and will indemnify all boat owners for damages.  All survivors found should be brought back to the dock, and ambulances will be standing by.

Update: OK, I know some of you don't believe that this is a control issue for the bureaucrats.  Well, here is more evidence, from the Red Cross web site, via Instapundit.

Hurricane Katrina: Why is the Red Cross not in New Orleans?

  • Access to New Orleans is controlled by the National Guard and local authorities and while we are in constant contact with them, we simply cannot enter New Orleans against their orders.
  • The state Homeland Security Department had requested--and continues to request--that the American Red Cross not come back into New Orleans following the hurricane. Our presence would keep people from evacuating and encourage others to come into the city.

Update #2:  Still reluctant to believe that control over the process is more prized by bureaucrats than results?  Try this, from CNN and via Instapundit:

Volunteer physicians are pouring in to care for the sick, but red tape is keeping hundreds of others from caring for Hurricane Katrina survivors while health problems rise.

Among the doctors stymied from helping out are 100 surgeons and paramedics in a state-of-the-art mobile hospital, developed with millions of tax dollars for just such emergencies, marooned in rural Mississippi.

"The bell was rung, the e-mails were sent off. ...We all got off work and deployed," said one of the frustrated surgeons, Dr. Preston "Chip" Rich of the University of North Carolina at Chapel Hill.

"We have tried so hard to do the right thing. It took us 30 hours to get here," he said. That government officials can't straighten out the mess and get them assigned to a relief effort now that they're just a few miles away "is just mind-boggling," he said....

It travels in a convoy that includes two 53-foot trailers, which as of Sunday afternoon was parked on a gravel lot 70 miles north of New Orleans because Louisiana officials for several days would not let them deploy to the flooded city, Rich said....

As they talked with Mississippi officials about prospects of helping out there, other doctors complained that their offers of help also were turned away.

A primary care physician from Ohio called and e-mailed the U.S. Department of Health and Human Services after seeing a notice on the American Medical Association's Web site about volunteer doctors being needed.

An e-mail reply told him to watch CNN that night, where U.S. Health and Human Services Secretary Michael Leavitt was to announce a Web address for doctors to enter their names in a database.

"How crazy is that?" he complained in an e-mail to his daughter.

Dr. Jeffrey Guy, a trauma surgeon at Vanderbilt University who has been in contact with the mobile hospital doctors, told The Associated Press in a telephone interview, "There are entire hospitals that are contacting me, saying, 'We need to take on patients," ' but they can't get through the bureaucracy.

"The crime of this story is, you've got millions of dollars in assets and it's not deployed," he said. "We mount a better response in a Third World country."

Update #3:  Yes, there's more.  The Salvation Army has also been blocked, and the reason?  Their efforts did not fit snugly into the technocrats plans (via Cafe Hayek):

As federal officials tried to get some control over the deteriorating situation in New Orleans, chaos was being replaced with bureaucratic rules that inhibited private relief organizations' efforts.

"We've tried desperately to rescue 250 people trapped in a Salvation Army facility. They've been trapped in there since the flood came in. Many are on dialysis machines," said Maj. George Hood, national communications secretary for the relief organization.

"Yesterday we rented big fan boats to pull them out and the National Guard would not let us enter the city," he said. The reason: a new plan to evacuate the embattled city grid by grid - and the Salvation Army's facility didn't fall in the right grid that day, Hood said in a telephone interview from Jackson, Miss.

"No, it doesn't make sense," he said.

Update #4:  I can't help myself.  Here is another:

The Fox News Channel's Major Garrett was just on my show extending the story he had just reported on Brit Hume's show: The Red Cross is confirming to Garrett that it had prepositioned water, food, blankets and hygiene products for delivery to the Superdome and the Convention Center in the immediate aftermath of the hurricane, but were blocked from delivering those supplies by orders of the Louisiana state government, which did not want to attract people to the Superdome and/or Convention Center.

Update #whatever-I-am-up-to: Welcome Instapundit readers!  I have posted a follow-up on big government and disaster preparedness here.

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Posted on September 4, 2005 at 08:36 AM | Permalink | Comments (3)

More "Government Coersion = Freedom" Arguments

The other day, I posted on a NY Times editorial that attempted to make the point that a coerced and conscripted army was more consistent with freedom and democratic values than an all-volunteer army.

This aggressively ridiculous position is none-the-less repeated by statists every day in many contexts.  Today I will focus on a post by David Sirota on the Huffington Blog.  Its premise is that government ownership of commercial assets is more conducive to freedom that private ownership.  I could probably have found a more serious writer to Fisk, but I am bored this afternoon and needed some fun.  Besides, its fun to see someone actively channeling some of the minor characters in Atlas Shrugged.

First, to be fair, I have to start with a strong point of agreement with Mr. Sirota:  Both of us are frustrated with the corporate welfare, subsidies, eminent domain land grabs, new stadiums, and incumbent protection laws handed by all levels of government to various corporations.  Mr. Sirota cites the stadium example in particular, which has always been a pet peeve of mine as well:

Usually, government is in the business of handing over huge amounts of our taxpayer money to corporations, so that the corporations can just take all the profits, and charge whatever they want to the customers. That's been the backbone of the recent spate of high-profile stadium deals, whereby city and state governments just fork over cash to private pro sports teams, while getting no share of the massive profits in return, and letting those teams charge higher and higher ticket prices to the fans whose tax dollars are supporting them.

I feel fairly well protected on the price angle by the fact that I can just choose to not go to the games, but he is right that the government is handing over stadium money with little to show for it in return.

But this is where he and I diverge.  My answer is to stop crony capitalism, and to stop using government money and regulatory authority to support favored businesses.  Mr. Sirota goes the other direction, which one might call "in for a penny, in for a pound", of having the government continue investing in businesses but to do so on the government's own account.

ordinary Americans are realizing that there's an alternative path, whereby community ownership of certain economic institutions and businesses are a pretty good deal. Instead of allowing Corporate America to reap the windfalls of everything, more and more communities are trying to get a piece of the action – all while making sure the public is adequately served, and not abused.

The highest profile example of this is in municipal broadband, where city governments are developing taxpayer-owned high speed Internet networks. Instead of allowing Verizon or other corporations to control Internet access and rake in all the profits from it, these communities are making Internet access a public utility and sharing in the profits. These communities can make some money at it, while doing the public a service by keeping rates low.

I will accept his chosen example of broadband networks. I will also, for today, give the author a break and not challenge the bizarre notion that replacing a private company like Verizon who has a 5-10% profit margin with an inefficient government bureaucracy can yield substantial cost savings for customers AND fat profits for the municipal government.  In fact, I will leave the obvious efficiency arguments behind entirely and only discuss the morality, the right and wrong involved in his proposition.

Ownership and Capital Investment
Corporations like Verizon are owned by communities of millions of ordinary people through a mechanism we call "stocks".  Even the few large shareholders of Verizon tend to be investment funds, which are really just vehicles for aggregating ownership of many many ordinary people via mutual funds and/or the pension obligations they back.  Owners of Verizon provide capital to the company through their stock investment in an uncoreced transaction and of their own free will.  Their ownership is evidenced by actual paper shares, and is portable, such that they retain ownership anywhere they live, even overseas.  Investors at any time, if they don't like the company's performance or prospects, are able to cash out at the market price, and companies routinely return a portion of their surplus to them in the form of dividends.  Investors elect a board of directors to steward their investment in the company, and can throw these directors out any year with a 51% vote.  The company they have invested in must provide them clear reports quarterly using GAAP accounting rules about how their investment is fairing.

Contrast this to a municipal-owned broadband network.  In some sense, all members of the municipality have an ownership interest in the network, but they receive no documented evidence or guarantee of this ownership.  Local citizens are required by law to contribute capital to the enterprise via their taxes.  Their investment is mandated by the state, is not optional, and non-investment (via non-payment of taxes) is met with a prison sentence.  Once their money is invested, they may not sell their interest or in any way recover their investment.  History has shown that surpluses in municipal owned business seldom exist, but when they do, they are never returned to the citizens, but are spent in other government functions at the whim of the local authorities.  If the citizen moves, he loses any benefit of his investment.  Municipal authorities seldom produce financial statements for these enterprises, and, when they do, they would never pass GAAP muster.  Since the author mentions Enron, I will say that Enron had cleaner financial statements than most government entities.

The author clearly prefers the latter.  Does someone who chooses the latter over the former really care about freedom and individual rights?

Competition and Evolution

A private company, particularly in an industry like broadband with rapid technology change, is constantly subject to getting beaten by a competitor with better technology or a lower cost position.  In the absence of government intervention, the private company has to constantly match competitive technology changes and cost improvements, or die.  Its interesting that the author would choose broadband, because the corpses of literally hundreds of failed broadband companies litter the American landscape.  Broadband has historically been a brutal business, with most companies failing to repay their investment in their infrastructure.  I will confess that many of the major communications players have been slow to move in this area, but in large part it has been government incumbent protection, not market incentives, that have slowed progress.  Wireless broadband providers and equipment producers have to move rapidly -- they have already migrated from proprietary designs to A to B to G and now to N in just five years or so.  A private company without government protection in this environment is faced with two choices:  constantly upgrade, or die.

Now, lets look at municipally-owned broadband company.  Like the private company, it will have to make a large start-up investment to get the infrastructure in place.  Also like the private company, repaying this investment (and thereby avoiding hitting their taxpayers with new charges each month for operations, ala Amtrak) will require putting a lot of volume on the network.  Finally, also like the private company, it will be facing new technologies and new potential competitors almost before the network is complete.  So what does it do?  It could begin to reinvest in the infrastructure, earning the ire of local citizens because it goes back for yet more taxes for the development.  It could cut prices and drive for market share, lengthening the time before it breaks even and eliminates the tax subsidy it will require. 

Or, it has a third option that the private company does not have:  It can use its government authority to block new entrants.  I will tell you right now - the government will use this third option every single time.  Take another large government network business: The Post Office.  The USPS tried like hell to get the government to block Fedex, and almost succeeded.  The government continues to block competition to the USPS for first class local mail.  Heck, the USPS has tried at various times to argue that it should have authority over email and the Internet.  The government blocks new cigarette manufacturers to protect the settlement money it gets from the old-line tobacco companies and it blocks usage of Love Field in Dallas to protect D/FW airport.  Bureaucracies never, ever let themeselves die, and there is no way a municipal broadband business will ever let itself be killed by a competitor - that competitor will be blocked, even if that likely means that local broadband consumers have to stick with higher costs and outdated technologies.

Gee, that sounds great, huh?

Pricing
My sense is that this is what gets the socialists and community ownership guys excited.  You can see from the quotes above, the author sees the world of private enterprise as this enormous price gouging domain, with no accountability on prices.  Though he does not say it explicitly, I am sure if asked he would say that private corporations have no accountability to the public (ie consumers)on pricing, whereas the local municipal government would.  This pricing issue is I think at the heart of his support for public over private ownership:

People know corporations right now have far too much power and far too much leeway to rip off ordinary citizens - but there is a feeling that that's "just a fact of life." The Community Ownership movement shows it doesn't have to be a fact of life, and that there is an alternative

The obvious response is that private companies have a tremendous accountability on price, from two directions.  First, consumers, if prices are too high, can choose not to buy.  Second, if prices remain "too high" for long, then competitors emerge to undercut them.  Like most socialists or "progressives", the author doesn't understand or trust these mechanisms - he prefers top down rather than bottom-up accountability.

In this sense, he prefers the comfort of the municipal business where elected officials that the consumer votes for set prices, and trusts these elections to provide more accountability than the market  (how ). Even forgetting that government inefficiency will make price savings impossible in such a thin margin business, how can anyone look at Congress or this administration and believe that electoral accountability is stronger than the market.  Do you really feel that you can do more about to affect government set rates like local sales tax rates than you can in response to say rising cell phone rates?  If I don't like my cell phone rate, I can switch plans, switch companies, or switch to other technologies (land lines, VOIP, etc).  If I don't like the sales tax rate, the best I can do is move to New Hampshire.

Conclusion

Wow, this piece really went on for a long time, and certainly far longer than Mr. Sirota's article deserved.  As a final comment on the author's grasp of reality, note this quote, where he refers to:

the out-of-touch confines of the Beltway where free market extremism reigns supreme

LOL.  I would love to find even a little bit of free market extremism inside the Beltway.  And if by free-market extremism he means crony capitalism of the sort I described at the top of the post, well, he should be more careful with his word choice. 

For too long, our side has rolled over and died when it comes to questions about how to manage the free market so that it works for ordinary people.

Here is a hint - if you want to participate in the profits of the free market just like the fat cats, try this.

Posted on July 27, 2005 at 04:27 PM | Permalink | Comments (3)

Decoding the Anti-Globalization Protestors

As a note, I had this post ready last Thursday, but with the terrorist attacks in London, the regular G-8 protesters sort of dropped off the radar screen.

For years now, I have struggled trying to categorize what philosophy motivates the brick-throwing protesters that seem a regular part of G-8 summits ever since they ripped up Seattle several years ago.   To say they are against Globalization does not answer the question, since what exactly does that mean, given that the protest movement itself is global and multinational in nature. 

To some extent, the protests of course just Marxism returning under a different guise.  However, even when compared to socialist reality avoidance, the arguments of the protesters seemed really hard to follow.  Part of the problem is that many of the protesters are violent anarchists and out-and-out criminals who want nothing more than violence and destruction.  However, there are people and groups who seem to be trying to accomplish something, and who resent being associated with these criminals.  After reading a number of different web sites of the protesters (many are really, really hard to parse logically), I have come up with the following basic argument shared by the core of the protesters.

  1. They want to help the poor and outright poverty-stricken nations of the world
  2. Many want the wealthiest nations (G8) to help these poverty-stricken nations, both because they blame the wealthy nations for this poverty, and because the wealthy nations are seen as the ones with the means to do something
  3. They want to help these nations by encouraging the poorer nations to avoid any of the techniques or economic models the G8 used to get wealthy and successful in the first place

There is nothing particularly new about arguments 1 and 2; however, it was recognizing part 3 of the argument that helped me realize why I could never understand what they wanted.  In a nutshell, they want to fix poverty in the third world by disavowing everything -- private property rights, individual enterprise, free commerce, entrepreneurship, individual freedoms, etc. -- that made the G8 not impoverished.  Rich nations, you have to help the poor nations, but whatever you do, don't allow they to emulate what you did to get rich. 

This is so nutty its unbelievable.  If they were camping outside of the G8's door and saying that we want you to drop trade barriers on our goods and help us foster entrepreneurship and we want your help promoting private investment in our economy and infrastructure, I could understand perfectly.  This is like activists camping outside of Jack Welch's door looking for him to help the poor by funding programs to teach children to drop out of school and avoid getting a jobs.

I discussed suggestion on providing aid to Africa here and here.  A good companion article to this piece is this one on why progressives are too conservative to like capitalism.  Here is the part that is relevant to development:

However, when we move to fields such as commerce, progressives stop trusting individual decision-making.  Progressives who support the right to a person making unfettered choices in sexual partners don't trust people to make their own choice on seat belt use.  Progressives who support the right of fifteen year old girls to make decisions about abortion without parental notification do not trust these same girls later in life to make their own investment choices with their Social Security funds.  And, Progressives who support the right of third worlders to strap on a backpack of TNT and explode themselves in the public market don't trust these same third worlders to make the right decision in choosing to work in the local Nike shoe plant.

Beyond just the concept of individual decision-making, progressives are hugely uncomfortable with capitalism.  Ironically, though progressives want to posture as being "dynamic", the fact is that capitalism is in fact too dynamic for them.  Industries rise and fall, jobs are won and lost, recessions give way to booms.  Progressives want comfort and certainty.  They want to lock things down the way they are. They want to know that such and such job will be there tomorrow and next decade, and will always pay at least X amount.  That is why, in the end, progressives are all statists, because, to paraphrase Hayek, only a government with totalitarian powers can bring the order and certainty and control of individual decision-making that they crave.

Progressive elements in this country have always tried to freeze commerce, to lock this country's economy down in its then-current patterns.  Progressives in the late 19th century were terrified the American economy was shifting from agriculture to industry.  They wanted to stop this, to cement in place patterns where 80-90% of Americans worked on farms.  I, for one, am glad they failed, since for all of the soft glow we have in this country around our description of the family farmer, farming was and can still be a brutal, dawn to dusk endeavor that never really rewards the work people put into it....

More recently, progressives have turned their economic attention to lesser developed nations.  Progressives go nuts on the topic of Globalization.  Without tight security, G7 and IMF conferences have and would devolve into riots and destruction at the hands of progressives, as happened famously in Seattle.  Analyzing the Globalization movement is a bit hard, as rational discourse is not always a huge part of the "scene", and what is said is not always logical or internally consistent.  The one thing I can make of this is that progressives intensely dislike the change that is occurring rapidly in third world economies, particularly since these changes are often driven by commerce and capitalists.

Progressives do not like American factories appearing in third world countries, paying locals wages progressives feel are too low, and disrupting agrarian economies with which progressives were more comfortable.  But these changes are all the sum of actions by individuals, so it is illustrative to think about what is going on in these countries at the individual level. 

One morning, a rice farmer in southeast Asia might faces a choice. He can continue a life of brutal, back-breaking labor from dawn to dusk for what is essentially subsistence earnings.  He can continue to see a large number of his children die young from malnutrition and disease. He can continue a lifestyle so static, so devoid of opportunity for advancement, that it is nearly identical to the life led by his ancestors in the same spot a thousand years ago.

Or, he can go to the local Nike factory, work long hours (but certainly no longer than he worked in the field) for low pay (but certainly more than he was making subsistence farming) and take a shot at changing his life.  And you know what, many men (and women) in his position choose the Nike factory.  And progressives hate this.  They distrust this choice.  They distrust the change.  And, at its heart, that is what globalization is all about - a deep seated conservatism that distrusts the decision-making of individuals and fears change, change that ironically might finally pull people out of untold generations of utter poverty.

Scratch a progressive, you will find a totalitarian.  That is why progressives support totalitarians like Chavez in Venezuela and why you find "progressives" supporting brutal Muslim totalitarian apartheid states.  That is why you will hear a lot from protesters about Nike wages being too low, but nothing about the impact totalitarians like Robert Mugabe have on creating poverty.  By the way, I am willing to offer them some help spotting dictatorships if they need it.

To their point that poor nations got that way because of rich nations, their argument relies on a zero-sum mercantilist view of economics that I deconstruct here.  Their other argument is that western colonialism ruined the poor nations, but if that is true, why do they attack the US the most, which had the fewest colonies of any of the G8, instead of France, which made the worst mess of its colonies?

Posted on July 10, 2005 at 04:03 PM | Permalink | Comments (1)

Libertarians are Generally Not Moderate

Today, as linked by Hit and Run, the Washingtonian lists a number of blogs that are popular with journalists.  I have no particular problem with the list -- I read many of the same blogs myself.  However, this description of the libertarian blog at Reasons's Hit and Run struck me as odd (emphasis added):

The libertarians behind Reason magazine strike back with moderate commentary on a variety of topics ranging from public television to Gwen Stefani’s “Hollaback Girl.”

I am not sure that many Republicans or Democrats would consider Reason to be moderate.  Its hard to believe that any of us anarcho-capitalist make-government-and-taxes-go-away libertarians would ever be confused with moderates.  Reason has in the last month taken stands against the drug war, against any government intervention into property rights, against the Patriot act, in defense of steroid use, and favoring legalization of prostitution and continued legality of pornography.  Not many red-staters or blue-staters would call that moderate.  It may be consistent, in that it is against statism and for the primacy of individual decision-making, but libertarianism tends to be extreme and uncompromising in these views.  And, while most libertarians are not moderate, most moderates are not libertarians -- those who generally call themselves moderate tend to do so because they pick and choose bits of statism from both political parties. 

But there is an explanation for the word "moderate", and it goes back to the crappy civics lessons we all have gotten.  As I wrote before, those civics lessons were the statist's wet-dream, portraying the range of political thought on a linear scale from socialism on the left to fascism on the right.  In other words, our political choices are defined as running from statist control to... statist control.  In this framework, anyone who is not a commie or a Nazi are put somewhere in the middle, which has been shorthanded "moderates".

This is obviously a stupid framework, and breaks down when libertarians come into the picture.  More modern self-assessment frameworks use grids of at least two dimensions, with at least one dimension being the degree (from none to total) that one accepts state authority over the individual.

Update:  Oops, I missed the fact that some of the Reason writers themselves had much the same reaction

Posted on June 26, 2005 at 06:45 PM | Permalink | Comments (6)

The Public Be Damned

You still hear William Henry Vanderbilt's quote all the time today.  Generally, it is used to comment on situations where public companies dishonor themselves by fraudulently providing poor products and services.  Interestingly, doing a Google search on the term, I also see a lot of usage for it as applied to government as opposed to industry.

Anyway, it is ironic that the origins of the quote are very different than the current usage.  Vanderbilt's New York Central had just canceled an experimental high-speed high-service train from New York to Chicago.  A reporter asked him "Don't you run it (the train) for the public benefit?" and Vanderbilt very reasonably replied:

The public be damned.  I am working for my stockholders. If the public want the train, why don't they pay for it?

In reality, Mr. Vanderbilt was eliminating a product that had proven unpopular in the marketplace.  His notion of fiduciary responsibility is not only appropriate, but in certain contexts can be argued to be legally required, at least today.  If some reporter today was stupid enough to ask the CEO of a failed dot-com this question (ie, why are you going out of business, why don't you just keep losing money for the public good) would we really criticize the CEO for giving the moron a smartass answer?  Accepting that Mr. Vanderbilt's answer was wrong is to accept that Mr. Vanderbilt should be a slave to public opinion, not as expressed by individuals in their purchasing decisions, but as expressed by an ill-defined elite who seemed to support the service for its aesthetic value.  And by the way, how had a service that didn't even exist a decade earlier, and only existed through the creativity of the NY Central, suddenly become an essential public service and expectation?

By the 20th Century, the high speed Chicago to New York express train  was bread and butter to the NY Central and its arch-rival the Pennsylvania.  In the end, cutting this service turned out to be just a temporary suspension of a product ahead of its time.

Posted on June 14, 2005 at 09:34 PM | Permalink | Comments (5)

Followup on Income Inequality

Several people say that I have missed the point in my post here - that the issue is with mobility, particularly in multiple generations.   They argue that the rich of the next generation are likely to be the kids of the rich of this generation, that success now depends on education and connections that only the wealthiest can buy for their kids.   

A couple of thoughts on this.  First, the Times's own data (plus many other studies) doesn't bear this out, particularly with new immigrants.  Thomas Sowell addresses this in more depth here and here, and suggests that the explanation may lie more in values and aspirations than in purchased stuff.  Marginal Revolution, for example, had this thoroughly depressing story featuring a study by Harvard economist Roland Fryer on the social pressures in many African-American and Hispanic neighborhoods to under-perform in school.

My other thought on this is that to the extent social mobility is slowing in this country, our public education system is a major culprit.  Forget for a moment about quality issues.  Schools have increasingly emphasized self-esteem over achievement and competition. Standards are lowered, and the value of exceeding standards or improving performance is downplayed.  Without other influences, students will walk out of public schools with a value system vis a vis achievement and competition and performance that leaves them totally unprepared for the real world.  I am reminded of one of Bill Gates' pieces of advice to graduates

Rule 8: Your school may have done away with winners and losers, but life HAS NOT. In some schools they have abolished failing grades and they'll give you as MANY TIMES as you want to get the right answer. This doesn't bear the slightest resemblance to ANYTHING in real life.

Kids with parents who have achieved in some way in the world are likely to overcome this by the example and exhortations of their parents.  But what happens to kids without this example?  Or kids (lacking voucher programs) who can't afford to escape the public school system cult of mediocrity for high-achievement private schools or home schooling?

Ironically, the very people who bemoan income inequality and lack of mobility are the very same people who have gutted the public education system.  These are the people who deal with inequality by flattening down the peaks, which is exactly what they have done in schools, eliminating valedictorians and substituting social promotions.

Posted on June 13, 2005 at 09:06 AM | Permalink | Comments (6)

Why Income Distribution Doesn't Matter in This Country

The NY Times has somehow decided that one of America's real problems is widening income distribution, or more specifically, the exponentially increasing wealth of the top tenth of one percent of US earners.  The series seems to be running to about 47 episodes (actually 10), but a key article is here, entitled “Richest Are Leaving Even the Rich Far Behind,”  There are a number of ways to attack this article.  One is to fisk their really abused and misused numbers, which George Reisman does here on the Mises Economics Blog

Lets accept that the very very rich are getting richer.  So lets move from there to the question of...

"so what?"

The Times is a little weak on the "so what".  I presume that in their intellectual-statist readership,  it is an axiom that rich people suck and rich people getting richer sucks more.  However, it is possible to pull out four things the Times extended editorial-masquerading-as-a-news-story finds bad about increasing income inequality:

  • As the rich get richer, there is less money left for the rest of us
  • The process of the rich getting richer reduces opportunities for the rest of us
  • Having very rich people around make the rest of us feel bad
  • The rich are only getting richer because the rest of us are subsidizing them through tax policy

It has been a while since I have really gotten carried away writing about a topic (at least three or four days) so I will now proceed to address each of these in turn and in some detail.

As the rich get richer, there is less money left for the rest of us.  At the end of the day - this is what is in most people's minds when they decry aggregations of wealth.  There are many, many people in the world, even in this country, who think of wealth as a fixed pie, as a zero sum game where one person's victory requires another persons loss.

If we were living in 17th century France, where the rich nobility got that way by taxing the crap out of the working peasantry, this would probably be an adequate view of reality.  Wealth came from the land and its products, whose supply, given no technology improvements for decades, were both relatively fixed.  This zero sum view of commerce led to a mercantilist view of the world economy, where it was thought that wealth was fixed, and that the only thing that could be done to it was to move it around, or tax it, or steal it, or loot it.

But we don't live in 17th century France.  We live in a modern, dynamic capitalist society where wealth is created.  One proof of this is so obvious that it amazes me anyone clings to the implicit zero sum economy assumption:  Compare the US in 2000 to the US in 1900.  We are so much wealthier top to bottom in our society than in 1900 its not even worth spending much time on the proof.  This is not just in real dollar terms, but in things that affect ones life, from average life span to leisure time to entertainment to technology.  People who live in the poorest 20 percentile today have things -- such as a lifespan over 70, access to cancer cures, cars, computers, VCRs -- that not even the richest one half of one percent had in 1900.  The poorest 20 percentile in this country would be the upper middle class or even the rich in many countries of the world today.

Michael Dell and Bill Gates are both in that evil 1/10 of 1% of richest people.  But how did they get that way?  They made their fortunes by providing me with this incredible tool on my desk that was unimaginable when I was born 40+ years ago, but now is pedestrian.  Right now I am typing on a Dell computer using Microsoft Windows, which I bought from the suppliers for a mutually agreeable price in a totally uncoerced manner.  My computer provides me with thousands of dollars of value - in productivity, in entertainment, in the ability to do new things that could never be done before (e.g. blog).  Most of this value I keep for myself; some, about $1200 in this case, went to the suppliers of labor and materials to build and program this thing.  And a small portion, less than $100, went towards the fortunes of Mr. Dell and Mr. Gates who had the vision to build the businesses they did.  The PC I have creates new value all around:  Thousands of dollars of new value for me the user and  hundreds of dollars in the form of jobs and new markets for suppliers.  Mr. Dell and Mr. Gates keep just a small portion of all that value created.  At some level, they are working cheap. And any one of us, had we had the vision, could have piggy-backed on Mr Gate's or Mr. Dell's wealth creation by buying stock in their firms.

The process of the rich getting richer reduces opportunities for the rest of us.  Since the "zero sum" argument is so easy to disprove, proponents of rich=bad have morphed their argument to this one.  This accusation comes up several times in the NY Times series, but is hard to refute mainly because the authors never explain the mechanism that they think is at work here or show any shred of proof.  The articles cite folks such as Warren Buffett, George Soros, and Ted Turner.  But how has their fortune-making reduced my personal opportunities one iota? 

Do I have less opportunity because Warren Buffet has made good investing decisions?  Heck, one can argue that any American has always had the opportunity to gain wealth in direct proportion to Buffet at any time, merely by buying Berkshire Hathaway stock.

How about Ted Turner.  Do I have less opportunities to improve myself because Ted Turner got rich creating CNN?  I guess I could facetiosly argue that by his creating CNN, others can no longer create a 24-hour cable news service because he has locked up the market, but Fox has disproved even this narrow argument.

What about George Soros?  I guess you could argue that from time to time my Sony Walkman was a buck or two more or less expensive because of some currency game he was playing in the markets, but I don't see how my opportunity has been reduced.  A better argument is that Soros's being wealthy might really threaten my opportunity if only because he funds so many statist-socialist causes with his billions.

In fact, this is one of those black-is-white arguments.  The reality is exactly the opposite.  When most rich people get rich (with the exception maybe of Peter Angelos and other tort lawyers) they do so by creating new value and thereby opportunity.  While all these folks may be really wealthy, in reality the wealth they have amassed is but a small percentage of the wealth and value that they created.  Where did the rest go?  To all of us, of course, in the form of jobs, and tools, and longer lifespans, and better entertainment.

Having very rich people around make the rest of us feel bad.  OK, this sounds like a problem for group therapy, but you see it in print all the time.  The disparity of incomes is "troubling" and could lead to "resentment".  If one were living in Venezuela or Nigeria or some country where, like 17th century France, wealth came from looting rather than the free exchange of goods, then I would agree that the income disparity would be troubling.  Shoot, if people were much wealthier than I because they were using the legal system to loot the rest of us, I would be pissed off (ironically, this is the case with the billionaire tort lawyers, but this is the last group that the Times will ever challenge). 

However, in this country, where most of the very rich got that way through hard work and better ideas, the result of free and uncoerced commerce, why be resentful?  Sure, I would love to have a G-V aircraft and hot Swedish wife [ed note:  oops, my wife might read this] like Tiger Woods, but lacking these, I have zero desire to deny them to Tiger.  I don't even begrudge super-tramp Paris Hilton her millions (but she did inspire me to change my will so my kids don't inherit from me until they are well past their majority).  Heck, I have spent whole vacations touring the discarded toys of the super-rich (e.g. mansions in Newport, RI).  What fun would there be without a moving target to aspire to?

So why do the Times and some many intellectualls legitimize this envy?  This type of envy has driven anti-semitism and in fact all sorts of racism through the ages.

The rich are only getting richer because the rest of us are subsidizing them through tax policy.  Around my house, I joke that everything, at least in my family's opinion, turns out to be my fault.  The equivilent at the NY Times is that everything is Bush's fault, and in particular, the fault of Bush's tax cuts.  The Mises article cited above does a pretty good job of fisking the argument that the tax system post-cuts favors the rich.  I took on took this notion here and here.  The Times "analysis" makes two major mistakes:

  • Social Security Tax hide and seek:  The NY Times article shows the very wealthy paying lower marginal rates than lower level earners.  As I pointed out here, this is entirely because they are including social security taxes in their analysis and that the taxes are capped at $90,000.  If you look at only income taxes, then marginal rates do not drop at higher incomes.

The left's argument here is highly contradictory.  When wanting to make the "rich are not paying enough" argument, they include Social Security taxes, knowing that since those taxes are regressive, they make it look like the rich are somehow getting off easy.  However, when discussing Social Security, the don't want to think of them as taxes - because they want Social Security to be insurance with premiums rather than a transfer program with taxes

  • Bracket Creep: The TImes points out that the income tax rate for the super rich is no higher than the rate for the merely rich or even $100,000 earners.  The implication is that the super rich are somehow getting a better deal.  But in fact, the problem is that the definition of rich, vis a vis taxes, has been lowered through the years.  The whole history of the income tax is to sell a tax as applying only to the very very rich, and then broadening the applicability over time.  The federal income tax followed this path, as has the AMT.  More recently, the top rate on California income taxes is seeing the same creep.  The statist trick is to apply a rate to the super rich, then creep it down so eventually it applies to everyone.  Then, they cry that - hey, the super rich aren't paying more than the middle class, so they institute a new higher super rich rate.  Rinse and repeat.

Conclusion.  I will leave you with the lyrics from Rush's The Trees:

There is unrest in the forest
There is trouble with the trees
For the maples want more sunlight
And the oaks ignore their pleas

The trouble with the maples
(and they’re quite convinced they’re right)
They say the oaks are just too lofty
And they grab up all the light
But the oaks can’t help their feelings
If they like the way they’re made
And they wonder why the maples
Can’t be happy in their shade?

There is trouble in the forest
And the creatures all have fled
As the maples scream `oppression!`
And the oaks, just shake their heads

So the maples formed a union
And demanded equal rights
’the oaks are just too greedy
We will make them give us light’
Now there’s no more oak oppression
For they passed a noble law
And the trees are all kept equal
By hatchet,
Axe,
And saw ...

Update:  Several people said I missed the point about mobility, rather than just the rich getting richer.  I respond to this here.

Posted on June 10, 2005 at 11:02 AM | Permalink | Comments (20)

What a Concept

Marginal Revolution notes a recent piece by Jeffrey Rosen about potential libertarian supreme court nominees.  In particular, they noted this quote:

...Epstein was promoting a legal philosophy far more radical in its implications than anything entertained by Antonin Scalia, then, as now, the court's most irascible conservative. As Epstein sees it, all individuals have certain inherent rights and liberties, including ''economic'' liberties, like the right to property and, more crucially, the right to part with it only voluntarily. These rights are violated any time an individual is deprived of his property without compensation -- when it is stolen, for example, but also when it is subjected to governmental regulation that reduces its value or when a government fails to provide greater security in exchange for the property it seizes.

Whoa, how crazy is that?  I find it depressing that believing in the right to part with property "only voluntarily" is today considered so wildly out of the mainstream that it is necessarily a disqualification to be a Supreme Court judge.  The courts today are terribly important battle ground in protecting individual rights against both creeping socialism and paternalism.  Unfortunately, neither Republicans nor Democrats can be trusted with leading this battle.  Each wants the judiciary to protect individual rights in one area and restrict them in another.  The left supports limitations on political speech via campaign finance restrictions and an unfettered right of government to invade personal property.  The right wants limitations on non-political speech via "community standards" on entertainment and hopes to regulate America's sexual practices.

Most people interested in politics are constantly hoping their party is the winner in the race to power.  I just wish I had a horse in the race.

Posted on April 19, 2005 at 09:10 AM | Permalink | Comments (0)

Carnival of the Capitalists

Welcome to the Carnival of the Capitalists.  Many thanks to Silflay Hraka for starting the Carnival of the Vanities, of which this is a spin-off, to showcase smaller blogs to a wider readership.  Look for future Carnivals of the Capitalists at these sites (you can submit articles here):

March 7, 2005 Blogcritics.org
March 14, 2005 The RFID Weblog
March 21, 2005 Beyond The Brand
March 28, 2005 The Mobile Technology Weblog
April 4, 2005 Law and Entrepreneurship News
April 11, 2005 TJ's Weblog
April 18, 2005 Gongol.com

While you're here, feel free to look around -- this post will tell you more about what I do at Coyote Blog.

For this week's Carnival, I have decided to take a bit of a risk, and, in true capitalist fashion, I have taken on a sponsor for this week's Carnival:

This Carnival of the Capitalists is Proudly Sponsored by…
ACME
Maker of fine anvils for over 50 years

Blogging and the Internet

Corporations large and small are trying to figure out what to do about blogging, both officially by the company as well as unofficially by their employees.  BPWrap offers the Canute Business Blogging Barometer for corporations trying to figure out if blogging is an opportunity or a threat.

Resistance is Futile assesses the impact of comment spam on blogs and puts forth the idea of a class-action lawsuit against spammers to recover bloggers' economic and non-economic damages.

New Millennium Minds suggests that the folks from MySimon may have found the application to take on Google.

Barry Ritholtz in the Big Picture explains why the he doesn't trust the social networking sites (like friendster) that he gets invited (2 or 3 times a week) to join.   I never get invited to join any of these - does that make me a loser?  Don't answer that.

VoluntaryXchange calculates the value blog readers get from a blog, based on the value of their time, and comes up with a surprisingly high result.

Ego looks at RSS feeds as a powerful business PR tool

Property Rights

Coyote Blog (yes, thats me) rants this week about property rights and the misuse of eminent domain; or, as New London, Connecticut might say, "All your base are belong to us"

The folks at Freedom's Fidelity are obviously very insightful and discerning folks, since they chose the same topic as I did, though they give more background on eminent domain than I did.  However, they didn't have my nifty photoshop work, so I still feel good about myself.

This Carnival of the Capitalists is Proudly Sponsored by…
ACME
Escalating crises since 1952

Marketing and Business Success

DAtum discusses the reasons behind Bose's success as a private company, and what CEO Amar Bose is planning next.

The Media Stock Blog discusses the changing business model in TV, where broadcast shows are increasingly a loss leader for DVD sales.

Blog Jones points out that word of mouth advertising cuts both ways, and will punish companies who don't invest in customer service.

Land of Opportunity takes us through the nuts and bolts of putting on a successful trade show, in this case a show highlighting successful small businesses and business issues to state legislators in Arkansas.

Blog Business World gives pointers on that most difficult management task:  Assessing the value of advertising

The Entrepreneurial Mind writes on the secrets to business growth, and for managing that growth.

Retail Store Blog argues that doing good work often leads to good fortune

SMB Trendwire has a downloadable audio post on turning customers into evangelists for your business.

BizzBangBuzz gives several suggestions for checking new trademarks in advance for potential conflicts.

Lip-Sticking demonstrates some ways that women think and work differently, and outlines implications for online merchants

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ACME
The secret to Glenn Reynolds success

Business Opportunities

The Charlotte Capitalist began this post as advice for parents looking for alternatives to public schools.  He soon realized that what he had also done was post a roadmap for future education entrepreneurs.

Wayne McVicker in Small Business Trends explains why he chose self-publication for his recent book and hands out a lot of good advice on self-publishing a book.

Managing Sales Channels

Photon Courier uses a recent Forbes article as a jumping off point for discussing the issues in matching sales channels to products

Economic Forecasts

Steve Shu of S4 Management Group Perspectives reports highlights from the U. of Chicago Business Forecast 2005 conference featuring Harvey Rosenblum and Robert Aliber

This Carnival of the Capitalists is Proudly Sponsored by…
ACME
Never be without a date on Friday night

Economic & Business Theory

Chocolate and Gold Coins applies Ed Prescott's "lottery technology" to the problem of end-of-life medical care expenses, and reaches a disturbing result.  Soft of Logan's Run for the 21st century.

Cattalarchy has a humorous idea for combatting the "broken window fallacy" (the oft-repeated idea in the MSM that natural disasters are actually good for the economy). 

Brian Gongol (thanks for hosting the COTC submission page) argues that we should go further than just NAFTA, that the United States should actively seek to co-opt and absorb the best of Latin American culture.

Talking Story outlines seven ways to get more out of your business book reading.

Business Pundit rejects a proposal by some Harvard professors to institute professional licensing for managers.  I would add that as a graduate of Harvard Business School, I agree with Business Pundit and find the notion of professional licensing for managers to be hugely counter-productive and arrogant in a way that I have found Harvard all too often guilty.

Ashish's Niti looks at why the dollar remains the international currency of choice

Management Craft discusses the theory of sensual management

Crossroads Dispatches turns the Cluetrain Manifesto upside down, and argues that conversations are markets, and in particular, that we all suffer when conversations are not occurring.

Taxes

AnyLetter suggests reforming the tax code by giving taxpayers partial budgetary control, ie some direct say where their money gets spent.

Taxable Talk reviews a North Dakota plan to license Internet gambling sites in-state in order to generate tax revenues, and comes to the conclusion that the state is unlikely to be successful.

The intriguingly named blog Borrow a Trillion Dollars begins the first of a five part series on IRA's and other retirement accounts, with some fairly radical suggestions for the future.

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ACME
California Dreamin' with Earthquake Pills

Regulation

Tim Worstall is starting to make a career of publicly fisking EU Commissioner Margot Wallstrom's blog.  This week, Tim tears apart Ms. Wallstrom's comments on REACH, the aptly named expansion of EU environmental regulations.

According to Wordlab, both Ivanabitch and Kalashnikov Vodkas are in trouble with US and UK regulators.  And don't even get us started about the pickle.

Abigail's Magic Garden urges the government to enforce the 40 hour work week for all employees to stop greedy corporations from making white collar workers work overtime.  Dang, it looks like I have been exploiting myself again.

Health Care and Malpractice

One of my favorite bloggers, Walter Olson does his usual thorough job of addressing tort-related issues at Point of Law in taking on the New York Times for misreporting on medical malpractice (part 2 here). 

Different River considers Arnold Kling's "event-based" health insurance idea, and concludes that the proposal has some merit in addressing problems in the health insurance system, but that it won't work unless diagnosis costs are addressed as well.

FullosseousFlap's Dental Blog wonders whether the concerns about hackers turning off Grandpa's pacemaker aren't a bit overblown.

Social Issues

Wyatt's Torch suggests the concept of a maternal lien on children, providing financial incentives to eschew abortion and some enforced financial support in old age.

Mad Anthony rebuts a recent article in Slate slamming Walmart and how Walmart pays its employees.

Continuing on the Walmart theme, Interested Participant observes that the tactics of unions trying to organize Walmart deserve a lot more scrutiny than they have gotten to date.

This Carnival of the Capitalists is Proudly Sponsored by…
ACME
Leader in dehydration technologies

Wall Street & Investing

View from a Height doesn't expect Qwest to prevail in the bidding war for MCI, despite its sweetened offer.

Byrne's MarketView looks at the Choicepoint insider trading allegations and makes a suggestion for an alternative approach that he argues makes much too much sense to ever be accepted.  I would add that his suggestion would get us out of the "Martha Stewart" paradox, where government legal actions to protect shareholders ended up hurting shareholders far worse than Ms. Stewart's actions.

Political Calculations analyzes whether allowing private investments in Social Security accounts will give the stock market a boost.

Capital Chronicle looks at the recent runup in Chinese mining stocks and analyzes whether investors should take profits or ride the wave further.

Internet Stock Blog looks at the high growth in Internet use by wealthy households and comes up with some surprising conclusions for investors

The RFID Weblog reviews the market for RFID-related stocks in the wake of Walmart's big commitment to the technology.

Politics and Other Issues

The Mobile Technology Weblog contrasts the differences in security and inclusiveness between Kennedy's Berlin visit and Bush's recent visit to Mainz.

This Carnival of the Capitalists is Proudly Sponsored by…
ACME
Escape from it all with the Smoke Screen Bomb

Closing Notes

Thanks to the Original Illustrated Catalog of Acme Products for the advertising copy.  You can find more ACME promotional material here

Kate Groves Handbags

Finally, I can't resist showing pride in my newly famous wife Kate Groves, whose original handbag designs were featured this weekend in YES magazine.

So far I would categorize her handbag business more as a not-for-profit than capitalism, but there is always hope...

Thanks, its been fun.  I am going to rest for a few weeks before I try it again.

Posted on February 28, 2005 at 05:26 AM | Permalink | Comments (1)

In Praise of "Robber Barons"

After seeing a piece of my son's history curriculum at school, I realized for about the hundredth time just how poor an understanding most people have about the great industrialists of the 19th century, so unfairly painted as "robber barons".  While it is said that "history is written by the victors", I would observe that despite the fact that socialism and communism have been given a pretty good drubbing over the last 20 years, these statists still seem to be writing history.  How else to explain the fact that men who made fortunes through free, voluntary exchange of products can be called "robber barons"; while politicians who expropriate billions by force without permission from the most productive in society are called "progressive".

To be sure, capitalists of the 19th century sometimes played by rules very different from ours today, but in most cases those were the rules of the day and most of what they did was entirely legal.  Also to be sure, there were a number of men who were fat ticks on society, making money through fraud and manipulation rather than real wealth creation (Daniel Drew comes to mind).  However, most of the great industrialists of the 19th century made money by providing customers with a better, cheaper product.  In the rest of this post, I will look at two examples.

The first is Cornelius "Commodore" Vanderbilt, the person to whom the term robber baron was originally applied (by the New York Times, interestingly enough - some things never change).  While Vanderbilt is perhaps best known for his New York Central railroad, the term was actually applied to him earlier in life in his shipping days, where he made a fortune running steamships in and out of New York City.  Vanderbilt stood accused of overly predatory tactics in moving into rivals territories.  However, in 1859 Harpers Weekly observed (via An Empire of Wealth by John Steele Gordon):

...the results in every case of the establishment of opposition lines by Vanderbilt has been the permanent reduction of fares.  Wherever he 'laid on' an opposition line, the fares were instantly reduced, and however the contest terminated, whether he bought out his opponents, as he often did, or they bought him out, the fares were never again raise to the old standard.  This great boon -- cheap travel-- this community owes mainly to Cornelius Vanderbilt". (sorry, no link available -- I guess they weren't putting their articles online in 1859)

In many ways, Vanderbilt was the Southwest Airlines of his day, and, just like with Southwest today, towns begged for him to serve them because they knew he would bring down rates.  In fact, there is actually another parallel with Southwest Airlines.  In the early days of Southwest, most of the airline industry was regulated such that new entrants competing at lower prices were pretty much excluded by government rules.  Southwest got around these rules by flying only in Texas, where interstate rules did not apply.  Their success in Texas was a large reason for the eventual demise of government regulation that effectively protected fat and inefficient incumbent airlines, with drastically lower fairs the result.

When Vanderbilt first entered the steamship business, most routes were given as exclusive charters to protected monopoly companies, most run by men with friends in the state government.  Vanderbilt took on the constitutionality of these government enforced monopolies and, with the help of Daniel Webster, won their case in the Supreme Court.  Within a decade, the horrible experiment with government monopoly charters was mostly over, much to the benefit of everyone.  While private monopolies have always proved themselves to be unstable and last only as long as the company provides top value to customers, publicly enforced monopolies can survive for years, despite any amount of corruption and incompetence.  Vanderbilt, by helping to kill these publicly enforced monopolies, did more than perhaps any other man in US history to help defeat entrenched monopolies, yet today most would call him a monopolist. 

By the way, there are two charges against Vanderbilt that partially stick.   Those are that he bribed legislators and that he sought out price fixing agreements with his competitors.  Both are true, but both need context. 

To understand the bribery, one has to recognize that NY state passed a law that you could not be convicted of bribery solely on the evidence of the other party involved in the bribe.  In other words, they effectively made bribery legal as long as you were smart enough to do it without witnesses.  The real corruption was in the NY legislature at the time.  While Vanderbilt's motives were likely not always pure, no one who understands the state of NY at the time would deny that Vanderbilt would have been gutted had he not pro-actively played the bribery game himself in Albany in self-defense.

The price-fixing charge is even easier to deal with in context - basically price fixing agreements were entirely legal at the time.  In fact, price-fixing has been thought necessary, particularly in transportation, by politicians of all stripes for centuries - remember as late as the 1970's we had government enforced price-fixing in railroads and airlines.  In the 1930's, FDR via the NRA briefly instituted a government price-collusion scheme on the entire economy.

My other featured industrialist here on hug-a-robber-baron day here at Coyote Blog is John D. Rockefeller.  At one point of time, Rockefeller controlled 90% of the refining capacity in the country via his Standard Oil trust.  He was and is often excoriated for his accumulation of wealth and market share in the oil business, but critics are hard-pressed to point to specifics of where his consumers were hurt.  Here are the facts, via Reason

Standard Oil began in 1870, when kerosene cost 30 cents a gallon. By 1897, Rockefeller's scientists and managers had driven the price to under 6 cents per gallon, and many of his less-efficient competitors were out of business--including companies whose inferior grades of kerosene were prone to explosion and whose dangerous wares had depressed the demand for the product. Standard Oil did the same for petroleum: In a single decade, from 1880 to 1890, Rockefeller's consolidations helped drive petroleum prices down 61 percent while increasing output 393 percent.

By the way, Greenpeace should have a picture of John D. Rockefeller on the wall of every office.  Rockefeller, by driving down the cost of Kerosene as an illuminant, did more than any other person in the history to save the whales.  By making Kerosene cheap, people were willing to give up whale oil, dealing a mortal blow to the whaling industry (perhaps just in time for the Sperm Whale).

So Rockefeller grew because he had the lowest cost position in the industry, and was able to offer the lowest prices, and the country was hurt, how?  Sure, he drove competitors out of business at times through harsh tactics, but most of these folks were big boys who knew the rules and engaged in most of the same practices.  In fact, Rockefeller seldom ran competitors entirely out of business but rather put pressured on them until they sold out, usually on very fair terms.

From "Money, Greed, and Risk," author Charles Morris

An extraordinary combination of piratical entrepreneur and steady-handed corporate administrator, he achieved dominance primarily by being more farsighted, more technologically advanced, more ruthlessly focused on costs and efficiency than anyone else. When Rockefeller was consolidating the refining industry in the 1870s, for example, he simply invited competitors to his office and showed them his books. One refiner - who quickly sold out on favorable terms - was 'astounded' that Rockefeller could profitably sell kerosene at a price far below his own cost of production.   

More here. In fact, many, many of these defeated competitors became millionaires in their own right with the appreciation of the Standard Oil stock they got in the merger.

Eventually the Standard Oil monopoly weakened as most private monopolies do.  Monopolies seldom if ever engage in the price-increase games everyone expects them to, but they do get risk averse and lose vitality over time without serious competition.  This indeed did happen to Standard Oil, and it missed a number of key market turns, such as the Texas oil boom.  By the time is was broken up under the Sherman anti-trust act, Standard's market share had already fallen to 60%.  As would be the case many times in history, the government acted on the economic "threat" of Standard Oil at the very time the market was already doing the job.

Ever since, people have expended a lot of unnecessary energy getting worried about bigness and monopolies in industry.  I always laugh when "progressives" decry the monopoly power of the oil industry to manage prices.  I worked for the oil industry in the 80s, and if they had the power to manage prices they sure were doing a crappy job of it.  If someone thinks that oil companies have been manipulating prices, they have to explain this chart to me.  If prices are manipulated at all, they look like they are being kept low and stable.

Another great example of monopoly paranoia is the near continuous Microsoft-bashing in the courts.  The most famous anti-trust case was the successful case by Netscape and numerous other Microsoft competitors attempting to kneecap Microsoft, nominally for monopolizing the browser market.  Now lets leave aside the obvious issue of just how consumers are getting hurt by being given a free browser by Microsoft.  The plaintiffs apparently successful argument (incredibly) was that through a series of technology and marketing moves, Microsoft prevented competition.  If that is so, if competing with Microsoft is so hard, then why are 30% of my visitors using Firefox when none used it a year ago.  I use Firefox, and you know what, it took me about 5 minutes to download, install it and start running it.  Boom, monopoly gone.  Lots more on anti-trust here.

UPDATE:  Welcome to the Greenwich Public Schools.  Thanks for linking me from your web site.  Despite my Arizona home today, I actually lived in Greenwich for a while growing up.  You can find other essays on capitalism and individual freedoms here and here, or you can check out Dave Berry, who is much funnier than I am.  If you are looking for a stronger defense of free markets than you can find in most public schools, a good place to start is at the Cato Institute.

Posted on February 18, 2005 at 09:39 PM | Permalink | Comments (14)

Giving Thanks For the Lack of Gold and Silver

Hey, what does a good capitalist have against gold and silver?  Nothing, per se, but I have been reading John Steele Gordon's An Empire of Wealth and it got me to thinking how important for the eventual success of the US it was the English and the Dutch, rather than the French and the Spanish, colonized most of the eastern US.

Very few countries colonized by Spain have been able to recover from the experience, even hundreds of years later.  When people decry imperialism, they should be thinking first of the old Spanish empire.  Their colonization was nearly entirely extractive - focused on pulling out gold and silver and some tropical agricultural products.  There was no thought of developing a colony that might grow in value over time through investment and entrepreneurship.  Perhaps worse, Spanish and French imperialism were entirely micro-managed top-down by the state, leaving a legacy of bad statist economics in the countries they colonized.  My previous post, though it focused on France rather than Spain, shows through statistics the legacy of poverty and bad government that this approach left behind.

So, how does silver and gold come into play?  Well, the US eastern seaboard is singularly devoid of precious metal ore deposits, which kept Spanish attention to the south, seeking more lucrative immediate spoils in Mexico and South America.  The lack of abundant fur animals like beaver kept the French to the north.  As a result, the US was left to be colonized by the Dutch and the English.  Unlike the Spanish and the French, most of this colonization was not military or state-run.  Most of the major colonization pushes were actually for-profit private enterprises.  Though these early colonies would have loved to find gold and silver, lacking this they had to find ways to develop the land and the New World to make returns for their investors.

Posted on January 8, 2005 at 01:46 PM | Permalink | Comments (0)

Respecting Individual Decision-Making

As a capitalist and believer in individual rights, one of the things I notice a lot today is just how many people do not trust individual decision-making.  Now, I do not mean that they criticize other people's decisions or disagree with them -- in a free society, you can disagree with anybody about anything.  I mean that they distrust other people's free, private decision-making so much that they want the government to intervene.

Interestingly, most people don't think of themselves as advocating government interference with people's private decisions.  However, if you ask them the right questions, you will find that they tend to fall into one of several categories that all want the government to intervene in individual decision-making in some way:  nannies, moralists, technocrats, and progressive/socialists.  Though the categories tend to overlap, they are useful in thinking about some of the reasons people want to call in the government to take over parts of people's lives.

By the way, before I get started, just to avoid straw-man arguments like "well, you just want 12-year-olds to have sex with dogs", there are three philosophical limitations that apply to decisions made by individuals or between individuals:

  • The decisions or agreements are made without fraud or physical coersion
  • The decisions are made by adults (the very definition of adulthood is the legal ability to make decisions for oneself)
  • Decisions and areements don't violate the constitutional rights of others

That being said, here are examples of the government interventionism of  nannies, moralists, technocrats, and progressive/socialists.

Nannies

Nannies see government (and increasingly, the courts via class-actions and the tort system) as super-mom.  They believe the government's job is to protect people mainly from their own bad decision-making.  Ironically, they are in many cases making decision-making worse, by either explicitly or tacitly reducing people's sense of individual responsibility.

  • Seat Belts and Helmets:  Nannies love "for your own good" laws.  They hate the fact that drivers and motorcycle riders make such poor decisions for themselves and want the government to take over.  Recently, as they have met more resistance to "for your own good" legislation, nannies have worked on arguments to try to recast these decisions as hurting others, such as the "seat belts help drivers control the car better in accidents", but these are pretty uncompelling and clearly not the real motivation for nannies.
  • Unhealthy Food:  Having won the battle over seat belts and motorcycle helmets, nannies have moved on to other unhealthy habits that hurt no one but the individual themself.  Interestingly, increasing monopolization of health care by the government may be giving nannies firmer ground to micro-manage individual health decisions on the basis that a person's bad decision-making increasingly hurts taxpayers as well as themselves. 

Moralists

Moralists hold strong beliefs, often inspired by religion, that certain kinds of individual behaviors are immoral.  However, one can be profoundly moral without asking the government to police morality in others.  Moralists disagree with this latter, desiring that the government act as God's instrument on Earth, punishing sinners even when their actions don't hurt anyone else.  Like nanny's try to protect people's body from their own poor decision-making, moralists are trying to protect their soul:

  • Narcotics:  OK, no one really wants to defend drug abuse, but saving people from poor choices with narcotics is just not the government's job  (and if it is the government's job, they sure are doing a poor job of it).  The government gave up its short experiment with alcohol prohibition and I think they will have to do the same some day with most controlled substances.  The number of people in jail for petty drug offenses is insane, not to mention to the number of violent crimes that are caused by the black market status of narcotics (even prim Ms. Martha Stewart has come around to this point of view).  If people want to trash their own body, that should be their right, though in a free society no one will stop you from trying to talk them out of it.
  • Sexual Practices:  In the same way, it is difficult to justify how the government has any say in sexual decisions by two (or I guess more) people as long as those decisions are consensual.  In particular, the government is only just now getting out of the business of regulating homosexual practices.  Just to make sure I really make people mad, I'll bring up the example of prostitution.  Why is consensual sex suddenly illegal if money changes hands?  Or, even more bizarrely, why is illegal prostitution suddenly legal again if the sex act for money is filmed and that film is distributed and sold?  Like with narcotics, many of the worst abuses associated with prostitution actually stem from its illegality.
  • Media Excesses:  Probably since the first caveman drew on a wall, there was someone complaining to the town elders that the drawing was too violent for kids and should be banned.  There are always people who don't like what some artists choose to produce, and what some viewers choose to watch, and want the government to intervene.  Its hopeless.  There is no possible way to intervene in these decisions fairly.  If you think broadcast TV is bad for kids, don't let them watch it (we don't in our house).  If you can't stop them from watching it, get rid of the TV set.

Technocrats

For the last century or so, many in the elite of the western democracies have had a strong technocratic bent.  They tend to look at capitalism and individualist societies as messy and chaotic.  They strongly believe that there are a number of situations where individual decision-making sub-optimizes vs. what one smart person could do at the top of the system running things (see here and here, for much more detail on the top-down technocratic urge).  Technocrats have at many times been strong admirers of both fascism and Soviet-style economic planning, at least, that is, until the bodies started piling up.

  • Standards:  Technocrats have always been disdainful of competing products and standards.  They grind their teeth at the inefficiency of format wars such as Beta/VHS or Apple/IBM or cable/DSL or like we see currently for the next generation of DVD's.  They greatly prefer government standard setting, such as has occurred with HDTV.  While this can sound seductive, what the technocrat is really saying is "we don't trust you consumers to make the right standards choice, so we will make it for you" or possibly "you consumers will just get confused if you have too much choice so we will limit the choice for you".  Doesn't sound so good that way, huh?  By the way, it also doesn't usually work.  Though the comparison is a bit apples and oranges, it is instructive to notice that the government managed HDTV format change, after decades of planning, had about a tenth or less of the market penetration that the chaotic all-private DVD standard has in the same households during the same period of time.
  • Government Monopolies: Technocrats are also big fans of government-run or at least government-managed monopolies.  The old Bell system and electric utilities are classic examples.  The systems worked OK in delivering reliable, predictable service, but sucked, among other things, when it came to changing technologies.  Technocrats wanted to carefully manage technology changes with lots of thought and avoiding false starts.  Consumers want to decide for themselves, taking risks with new technologies, quickly reaping benefits, sometimes going down blind allies, but always making choices based on their own risk-reward-cost trade-offs, rather than those of the technocrat.  Today, we are on our second or third generation of MP3 player - under governement control, we'd still be waiting for the standard to be issued.
  • National Recovery Act (NRA):  Though not exactly a recent example, the NRA was for FDR the centerpiece of his New Deal, and is perhaps the ultimate piece of technocratic regulation in this country's history.  Many people don't realize how far down the road to technocratic fascist economics that FDR took us with the NRA, which he modeled on Mussolini's example in Italy.
  • Prescription Drugs and Medical Devices:  The FDA drug approval process is a great example of classic technocrat thinking.  Instead of letting individuals work with their doctors to make risk reward trade-offs on using certain drugs, technocrats take over this decision and make a single risk-reward trade-off for the entire country.  They study reams of data for years and years and make a decision whether a drug is effective enough given its cost and side effects that people should use it. 

What if a person dying of cancer where all other treatments fail is willing to try a drug, even if it has a low probability of success?  The technocrats of the FDA say "nope", you may think that is a good decision for you, but we are the experts and we know better and we are not going to let you make that decision.  Unfortunately, they probably also are not going to send flowers to the funeral.

By the way, I wish women's groups like NOW would get their message straight on the sanctity of a woman's decision-making for her own body.  Simultaneously on the NOW web site they are complaining that the government may deny them the right to choose to have an abortion, while at the same time complaining that the government is not denying women the right to choose to have breast implants.

Progressives/Socialists

OK, I saved best, or worst, for last.  I think that the far left, calling themselves anything from progressives to socialists, have become the worst enemy the world faces today to free individual decision-making.  The worst of them have dropped any pretense of trusting individuals with choice.

  • Employment and Wages:  If I was going to sell my old TV set on eBay, most people would not think to have the government tell me how much I should be willing to accept for the TV.  For me, even $20 might be enough, if the TV was not being used and just taking up space in my house.  Can you imagine government agents descending on me and saying - "I'm sorry, but people much smarter than you have decided that $20 is too little for you to accept for that TV.  We would rather you get nothing than get too little."

Well, that is exactly what happens with labor.  The government that does not tell me how much to sell my TV for does tell me that I can't sell my labor below a certain price.  They would rather me not work at all than work for $4.50 an hour.  The arrogance of this is startlingly clear in lesser developed countries.

Progressives do not like American factories appearing in third world countries, paying locals wages progressives feel are too low, and disrupting agrarian economies with which progressives were more comfortable.  But these changes are all the sum of actions by individuals, so it is illustrative to think about what is going on in these countries at the individual level. 

One morning, a rice farmer in southeast Asia might face a choice.  He can continue a life of brutal, back-breaking labor from dawn to dusk for what is essentially subsistence earnings.  He can continue to see a large number of his children die young from malnutrition and disease.  He can continue a lifestyle so static, so devoid of opportunity for advancement, that it is nearly identical to the life led by his ancestors in the same spot a thousand years ago.

Or, he can go to the local Nike factory, work long hours (but certainly no longer than he worked in the field) for low pay (but certainly more than he was making subsistence farming) and take a shot at changing his life.  And you know what, many men (and women) in his position choose the Nike factory.  And progressives hate this.  They distrust this choice.  They distrust the change.  And, at its heart, that is what opposition to globalization is all about - a deep seated conservatism that distrusts the decision-making of individuals and fears change, change that ironically might finally pull people out of untold generations of utter poverty.  (update:  good post in the Mises blog on Taco Bell and wages here)

  • Advertising and Consumerism:  I haven't had a chance to take on my fellow Princetonian Ralph Nader lately.  Ralph Nader firmly believes that you as a consumer are a stupid, unreasoning, easily controlled and manipulated dupe.  Nader and the consumer groups he has spawned oppose advertising and marketing at every turn, because the seem to believe that people walk away from ads like zombies from Night of the Living Dead, staggering into the local Best Buy to fulfill their programming by buying uncritically more consumer goods.  Some even go further by arguing for high marginal tax rates to save us from these nasty consumer choices that just make us unhappy.
  • Social Security:  This is playing out right now. The argument is confused by issues of benefits cuts and taxes, etc, so I will simplify.  Take two plans, both of which tax at the same rate and provide individuals with the same present value.  Plan A allows individuals to make their own investment decisions with the money, including the choice to let the government invest it for them, while Plan B has the government continue to make fixed payouts in the future.  Progressives today want B, even though individuals who want a plan B style system can still get it under A.  Liberals and progressives do not think the average worker is capable of making their own investment decisions - I know, I have had this argument time and again with people.
  • Education:  Ditto from Social Security above, though this issue is often tinged with a subtle racism, an implication that poor, often black families who are the target of many school choice initiatives (because the schools they have now are generally so bad) can't handle or be trusted with choice.  For most people, nothing is more fundamental, more important, and more personal than their children's education.  No other decision carries so much weight, and is so fundamental to the dream of providing a better life for one's children. 

Beyond just quality, though, is values and philosophy.  It is impossible to educate kids in a values-neutral way.  Statist parents object to too much positive material on the founding fathers and the Constitution.  Religious parents object to secularized science and sex education.  Free market parents object to enforced environmental activism and statist economics. 

One reasons progressives oppose school choice is that the majority of school teachers are tilting toward a secular-statist point of view, and progressives treasure the opportunity to indoctrinate young minds (the code words for this in the debate are things like protecting the "shared experience" which sounds like indoctrination to me).  The fact is that the "free thinkers" of the 1960's want all our kids to think alike.

That's probably enough, and is certainly sufficient to irritate just about everyone who reads this.  It might be easy to assume that having said all of this, I am amoral.  That is actually far from the case.  I have a strong sense of right and wrong, of honor and dishonor.  I spend time almost every day trying to get my kids to make smart decisions on a myriad of things, including sex and drugs.  I think most broadcast TV today sucks for kids and we don't let our kids watch it.

However, I don't think it is the government's job to enforce morality on individuals when they make decisions that only affect themselves.  And if you disagree, you better be dang careful that you have a majority on your side, because if the government is going to manage individual behaviors, there is a good chance they may not be the ones you want.

By the way, if you want more, the place to start is with Hayek, the godfather of individual choice.  Reason has a roundup on Hayek here.

Posted on January 7, 2005 at 08:35 AM | Permalink | Comments (10)

Walmart: The New Collectivist Target

Collectivists, Progressives, and anti-capitalists have apparently moved on from Halliburton and targeted Walmart as the Satan of the moment.  Walmart is charge with everything from destroying communities to mistreating employees.

What most of these attacks overlook is that no one shops or works at Walmart except by their own free will - that shopping there or working there are better than their other choices.  Cafe Hayek points out this rather obvious but consistently overlooked point.  However, it is a hallmark of "progressives" that they distrust individual decision-making, so I guess it is not so surprising.  You can't compare jobs to some mythical ideal and claim that they don't measure up - jobs measure up or not only in comparison to other available opportunities.

Posted on December 30, 2004 at 10:43 PM | Permalink | Comments (0)

Dave Berry, Libertarian (and Dang Funny, too)

I found this interview with Dave Berry in Reason Magazine while cleaning up some of my IE favorites.  Its a bit old, but still fun to read.  A sample:

If we're spending $853 trillion on some program now, and next year we spend any less, that's "budget-cutting" to them. For them, the question is always, "What kind of government intervention should we impose on the world?" They never think that maybe we shouldn't.

It gives me a real advantage as a humorist because I get credit for having insight and understanding--and I don't. I don't have any insight or understanding on anything about the government. All I think is that it' s stupid--which is the one perspective that' s almost completely lacking in Washington.

His discussion of why libertarianism won't lead to everyone having sex with dogs is priceless.  No, I am not going to explain this, you have to read it.

Posted on December 29, 2004 at 09:52 PM | Permalink | Comments (1)

New Age Ayn Rand

Check out this flash animation that seems kind of strange and new-agy at first, but actually is a pretty good, simple definition of libertarian philosophy.  Definitely worth checking out.  Hat tip to the Mises Institute.

Posted on December 26, 2004 at 09:49 PM | Permalink | Comments (0)