Friday, December 31, 2004

Resolving to Fail

Good to have you back, Ron. We’ve missed you and I’m glad you can continue contributing to the growing quality of LL&L.

Speaking of growing quality, it’s that time of the year again! That’s right, time to reach deep in yourself, find something you want to improve and hammer out a resolution only to abandon it by February. Now there are a scant few people I know (like my friend Jon) who keep their resolutions but most say them in name only. I got to thinking today why that is.

Most people in the resolution game experience the bitter taste of path dependence. Resolutions, by their very nature, require changing fundamental things about your daily life: saving more, eating better, quitting smoking and exercising all fundamentally impact our daily “path,” or routine. There are costs in the forms of money (paying for the better food or the gym membership), time (engaging in the new activity), memory (remembering to do the new thing) and custom (being comfortable doing it, or not doing it). Obviously these costs are high—lots of people don’t fulfill their resolution.

Not only are these costs high, it’s so easy to revert to the earlier path. Other forms of path dependence tend to have one time costs—to switch to the new keyboard, for example—and for all intents and purposes, they are instantly paid. Once you pay them, you are “locked-in” on a different course. These costs are usually easier to see. Resolutions are more difficult to establish because the costs are spread out and there’s genuine uncertainty of what those costs are.

Let’s take exercising, my New Year’s resolution. On January 1, I’ll start walking regularly, doing sit-ups and lifting weights. I’ll do it on the second and the third and fourth and so on but somewhere down the line, for whatever reason, I’ll stop and the resolution ends. Note that if my resolution was, say, switch to a different keyboard layout, it would be different. On January 1, I’d buy the new keyboard, throw away the old one and I’d be locked in a new path. Sure, it’ll take time to for my fingers to adjust, but with my old one in the landfill, it’s costly to move back. Even if I don’t throw it away, pulling out the cord from the keyboard and replacing it with a new one is a cost. In other words, I’m on a new path. But with exercising, it’s costly to stay on the path and costs nothing to revert (except for the reason why you wanted to change paths in the first place, but if those things were constantly on your mind you wouldn’t need New Year’s resolutions in the first place).

You can point out that there are costs of adapting to a new keyboard, and you’re right. But these costs are overshadowed by the price of the keyboard (and finding one to buy) while switching to excising over sitting can cost next to nothing if you don’t go to a gym. Indeed, a lot of these costs are predictable: prices are found, time is estimated and memory can be stimulated with post-its and to-do lists. But for New Year’s resolutions, custom is unpredictable. People have a hard time being comfortable with their resolution because, by it’s very nature, is a grand departure from what they are used to. It’s hard to integrate it into your world while with other cases of path dependence, there’s a physical object or a macro, real world force that roots you to the new path. And because there are so many times to abandon an establishing path before you’ve completed paying the custom cost, resolutions are rarely fulfilled.

That’s why they say you should only make one or two minor resolutions and not be like Jon, who’s so capricious he has to keep a list to keep them all straight. :P

All Dressed Up and No One to Call

A few brief words on this tsunami business.

Let me say by way of preface that this truly was a terrible natural disaster. The loss of more than 100,000 people is truly staggering, even in an area as populous as the Pacific Rim. My heart goes out to those who have lost property and loved ones.

That said, here is an example of sheer shortsighted stupidity on the part of the affected governments on a scale as large as the wave. I read where seismologists in California and other countries monitored the 9.0 earth quake as it happened, and quickly concluded based upon their calculations that the likelihood of tsunami wave action was quite high for those land masses surrounding the epicenter. But we didn’t have anyone to call.

In this country, we have more emergency alert systems than we can count. We have that ridiculous color coding system for the terrorism level, there is a siren on my local fire department that whines like it’s the nuclear holocaust when there’s a fire (or in the Midwest when there is a tornado), many urban areas have EAS loud-speaker systems throughout the town, and the local weatherman interrupts my regularly scheduled programming for every stinking lighting flash and rain drop. And if the stuff really hits the fan you can be sure that the sheriff or the national guard will be driving through the neighborhood with bullhorns like they do in the aftermath of a hurricane. The point here: if there’s an imminent problem that requires quick action like evacuation, we’re on that.

Of these many and varied ways of disseminating warning of danger, these countries failed to employ any of them. Apparently, no one even picked up the yellow pages to start calling beachfront hotels and say something like, “Uh, you might want to avoid the really big wave about to crash into your hotel.” And I am forced to ask: at what point does negligence become criminal? If there is any example of how government interference and ineptitude can be dangerous, this is it.

Chris mentions in one of his recent blogs that the UN has already been critical of our low-ball offer of financial aid for these countries. I say that since we called them up and told them to tell their people (and some of ours) to get the hell out of the way, we’re not obligated. Apparently, these folks couldn’t even get a dial tone. What really grates me about this situation is that despite the fact that this was a one-in-a-million kind of thing our technology nonetheless detected it, saw it coming, and was ready to act. Not only was this was a preventable tragedy, but the governments there blatantly, and arguably criminally, failed to act. If we send them any money at all, it should be for attorney’s fees.

Thursday, December 30, 2004

The After Christmas Sale-a-thon

I like clothes, and I’m not afraid to admit it. I don’t feel girly or gay (not that there’s anything wrong with that) because I insist that my shirts bear the insignia of Izod or my pants the iconography of Van Heusen. But good guys’ clothes can get pricey. Since men tend to purchase clothes less frequently, and therefore expect those clothes to last longer and be more durable than comparable women’s clothing, ours naturally cost more than women’s clothes. Now if you’re poor like me, and you dwell in a constant state of “short on cash,” you have to find the best bang for your buck. And that brings me to the ubiquitous after Christmas sale-a-thon, going on now.

Isn’t amazing how that $50 shirt becomes just $9.99 with nothing more than the flip of a calendar page! Markdowns, blowouts, roll backs, and end of the year clearance extravaganzas of all sorts usher in savings of every kind to the savvy buyer. And so it is without shame that during this special holiday season of silent nights and commercial discounts that you will find me at the mall, and the outlet mall, and the strip malls, and Target, hell, even Wal-Mart spending every last cent that I can spare without risking having the electricity shut off. I think of it as a kind of investment – saving money whilst procuring a good that will have longer-term, recurring benefit; and things that I would have to purchase anyway eventually.

The market is not always predictable, but it often is. And this is one instance where the clearance aisle is a persistent harbinger of good: it means that the spring merchandise is ready and waiting to be shipped out for the world to buy. And these sales allow penny pinchers like me to enter the market to get “just-barely-still-in-style” fashions for pennies on the dollar. Ultimately I don’t mind wearing last year’s best – it certainly beats this year’s worst. Somehow, though, the only one who got stuff today (on MY birthday no less) was my wife. Talk about market failures.

Going Postal

An old neighborhood friend is in town for the holidays from California. Today we grabbed her brother and the three of us went to a movie. On the way we talked about life in California and I kept thinking about my article on California’s twisted laws.

For example, her cell phone is taxed at the state, county and city level with total taxes adding up to about $20 a month. But one of my friend’s more frustrating complaints wasn’t California law; it was one of the oldest national monopolies in the country: first class mail.

My friend works for a church in LA and one of her duties is sending out the bulk mail, a chore which the US Postal Service makes sure is not easy. For starters, the post office is about the only place in LA that accepts checks. Every other organization flatly refuses them since check fraud is so common and LA is so large (making it hard to track bad check writers). That, in itself isn’t a problem. But checks are the only thing they accept—no cash, no credit cards. This isn’t just a huge inconvenience for my friend; it’s a taxpayer burden. God knows how many bad checks are written to the government, but it has to be a lot since accepting checks is too much of a risk for virtually any private organization. Given that it is taxpayer money funding this enterprise, their loss is own loss.

Customer service is problem, too. Take a few thousand letters and the postal workers will pick ten at random. If all of those ten don’t meet their exact specifications (including rules regarding the distance from the content edge to the edge of the envelope’s end), they won’t accept the letters. If there was competition, people could take their hours of stuffing and sorting to another less picky sender. Instead, they have to spend more precious time micromanaging the millimeters.

Prices are high, too, though a lot of people don’t know it. I remember Bill Maher once said that we (the American people) get a “great” deal on first class mail because it’s “only” 37 cents. I doubt that any sustainable monopoly provides deals of any sort. Sure 37 cents isn’t a lot when you send one letter, but it gets nasty when you send a thousand. And considering FedEx and UPS can send packages all over the country for a couple of bucks, there’s no reason to believe an envelope and a few pages can’t be sent for less than 37 cents. Just because you can pay for it with pocket change, doesn’t mean it’s a deal.

Contemplating My Birthday

Here I sit on this, the celebratory day of my 28th year. It does not seem that I should be that old, especially since I am only just now finishing my undergraduate education (having crammed my five years into ten). But as I reflect, I realize that there have been a world of experiences in this last decade that (except for the part where I’m as broke as any college student) make this journey more than worth it. Since graduating high school in 1995, I have lived in Baton Rouge, LA, Lexington, KY, southern West Virginia, and now back to my native Wheeling. I got married, spent a summer working for the Salvation Army in Youngstown and Maine, worked in radio, competed at academic functions, acquired a personal library of over 2000 volumes, had a kid, and saw murals of Ceaser Chavez and a urinal at Pitzer College. There have, of course, been down moments: loosing my grandfather to a hear attack, my father to cancer, but all in all I can’t complain.

So what is the point? The crucial point here is that I, me, personally made each and every one of those decisions (okay, with a little help from my wife). Even in the situations that I could not control, like my dad when he got sick, it was me who decided how I would respond. Consider this one of Aesop’s fables: The Oak and the Woodcutter:

The Woodcutter cut down a Mountain Oak and split it in pieces, making wedges of its own branches for dividing the trunk. The Oak said with a sigh, “I do not care about the blows of the axe aimed at my roots, but I do grieve at being torn in pieces by these wedges made from my own branches.” // Misfortunes springing from ourselves are the hardest to bear.

The corollary to this maxim might be that decisions made in one’s own interest are the easiest to bear. Do I regret that I did not more quickly finish school and move into a job, retirement package, and health insurance? Sure, sometimes. But on the whole I tend to think that I place more value on the experience of these last years than I do on cash assets at the bank. In fact, this is clearly the case since I explicitly chose to cash in those assets to allow me to make an investment of a different sort: an investment in myself. It’s still too early to say whether that gamble will pay off – call me in 20 years and ask. But if you ask me if I have any regrets about the decisions that I have made, I will tell you, “Not a one.” I have been allowed to live my own life, and make my own choices. My father was allowed to pass on what he and earned and accumulated in his life to me and my sister, which in turn allowed us to get farther ahead than we might otherwise have.

When people ask me how I can be a libertarian, when they inquire how it is that I can be so supposedly uncaring of those less fortunate, my tendency, like many of us, is to respond with a short treatise in free market economics or a canned rant on government control and inefficiency. Maybe I should just tell them about my birthday.

Wednesday, December 29, 2004

Time on the Horizon

It is perhaps interesting to think about the changing nature of time in the context of history. Our life spans, for example, have increased; and yet our accelerating pace of suggests that in terms of our perception, we haven’t much noticed. Clocks themselves are a relatively recent invention, and we have exacted that science down to the atomic level with our timepieces now remotely coordinated by radio signal from thousands of miles away. And if you look at ebay, you will find that time keeping antiques such as hourglasses and sundials fetch enormous sums of cash. We celebrate our birthdays religiously, and then lie about how many of them we have had. We look to genetics as the secret to longevity while being simultaneously reminded by the Good Book that life is as dew, here one moment and gone the next. Unions long ago fought for the forty-hour workweek, and we have come to associate punching a time clock with the counting down of our lives. We are centrally concerned, perhaps even obsessed, with time. Indeed Western civilization itself is based upon the notion of linear progress.

We free-market types are especially concerned with time in that markets rely on price, and one of the primary determinants for setting price is time – especially the time it takes to do or make something. Time is a resource just as surely as your car, house, or certificate of deposit. This last semester reminded me painfully of this reality. With a semester that exceeded 21 hours, plus a family and other obligations, the premium I in turn placed upon my time increased significantly, to the extent that I was forced to scale back production in other areas of my life – this blog one of them (though I might add that my own blog was also sacrificed). This semester was quite interesting. As some of you know, I am finishing up my senior year at Bethany College. That means that all of my courses are either capstone courses or otherwise upper division classes in addition to an internship and senior project. In fact I just finished my internship with – ironically enough – the Pittsburgh City Council (much more on that to come). I greatly regret that I have been silent for these last months, and am hopeful that my good friends will welcome me back to their company with smiles and hugs (okay, maybe not the hugs). In any case, you should expect to hear from me much more frequently these next months. (Also, a special hello to Mike, the newest member of LLL: I hope that we will become better acquainted as the weeks roll on.)

One final thought. While I think that Steven Davies was absolutely correct, and that things are getting better, there nonetheless seems to be in our midst and in our time a sense that the future is bleak. Our day is marked by a loss of hope and faith in the potential of mankind. The generation that sent man to the moon now trembles at the thought of sending him to Mars (don’t worry David – I’m not plugging NASA). When is the last time we built a Statue of Liberty? A pyramid (which, by the way, are the ultimate precision time pieces)? A Hoover Dam? Whatever our bias about the way in which these kinds of things tend to come about, the lack of them does seem to suggest a certain lack of vision or grandeur. Pal Valery has commented that, “The trouble with our times is that the future is not what it used to be.” I submit to you that it might time to change that.

Sunday, December 26, 2004

Reading with Paul

Whew! What a week! Christmas has finally come and gone along with bookshelf space. I receive a total of seven books this year, primarily thanks to a new tactic I’m adopting: thumbing through the laissez faire books catalog, circling favorites and handing it off to the family. It’s an absolutely great method and it’s a lot easier than wadding through the book store.

My most anticipated book I got this year is Guns Germs and Steel, by Jared Diamond, a work I originally heard about at an IHS seminar in the summer. The basic premise of it is providing an ultimate explanation for why some civilizations advanced faster than others. Not merely stating that Europeans (and to some extent, East Asians) became world powers because they had guns, powerful germs to infect others and steel, Diamond proclaims why they had these things. The straightforward answer is one economists can related to: specialization. Due to ecological and geographic forces, these places developed the best agricultural infrastructure, allowing other people to devote their time to other tasks: governing, inventing, exploring, military training and manufacturing.

This is where things get weird. Scanning the praises on the back, I caught a name that made me do a double take: anti-globalizationist and famed stasist, Paul Ehrlich. Ehrlich is famous for his various books on population growth—how it’s reaching a maximum—and for losing a bet with master resource economist, Julian Simon. (The bet was if the prices of various raw materials would go up or down over the course of several years—Simon correctly stated that they would decrease, representing a lessening scarcity.)

What’s the deal? A book featured in a libertarian catalog is praised by someone who is widely known as being anything but. You could argue that it’s history and thus neutral territory. There’re two things wrong with this. First, I doubt anything’s “neutral territory,” especially something as fundamental as history, especially a work that explains the underling reason for everything about our society and sets the bedrock for 13,000 years of human existence. Second, Ehrlich isn’t that famous. I can’t imagine publishers are so vying for his opinion that they would crowd out someone more renowned or connected with the topic. So why is Ehrlich quoted?

My best guess is two completely different interpretations. According to Ehrlich’s praise, “[The book’s] account of how the modern world was formed is full of lessons for our own future.” My take on Gun, Germs and Steel thus far is that specialization and private property led to greater wealth for those societies that practiced them. This difference is positive-sum in its nature; Diamond suggests that if other continents developed these things, they would be rich, too. Economics as a positive-sum interaction is not one anti-globalizationist accept so I assume that Ehrlich is thinking of the conquests of the poor by the rich. The “lessons for our own future” he sees are ones about protection while I see lessons for progress.

I don’t want to judge to quickly as I’m early still in the work, but I think Ehrlich is interpreting the book so far from its original intent, he’s missing the point. Diamond says that more people enhance societies because it allows for greater specialization and chance for invention. Ehrlich is a staunch supporter of lessening the world population. Ehrlich states the best salvation is “self-sufficiency,” when a society produces its own demands and doesn’t depend on importing. Yet Diamond cites specialization as a key to economic growth. This means societies must not produce other things, requiring them to import.

So am I silly for commenting a book I’m only 80-some-odd pages in or is Ehrlich just off his rocker? Given that friends tell me the book has a strong libertarian theme and LFB sings its praises, I have the feeling Ehrlich only pays attention to the facts that he likes and ignores the rest. This, of course, is not a new pattern.

Sunday, December 19, 2004

The Government Before Christmas

Every Christmas since God knows when, I’ve watched The Nightmare Before Christmas, one of Tim Burton’s better films. It’s about where holidays come from and what happened when someone from “Halloweentown” discovered “Christmastown.” This explorer—Jack Skelington—is tired of being the “Pumpkin King” (which I assume is the star of the annual Halloween festivities) and anxiously tries to understand Christmas so his comrades can celebrate it. I was humming songs in anticipation of my movie-watching ritual when I discovered this seemingly kind gesture by Jack is really a libertarian lesson in action.

Jack doesn’t just want to celebrate Christmas with his Halloween friends. The folks of these holiday towns bring their holiday to the real world. Now Jack wants a crack at it and doles out Christmas jobs to Halloween workers. In doing so, Halloweentown emulates the state—and Jack an important politician—as it shoves its nose in places it doesn’t belong. Not surprisingly, Halloweentown gets Christmas horribly wrong.

Some of the strongest evidence comes from the fact that they kidnapped Santa Claus, using coercion to get their way. Jack snagged Cringle’s hat and—with Santa out of the way—impersonated him so Halloweentown could take care of Christmas. This is exactly what government does when it takes over an industry.

Government never does a good job at the industry and neither did the Halloween folks. Instead of giving people what they wanted (like Santa or the private sector does), Jack and the crew gave them horror-themed gifts (exactly what they thought the people would like). Jack-in-the-boxes had monstrous surprises, a Christmas (Halloween?) tree tried to eat an old lady and there were shrunken heads all around. The National Guard was called in, people barricaded their homes (including their chimney) and there was general chaos and sorrow. It was a disaster.

Why did the Halloween people do such a bad job even though they meant well? Because they had exactly the same problems government has: they lacked the knowledge. In the song where Jack tries to explain Christmas, he points out this knowledge is tacit: “It’s a world unlike anything I’ve ever seen / And as hard as I try / I can’t seem to describe / Like a most improbable dream” and local: “Well, at least they’re excited / Though they don’t understand / That special kind of feeling in Christmas land.”

But even Jack doesn’t get it right. There’s a whole song he sings as he tries to figure Christmas out and in the end he simply concludes: “Just because I cannot see it / Doesn’t mean I can’t believe it!” He merely believes “in Christmas” and he assumes that belief is all that’s needed. He doesn’t consider there are things involved he can’t understand: knowledge that’s wrapped up in the holiday. Because he simply “believes,” he combines Halloween values with Christmas customs (just as state legislators combine their values with industry customs).

With his mere belief comes the slippery slope of tyranny. In the song that he “figures out” Christmas, Jack moves from communism (“And why should they have all the fun? / It should belong to anyone”) to fascism (“Not anyone, in fact, but me / Why I can make a Christmas tree / And there’s no reason I can find / I couldn’t handle Christmas time”) to outright megalomania (I bet I can improve it too / And that’s exactly what I’ll do. [Evil laughter] ”). Remind you of anything?

I’m all in favor of experimentation and trying new ideas and combinations but not when it’s forced on people, as Jack forced his version of Christmas on the world. Like the typical politician who wants to expand his realm of control (though Jack did it because he was bored: not a common reason government meddles with industry), Jack made fundamental mistakes because he lacked the tacit and local knowledge needed to pull off the endeavor. He had to resort to stealing, kidnapping and other coercive acts. Thus, he had no incentive to correct this knowledge problem. This bit of a song Jack sings at the end of the movies sums up many politicians’ reaction when they unwittingly discover their new pet policy only made a mess of things:

“But I never intended all this madness, never / And nobody really understood—well, how could they? / That all I ever wanted was to bring them something great / Why does nothing ever turns out like it should?”

Monday, December 13, 2004

Liberating Europe

In response to Washington Post op-ed that called for subsidizing Boeing so it can compete with European subsidized Airbus, Don Boudreaux wrote his own op-ed with the mandatory longer explanation at Café Hayek.

Don’s right about a lot of it, but he’s wrong when he says “For as long as any foreign subsidy lasts, it is a gift to consumers. We consumers who are not taxed to fund these subsidies should be thankful.”

No, we shouldn’t be thankful; we should be outraged. In this interconnected world, their loss is our loss. Don himself points out: “A subsidized firm spends much time and effort and resources playing politics; this is time and effort and resources not devoted to improving operating efficiencies and the firm’s facility for anticipating and satisfying consumer demands.” There’s an opportunity cost here. If Airbus won’t improve its product, we don’t get the improvement. Sure, we might get some gold-plated arm rests, but we won’t get the genuine novelty and innovation that can only come with fierce, mind-stimulating competition.

We also loose money. Those European taxpayers won’t burn their refund in their backyard if the government cuts the subsidy and passes on the saving. Believe it or not, they will buy something (and to be sure, some of it from us). Simple mathematics tells us the net worth of all the buying will add up to all that gold-plating. Except in this case, it will serve a worthwhile function.

Thursday, December 09, 2004

Call In the Squad

The economy is about to explode.

At least that’s what the Wall Street Journal seems to think. The front page of the Marketplace section of Tuesday’s Journal ran an article titled: “Economic Time Bomb: U.S. Teens Are Among Worst at Math.” Our fifteen-year-olds ranked 24th out of the 29 countries included in Organization for Economic Development and Cooperation for math scores. The article goes on to quote Richard Murnane, a Harvard University economist: “It’s their productivity that will determine economic growth and whether my generation gets Social Security.”

Technically right, but sensibly wrong (and, as I’ll show, technically wrong to some degree). It’s not their productivity that will grant you Social Security; it’s their productivity in ten or fifteen years, and that makes all the difference. I don’t know why the WSJ thinks fifteen-year-olds are running the economy; maybe that’s because they’re running the WSJ.

So that might have been harsh, but I have reason. The article goes on to say that math scores for ACT and SAT scores are up slightly, but up from what they don’t say. Well, this article from (found by a simple Google search) tells us SAT scores were at a 30-year high just two years ago. The WSJ article then tries to play down the rising math scores, saying the test are too easy; “eighth-graders aren’t tested on fractions and percentages.” Granted it’s been a while since high school, but I don’t remember taking the SATs in eighth-grade.

For the sake of argument, let’s suppose that math scores for US citizens really are going down. Are we still sitting on a time bomb? Absolutely not; the Journal’s own article provides us with the answer (though they dress it up like it’s a bad thing). “US employers rely heavily on foreign applicants to fill high-tech jobs.” This is where Mr. Murnane misses a crucial point: he’s dependent on these people for his Social Security, too. And because foreigners are better at math (generally speaking), Americans can focus on other things: management, design, advertising, marketing, certain avenues of research and thousands of other professions that don’t require a deep understanding of mathematics (or at least requires a calculator and the knowledge to operate it). We can’t, and we don’t have to, be good at everything.

Whoever thought defusing a bomb would be so easy?

Sunday, December 05, 2004

Being Pricked To Death

The American Academy of Medical Acupuncture reported in their news letter this month that they might get their own board. While working on a bill for the licensure of nonphysician acupuncturists, “there was heated discussion among the different groups of nonphysician acupuncture practitioners in [Michigan], on the specifications of the credentialing process they will need to undergo, but a consensus was met. The bill mandates the formation of an acupuncture board, which will refine the details of credentialing. This board is set up to include three physicians.”

Acupuncture isn’t for me—I just don’t believe “chi” is running though us and needles will stop it and I’m very wary of any treatment that claims it can fix virtually anything—but I have no problem if other people want to pay people to stab them. I do have big problem with paying for it, the nation’s acupuncture bill runs high. Universities have acupuncture training courses, Medicare and Medicaid cover acupuncture, insurance companies are often forced by law to cover acupuncture—including frivolous ones—and the Office of Alternative Medicine supports studies of acupuncture. Now acupuncturists are getting their very own taxpayer-funded board.

Somebody stab me.

Tuesday, November 30, 2004

And the Pendulum Swings...

Russell Roberts put up this post today at Café Hayek about the decline in circulation of the Washington Post. Apparently, management held a meeting with staffers about this topic but, as the article Russell is referencing says,

“However, the more intense discussion at the meeting involved diversity at the newspaper, as several minority staff members lamented that a white man recently was chosen over a woman and a black man as the paper's new managing editor.”

Wait, what? Circulation is down 10% over the past two years and they are talking about that? Now perhaps the Post staffers have legitimate reason to complain—we don’t really know the details—but it points to a disturbing trend in our society. Swept up in the politics and legislation of diversity, the public has developed a fetish for pointing fingers and yelling “bigot,” especially when inappropriate. Yes racism is bad but so are lost priorities—it denies you from talking about something more worthwhile.

Now as much as I blame the public, I also blame the government (big surprise) as they affirm the public’s views that racism is the world’s greatest evil and everything possible should be in place to stop it. Ironically they go to such extremes they end up being racist.

The goal, ladies and gentlemen, is not a manufactured world where everyone is the same or where everyone’s orderly different. And while today the white man in charge may sound the alarm of racism, I beg you to follow the words of one of my favorite speakers: “Just not by the color of the skin, but the content of the character.”

And oh yeah: lay off already!

Monday, November 29, 2004

Faking It

Beloit College biology professor Yaffa Grossman is teaching a class this semester called Environmental Sustainability. Their main book is Nature’s Services: a collection of essays edited by Stanford professor Gretchen C. Daily. Scanning the list of contributors yields other famous stasists: Paul R. Ehrlich and Stephen H. Schneider. Since I’ll be speaking to the class about free market environmentalism, I decided to take a closer look at the work.

Not surprisingly, Nature’s Services is built on economic fallacies. While it tries to incorporate economic ideas (most notably the idea that people make decisions on the margin) it fails to take into account fundamental economic realities. Unfortunately, this is hardly the exception in the environmental debate.

One of the worst problems is how the book approaches value. Over and over again the authors claim that because nature provides services necessary for human life, then the natural world has infinite value. First, that’s simply wrong. If we look at other goods required for human life—food, water and shelter—we discover that people don’t assign them an infinite value. Their prices are most definitely finite. Moreover, declaring certain aspects of the natural world has infinite value sets a dangerous precedent: if these things are boundless in their significance, then they are worth any price. Loss of property, jobs and even human life become justified because it’s for the “greater good.” The authors defy one of the fundamental principles of economics: there are always opportunity costs. Deciding to ignore these costs deny the people the authors are trying to protect things the public needs.

The authors also have a nasty habit of being to sure of themselves without having any real evidence. Yes, they are experts in their field and I believe them when they say that the environment provides us with things we don’t always see in ways we don’t always understand but they also claim to be experts on everything else because they say “it would be difficult today for even the most optimistic rates of innovation and of adoption of improved technology (broadly defined) to offset the rates of increase in human disruption caused by rapid population growth and increases in per-capita impacts.”

How on earth could they possibly know that?

Like nature itself, knowledge is disperse and filled with complexities and intricacies we don’t always see or comprehend. How could a group of scientists from one field possibly declare with such certainty that we’ve—as a society—reached the apex of human progress? They can’t; no one can. Especially because it’s also wrong; the rate of technological progress is increasing, not decreasing, and for every mind that’s added, our capacity to reach farther increases. There’s no hard evidence that technological improvements won’t change our world. Arguments like this are based on conjecture and unimaginative doubt.

The role of incentives is similarly ignored. Their solution, they say, is to get all the interested parties involved—governments, companies, environmentalists, engineers and so forth—to value the services nature provides (which is weird because apparently their value is infinite; I guess that’s the problem with an assembly of essays instead of making a comprehensive book). They don’t say, however, how they will get all of these people to work together and why they would gather to talk about this. They touch on the idea of making this monitoring system an international government agency, but that, of course, has its own problems.

Furthermore, there’s little to no mention of private property in the book, which would solve the problems of incentives, opportunity costs and knowledge.

I really wish that people who want to use economics in their analysis would actually use economics in their analysis and not throw some in just to make their claims seem more viable.

Tuesday, November 23, 2004


I was watching Ghostbusters last night when I discovered how much of a libertarian movie it is, especially in the realm of the decentralized nature of knowledge. Think about it:

At the beginning of the movie the ghostbusters are kicked out of the state-run university right after they make a major discovery about the nature of ghosts. I argue that a private organization would have a) insisted that the scientists formalize their methods a long time ago (one of the reasons the state kicked them out of the university) and b) examined their new evidence (the ghostbusters caught the apparition on tape and have an eyewitness).

After they become successful entrepreneurs, the state (manifested this time by the EPA), shuts down the reactor—a piece of technology they admit they don’t understand—and end up hastening Armageddon. This is all due to unfounded claims that the containment field is damaging to the environment.

The ghostbusters are then arrested, accused of violating EPA standards. This is happening as an untold number of ghosts spill out into New York City proper.

The mayor releases the ghostbusters from their control not because it was wrong to arrest them or because it’s the right thing to do but because Bill Murray reminded him he’d be saving millions of registered voters. In other words, the mayor doesn’t care about saving people, he cares about being re-elected. After realizing his job’s at stake, he’s willing to hand the ghostbusters unlimited state resources (which they didn’t really use, except to get to the building in question).

In Ghostbusters, the scientist, with the local knowledge about a wild theory, is the hero, fighting to save the world against ghosts and the state that gets in the way of him acting on his local knowledge. More after I watch Ghostbusters II.

Wednesday, November 17, 2004

Tree-Huggers and Corporate Pigs Share a Beer and Why We Love It

Regular visitors of LL&L will notice that it’s been nearly a week since any new published posts. Frankly, it’s a busy time of the year for all of us—the semester is beginning to wind down, Tim has one of those job-thingies I’ve heard so much about and a few of us are scrabbling to set up what we’ll be doing next semester.

But I swore to myself I wouldn’t let a whole week of inactivity pass by unless absolutely necessary so as not to disappoint our millions (or sixth root there of) of fans, I offer you this bit of good news.

The Wall Street Journal reported today in a front page article by Deborah Ball that environmental activists are increasingly switching sides to work for “the Man.” Mostly former heads of environmental groups, these people literally started working for the businesses they fought against, believing they can do more good from the inside.

Some environmental groups aren’t so happy about these transformations of their formal colleagues and some say it hasn’t resulted in real change. This, of course, does not surprise us and alluded to a fact I’ve repeated over and over: politics is about confrontation and economics is about cooperation.

We’ve all heard the opposite—government is where people come together and the market is where they compete. While competition is an important dimension of market activity, what’s often overlooked is the cooperation behind it. Firms have to work together—newspapers have to work with paper mills that have to get along with lumber mills; computer manufacturers have to be on the same page as software firms and sellers of operating systems; nearly everyone has to cooperate with the power company. These relationships are built on negotiations and contracts, a rare thing in Washington.

Why? Politics is about all-or-nothing power. You win or you lose. There are few benefits to compromise (so there’re lots of reasons to make the other side look evil). If two firms want something from the other but each has conditions on providing their service, they can come to an agreement. But if they have to go through the government, they can use it to force the other to get them all of what they want while sacrificing very little. This is why environmental groups and corporations almost never reach an agreement when the government’s involved (this includes, but is not limited to, water rights, ANWAR drilling and air pollution). Each side wants everything perfectly.

Which is why environmental leaders want to work from the inside. “Defector” Tom Burke said, “I’m not going to listen to someone who says, ‘Go away until I can be done perfectly.’” He’s tired of the inherent confrontation so he adapted. On of the first things he learned was the art of compromise—offering executives real solutions instead of reporting environmental solutions. They can now synthesize using their tacit and local knowledge from both view points. The company Tom Burke went to work for—Rio Tinto—is developing fast growing trees to replace the ones lost in the mining operations and will assist the natives in learning to live off the land in light of the sparse tree population.

Burke also sees his new colleagues as people who also care about the environment (especially after he took them on bird watching expedition), and not as the soulless monsters environmentalists claim they are. Capitalism isn’t just about freedom, it’s about harmony. Makes me feel all warm and fuzzy inside.

Thursday, November 11, 2004

Keeping It In the Family

Why does the law tell us that we trust some people more than others and why are some people prevented from exposing lawbreakers?

Last night on Law and Order, getting the bad guy in jail depended on the testimony of a gay man because the defendant confessed to him. The catch was the two were legally married some time ago after a small town made such marriages legal. The defense pulled the spousal clause, meaning married couples can’t testify against each other even if one wants to.

The logic behind the law is that people tell their spouse things they tell no one else. Thus all such conversations are outside the boundaries of the state. All things equal, that’s right: government should stay out personal lives and people tell their spouses things they tell no one else.

Some people, I should say. This is the first problem with the law—it’s literally deciding for you who you trust more. Some people trust their siblings, parents, peers or even strangers more than their spouse. Your best friend of fifty years can testify against you; your wife who cheated on you and is about to divorce you cannot.

I’m not saying that all conversations should be held in private—quite the opposite. When it comes to crimes, if someone wants to testify against someone else, no one should be barred. The fact that some tell their spouses things they tell no one else is a reason to let them testify, not prevent them.

Yes, it will probably tear apart the marriage (though I think it was the murder that would tear it apart) but it’s not the state’s job to protect marriages. It’s their job to protect us from crimes and punish those that engage in them.

Wednesday, November 10, 2004

The Radioactive Spice-Rack

Cooks out there, take notice!

Hungary has recently banned the export of paprika. One of the largest producers of the savory spice, its culinary and cultural roots run deep, back to the time of the pepper (capsicum) plant's introduction into eastern Europe. Used in great abundance in all manner of fine dishes, from Goulash to Porkolt, the ramifications for the domestic industry in Hungary from this legislation is potentially very large indeed.

But what, pray tell, is the cause of this could-be-crisis? Fungus, or Aflatoxins in particular. You see, spices are notoriously dirty, swarming with myriad pesty critters. Many spices can be contaminated with diseases - some harmful to plants, as in the case of America banning importation of Sichuan peppercorns (fagara) to protect domestic citrus groves from potentially dangerous disease common therein.

My question is simple: why need we worry? The technology exists to make spices nerely perfectly sterile and safe. It's known as irradiation, and you may have heard of it before in frightful news stories decrying the process as dangerous and potentially harmful in itself.

In the absence of evidence supporting these chimeras, opponents of irradiation have largely succeeded in preventing wide-scale implementation of the procedure, which would, through dosing with radiation (of which, remember, light and heat are forms), destroy harmful bacteria and fungi. Steak Tartar and Sushi lovers would be free to indulge in their favored dishes with impunity, free from the realistic concern of food poisoning.

So here we find ourselves, solution in hand, yet no will to implement it. I'd call it cultural nearsightedness, but then, I'm one of those not overly scared by the procedure. We absorb radiation all the time; eating bananas will dose you, and don't even think of flying if you're worried about becoming a glow-bug - levels of cosmic radiation are far more prevalent at altitude, having less protective atmosphere to dissipate their damaging energies.

Is the fear realistic, proportional to the actual risks? I don't think so. We pursue these hobgoblins to keep peace of mind, and in doing so, often sacrifice genuine safety and security, much in the way airline security is treated (to be touched in a few days). What is seen is apparent, but the hidden costs are (forgive me for being tautologically pedantic) just that: hidden.

So gentlefolk, start your ray-guns and let's cook some irritatingly robust microfauna!

Sunday, November 07, 2004

Are You Feeling Lost Yet? How About Now?

Yesterday I friend of mine and I had a conversation about the state of the world, capitalism and the general consensus of the people. He’s a smart guy and favors (for the most part) a free market. Unlike a lot of people at Beloit College, he acknowledges that we’re better off now than ten or twenty or fifty years. So I was completely thrown off when he told me more people today feel “lost” than they ever have before.

We were discussing that there are huge aspects of the world that can’t be captured mathematically or empirically (something us Austrians are more than willing to concur) when he offered this conclusion as evidence. He said you can’t capture “lostness” numerically; you have to depend on their perspective of it. He moved to conclude that capitalism has a long way to go because so many people feel “lost.”

To a degree, he’s right. People are the sole experts on themselves and if anyone is to ascertain their closest level of “lostness,” it’s them. But there are three big problems with his argument from that point forward.

I’ve had more than my fair share of experience with bad studies. People tend to quote them like biblical doctrine without even knowing how they were conducted. So when my friend said that more people were feeling lost, my bullshit meter went off. How are these researching phrasing the question(s) that determine “lostness?” How are they measuring degree? How much time does the respondent have to answer? I asked my friend these questions and he said he didn’t know (meter goes off again), but that’s not important (meter really goes off again).

That takes us to problem two. He says this is something that can’t be measured—that’s the point. Of course I forgot to point that that because it’s a study (or rather a series of studies), it has to be measurable—how else are you going to determine if there’s more “lostness” in the world? Guess? It’s true that the person in question has all this tacit and local knowledge about their state of affairs thus they can’t define it quantitatively, but how do you use that to conclude something so concrete as “people are feeling more lost?” I’d imagine he’d deduce that the study asked people to rate on a scale of one to ten how lost they feel, but that’s not good enough.

Why? Because we still have problem three: how do you get around the perspective problem? This is really two issues. First, people have a tendency to dwell on all the negative things going on in their life and ignore the positive things. This is why lots of Beloit College students (along with far too many other people) think life was better fifty or a hundred years ago. Thus if someone “feels lost,” it’s very possible that it’s not that bad; their just thinking about their problem a lot and it just seems overpowering. The second issue is more interesting: maybe feeling lost isn’t a bad thing. Fifty years ago, people had fewer options today in nearly all things. This includes, but isn’t limited to, careers, food, places to live, things to do and people to meet. These are all important (especially the first one) so options aren’t bad. In fact, they’re quite good and in our society, we have so many we may feel overwhelmed. We feel lost (I know I did).

The world is a wide, wide place, seething with ideas and nuances we don’t always see and understand. It’s no wonder that studies don’t capture all those important details and we should always be wary of studies that claim they have. Sometimes they’ll be really bad and sorting through the bullshit will make you feel lost.

Saturday, November 06, 2004

The Conservative Betrayal

Conservatives are fundamentally traitors to the very world that they live in.

Don't get me wrong; some of my best friends are conservatives. I don't dislike them, just their ideology, and for most people this compartmentalization is both possible and functional, permitting interaction on multiple levels: both as philosophical adversaries and as members of a valuable friendship.

But what is it about Conservatism that I dislike? Put simply, it's the clinginess of it all. Much like a Buddhist views a soul not far along on the path to enlightenment and transcendence, I see Conservatives as clutching desperately to that which is, the reality around them. They want to prevent change, to impose stasis, etc.

Now let's be clear: many of those we call conservatives are not. I don't think there is really a totally ideal Conservative; just as I compartmentalize my relationships with people, we all often do the same thing in our judgments of situations. We may come to the conclusion that A is desirable (and so we will act to preserve it) and B is not (so we will act to change it) - ultimately, the closest to perfect conservatism that one can come is this: to wish on the balance of things that they should so remain, and to act with a view of bringing this about.

So really, there's not just one Conservatism. We're dealing with two totally different animals: the former is total (and impossible), the latter is partial. I don't mind the latter, but abhor the former. We all embody some elements of Conservatism in this second imperfect sense - we all find things existent that we would like to preserve, from lives to sunny days, or even a deep-dish pizza. This is normal, and harmless.

The other kind isn't so benign. While impossible to achieve, it may still be a stative goal of a person - in this sense, it still may cast its shadow on the imperfect Conservatism. Absolute conservatism denies the basic nature of existence: change. In doing so, it denies that which is, and can't help but being a permanently dissatisfied goal, persuit never generating satisfaction, merely more misery as the realization is made that the goal endlessly regresses.

Grasping at a state of being is like grabbing at a beach, a handful of sand rushing through your clenched fingers despite your best efforts to the contrary. Holding on to an idealized state can bring nothing good; the viable alternative is to embrace reality and its changing nature. To do anything else is to be in denial.

My suggestion: go read Epictetus's Enchiridion, available online from the Internet Classics Archive and Perseus Project, amongst other places. It's a great introduction to Stoic philosophy, which encouraged an involved life, attempting to moderate stresses and aggravations thereof by recognizing the difference between things that we can control, and things that we can't. Maybe it'll bring you some piece of mind; I know it well served me in that capacity when I needed it.

Friday, November 05, 2004

Miss Cleo Beams Up

I have this great idea. If you’ve ever watched Star Trek (the later ones), you’d notice that they have these things called “replicators.” They’re machines about the size of refrigerators that can make anything you want; all you have to do is ask. Want a cheese sandwich, a semiautomatic rifle, late-nineteenth century period clothing or a ten-foot steel beam with 7-degree curve? Just tell the replicator to make you one and it transforms energy into whatever matter form you wish. I could sell each one for millions.

Granted, I’m no “physicist,” but I don’t see why this can’t happen. Energy turns into matter everyday. So I’m offering you, the reader, a unique opportunity—invest in this technology and I promise you that you’re never have to worry about money for the rest of your life. Any takers?


Well, too bad the Pentagon isn’t reading this; I could retire by now. USA Today reported in their latest paper that the Air Force already tried investing in another Trek technology: transporters. You read that right: transporters. Wait, it gets better because they’re not just any transporters; they’re psychic transporters. Star Trek doesn’t even have these. According to a report the Air Force paid $25,000 for,
This study was tasked with the task of collection information describing the teleportation of material objects, providing a description of teleportation as it occurs in physics, its theoretical and experimental status, and a projection of potential applications…Contemporary physics, as well as theories that presently challenge the current physics paradigm were investigated.

Thank God they didn’t limit themselves to science; it would have stopped them from referencing UFO sightings and Soviet and Chinese studies of the paranormal. (Not a joke.)

Now I’m all for pushing the boundaries of our knowledge. Challenging the established and accepted norm is at the heart of the dynamic world libertarians revel in. I wouldn’t even mind some scientist claiming he can turn lead into gold or overcome the laws of gravity through sheer force of thought; I just don’t want to pay for it.

The bedrock of a dynamic society is creative destruction. Lots of people try to pull off something. The winners get piles of cash; the losers go into debt and are forced to stop their work. We get more of the winning idea and less of the ones that don’t work. It’s a messy process, full of trial and error, but it works. So when an organization takes people’s money by force and gives it to some crackpot idea, it ruins the whole process of creative destruction. A spokesman for the Air Force Research Lab—Ranney Adams—justified the spending saying, “If we don’t turn over stones, we don’t know if we have missed something.” It’s that kind of stupid, all or nothing logic that’s so popular when turning over a stone costs nothing. Adams would look for an aircraft carrier under a million separate pebbles, “just to be sure.”

So call me crazy, but I think the funding is better off in hands of the people who have a vested interest in making it work. Time and money are scare resources—it doesn’t make sense to turn over every rock, to explore each idea thoroughly. That’s not what creative destruction is about. Scientific progress goes through many stages: idea to theory to proof to more proofs to planning to building to rebuilding to testing to rebuilding to adjusting to more planning to more testing… Knowing when to give up and try another avenue requires a great deal of tacit and local knowledge. Every successful investor of technology has to know a lot about the research in question. Every successful scientist has to be brutally honest and open with themselves in order to get funding. Governments are neither.

If the Air Force really wants transporters, try holding a prize, Ansari X-Prize style. You want a faster way to deploy and reploy troops? Try offering the $7.5 million the report recommends for “psychic transportation” as prize money instead. Sure, you won’t be beaming any where but at least the new technology will actually work.

Smoking Affects Brain Like Heroin

Oh, the wonders of science.

Thanks to our wonderful friends at the University of Michigan at Ann Arbor, we now know that smoking cigarettes can have a heroin-like affect on the brain. While the MSN webpage linked to frames this as a significant discovery, I'd like to offer a different interpretation:

For starters, is this really a surprise? Drugs can cause pleasure, and use is correlated with addiction and dependency (in fact, almost contingent thereupon - it's very hard to become addicted to nicotene or heroin, and even impossible to become chemically dependent upon them, if you don't first indulge in their consumption). This isn't exactly earth-shattering; we've known that cigarettes can be addictive and pleasant (in some way) for years.

Finally, consider this: the brain is awash in chemicals, some of which resemble opiates. Endorphins, for example, which can dull pain perceptions and affect emotions. If you're happy, guess what: there are drugs floating about in the gray lump sitting between your shoulders. If you're ecstatic, trembling with job, almost crying, believe-you-me, you're flying just as certainly as a crack-monkey.

Even something like love is known to have drug-like effects; via a chemical cocktail of endorphins, norepinephrine, monoamines, dopamine, oxytocin, and vasopressin (to name a few), love gives us "wings," a metaphor not entirely dissimilar from that used to describe an LSD trip.

So when researchers come to comclusions like these, is it really good science, or just lunacy?

Wednesday, November 03, 2004


A wonderful little article in the City Journal by Steven Malanga, "The Myth of the Working Poor" goes a long way towards providing a viable alternative interpretation of the economic situation of the poor in conventional American society. I quote:

"The Sphere Institute, a California public-policy think tank founded by Stanford University professors, charted the economic path of workers in the state from 1988 to 2000 and found extraordinary mobility across industries and up the economic ladder. Over 40 percent of the lowest income group worked in retail in 1988; by 2000, more than half of that group had switched to other industries. Their average inflation-adjusted income gain after moving on: 83 percent, to over $32,000 a year."

Go and click on the title to read it; it's well worth your time.

Tuesday, November 02, 2004

Voting Mania

Oh, it's a madhouse out there all right.

I never realized it, since I've never before voted in Illinois (and pity the fact, for my vote is far less valuable here than elsewhere), but there's no requirement here for showing identification documents of any sort when voting. I was ready to produce valid ID at the polls, but none were actually needed!

The sense in this is what, exactly? How does this help ensure accurate voting?

And I thought things were bad in Wisconsin (where you could register and vote on the same day of an election) - voting fraud doesn't seem like it would be hard to commit thereabouts.

The Humanity of Open Borders

Don Bordeaux posted this article about immigration at Café Hayek today. He points various very true statement: immigration is good for the US economy, people have a great deal more (on average) than people of times of immense immigration so there is little reason to believe there’s not enough to go around and there are unavoidable restrictions to immigration (like finding a place to live and transportation costs) that guarantee it won’t be a chaotic surge.

But it’s around here he stumbles. He asks you to consider California to illustrate the last point.

It is completely open to people from Mississippi. California’s median household income is a whopping 54% higher than is Mississippi’s. Californians enjoy environmental and social amenities – beautiful beaches, snow-capped mountains, fabulous weather, big and exciting cities, professional sports franchises – that Mississippians lack. And yet, despite being free to move to California en masse, Mississippians don’t do so. Nor do West Virginians, or Arkansans, or Alabamians.

Okay Don but there’re some things that Mississippians lack that most immigrants do not: a tyrannical government trying to kill them or a devastating economic that’s starving them or both. Of course Mississippi isn’t emptying to fill California; moving sucks. And if you don’t have a pressing reason to leave (like you need to go or you die), then it’s not an accurate analogy.

This doesn’t speak to the logic of immigration law, but to their lack of humanity. Immigration is not only good for the economy, it’s not only something the US can “absorb,” it’s also the right thing to do. People, through no fault of their own, are born into repressive, nightmarish conditions. To turn them away because they seek to rid themselves of such poverty is exactly what libertarians are often accused of being: heartless. Classic liberalism isn’t just about freedom and progress; it’s about dignity and compassion.

Monday, November 01, 2004

Election Day is Tomorrow...

The best thing I can imagine doing is going out and casting a vote for the Libertarian candidate (Badnarik); if you're on this website, odds are that you probably don't feel too differently.

Follow your heart and mind, vote or not, and let's get on with Life As We Know It (TM).

Trust and Democracy

Can a nation of people that have no good faith in each other long remain a democracy?
Can a nation that doesn't let people make mistakes and bad choices really be free?
If you can't make a wrong decision most of the time, what will you do when you can?

Our country has decided that the public's interest is in protecting individuals in all circumstances - not only from invasion, but also from each other (violent crime, negligence, etc.), as well as from themselves.

Something as simple as a cheeseburger is heavily regulated, as are doctors, insurance companies, pillow manufacturers, et al. We create barriers to error to prevent them from happening in the first place, yet by doing so, do we erode the natural disinclinations to these behaviors that would otherwise exist? I think that this is a reasonable assumption.

People are not taught that they must bear the costs of their behavior as often as I would like - instead, an imbecile that scalds themselves with hot coffee is given thousands upon thousands of dollars, and wastes countless more in court fees. Someone that takes up smoking, decades after the link between tobacco use and cancer was revealed, is not asked to bear their own medical expenses, but are permitted to ride on the backs of others, and on the backs of the cigarette companies themselves. We can't even turn off the warning beeps in our cars that sound when we have the keys in the ignition and the door is open.

Remember: the less responsible you think of people and treat them, the less responsible they're likely to act. Ask any ye shall receive, seek and ye shall find. Just be careful what you ask for; as foolish as people may be, stupidity is often magnified by the context in which they operate. It's not, I'll propose, the person that's really so stupid as much as the situation that they exist in that permits them to be so. Most people when their actions hurt themselves will modify their behavior.

A little faith in humankind would do us all a world of good.

What Free Market?

(I'm back)

In this column in the Washington Post (thankfully just a column, but I think it betrays some larger issues), the "free" market is blamed for the flu shot shortage. The juiciest part of the article is here:
Why doesn't the market work?

One reason is product liability, drug companies said, which keeps them out of the flu vaccine business. That is not a big issue, however, Pavia said, because lawsuits over flu vaccine have not been successful.

Another is the high cost of regulation...

Exactly which parts of the regulation constitute the "free" market? But there is a deeper problem here than blaming the negative effects of regulation on a "free" market. What exactly is the solution to product liability lawsuits? I cannot see any possible way to address this issue other than yet more regulation, either in the form of limiting lawsuits, which protect the vaccine makers from their mistakes, or in the form of regulatory oversight of the production and maintenance of vaccines, which will of course raise costs for the vaccine makers. Given how strongly the author feels about protecting the nation's health, I can't imagine him supporting a solution that increases the chance of a mix-up in the system. But since regulation is, according to him, such a huge problem, why do we want more of it?

The problem, of course, is a failure to understand what exactly the free market is. It is telling that the author quotes two people:
"The market has failed," said Andrew Pavia, chief of pediatric infectious diseases at the University of Utah, who chairs the flu task force of the Infectious Diseases Society of America, based in Alexandria.


Drug companies don't want to take on those costs because of the third problem with the flu vaccine business: it's a low-profit business and the demand for flu shots is "exceedingly fickle," said Poland, the Mayo clinic expert.

Neither man, along with the author, appear to have much understanding of, or much to say about the "free" market other than that it must be the root of our problems.

Sunday, October 31, 2004

A Spooky State of Conformity

I remember a time when opponents of Halloween said it’s an evil day that promotes sorcery and witchcraft. While these are still vocal accusations, I never thought I’d see the opponents saying Halloween isn’t evil enough.

Alex Tabarrok at Marginal Revolution posted this article today about a Washington School in Puyallup banning Halloween because the school has “been contacted by followers of the Wiccan religion, and they indicated they have been offended after seeing elementary school depictions of witches with long noses, warts, cauldrons and such," We’re upsetting Wiccans, thus we must stop. God forbid anyone is uncomfortable about anything.

The Washington Post article goes on to say that this is a growing trend—“It is part of a contentious nationwide trend, as public school administrators, in the name of test-centered learning and multicultural sensitivity, attempt to abbreviate and homogenize classroom celebrations of Halloween, Christmas and Easter. [emphasis mine]”

Now this is scary. We have become so politically correct, so “accepting,” we’re literally white-washing the world into dull conformity. People tell me that globalization “destroys” cultures. That’s not true; globalization stimulates cultural evolution by encouraging collaboration and trade. People exchange ideas and rework their lives. Governments destroy culture because they are under political pressure and have the guns to force people not to offend the “right” group. Conformity is the signature of the state, not the market; histories of China, the Soviet Union and Cuba confirm that.

The school’s first official reason was that these holiday activities take away from schooling. Well, yes and no. Kids running around in costumes may not be sitting at desks learning math, but they are learning something about the American culture (and as Americans, I think that’s pretty worthy). More importantly, any teacher worth their salt could integrate Halloween celebrations with history lessons about origins and witch trials and how too much state power can get out of control rather easily. But because so many schools are run by the government, the average American doesn’t get that option and they don’t get to try different variations on the topic. We are told the one “best” way to do something so we must follow. And we don’t get to dress up.

Thursday, October 28, 2004

No, They Can't Take My Job Away From Me

Economics professors are some of the best people to ascertain how to go about economic expanse. Not only have they spent their lives studying the subject, they have little incentive to lie. It’s not like their job will ever be in danger of being outsourced (at least with current technology) and they don’t have to worry about the politics of pleasing those that feel that’s something they do have to worry about (justified or not). Academics have the knowledge and incentive to determine economic policy in all sorts of areas. In many ways, that’s exactly what their job is (they just don’t tell anyone already in power about it).

But no one is an angel, not even me.

As someone who aspires to be a professor of economics some day, tenure is incredibly seductive. The idea that I could have a job I love and I can’t get fired (barring extenuating circumstances) fills me with joy. As an economist, however, it sickens me.

Talk about a crazy incentive structure! Do well for a few years (if even that) and we won’t ever fire you. You don’t even have to show up to class, as long as you do the absolute minimum required. Then go on sabbatical.

Granted, each school has their own expectations from their professors and there are costs to not meeting them (if there are any professors reading this, I’d love to hear how your institution handles tenure), but it’s still silly.

One of the unfortunate consequences is course evaluations. In my experience, good professors also have evaluations religiously. Bad ones rarely have them (and those that do probably don’t pay much attention to them). Yet it’s this latter category that really needs to take the time to use them and the former that could spend their time with something else. Ironically, the institutions that are built around self-discovery and improvement and learning have a system that incites their employees to avoid exactly those things.

It doesn’t stop there. The economy of any type of professor changes with the economy in general. If biology professors are in short supply because drug companies are hiring en masse, schools have to hire someone who isn’t as good. After a few years, that person is expected to get tenure. Now fast forward a decade. The economy is different and drug companies aren’t hiring as much. More people want to be a professor but because the bad ones can’t get fired, there’s no room for the good ones. Firms are literally stuck with employees they don’t want. No economist would call this a good thing.

So what’s the deal with tenure? If it’s so bad, why not get rid of it? There are advantages to it: academic freedom, for one. Professors can teach strange courses and challenge the status quo without fear. This can be a good thing. It can also be bad. Beloit has offered courses in comic books and basket weaving. I don’t know if any or all of these courses are “bad” but I can’t believe that all of them are “worth it.” I can’t believe the opportunity cost is that low.

Not surprisingly, tenure is fraught with the libertarian’s kryptonite: politics. Professors up for tenure enter a world where capability is put aside in favor of other reasons. Beloit had a particularly messy situation in the political science department a few years back. I was in Turkey at the time so all the details were handed down the following semester. But the basics were conflicts over whom the students wanted to have tenure and promises for tenure by the college to another person. In the end, the college won and the students have resented the outcome ever since. From what I understand, those promises were politically based; the students were more concerned with job performance. (If there’s any Beloit student reading this, please weigh in with any details you can remember; I sure you’ve heard about the incident.)

There’s been some progress in the education market. Some states require post-tenure reviews of faculty and others establish campuses without tenure options. Professors are increasingly being hired on a contract basis, allowing for removal if warranted. Still, tenure remains the standard and as long as it is, (some) professors will stand like Supreme Court justices: watching on their secure perches with all-too-proud eyes.

President of Turkmenistan to Construct Ice Chateau in the Desert

And our government officials spend our money on things like growing corn that nobody else is willing to pay for. Pity they aren't as imaginative as the Turkmeni President, who seems to think constructing an ice palace in the desert a good idea.

Take a moment and think, however, about the remakable technical structure underlying the process of such a construction - one, I'd say, that has precious little to thank government for for its existence; without this capacity , the caprice of officialdom would have to find other outlets for its expression.

Sunday, October 24, 2004

Books that Changed My Life

If you're looking for something to read, be inspired or educated by, or just want to understand some of the thought behind my brand of libertarianism, here're a few of the most significant books that I've ever read.

Economics for Real People: An Introduction to the Austrian School (Gene Callahan)
Just great, a very basic introduction to the Austrian school that nobody should go without reading. Entertaining as well as informative.

Culture of Fear (Barry Glassner)
While suffering from the same flaw it points out in the rest of American culture, the author rightly points out the misuse of fear in politics and social life.

The Future and its Enemies (Virginia Postrel)
One of David's favorites, I love the premise. The authoress draws a distinction between those that seek to control development (economic, cultural, and otherwise) and those that permit it and make it happen, those the author calls Dynamists. Dynamists drive the economy as well as all manner of change, and the future, like it or not, is in their hands - and that's OK!

Democracy: The God that Failed (Hans-Hermann Hoppe)
This book woke me up to the possibility of the absolute dispensibility of government.

The Evolution of Cooperation (Robert Axelrod)
Axelrod does a good job of demonstrating how cooperation can spontaneously arise from the interaction of self-interested agents. His later books are worth checking out after reading this one.

The Selfish Gene (Richard Dawkins)
Dawkins explains the nature of life, and why we shouldn't expect any help from our genetic heritage in the establishment of an altruistic social order.

The Philosophy of Aristotle (ASIN = 0451627830)
A stunning masterpiece, covering everything from logic and metaphysics to politics and ethics. Aristotle's philosophy continues to provide a practical foundation for the conduct of inquiry. Get it.

Suicide (Emile Durkheim)
Durkheim's exploration into the social phenomenon of suicide introduces some powerful concepts of social integration and control. Essentially functionalist, his paradigm can be used to explain and analyze many phenomena.

Law/Society (John Sutton)
This book made me very keenly aware of the lengths to which a special interest group will go to further their own security, power, wealth, etc. In this case, we're talking about the American Bar Association, but the AMA and other professional groups can be plugged into the analysis with equal applicability.

The McDonaldization of Society (George Ritzer)
A great introduction to the sociology of Max Weber with very specific applications in modern society and everyday life. Detailing the seemingly inexorable progression of rationality (i.e. attempts to control things) in institutions, this book will acclimate you with some of the most important trends to be aware of.

I hope this list finds you readers well, and that some of these selections enrich your lives as they have my own.

Remembering the Man

On this day, thirteen years ago, Gene Roddenberry left us. Gene taught us that the future is something to look forward to and our capacity for greatness hath no boundaries. He reminded us that the human condition is godly in its might, its punishment and its humanity. As the public takes those first steps into the final frontier, he is dearly missed but his lessons will always live on in our words and in our deeds and our belief in the future. We will go boldly on. Thank you Gene.

“Change is the essential process of all existence.”
-Spock to Bele
TOS / “Let That Be Your Last Battlefield”

In Which I Summarize David's Blogging Career

David: 1. Congress: See Section 204.54.3-78

The Fruit of Our Logic

If you don’t like economics, never go grocery shopping with me. I just got back from taking a friend to Woodman’s grocery store (who lack a website, unfortunately). Woodman’s is a massive store in Beloit and part of a chain of ten. Centered mostly in Wisconsin, the chain focuses on providing large volume very cheaply.

And it does this astonishingly well. Every time I go to Woodman’s, I marvel at the huge aisles of meat, cheeses, cereal and ice cream (yes, there is an aisle dedicated to ice cream and it’s a big aisle). There are fruits there I barely recognize let alone pronounce. They have several different types of tomatoes, fresh ginger, those things like bananas but aren’t quite bananas and on and on and on. And that’s just the fruit and vegetables aisle. There’s even a display for Krispy Kreme Doughnuts, even though the closest Krispy Kreme is over twenty miles away.

Beloit, by the way, is the typical liberal arts college town; it’s small and in the middle of no where. It’s along no major trade routes; it’s only life lines are I-90 and the sparsely used Rock River. There are no major airports, seaports or train stations in the immediate vicinity. There’s Chicago, but it’s a good two hours away. The point is, Beloit is no center of civilization.

Yet we have access to all this variety. Imported foods (I found some Italian concoction made from three different oranges grown in volcanic soil), exotic fruits, ice cream, ice cream and more ice cream are at our fingertips. Even more fascinating, this is hardly the exception.

This is the norm.

When I hear stories about Soviet Russia—how hard it was to get just a single banana, how long people had to stand in line for bread, how little variety people had in their diets—and then go to Woodman’s, I can’t help but try to spark my companions’ enthusiasm for globalization. It creates incentives for people to invent better transportation infrastructure. It exposes the wonders of free trade. It opens the door for solutions for malnourishment. It rewards entrepreneurs that discover a way to offer people variety at low prices. If you ever believed in socialism, go to the grocery store; it’s a microcosm of everything good about capitalism.

Phenomenal Productive Capacity...

Remarkable, the miracles of modern industry - from the Baby Ruth candy bar to the Boeing 777, any number of wonders unimaginable as little as two hundred years before are produced in great quantity. And yet, even the best businesses often do very poorly, considering what they're capable of.

The problem I'm getting at is one of actualization - that is to say, actually getting the company to perform up to its potential. Take the business I work for, for example (a new job - the reason I've been posting less frequently as of late):

We stock a variety of housewares, bedding, and bathroom supplies; that which we can't fit on the sales floor goes into a stock room, or into "topstock", accessable only via ladder. So let's say that we have only 5 units of product A on the floor, and the rest (15) in the stock room. When we run out, we need to discover the shortage, input the UPC into the computer system to find out if we have any more, then actually locate the products (a daunting task, since the ladders don't really fit in the stockroom, and climbing becomes the most expedient, if not the safest means of locomotion).

There's plenty of room for process improvement here; all the products are in the computer system, so products running on-shelf or in stock should be automatically brought to the attention of management for restocking. Further, having the information of where in the building (topstock, backstock, etc.) the reserve units are would save hours of time every day spent wandering around, climbing shelves, etc.

And this is no small mom & pop shop; this year, more than 50 new locations are being opened in the midwest alone. The point of all this is just to demonstrate in one small area of business the opportunities for competition to erode the market position of existing businesses. The margin could be much tighter. Yes, they have lots of advantages, key amongst them being economies of scale and inherited structure and organization, but that shouldn't dishearten an entrepreneur too greatly. Just remember that the opportunities are there if you look hard enough, and if they're not, there's a good reason for it (like getting the cheapest possible products, all else unchanged).

A Thousand Words

Given my recent post on flu vaccines this cartoon by Chuck Asay I found on Exploit the Worker deserves posting.

There you go Michelle. A short post that you will actually read but also has enough to comment about. You have no excuses.

Saturday, October 23, 2004

An Unlikely Democrat

I'm going to make the argument that if you're a real libertarian, you're going to vote for Kerry. Consider that the Libertarian candidate has no chance of winning; you can't do any good by voting for him. On the other hand, a vote for Kerry will bring about a larger, more socialized nation with a more heavily progressive tax structure, increasing control over private industry and life, so on and so forth.

So why, you ask, is that a good thing? Why would I advocate helping Kerry win the presidency? Simple: His policies won't work, if they're really carried out long-term. Not that Bush is much better (he is - barely), but Kerry is bound, if he's able, to send the country straight into the furnaces of the firey down under (and we're not talking about the land of vegemite and boomerangs, here).

The end result of his twiddling and tinkering can be nothing other than the realization that government intervention produces the sort of problems that Americans abhor. From this point, perhaps real progress can be made.

Before you comment, just remember that this is very tongue-in-cheek. Now fire away, gentlefolk.

Tuesday, October 19, 2004

Mom and Dad, Stop Fighting!

Let’s not play pretend boys and girls, both Republicans and Democrats have it wrong (in different—and in similar—ways). We’re told by pundits, politicians and sometimes parents that one side is good and other is bad. This kind of black and white view of the world is one of the deadliest poisons in our society. Like politics itself, it encourages name-calling instead of respect, yelling instead of listening and bickering instead of discourse.

Of all the shows on television, few capture this mentality better than CNN’s Crossfire. They should know. Jon Stewart told them Friday. Here’s the transcript.

I love Jon Stewart. I don’t always agree with him, but I love him anyway. Mostly because he’s willing to tell the mainstream media that they could do a much better job than they are now and their current trend it hurting the country. During his Crossfire interview, he told Paul Begala and Tucker Carlson their show is “theater.” It’s a debate show in the same way as pro wrestling is an athletic competition. He’s completely right.

The media is the most relevant example of a market failure—people could be getting so much more for their time. Instead of shallow entertainment, we could have knowledge creation. Instead of Jerry Springer, we could more have Bill Maher. In economics, this is particularly important as virtually every “economist” on television is replaced by what Paul Krugman so kindly calls “policy entrepreneurs,” or sell-outs: economists who now work for political parties. They spit out the (often protectionist and/or isolationist) party platforms and dress it up as sound economic policy. Bad media is bad economics but good politics.

There are exceptions, of course. News networks don’t hold a monopoly over information. We have our HBO and our Daily Show. The Internet is stuffed with blogs (I particularly like this one). But this makes just a small dent in the American psyche.

The core problem is information. People simply don’t know what they are missing. How can you, a consumer, really say if what you are getting as news is “worthy” if you don’t know what was cut? Do people even know that bi-partisanship and rational debates are actually possible?

I don’t really have an answer to this market failure. A law, of course, won’t work. The last thing we want to do is have politicians decide what should and should not be covered. Subsidize bloggers so they can advertise? I like that as a blogger, but not as an economist; we’ve just get a flood of partisan blogs. Break up the media giants into smaller companies? I’ve often thought about that but I doubt there would be much change.

The only real way to ensure our media smartens up is if the politicians do, too—that’s where the most discourse is needed (and where it’s most scare). If political parties start saying that they are tired of the endless bickering and actually want to start making real progress, the media would have to follow suit. Most of their guest speakers are from the parties.

So this is a shout out to all those party leaders out there. George, John, John, Dick, Donald, Condoleezza, Bill, Zell (especially Zell)—I know you guys read LL&L religiously and I know we haven’t had the best opinion of you over the short time the blog’s been active. But both sides have important stories to tell, and more important ones to listen to. You guys have your flaws and your strengths. I’m not asking for a marriage, just a talk. A real one. Come on you two, for the country?

Monday, October 18, 2004

Big Brother is Watching You...Buy Porn

Utah’s a funny place.

Actually, I feel that way about most places in the world, but recent news makes me want to put Utah in a special category: one that involves scary, too. I’m hoping my Utah friends (I think there’s one of you) will be able to help me sort through this web of crap.

Seems authorities in northern Utah want to start tracking the porn they find at crimminal sites in hopes of finding a link between types of porn and types of crime. If they can, then they can use it to help solve crimes—sort of like racial discrimination for the horny.

According to Lt. Matt Bilodeau, spokesman for the Cache County Sheriff's Department, "Like gangs, people who use pornography have associated traits, and we'll define them so we can link them to crimes and pornography."

Obviously Lt. Bilodeau never took any statistics. If you try hard enough, you can link anything with anything, even things completely unrelated, like porn and crime. I can’t even begin to fathom what their computer will spit out after they get enough data to run an analysis and how they’ll justify it. Serial murderers have an “unusual” amount of orgy porn in their homes (they like activities involving many different people). Purse thieves pick up a lot of gay porn (why else do they like stealing purses and not something manly, like a car?). Bank robbers tend to purchase “Girls Gone Wild” (probably because they feel like they’ve been cheated, not that I’m speaking from experience). I could go on for hours.

Of course, this is about where it stops becoming funny and start being scary. The entire point of the investigation isn’t to figure out what felons like to whack off to, but to try to capture criminals. Thus, Utah authorities will mess up causation (a common fallacy): people who buy certain types of porn are likely to commit certain crimes. Rent a saucy movie? That explains the cop at your door. Buy a dirty magazine? That’s why you have a police record. Purchase “The Slutty Professor” over Amazon? That’s grounds for a search warrant. Linking personal preferences with vicious crimes heralds an insidious policy of state control over our daily lives.

Laws that restrict freedom in the name of public safety always sounds innocent and reasonable (or completely unreasonable in this case) at first, but it is one of the few slippery slopes that actually exist. If porn “causes” crime, it’s not a big leap to ban porn, then to link other unpopular inclinations to crime and ban or control them, too. Personal freedom is sacrificed for security (a common theme) and the more these kinds of laws get passed, the more likely worse ones are on the way. People who commit crimes also date certain people, shop at certain stores, eat certain foods, have certain thoughts…

Utah’s a scary place.

Sunday, October 17, 2004

One Flu Over the Cuckoo's Nest

Tim’s post last week about the sudden price increase in the flu vaccination (from $70 to $900) has received a great deal of attention (about 17 comments, last I checked), mostly people challenging his (and my) protection of a company that’s “gouging” the public.

Russell Roberts at Café Hayek posted this lengthy article about the flu vaccine shortage (explanation why the company in question rose it’s price). I think we can learn a lot from it.

Many the comments point (rightly) that the supply of vaccinations are time sensitive; it takes time to produce them and the window for the market is very small. Mike particlular emphasizes this point, saying “If there were sufficient time between now and November for an entrepreneur to hop in, build a vast supply of vaccine, and market it, then David and Tim, you're right. But somehow I doubt such speed is possible, or else we wouldn't even be afraid of such a shortage.”

Flu vaccine manufactures know this so they tend to overproduce the vaccine (because they never know how much they’ll need). Over past few years, they’ve litterally been throwing out millions of vaccines eash season because they didn’t sell them. And it’s not like they can keep them for a later year. The virus mutates just slightly each season, requiring the companies to start from scratch over and over again. (Thus calling the whole idea of “stocking piling vaccines” into quesiton.)

These vaccines aren’t cheap, either. It takes time and skill to make them. The industry standard it to inject a fertilized chicken egg with the flu so the embroyo makes the vaccine. A single eggs yields just four or five doses. This has to be done by hand.

The market’s also very small (and more prone to sudden changes); with a size of less than 1/50th of the drug industry ($6 billion versus $340 billion), there’s not a lot of room for lots of drug makers who would keep the price low.

In fact, the price would be very low because the vaccine is so elastic. Vaccines are identical across companies so very minor changes in price greatly affect revenue. In short, profits from these companies are very slim. This price is even lower because of government purchases, who bought 55% of all vaccinations last year.

This is from the National Center for Policy Analysis:

The root of this government role goes back to August 1993, when Congress passed Clinton's Vaccines for Children program. The plan, promoted by the Children's Defense Fund, was to use federal power to ensure universal immunization. So the government agreed to purchase a third of the national vaccine supply (the President and Mrs. Clinton had pushed for 100 percent) at a forced discount of half price, then distribute it to doctors to deliver to the poor and the un- and under-insured.

According to, the market share for 2004 is now 60%.

For the record, in 2000, the Department of Health and Human Services spent $449 million for the Center for Disease Control and Prevention for immunizations. In 2003, that number was $556 million.

So on one side, vaccine companies face a really tough market: their good is really elastic, their production is really expensive, their market share fluctuates greatly and it’s not too big to begin with. On the other side, government purchases are depressing the prices more and more every year by exposing the high elasticity of the good. As their market share climbs, governments represent a monopsony (the demand version of a monopoly) closer and closer, dangling their market share to force a company to drop their price or loose the increasingly important government contract. This is why there were over two dozen vaccine companies thirty years ago and only one now.

But with just one left, it has the opportunity to offer a price more incline to represent the costs of doing it’s business, including a wide profit margin for all the risk they shoulder.

Some readers suggest that vaccines should be an exception to this sudden jump in price. They save lives, after all, and lives have infinite value. I’ll agree that each person has infinite potential to make the world a better place, but I deny that every person should be saved no matter what the cost. Very few people ever come close to realizing this potential and some of saved go on to be pretty awful people. Saying that everyone needs to be vaccinated no matter what isn’t a good argument.

They also deny others life because they commit a classic fallacy in economics: the broken window fallacy. Considering how expensive the vaccines are to produce, it’s pretty clear that there’s lots of room for improvement; improvement that will only be discovered if the incentives are good enough to discover it. In classic Bastiat style, these people who criticize the “gouging” company see the person that’s suffering now; they don’t see the countless others that live because of the creation of a more effective or cheaper vaccine.