Monday, August 30, 2004

Getting’ All Rowd’ Up

I have a confession to make. Yesterday, I went to a Bush rally. The President came here to Wheeling, West Virginia to pay the good folks of the Rust Belt some quality time. And, since he is a pretty important guy, I waited for an hour in the rain to get advanced tickets; and then waited in the scorching hot sun another hour to get through the security gates. Like the postman, neither rain nor humidity would deter me from my goal.

The rhetoric was predictable: pretty much your standard stump speech, with extra emphasis on the steel tariffs to appeal to the local flavor of the steel working Ohio Valley. But then I suppose if you’ve managed to get even the unions to endorse you, you better play that up for all it’s worth. The speech was typical Bush, and could have been any or all of the speeches you’ve ever seen or heard him give. My seat wasn’t bad, except that I had to stare at the President’s but for an hour. My mother, who accompanied me, is an ardent Bush supporter. She spent the hour waving her giant “W” in the air and shouting “Four More Years.” I listened, more or less, with somewhat less enthusiasm and without displaying placards of any kind (though I did take pictures of the spectacle).

What was remarkable about the rally was that while the room was more or less supportive of the President, it was pretty subdued for a pep rally. That is to say that while there was cheering and banner waving and all the rest, it wasn’t anything like you see on TV (which perhaps explains why it didn’t make the TV news). And then it donned on me that the crowd was reluctant because many of them are still mulling it all over.

Although I did not take a poll, it seemed as though many folks were there because they were willing to hear the man out; after all, he is the President of the United States, and that counts for something in our society. You see, as I drove into Wheeling, though a veritable fortress of police cruisers stretched between the airport and downtown, people were lining up on the sidewalks along the President’s motor route because seeing the President is still something exciting and novel. Those folks didn’t line the streets to show their support (well, I suppose some of them did), but to see the car carrying the President. They turned out to see President Bush, not candidate Bush. And so those folks at the civic center were there out of respect and admiration of President Bush. And willing to listen to Candidate Bush if that’s what’s on the menu.

I cannot say what effect President Bush’s visit will have on the voting pattern of Wheeling-area residents. But what I can say with some confidence is that Mr. Mills is right. We libertarians are going to have to accept that our culture has endorsed the statist mentality, and we are enraptured by its symbols. Now, more than ever, we are going to have to craw into the trenches of compromise and do what we can to keep the system from veering too far into the chasm of “-isms” (socialism, fascism, etc.). The kindly old couple at the arena and those kids sitting in lawn chairs along Route 2 proves to me that we aren’t going to take this war on its merits. The best we can hope to do for now is help to shape the next battle, which is coming soon. There has never been a time where libertarian Democrats and libertarian Republicans have been needed. Since the libertarian experiment has failed to produce a unified political force, it’s time to start infiltrating. In the short run we can curb the excesses, help define the scope of the next battle, and make that battle winnable. The Bush rally got me all rowd’ up all right, just not in the way I think he intended. Now the question is whether our orthodoxy is flexible enough for sell-your-soul pragmatism.

The Economics of Politics

After just a few minutes of watching MSNBC, the phrase already started poking through as the Republican National Convention kicks off today. We all hear them but don’t really take the time to ponder all their hidden meanings, my favorite being “the party faithful,” sometimes just referred to as “the faithful.” For this 100th post, I thought I’d take a special moment to discuss the economics of politics instead of the politics of economics. So let’s look at the faithful.

Like any economy, the essence of it doesn’t lie with just a few individuals; it’s with the collective group of active minds. Our economy is powered by thousands, nay millions, of countless CEOs and small business owners. Our politics is similar: the ultimate power sits with the people that support a person, not the person himself (something Richard Nixon learned the hard way). But some CEOs are more powerful than others. The Bill Gateses and Ted Turners of the political world set the tone, the campaigners accept or reject it and everyone else (the party members and workers) produce it to be sold to everyone else. Selling policies is like selling sandwiches.

This is why there’s so much talk about the faithful; because the Convention isn’t for the voter, it’s for party members. It’s to get them rallied up for the election. It’s a retreat; the nomination, a formality; the platform, the mission statement. It’s not for us—if it were they would be held the week before the election so both sides would try to ride the boast in favor on Election Day.

But this is where the similarities turn on their heel. Politics is an all or nothing game and there’s too much at stake to try something new. You gather all the faithful and tell them what you know they want to hear to get them moving. You dare not try a new idea because the chance of it failing is too high. Corporations try new products all the time and most of the fail. But because they can grab a little bit of market share, their cut their losses. But if a politician catches 49% of the market share, he’s a giant loser (assuming majority rules). Politicians are risk-adverse—really risk-adverse—which is why I’m more likely to watch a new commercial than either the DNC or the RNC; I’m far more likely to see something new. The conventions just aren’t for me.

Yearning to Work Freely

A couple of days ago I alluded to an article about the economic virtues of open immigration and promised a post explaining why. In response, Chris the Libertarian wrote in today’s society, open immigration is bad for the economy because the government provides so much for us.

There’s a lot of truth to that. Ceteris paribus, more immigrants—especially legal ones—means more consumption of roads, education, welfare and so on. But there are two things wrong with the argument. First, more people—immigrant or not—mean more consumption of government goods. Most American born go to college and a great deal of them go to state schools. The vast majority of “native Americans” go to public high schools. Most welfare recipients were born in this country. Most people on the roads are from one of the fifty states. Saying more immigrants are bad because they put stress on government goods is the same argument China uses to curtail reproductive rights. So I ask Chris this question: should we limit the number of kids families can have, too? What’s a good number? 2? 1? And since a poorer family is more likely to use government assistance than a wealthy family, should the wealthy family get to have more kids?

An astute observer will quickly point out that Americans contribute to the economy, too. It is our tax dollars that pay for all these programs. And that’s the second problem with the argument. In the real world, ceteris paribus rarely applies. Illegal immigrants work, too. They landscape, pick fruit and wash dishes. Legal ones often do more, such as start businesses that employ (usually) other immigrants. Chris mentioned that immigration is a big issue in Southern California—of that I have no doubt. But the reason is it is such a spot light concern is because everyone sees the Mexican man begging on the street or getting the welfare check—anti-immigration groups make sure of that. But people rarely see the immigrant that contributes to the economy; he’s too busy running a business.

Saturday, August 28, 2004

Crossing the GOP Border

With the Republican Convention looming in the distance, I think it’s time we start setting the record straight in a pathetic attempt to hold back the tidal wave of mere rhetoric that will be spilling though the television over the next week. The general public has a misconception that Republicans are all about small government—an ideology libertarians hold at the core of their being. And as much as I would love to believe that there is a vocal entity shedding the repressive and obsolete laws of the secluded past, that’s simply not true.

There are really too many big government policies the GOP enjoys to explore in detail—farm subsidies, prohibiting gay marriages, tariffs (like the steel tariffs President Bush pulled out a few years ago)—but the politics and economics around immigration continue to one of those branches of government Republicans love to inflate.

Until recently.

The Des Moines Register reported yesterday that the GOP is divided over the issue of the President’s plan to offer a work program for illegal immigrants, legalizing eight to ten million foreigners. From an economic stand point, this is fantastic. This country, after all, was built by immigrates and economic activity increases when the number of its legal participants increase (as long as it’s a free market economy). But the economic virtues of immigration are really a discussion for another article. This post is about the politics.

Some conservatives are angry about the President’s proposal, saying it rewards people for breaking the law. Delegates pledged to fight it at the convention (so I might actually watch part of it). Rep. Tom Tancredo says the proposal is un-American—whatever that means—and plans to hold a news conference on Monday denouncing it. Nevada delegate Bonnie Weber, responding to Rep. Melissa Hart’s defense of the change, swept aside any concern for unlawful entries into the US with the always thoughtful argument “Illegal is illegal.”

You’d think that the party that claims the government is too big would understand that just because it’s legal doesn’t mean its right.

Crudely Venezuelan

Oil stocks rallied this week upon news that Hugo Chavez, Venezuela’s latest leftist leader with dictatorial latency, weathered a recall election storm. For now, Venezuela’s three million barrels a day of crude oil will continue to flow into gas tanks around the western hemisphere.

Those following the Venezuelan story will know that opposition to Chavez has amplified largely in response to Chavez’ ongoing efforts to consolidate his own power. Now, we’re not just talking about a few political appointees here, we’re talking about increasing the Supreme Court justice count from 20 to thirty-something (kind of like what old FDR once attempted, but failed). Another big concern is suppression and censure of the media and secret police tactics aimed against the other power center in Venezuela, which is the middle/business class; or more rightly, the propertied class. Latin America has had a history with these kinds of guys, and so they are understandably intolerant of moves that seem to suggest that the Mr. Chavez may be envious of the Dear Leader. As classical liberal we understand the essential role that property rights play in freedom, so it is no wonder that Chavez, who is a neo-Marxist, is aiming his guns against them. Not only has he made owning property increasingly burdensome, he simultaneously robs from those with success and wealth, and then turns around to destroy their very existence, biting the hand that feeds him. It’s not unlike the plot of an Ayn Rand novel.

Now, I’m all for free trade. I’m also all for keeping the oil flowing. Oil not only lubes the world economy, it fires it. But I would prefer that the nations that were pumping that oil weren’t working on a Marxist-like political and economic plan. For example, in order to win his recall, Chavez further extended benefits into the barrios, which of course will have to be paid for somehow, which means bad for the property owners who are being taxed enormously to pay for it. As oil reserves in that country plateau, and as the oil dependence of major consumers like the US decreases over time, Venezuela will find it increasingly difficult to remain afloat. Perhaps more importantly, they will find if increasingly tough to pump enough oil even to feed themselves.

The Venezuelan state, and the Chavez government, survives only by siphoning off oil money (not unlike another recently deposed dictator we know). While the oil serves our short-term economic interest, the economic and political unrest that this situation stands to generate seem likely to undermine our long-term interests in the region over the long term. Which brings me to wonder…how then should be we handing out foreign policy with this guy? And if we chose to focus on the long-term situation, how do we do that short of sending in the marines? I’m not entirely certain that I know the answer those questions. I do know is that Chavez, and tyrants like him, only serves to undermine the principles that we as classical liberals hold dear. What is less clear to me is what classical liberals should do about it.

Friday, August 27, 2004

The Chalkboard’s Call

Chalkboard economics—creating mathematical models to represent the whole of the economy—is tempting stuff. Mathematics is predictable, absolute and straightforward. The old joke that if you get two economists in a room you’ll get three opinions becomes obsolete. Chalkboard economics is made all the most tempting because it subtlety says that the economy is predictable and therefore controllable.

Mathematical models in economics really are useful (with the added bonus that professors never have to leave the safe confines of academia), but it has a habit of being taken too literally. Cafe Hayek’s Don Boudreaux posted this article, responding to a New York Times article by another economist. The article charged that price-gouging in the wake of Hurricane Charley was monopolist (so it really was gouging), because there was no perfect competition.

Perfect competition is an assumption necessary for mathematical modeling, equilibrium analysis economist. It says that there are a large number of firms producing identical goods for a large number of consumers. It never happens, but it’s useful sometimes to assume it does, so economists can take a look at the ideal.

This is when we hear the Siren’s Call. Perfect competition creates a neat and clean framework for analysis so some economists actually believe the world works this way. It does away with adaptation, entrepreneurs, innovation, uncertainty and a host of other real world phenomenon (Austrian economics does away with this and other conventional assumptions: it lets us look at the real world but it prevents us—in principle—from doing straightforward analyses).

The fact of the matter is, there is no such thing as perfect competition and “price-gouging” is a fantastic thing for the people of Florida. It creates incentive for new suppliers, allows for an economic triage, speeds rebuilding because workers can be paid to work longer hours and the while not costing the taxpayer a cent.

The rise of popularity of unrealistic assumptions being superimposed on the world correlates with the rise of government meddling in the economy. On the plus side, it adds to the number of economist jokes:

An economist, a chemist and a physicist wash up on an island after their boat sinks. Along side them is a crate of canned beans. Sadly, they lack the means to open it. The chemist claims he can find the right compounds among the wreckage to create an explosive substance to blow the cans open. The economist says that’s way too dangerous. The physicist suggests he climbs to the top of a palm tree and drop the cans on a rock at the perfect angle, breaking them open. The economist argues that’s way too complicated. The two scientists stare at him and demand his input. The economist looks proudly and says, “First, we assume a can opener.”

The Libertarian Ethic & Night Class

As readers here at the blog may be aware, I am a fulltime student at Bethany College where my semester typically involves a 19 or 20-hour course load. Since Bethany is a more academically challenging environment than many schools, the college does not allow students to take more than 21 hours for any reason. In order to circumvent that rule, each semester I take one night class at Northern Community College (which occupies the old B&O Railroad Headquarters Building in Wheeling; and which is an impressive structure architecturally, by the way). This is the way I’ve been able to do many of my intro-level required courses on the cheap, while reserving my expensive private school tuition dollars for more substantive classes. But this story is really about the community college, not me.

Northern has exhibited a wonderful example of the consumer market dictating the behavior of producers (we’ll ignore for the moment that Northern is a public, government subsidized school). Community colleges generally appeal to the nontraditional student, many of whom have fulltime jobs, families, and other responsibilities in addition to that of their educations. Students coming back to finish educations abandoned years ago, and single moms or divorcees who find the sudden need to train for a career are perhaps the most common examples of the community college clientele. This unique spectrum of consumers is what we might call the night class crowd.

The biggest problem for these busy folks is often physically getting to class. Having to work an extra shift, finding a babysitter, kids with homework, PTA meetings, and a myriad of other concerns often prevent folks in the work-a-day world from being able to attend class faithfully. Hence these nontraditional students often perform much poorer than their traditional counterparts, despite the fact that they often work as hard outside of the classroom as anyone else. As a new parent, I certainly understand that sometimes you just can’t get away from the house. Even though nothing is actually required of you per say other than your presence, you can’t just go off and leave the kids alone. In other words, you may well have time to read, work, and write – just not get to class.

At Northern, they realized that the only way to continue to attract students was to remedy this problem. Now night class students have a choice: they can do the traditional class thing with lectures, class attendance, and the rest. Or they can opt for various self-directed study options where they pace themselves outside of the classroom, doing the work and reading on their own, and only have to come in periodically to take tests. To further provide flexibility, there is a test-taking time block worked into each class (at the instructor’s discretion, usually the last 30 minutes or so) giving you up to 3 or 4 weeks from which to choose the time you wish to take your test.

How is this a market triumph? Well first, there is consumer demand. Colleges provide an educational product: in this case a degree program or professional certification. Consumers have certain expectations and demands, which Northern has had to meet in order to attract additional customers (students) in what is a heavily-colleged enironment (we have more than 10 colleges, universities, technical or vocational schools in a small, economically depressed, mostly suburban/rural area. Northern has to compete against the programs of all those other colleges, Bethany being just one of them (though admittedly Bethany reaches a more niche-oriented market). Also with the advent and proliferation of internet classes that cater to busy peoples’ lifestyles, there is additional market pressure to get the product in line with market expectations. Partly as a result of meeting this market demand, Northern has seen record enrollment for the last several semesters, even as enrollment at traditional colleges and universities nationwide has slumped. In other words, the consumer has responded to a flexible product that suits their needs.

Clearly, public schools are in many ways not the best model to show the market at work, because we know that government funding creates a distortion in the market. But to the extent that individual schools act as a more or less free agent within the market, and to the further extent that the school is letting the market dictate its policy, I think that we can afford to learn something from its example, even if we have to attend night class to do it. Perhaps we can think of it as one of Mr. Mill’s libertarian baby steps.

Thursday, August 26, 2004

The Changing Face of Blogs

Ever since Mike and I started Law, Legislation and Lunacy, I’ve been reading other blogs more and more. While my breadth of web literature pales in comparison to Mike’s, a scant review of our colleagues makes me want to change a thing or two about this blog, most notably our subtitle.

Here’s a list of other libertarian blogs—you’ll see what I mean.
-Marginal Revolution: Small steps to a much better world
-Café Hayek: where orders emerge
-History News Network: Because the Past is the Present, and the Future too
-Agoraphilia: The Center for Blurbs in the Public Interest
-Tech Central Station: Where Free Markets Meet Technology (okay, so not so much this one)

I’m fortunate enough to blog at a site that has a clever title (a title we can all credit Mike with) but like everyone else in the world, I’m always looking for progress: we deserve a clever subtitle to go with our kick ass name. As a nod to the grand tapestry of information out there, to the great wealth of tacit and local knowledge, to the millions of minds at work, I ask for your input on a new subtitle. In the words of Michael Polyani, we should let all the avenues of research (or this case, inspiration) be explored—forget the fact that only about six of those millions actually read this thing. The winner gets…um…how about a blog article about them (written by me), though I have no idea what the nature of the article will be about; I’ll try to put it into the context of a libertarian theme or something.

Technically, I haven’t mentioned this to Mike or Ron (surprise guys!) but if they don’t want anything changed, then we can forget the whole thing. No harm, no fowl. But just remember the old Japanese proverb, “The biggest room in the world is the room for improvement.”

The Amazing Colossal Bookstore

James Surowiecki posted an article about independent bookstores on Marginal Revolution today. Basically, some non-chains are bidding market share away from the Borders and Barnes & Nobles of the community by being larger than they are. A store in Michigan is some 35,000 square feet; another one in Pennsylvania is 45,000. For the record, Barnes & Noble stores range from 25,000 to 67,500 square feet; the average Home Depot is 108,000 square feet.

What I love about this development is it breaks the bias that the chains are attacking the quaint “mom-and-pop,” destroying the downtown. Competition generates change; cultures evolve. James suggests that the reason more independent stores are revamping themselves is that they finally caught on this is what people want. There’s a lot of truth to that. Hole-in-the-wall stores be damned; I want comfort, courtesy, selection and style. People forget that when the economy causes the standard to wear away, that’s rarely a bad thing. Large, nice stores are a practical option now—hell, they’re the standard. Isn’t that a good thing?

So will cultural stasists finally concede that the Chains aren’t “destroying” the little guy and there may be something to large bookstores or even large stores in general? Probably not. Instead of admitting they were wrong, they are more likely to accuse the Chains of “making” the little guys abandon their traditional values. Half right—customers made them do that.

Afterthought: I wonder if there’s a linguistic relation between the words “customers” and “custom”—after all, economic activity shapes culture.

Wednesday, August 25, 2004

Be the First on Your Block to Understand Advertising

People love being victims. I have this friend who is utterly convinced that advertising manipulates people and makes them buy neither stuff they don’t want nor need. I’ll agree we buy stuff we don’t need and sometimes we purchase something we don’t want (like when I saw Reign of Fire) but to say that we are “made” to buy things not only insults everyone that’s ever bought anything advertised, it doesn’t pay attention to the facts.

The advertising theory goes much like a conspiracy theory. Unseen men fool us into thinking their stuff is worth more than it is. Any random examples that support the theory prove it. Any overarching, reasonable evidence are exceptions or lies. I challenge you to seriously ask yourself the tough questions. If the anti-advertisers were right, why do 33% to 90% of new products (depending on industry) fail? Why is advertising the first thing every company cuts when there’s an economic downturn? Why don’t corporations just sell brightly-colored empty boxes and use the money they save on production to hedge their advertising budget?

Ads don’t—can’t—make us buy things; they can only inform us. They tell us about new products, new styles and new features. In the words of Dr. Jerry Gustafson, we are all authors of our own desires and we decide if we want to buy it. Sure, the information is blatantly biased but people who don’t know that are about as rare as people who don’t know cigarettes are bad for you. If you still don’t believe me, ask yourself why the pop machines aren’t stocked with New Coke.

Rethinking Reenacting

There are an incredible number of people out there whose hobby is participating in reenactments, or sometimes called living history. The most common are Civil War battles, but that is hardly the end of the line. Another timely example is Renaissance era reenactments, timely because the Pennsylvania Renaissance Fair is now in full swing. As a history lover, this is something that has always interested me; but for lack of time and disposable income I’ve just never really got involved other than attendance at the occasional masked ball. Reenacting is an expensive hobby. Purchasing authentic costumes, props, travel, taking time off work or school to participate, event planning – the cost of these things adds up quickly.

An acquaintance of mine thought it would be “neat” to try one of these reenactments out. He didn’t have much appreciation for history, but loves the novel. So he applied to a pre- Renaissance European Court reenactment. I’m quite certain he expected to be a knight, or perhaps a landed baron, or even monk would have done I think. But no, he was assigned, like 90% of all the people there, to the part of a peasant, in this case the page to an important knight; meaning one of his main jobs was to tend to his horse (and his horses, ehem, defecations). In the world of reenactment, one realizes that to be appointed a servant to an important knight is better than an unimportant one since you get to eat better food, tend better-behaved horses, and sleep in a better tent, and often reap the favors of an appreciative king. Anyway, my friend left the occasion after only 16 hours. He just wasn’t willing, as they say, to shovel the shit.

Mr. Youngberg points out in a recent post that people often dream of the past as though it was better than today. But as my reenacting friend discovered, the standard of living for most folks throughout most history was pretty crappy, and as in the case of our page friend, often quite literally. Today when we think of the Renaissance we think of lords and ladies, bishops and monks, minstrels and troubadours. Those folks were certainly around, but there weren’t very many of them, either as a percentage of the population or in real numbers. We conveniently forget the fact that most people, if they were lucky, were sharecropping, engaged in some trade as a smith or tanner, or fighting in someone or other’s crusade. If they were unlucky, and most were, they were a servant to the crown or one of his cronies, tending to their horses and chambers, building their castles and ramparts, and dying of the plague.

Folks need to start remembering that thanks to the Industrial Revolution and modern technology, it isn’t only women who have decided that they don’t have to take that crap anymore. 90% of people in the western world generally no longer have to concern themselves with their lord’s diuretic horse or their lady’s chamber pot.

Heaters Come of the Woodwork

Last week I introduced an environmental policy called distend, discard and disintegrate—an alternative to reduce, reuse and recycle. By consuming more and more natural resources, consumers can create an incentive for firms to develop ways of stretching the resource (reducing, reusing and recycling) and eventually coming up with ways to find substitutes. While DDD may “waste” a resource in the short run, the advancement that comes from the strained price incentive is with society for all time. The costs outweigh the benefits (especially if you care deeply for the environment).

History backs me up on DDD but it is still incredibly counterintuitive. So I find it helpful to point out this example—a hot water heater that doesn’t heat the water twenty-fours a day. This not only saves energy but it also reduces the metals needed for construction (there’s no tank). Note the company’s big selling point is how much money you’ll save, a point that would hold less weight if energy prices were lower.

The hot water heater example also reminds us that DDD provides advancement in areas the average government would never consider. Conventional environmental policy cannot account encourage these unpredictable types of developments because they do not possess the knowledge nor provide the incentive to spark their discovery. Carrots (prices) work a lot better as motivation than sticks (government). They encourage unpredictable benefits, are more humane and appeal to far more people. When a government tells people to use less energy, no hot water heating company is going to point out they are in need of regulation. But when prices provide a worthwhile reward, the extended order comes out of the woodwork.

Tuesday, August 24, 2004

The “Price” of Opulence

Don Boudreaux posted this article today criticizing an NPR interview between Susan Stamberg and author Susan Strasser. The Susans were discussing Ms. Strasser’s book, Never Done: A History of American Housework, a work that describes how modern technology may make housework easier, but caused a great deal of social damage. A typical woman’s work of sewing and laundry and so on became less valuable as industrialization set in (preventing them from selling their services). Moreover, they lost the social connections with their neighbors because they stopped doing the chores together.

According to reviewer Erika Mitchell,

Strasser notes that industrialization simplified many household tasks, from cooking to heating, from dress making to laundry. This enabled women to accomplish more in less time, but rather than reap the benefits of having spare time, she cites time use studies that show that following industrialization, women devoted the same amount of time to their housework, but were able and consequently expected to work towards much higher standards. As if this weren't enough, manufacturers also pushed women to fill their spare housework time by increasing their consumption activities, to take on consumption as a new household task alongside cooking, cleaning and childcare. But since virtually every source of income from women's work in the home had dried up by this point, in order to go along with the drive to consume, women needed to take jobs outside the home to supplement the family income. And that's why their work is never done.

It’s common in our modern society for people to let themselves be overwhelmed with the nostalgia for some forgotten past. Humans, after all, are always looking for the better thing and while some people turn to technology and novelty, others yearn for something more certain—dead but recorded cultures. This longing tends to cause reactionaries to distort the facts and even contradict themselves in pursuit of some idealized past.

While Mitchell says Strasser acknowledges that housework became more productive, women spent the same amount of time doing housework to achieve higher standards of living. Apparently, a higher standard of living really isn’t a good thing. Strasser clearly downplays the fact that a higher standard of living is the cornerstone to a prosperous society.

But then it turns out that’s not true—their spare household time was filled with “consumption activities.” I have no idea what “consumption activities” are but my best guess is buying stuff, something I’ve learned most females actually enjoy. I really don’t think manufacturers “pushed” them to do anything.

People always talk about the price of success or of opulence or of progress. The suspicion of genuine advancement harkens to fears of the unknown and appeals to misconception that the world is a zero-sum game—every gain is someone else’s loss. Paradoxically, while our ancestors struggled to accomplish economic success, modern society’s biggest problem seems to be accepting it.

God from the Statistic

Numbers are powerful. When I say that one out of ten people are gay or bisexual, that’s a pithy way of saying gay issues are so common, they demand constant attention. When I say that one out of four women are raped before the age of 18, that’s grounds for spending millions of federal dollars to try prevent more while quietly sentencing every man that’s accused of it. When I say that marijuana users are 85 times more likely to try cocaine, that’s reason to keep it illegal. These statistics say powerful things. They change minds, create uproar and turn a peripheral issue into a group’s rallying cry. They are also all wrong.

While mathematical in expression, statistics manifest by a decidedly human vehicle: the study. And like all human apparatuses, this one is only as good as the person that runs it. Take the “one in ten” figure. It‘s the result of a study done by Alfred Kinsey in 1948. It’s also fundamentally flawed: Kinsey asked volunteer (not random) male respondents if they’ve engaged in homosexual activity in the last three years. The study drew unduly from metropolitan areas, college students and ex-cons (all groups more likely to say they’re engaged in homosexual behavior but are not necessary gay). Studies done in the 1990s by the Alan Guttmacher Institute and the University of Chicago put the actual (but less catchy) number between one and three percent. Data gathered in Canada (2004), England (1992), France (1992), Norway (1988) and Denmark (1992) put the figure between one and six.

Rape statistics are similarly skewed. The one in four statistic is from a 1985 study by Mary Koss who used ambiguous questions to tally the numbers. For example, the study used the following inquiry to help determine the rape statistic: “Have you had sexual intercourse when you didn't want to because a man gave you alcohol or drugs?” Thus if you ever regretted sex that you had while drunk, and you being drunk could be attributed to a man in some way, you’ve been raped. The word “because” doesn’t mean there was a malicious intent or a threat of force, either. Most surprisingly, 73% of the girls Koss labeled as raped didn’t think what happened to them was rape. A better study by Louis Harris and Associates (1993) put the number closer to one in fifty.

The 85 statistic used to support the gateway theory (marijuana is a gateway to hard drugs), though the theory is older than the study. Quoted by the Executive Director of the Center for Alcohol and Substance Abuse, Joseph Califano, in 1997, the analysis is not only poorly done, it contradicts another study by the Department of Health and Human Services in the same year. The CASA conclusion is the result of some shady math relying on the fact that most people who use cocaine try cannabis first. Only .2% of all cocaine users have never tried weed. The DHHS study wasn’t the first to question the gateway theory (that’s the LaGuardia Report in 1944) but its conclusion is light years away from the CASA study: “For every 104 people who have used marijuana, there is only one regular user of cocaine and less than one heroin addict.”

There are two reasons why you’ve never heard of these alternative studies. First, they aren’t that interesting. When only six percent of the world is gay, two percent of women are raped and less than one percent of marjuiana users move on to harder drugs, it’s a lot harder to get mad at stuff (this is truer about the last two numbers). Second, the popular figures are what Joel Best calls “mutate statistics:” ones that everyone knows so no one questions. They are repeated over and over until they stop becoming the conclusion of one random study and start becoming Truth, Truth gay rights groups, women’s rights groups and anti-drug groups tend to cling to. Numbers are powerful things, capable of turning the course of an argument completely around. Shouldn’t we be sure we get them right?

The Dreaded Mark of U

My glorious return to LL&L also marks my 50th post so I decided to focus on one of the first laws I thought was completely crazy.

As I alluded to in Paths of Salt, my sense of direction is worse than blind lemming. Streets and signs blur together, turns pass unnoticed and I always seem to forget where I am and how I got there. While this tends to happen more in the city, the wrong approach on a highway can be far more time consuming because you’ll travel for 20 or 30 minutes before you have a chance to turn around (this has happened to me on more than one occasion). The highway system in general can be rather confusing, especially around metropolitan areas, and it’s easy to grab the wrong exit (given Ron’s post, some of this confusion can probably be derived from poor government planning).

When I was driving back up to Beloit, I noticed a pick-up truck pulling to the left shoulder and sneaking past the wretched sign: "No U-Turn.". The man obviously took a wrong exit and was anxious to correct his mistake. Why should he have to travel thirty-some extra miles more to turn around and backtrack another thirty-some miles? Why is it that we—the taxpaying public—are barred from using those nifty connections that bridge the halves of the interstate? Why can’t we make U-turns on pavement and gravel we paid for?

Traffic regulators might say that the connection is for emergency vehicles only is open in case they need to suddenly change direction. But that’s not really much of a reason considering “authorized” vehicles rarely use the connections in the first place. And if they did need some one to get out of the way, the motorist would move. That’s why these vehicles have sirens and lights.

And even more ridiculous argument is safety. Because there’s no merging lane, one can claim that it’s too dangerous for motorists to merge successfully. If you can’t merge with traffic, especially since “merging” in this case means waiting until there’s a break in flow, then you shouldn’t be driving.

Granted, this kind of violation is rarely enforced (I’ve never heard of anyone getting a ticket for making an improper U-turn) probably because it’s so easy to get away with. In fact, it’s easier to get away with than speeding because you’re moving so much slower. But the very idea that I could get fined for making something as useful and harmless as a U-turn burns my blood.

Saturday, August 21, 2004

Privacy Policy

Posters of comments on this blog should expect us or other readers to respond. Thus, there should be no reasonable expectation that comments not be taken out of context, twisted, mangled, and abused. We do respect your right to anonymity though; feel free to post anonymously. We will not delete comments unless we deem them to be patently offensive or spam.

Beyond this, each member of Law, Legislation, and Lunacy can make their own policies on privacy.

Mike's Privacy Policy:

When you send me an e-mail, I will make two assumptions: first, that you do not mind it being quoted. Second, that you wish to remain anonymous if quoted. It is your duty to state otherwise. I will not comment here on my employers, friends, or other non-bloggers without their express permission.

David's Privacy Policy:

Same as Mike's but if I know you well enough to know you wouldn't mind, I'll use your name if you e-mail me and I want to post about the e-mail (as Mike found out).

Ron's Privacy Policy:

My privacy policy is not entirely different from Mike’s. If you post to the blog, anonymously or otherwise, you are posting to a public forum. This makes your comments subject to analysis. You may email me privately. However, depending on whether I know who you are or not, and the content of your message, I may choose to respond to you publicly through a regular post on the blog. Please note that this post may appear like any other post, so you may have to read between the lines for your personal response. Think of it as the De Vinci Code or something.

Whenever possible, I will respect a user’s right to their own privacy in the form of anonymity (though I think we all understand that there is no such thing as true anonymity online). In other words, I won’t quote you. So feel free to send on your question or comment without fear of exposure. That said, messages that are offensive, threatening, or otherwise grossly inappropriate will be met with a very public response from me, up to and including “outing” you.

As concerns my life outside of the blog, I reserve that unto myself. Since Mr. Mills, Mr. Youngberg, and myself are old pals we’ll continue to share our secrets in barrooms and brothels together secretly when you’re not looking. Regretfully, you’re not invited.

Bourne of Suspicion

I have just come from watching the new feature film The Bourne Supremacy. Not bad for an action flick, but lacking for plot. Or maybe it was just the Matt Damon thing, I’m not completely sure.

What, upon reflection, strikes me about the movie and others like it is how we (the American public) buy into the plot. A dark, secret government agency does really bad things that even it’s not supposed to do. In this case, the CIA creates black ops assassins who go rouge. It’s a pretty old and tired mantra, and yet you can sell it. Why? Maybe it’s because we all know that this is what the government does. Of course, I don’t mean the whole government – that would be silly. But deep down in our psyche, we know that there are secretive agencies that deal in dirty work of various kinds; and our imaginations are not very heavily taxed to follow that line of logic to its inevitable conclusion. Which is to say that the viewing public accepts that these are aspects of our government, however limited in scope they may believe them to be. And, for the most part, we seem to be okay with it. After all, shows like The Agency seem to put a very “this is necessary” and “for the good of the country” and “to make you safer” spin on things.

You know, it very well may be. I’m not really privy to the kinds of information that the spooky folks trade in and so I can only speculate about it. But ultimately I am, as Mr. Youngberg writes, not anti-government, just distrustful of it. Specifically, distrustful of what happens when power and human nature collide; because inevitably you end up with a story like Bourne that isn’t quite as fictional as we might like it to be; where human nature, taking its inevitable course, enters into personal greed or avarice or blackmail or whatever. It gives way to an abuse of the power and trust bestowed upon those who wield it.

You know, in principle I don’t oppose secret ops (I know that I will run afoul of some of my libertarian friends out there by saying this). I recognize that in a complex and dangerous world there are probably times and places where the long arm of law and order doesn’t quite reach, and that one needs to be prepared for those times. But the potential for abuse is ever-present as long as laws like the Patriot Act shield these kinds of super-secret activities from any kind of real Congressional or judicial oversight. And if those secret ops begin substituting for traditional police action, and operating outside our system of public justice with men in black masks abducting and survelling and whatever else right here in our own homes and on our own streets, then we have a serious problem.

The art of war may continue to depend on secrecy, and I cannot pretend that this is not the case. So I grugingly and compliticly nod my head to the on-going existence of this kind of thing. But our form of government is not particularly well suited to it, and should it get out of hand, it will not long breathe under its smother. It is an uneasy balance and I constantly pray that there are true patriots, men who appreciate the enormous responsibility of freedom, who weigh in the scales the actions they take; because this is a high-stakes game we’re committed to and there isn’t much room for error.


Sorry for the bad timing, but I too will be going on a brief respite. Construction has attacked our house and we just can’t take the pounding anymore. We’ll be vacationing far from the reaches of technology for the weekend. I’ll resume my contributions, assuming Mike hasn’t decided to boot me out the door, when I return. Until then, take care and God bless.


Friday, August 20, 2004

David Goes AWOL

David is currently on route to Beloit College, and will not be blogging. In honor of his favorite president, he neglected to mention that he was going to go away for a while. Expect him to resurface on Sunday with some missing records.

Mr. Mills’ Decent Into Hell

It is plainly clear that Mr. Mills wishes to turn his soul over to eternal damnation. Mr. Youngberg knows it, I know it, Ayn Rand knows it, we ALL know it. Or so it might seem.

What I do recognize is that idealism can affect fanaticism, and that is as true of libertarians as for anyone else. We libertarians would like to believe that this kind of firebrand dogmatic ranting is the exclusive purview of those folks out at the Ayn Rand Cult of Vilified Altruism. Sadly, it’s not.

Mike is absolutely correct in his observation that libertarians are bad at what the movie What About Bob called “baby steps.” Suggest such a small, concessionary step and immediately the libertarian zealots will rise to heckle, chastise, and ridicule you; and call you a traitor to the movement. But what movement? Hell, I can’t even tell you who the libertarian candidate for president this year is! Maybe that means that, like Mr. Mills, I’m not a true libertarian either.

CATO seems to understand this need to affect libertarian change within the system by helping to shape public policy step by step, and line by line. Granted, as libertarian idealists, we probably believe that there shouldn’t be much of a public policy to begin with. But acknowledging that, in fact, huge pubic policy movements have long been underway in this country, CATO does what it can to minimize the negative effects that regulation, legal reform, and whatever else the government tinkers with. If CATO hadn’t been willing to work within the system all these years, it would not have garnered the kind of influence and standing within government and public policy circles that it has. But maybe that means that the folks at CATO aren’t true libertarians either.

When our political philosophy takes on a religious fervor, then we really need to ask ourselves where that leads. Will we resort to conversion by the sword? Will we undertake an Inquisition of our own to root out the Mr. Mills of this world in the name of saving their soul from a socialist hell? Because that is the reductio ad absurdum of this line of thinking, and way too many of us libertarians are thinking this way. Passion is helpful when it is channeled onto canvas, through violin, or in the bedroom. It can be most unhelpful and obstructive if it steals away a healthful equilibrium. Not to mention that it sways no one to our way of thinking. Who are the folks who are true libertarians? It is people like Mr. Mills who already know that answer.

Black: The New Black

I suppose it is unfair to have a whole discussion on the blog about an unpublished e-mail, but David started it! I think his goal is to make me blog more often, the trickster.

David misunderstands my complaint. It is not that libertarians resort to the market as the solution for everything [it can be], but the degree to which they do. When was the last time you heard the libertarian party suggest moderate privatization? How many of the bloggers on our blogroll have ever suggested that maybe state control needs to be changed in a delicate way? Granted, when someone thinks the entire system is corrupt, it can be a valid argument to suggest that nothing but a complete removal of the entire system will do.

But how many non-libertarians are going to listen to that argument? If the capitalist in the corner could be replaced with a parrot quoting Hayek, why would anyone bother inviting him to the table? Why should they? My complaint is that the entire movement shoots itself in the foot by being unwilling to compromise by taking things slowly. Try telling a smoker he should quit smoking cold turkey. You'll get about the same response as telling the average American that the government should leave everyone alone in the (market/bedroom/choose your partisan issue).

Why Austrians Should Love Google

I have been doing some writing on the Google IPO (more on that later), which reminded me of how much Google demonstrates a number of things that Austrians have believed for a long time. I have started using this example to illustrate Austrian principles, to some success.

Clearly, with such a vast amount of data out there on the internet (isn't it something like a few thousand pecobytes?), no single human could possibly know everything that is out there. Enter the search engine, a way to connect viewer with website. In the early days of the search engine, information was "searched" by one or a combination of two methods. Most search engines were no more than a glorified F4 button. They worked no differently than search in Word or a web browser. Others would have a team of people compiling sites and categorizing them by topic, etc. Yahoo! started off with an engine that used some aspects of both, but entrepreneurs quickly realized that the only thing needed to get a top result on a search engine was to put the important words down as many times as possible. The computer would just assume that a high frequency of a word would imply a site is relevant to that word. Since Yahoo's algorithm assumed that any webpage with the word insurance must be relevant to a search on insurance, an insurance company would be wise to have a part of the page that just included the word a few hundred times in size 1 font. Categories were inefficient as well. How do we place the site that includes both Metallica lyrics and information on gardening in the bay area?

We can compare this method to rough attempts by the government to understand the market. Plenty of government agencies try to monitor as much economic activity as possible, and are understandably overwhelmed. Try looking at a CPI report on the item level. And merely allowing sites to self-identify creates a horrible incentive structure. A website would succeed in the early Yahoo! era not by being a quality website, but by tricking the algorithms. Similarly, we see plenty of industries rewarded for going through the motions of obeying various regulations.

Enter Google. Google brings to the table two now-obvious insights. First, that the internet is not a collection of independent sites, but a vast community of interconnected and interdependent information. Second, that the community understands itself better than any computer could. Roughly, Google determines the relevance of a given site to a given phrase not by the incidence of that phrase on the page, but by the incidence of the phrase in reference to that site. I know much better which websites are relevant to Austrian Economics, because I actually read them. Thus, Google looks at what amounts to price signals on the internet: the ever-important link. Additionally, links from a given page carry weight. We here at Law, Legislation, and Lunacy, add very little to the strength of Glen Whitman's blog in Google's eyes because we have a relatively low status on the web. Meanwhile, Volokh linking to him boosts him rather quickly, as they have themselves an immense number of websites linking to them.

Thus, the Google algorithm becomes a market process. The entire algorithm is recursive; my linking to you boosts the strength of your linking to me, and so on. Information is distributed efficiently, because the algorithm genuinely understands the importance of local knowledge. Now if we could only get it to grasp the value of tacit knowledge (i.e. that some of us can blog with less effort than others), we would have the perfect Austrian solution.

Full Disclosure: Blogger is owned by Google, so we are broadcasting these views to you on Google's dime. I would be quite happy to continue evangelizing for Google if they were to send me an offer.

Thursday, August 19, 2004

Life without Deals

A few years ago, my hometown of Davenport, Iowa received something wonderful, something I never thought we would get: our first Home Depot. Because the city finally grew to a large enough size, the Home Depot Corporation finally decided to build a store in the area. It was a glorious day.

Surprisingly, there are people that criticize Home Depot offering do-it-yourselfers rock bottom prices and quality equipment. Al Norton heads an attack against sprawl—cheap large scale development Home Depot and Wal-Mart are famous for. Norton dubs distaste for Home Depot as the “orange wars” in reference to the chain’s signature color. His main criticisms are 1) Home Depot isn’t nice enough to its employees, 2) Home Depot wins in a competitive market and 3) Home Depot stores are ugly.

Not surprisingly, these are the same criticisms Norton uses against Wal-Mart, another fabulous store. Reality renders these attacks irrelevant. No one forces anyone to work or shop at discount stores. If they require their employees to shave or if they offer lower prices, it’s none of our business to declare that “right” or “wrong.” It’s the same reasoning with the look of the building. Ascetics are a matter of opinion and even if they truly are ugly, that’s the price of low prices. Like most people in the world, I’m on a fixed budget and if going to an unsightly place saves me money, that’s fine. The success of the discount stores demonstrates that people are willing to tolerate unattractive buildings.

Home Depot and Wal-Mart provide a service to the economy. The poorest people in the country shop at these stores and because of the “evil” corporate practices, the lower class is better off. They can afford more, have a higher standard of living and employ more people, not just at the retail outlets, but through the products they buy. Wal-Mart saved people in small towns billions of dollars, billions of dollars these people spend on other things. Norton’s counterargument is that the number is a lie but his only evidence is a random quote from, Tom Coughlin, Executive Vice President of Operations: "At Wal-Mart, we make dust. Our competitors eat dust." That’s just not good enough.

In a world without Wal-Marts or Home Depots, people are poorer. Yes, there are minorities that are better off—small businesses—but the society as a whole is less prosperous. I’ve often said that the economy is more democratic than democracy. In a democracy, if 49% of the people want a candidate, they don’t get anything. But if just a handful of individuals want a product, they get it. Patrons of sprawl vote with their dollars. Demonizing them and the institutions that offer the option is not only poor economics, it’s undemocratic.

Black Goes with Everything

Mike sent me an e-mail last week confessing why he doesn’t define himself as a true libertarian. Libertarians rely too much on the market. Just as a communist’s answer to anything is government power or a Starfleet officer’s best problem solver is the deflector (seriously, watch any series of Star Trek; the deflector can do anything), libertarians’ knee-jerk answer to all of the world’s problems is market activity.

On some level, I share Mike’s concern. All of us spent our adult lives hearing dogmatic mantras of one type or another being shoved down our throats. Real estate investment is a sure thing. Peace is the only path to happiness. God is infinite and far-reaching. Black goes with everything. It’s a simplistic formula that’s easy to understand and adopt. It also tends to be wrong. Relying too much on any paradigm screws up your perception of the world and many libertarians are in danger of draping society in black.

That being said, let’s take a moment and remember that some paradigms are better than others. Black goes with a lot more than red; markets accomplish a lot more than governments. That’s what experience teaches us. Markets manage knowledge better. They are more adaptable. More forward looking. More democratic. While the individuals only care about themselves (though even this isn’t true), the market as a whole ends up caring for everyone. Some rules of thumb are better than others.

But only the most radical libertarians rely on markets for everything. And Soviet Russia wasn’t nearly as controlling as, say, 1984. Most everyone acknowledges that there needs to be some mix between the two, just as people who wear only black are as unfashionable as those that wear only red. A combination is always the better solution.

Mike expressed concern because a libertarian’s faith in the market is easily seen as dogmatic and dumb. People think we dress only in black and are arrogant enough to believe that’s all we need. If we are to convince critics and skeptics to dip their toe in the market, we have to remind them we like to wear red. The state has its place and that place is giant and enormous and powerful. We don’t hate government, we just distrust it.

The First Lady's Crystal Ball

I had no idea our first lady could see the future. Mrs. Bush imprecated supporters of stem cell research at the Pennsylvania Medical Society last week. Said she, "but I know that embryonic stem cell research is very preliminary right now and the implication that cures for Alzheimer's are around the corner is just not right and it's really not fair to people who are watching a loved one suffer with this disease."

For the record, the first lady is not a doctor, a biologist or any capacity a legitimate authority on the matter. So the only way that she could possibly know that a cure isn’t “just around the corner” (a phrase that can mean anything from a few days to a decade) is if she knows when it will happen.

People, especially politicians, like to pretend they are the utmost authority on everything. That’s why depending on them for research allocation (or almost any allocation) is inherently dangerous. One administration thinks an idea is golden, so they fund it. Then the funding gutted in favor of something else in the next administration. Then it’s re-packaged in yet another administration. Laura Bush’s comment, which was a response against the 58 senators requesting the President to endorse removing stem cell research barriers, demonstrates why research should be done by individuals and private firms. When governments use everyone’s money, it gives anyone the chance to bring up whatever argument they want.

Proof that News Just Ain’t What It Used to Be

Here are two articles that just make you wonder what it is that journalists do these days. First, is the happy pronouncement that Paris Hilton’s lost chihuahua has been found. Well, thank God for that. It’s not that I don’t think that people appreciate their pets, but I do have to wonder why it made national news. It is reasonably clear that our young vixen Ms. Hilton is a bit of a publicity junky. And I certainly don’t mind her parading her scantily clad self about for public consumption. But one has to assume that an opportunity cost was paid here; that some other news story was bumped for this. God help me, I can’t imagine what that would be.

At least I know it wasn’t the Pig Riot. Reuters reports that a truck carrying a shit-load (can I say that on this blog?) of pigs fell over and spilled the oinking menace onto the road. Apparently it caused quite the stir what with cars swerving to avoid the angry pigs. If only the Malaysian government had been more like New York, and thought to pay off the rioters, say with coupon discounts at the local Muslim no-pork bazaar. They might safely have avoided the riot.

Wednesday, August 18, 2004

European Environment Agency’s Wintery Demise

Much ado has been made about hurricanes over the last few days, so I thought I’d throw out another, somewhat more permanent weather feature: winter. Scientists know that over the course of hundreds of years, the earth goes through periodic warming and cooling periods. For example, we know that Great Britain once had tropical forests sometime during the last 2000 years.

It’s not a real exact science, but with the occasional shifts in earth’s polarity, subtle shifts of the planetary axis, greater or fewer numbers of sunspots, and other factors all come to bear on whether or not we have ice or water. As you might have inferred, this is the kind of change that occurs over hundreds, if not thousands of years; is entirely natural; and happened long before mankind began burning fossil fuels.

Try and tell this to the Europeans. Reuters reports today that European winters should be all gone by 2080. This, the report notes, will be especially bad for the elderly and the infirm. I suppose they will just have to winter in Russia to find more comfortable conditions. The report mentions the usual suspect – greenhouse gases – and cites that the report expects global temperatures to rise between 3 and 10 degrees over the next century. The report concludes that Europe, with its glacier mountains and below-sea-level lowland countries (alla The Netherlands and Belgium), will be hardest hit.

Now, to start with, 3-10 seems like a wide margin of error. It suggests to me that someone is just guessing. I can lick my finger and put it to the wind and come up with that kind of temperature range. Can you imagine the TV weatherman coming on with the forecast and saying, “Today it will be between 80 and 90 degrees.” He would be fired.

But I cannot help thinking that the just sounds a bit over the top; a bit apocalyptic if you will. Maybe they’re not saying here that the world is going to end, but to declare that winter has just about reached its terminus in the northern hemisphere seems, well, ridiculous. I can just see the new regulations that come out of the EU. Maybe they’ll call them “the Winter Preservation Acts.” In order to ensure snow in the elevations well into the distant future, we will all have to bicycle unless using government-sanctioned forms of public transportation. All recreational travel will have to be curtailed, of course, to cut down on superfluous emissions. Electricity will be strictly rationed, and each family will be allowed only .00001 kilowatt hours per day. The government, though, because of its priority need, will be exempt from these strictures.

Oh Ayn, can you hear us?

Paying off the Protesters

Moral Hazard or Pure Genius? You decide.

It seems New York has come up with a plan to placate a number of anti-Republican demonstrators by negotiating discounts for them at museums, stores, restaurants, and plays in the city. I doubt it will be successful in actually changing the nature of the protests. Cheap burgers and 10% off statue of liberty 1/1000th models are not likely to placate any true Bush-hater, though a trip to the museum of sex might.

Of course, I don't think the anti-Republican protests will get violent, at least not because of the protesters.

Understanding DDD

Yesterday (or rather very early this morning) I posted a blog article describing what I call distend, discard and disintegrate—or using massive amounts of resources in order to drive their price up, providing incentives for individuals to provide alternative. Amazingly, only one post criticized the proposal. Anonymous said my plan doesn’t try to “slow the flow of waste that the production of these resources use. For most environmentalists, the point of not using gasoline is not to conserve resources, but to reduce emissions. The point of recycling aluminum is not to save aluminum from being mined, but to reduce the damage associated with mining.” That’s aboslutely true. The ultimate goal of DDD and RRR is cheap energy, organic plastics and environmental harmony at all levels. While Chris touched on this, it deserves extra exploration. Unraveling how DDD accomplishes this requires one of my favorite phrases in economics (and one that’s often ignored).

There are short term costs but long term benefits.

We see it in immigration, investment, technological advance, outsourcing, reducing government spending and some macroeconomic changes. DDD is no different. I admit the policies I proposed would create huge amounts of pollution. That’s the point (the reason why don’t like these resources and want to drive up their price is because they are environmentally harmful in some way). But once that advancement occurs, it’s there for all time. And the turnover time won’t take long. California’s energy shortage initiated sudden changes in how people were getting energy—less than a couple of years. Alumium enjoyed sharply increased in the 1960s and 1970s, during a time when steel was on the rise. Once individuals know that price increases are sustainstive, they are far more willing to invest in alternatives. Once they do that, we, our children and every generation henceforth will enjoy a cleaner environment. That’s the goal, after all.

This is why I said resource economics is counterintuitive. It doesn’t make sense that polluting the environment now will make it cleaner tomorrow. But that’s what happens. Every price stress on polluting, “undesirable” resources is another incentive to make them obsolete. There are two ways to ensure ecological harmony (EPA standards often do more harm than good, but that’s another story): create new technologies or reduce the world population. Considering the most evil men in history justified the latter, shouldn’t we do everything in our power to embrace the former?

Pee Pee on the Potty

Here I am up at 7:30 in the morning on a perfectly good sleep-in worthy vacation day. Why? Because my Ronnie, my son, is potty training. So in my best 7:30 in the morning voice here I am coaxing the little devil to go pee pee in the potty. This morning we wake up with a wet diaper so I know this will be futile, but it is necessary all the same. And once you’re up, it’s virtually impossible to go back to bed. Maybe I’ll get a nap later. But this experience, while vaguely irritating to me, is essential. It’s how he learns. It’s how he graduates from diapers to big boy underwear.

Chris the Libertarian yesterday made mention in one his posts about police who tazered a guy merely returning to his hurricane-stricken home past a government-imposed curfew. And the article to which he refers pretty clearly sides with the cops on this one, implying that the author (and many others no doubt) thinks that this is appropriate action. This was not a man that the cop zapped; it was an animal, a pet. The owner says to his pet, “Pet, you may go out now. Stop barking or I’ll put a shock collar on you. Go to your box.” There are way too many incidence these days of government treating its citizens like pets. We already know they treat us like cash cows.

Folks, if you think that curfews are just fine you are mistaken. Robert Higgs makes clear that an emergency power today is tomorrow’s policy norm. Give ‘em an inch, and they’ll take the whole thing. As individuals and as citizens, we have to remember that we’re potty trained. We can go pee pee in the potty all by ourselves without government authority there to hold our hands and to tell us when we can come in and when we can go out. We need to start acting like big boys, because allowing ourselves to be treated like children will only get us diapers.

Distend, Discard, Disintegrate

We’ve all heard mainstream environmentalists tell us to engage in the three R’s: reduce, reuse and recycle. We’re told that these things need to be done to save the planet. There are only so many resources and natural habitat and as the world population swells, these things will obviously become rarer and rarer. The ecological stress is too great and every environmentalist who hasn’t doomed humanity yet warns that the apocalypse is rising.

Resource economics is one of the most interesting branches of the study of choice because its proper application is usually counterintuitive. But understanding it is not that different from understanding most economics. A change in the state of the world changes prices. A change in prices changes incentives. A change of incentives changes behavior. Because of these constantly demonstrated rules, conventional environmental wisdom does more harm than good. If you really want to save the environment, even at high costs (a sacrifice many environmentalists say they are willing to take), then you should do the opposite of the typical policy.

Distending is the process of expanding capacity from an internal source. As classic mantra demands people use fewer resources, I say people should start using more. This change in behavior raises prices and creates incentives for people to find substitutes. Iron is substituted for steel, steel for aluminum and aluminum for oil-based plastics. Dupont is currently developing organic polymers.

Discarding is simply throwing things away instead of using them again. For example, avoid using both sides of paper when writing. Using more paper means corporations like the International Paper Company will have to cut down more of its privately held trees (the company owns more than a million acres for this expressed purpose; that’s about as large as Delaware). It will then grow trees to replace the ones it cut down plus grow more in anticipation of higher demand. If the price of paper rises high enough as the consumption of it increases, the company will add thousands of more acres where the trees grow peacefully for decades.

Disintegration is when an object is de-atomized, preventing anyone from recycling it. Using gasoline is an easy way to disintegrate resources. As more and more oil is used, the price increases and people start turning to renewable (and cheaper) sources. When California had an energy shortage a few years ago sales of clean energy sources skyrocketed, especially solar panels.

An effective environmental policy would be to drive your SUV to the local office supply store, buy all their paper and then throw it away along with the soda cans you quickly went through. Obviously this process is rather expensive—that’s the point. But any environmental policy (effective or not) will incur costs. I personally think those costs are too high (Office Max has a lot of paper) but considering the Sierra Club receives millions in donations every year, there are clearly some that are willing to shoulder the burden.

Skeptics of DDD might say that human society has reached the “limit” to technological progress—we can’t rely on it. How could technology possibly provide alternative for conduction or energy? To demand to know how the future will answer our questions is to insist the impossible. It’s literally asking to predict the future. We can’t imagine how the world will change no more than IBM and the Wright Brothers could imagine our world of computers and airplanes. When people use our ignorance of the future to justify environmental laws, they insult all of humanity and ignore the breadth of history. The doomsayer’s predictions always depend on everything staying the same. That’s the one thing we know won’t happen.

Tuesday, August 17, 2004

The Backwards Bridge

The Interstate Highway System is quite a remarkable thing. Hundreds of thousands of miles of concrete and asphalt stretching out over the continent like the roots of a great oak. On the whole, it is an extraordinary feat of mankind’s ingenuity and engineering. But, it is also a government project. And as a result, lurking beneath the surface are the kinds of blunders that only governments can get away with. Which brings me to the story of the backwards bridge.

Interstate 70 runs east to west from the east coast around Philadelphia westward, and passes along its journey right through Wheeling, West Virginia. Wheeling is a unique place situated right on the Ohio River squarely between Pittsburgh, Pennsylvania and Columbus, Ohio. On our drive westward along I-70, one emerges from the Wheeling Tunnel and immediately drives up onto the bridge that crosses the river. For someone merely passing thru, all seems to be well with the world.

But upon closer inspection, one notices that the Wheeling side has two onramps, and on the other side the onramp is in a very peculiar location – it’s actually “on” the bridge itself, which is not supposed to happen for a multitude of safety reasons. Well, what happened? Quite simply, they put the bridge up backwards.

As you may know, bridges have long been prefabricated off-site and then merely delivered for assembly. And Wheeling’s interstate bridge is one of these prefab deals. But the architect misread the plans, and began putting it up backwards. After it was all finished and someone realized that, oops it’s backwards, they hastily built that crazy ramp that terminates on the bridge itself because there was no other place to put it. Thankfully, the bridge is structurally sound despite its rear orientation. But it creates incredibly dangerous traffic conditions that, over the years, have resulted in way too many traffic fatalities.

Government spending rarely offers the kind of accountability and oversight that private industry provides. Had this been a multi-million dollar private endeavor, you can be sure that the financiers would have had numerous engineers and architects all consulting together to prevent such a fiasco as this. And had this been a private undertaking, all those individuals who have lost their lives because of faulty engineering would have had, at least posthumously, the protection of the civil courts. But because this is a government enterprise, civil redress is exceedingly more difficult. Which just goes to show, once again, that private enterprise is better situated to development – even of roads – than is government. Because government, as we have seen, always seems to get it backwards.

Poverty Is Hard

In a seemingly random blog article (about as random as my last blog entry) at Café Hayek, Dr. Don Boudreaux drew from Alfred Marshall and Adam Smith to relay the following point: wealth has causes and poverty doesn’t. Poverty, Dr. Boudreaux writes, is humanity’s default setting. If we do nothing, poverty creeps in. Poverty is easy.

I can only assume that when Dr. Boudreaux said “we,” he was referring to society in general, manifested at the state. (If he meant people as individuals, then the default setting is death which isn’t poverty at all. It’s a state of non-existence, something completely separate.) Of course, there’s a thousand things society can do to cause poverty, some of which are constantly touched on in this blog. Tariffs, subsidies, industry regulations, immigration laws and progressive taxes all push society down toward the poverty end of the spectrum. Spontaneous order, free markets and decentralization are the wealth creating vehicles and these are institutions that are really easy to make.

Dr. Boudreaux points out that some wealth-creating institutions—property rights, money, language and double-entry book keeping—all had to be actively made by someone. Some of these institutions also have to be backed by the state. That’s very true. The state has the power to reinforce wealth creation and to make laws that generate poverty. Each one requires work and neither status is “default” in any way. Even in the darkest, most oppressive hours in human history, people were able to create wealth (though every slowly). It’s not that poverty is easy. People just make it easy because they so deeply believe in the economic barriers that create poverty.

Marveling at the Market

This is a fun concept that really pisses off government idealists: a free market economy is more democratic than any political system. Just watch Adult Swim—shows on Cartoon Network aimed a mature audience. They occasionally show their ratings. They’re also lucky if a half a million people (a whopping 0.17% of the entire country's population) watch their top show. When less than 1% of the nation wants a product, they get it. When 49% of the voters want a candidate, they get ignored.

Who says corporations don’t care about the people?

Monday, August 16, 2004

Laws Are Laws, No Matter Where They Roam

Eric Helland, who is now writing for the Marginal Revolution, wrote a post that cites an article by Jonathan Rauch, claiming Hayek would have been against legalizing gay marriages. The essence of the argument is a quote from Hayek in which he compares customs to prices. If prices have bunches of tacit knowledge stored in them, it makes sense that customs do too; they are both the result of spontaneous order. If we try to change them, then who knows what will happen?

Like me, Helland disagrees with this conclusion, saying “Hayek is making a case for gradual institutional change.” In order words, Helland believes that the decision should be up to the states. Nothing like a wide sweeping ban or legalization should be enacted.

But if we really do care about spontaneous order, then we can only conclude that’s not the answer, either. Saying the government should move slowly in legalizing gay marriage is like saying farm subsidies should be weaned away. Like a tariff artificially adjusting the price of a good, a law against marriage—federal or otherwise—artificially adjusts the cultural landscape. Cultural practices, like prices, are evolving things and they have to change with the world around them. While gay marriages really might have been fundamentally disrupting fifty or a hundred years ago, we don’t know if that’s the case now. “Institutional gradualism,” as Helland puts it, wouldn’t be Hayek’s preferred vehicle for change because it legitimizes laws that really do fall to the fatal conceit: social behavior between individuals should be applied to everyone in a community whether they want it or not.

Laws against gay marriages, like almost any laws, are made at the whim of political interests. Sometimes they are perfectly appropriate but usually they’re not. In either case, they become archaic as the world changes. The vast majority of laws aren’t perfect reflections of the cultural conditions and will ultimately become barriers in a society valuing spontaneous order.

Help! I'm Being Gouged!

Roderick T. Long posted this article at Liberty and Power, where he tries desperately to re-educate politicians the virtues of economic behavior (I say desperately because I doubt any politicians are reading libertarian blogs, though they certainly should). As Long explains why politicians shouldn’t attack “price gougers” in the wake of Hurricane Charley, I realized I have no idea what a “gouger” is.

In everyday conversation, a “gouger” is someone who charges “too much” for a good, "taking advantage" of the market. In the comments section, Mark Fulwiler suggests a “gouger” is someone who charges more than the competition or the government says is “fair.” Obviously, people who charge more than their competitors have some kind of product differentiation going on or will be put out of business. Government judgment is the more interesting case especially since it’s usually the government that declares price gouging (because the other one is self correcting).

How does the government decide if something is “too much?” Well, it’s ultimately a congressional consensus and/or a presidential conclusion based on limited understanding of time and place, appeal to emotion, organizations with big voting blocks and the political landscape.

This is excellent because now I can confirm I’m a victim. My car is on the verge of dying—I’ll be needed a new one in probably less than two years. I’m a student and can barely afford to buy a new one but I’ll need one some time in the future to continue my graduate studies (cry for me). Luxury car companies make a great deal of money selling their products while it is becoming more and more necessary to own a quality car in this country to live a life (get angry). In fact, if I could afford a new car, especially a premium one that will last a long time and keep me comfortable while I drive, I’ll be able to go long distances to find the best position for me, which would help the economy and your kids because I want to teach; I might even start participating in meals on wheels or helping senior citizens in some other way (mobilize your forces). And with an election coming up, I’m sure there’s lots of people that would agree with me (attack!).

Obviously, the people who make high-quality cars are price gouging. Someone owes me a Lexus.

State Planning Goes Six Feet Under

If politicians weren’t spending the public’s money when they tried to plan for uncertain events, it would just be really funny when they try. Unfortunately, it’s a bit too real. The Des Moines Register reported today that a new state-run morgue will not be getting their business from Polk County (where Des Moines is centered).

A tight budget and poor planning is mostly responsible for the $9 million mistake. The original plan was to streamline and centralize the state’s autopsies by making one facility the government could run. The new building was designed to employ thirty-four employees. Now, thanks to budget cuts, there are only eight so it can only handle a fraction of what it was designed for.

But the budget cut, which are an unavoidable result when the government does thousands of things and sudden administration and economic changes force constant reallocation, isn’t the sole source of the problem. Far from it. Like all big government projects, this one was subject to politics and/or gross incompetence (something all Iowans have to pay for). Dr. Julia Goodin, the head state medical examiner, was the main force behind the project but failed to make enough noise at state legislators. “With all the requests that we get, if they're not going out and asking, they're certainly not going to get it,” said House Majority Leader Chuck Gipp, R-Decorah.

It gets better. To help raise the $4.7 million the examiner’s office needs to centralize the facilities, the state is increasing the price for birth and death certificates but they are refusing private autopsies. The bump in the price of certificates would only raise $400,000 a year at most.

Let’s review, shall we? Because the government does so many things (the vast majority is counterproductive and economically unwise) funding for something the government actually needs to do (for the purposes solving murders) weakened. Moreover, the state’s emphasis on long term planning using a fluctuating budget makes the project incredibly subject to waste: the facility is now too large considering the number of people that work there. Instead of relying on privatized autopsies, which would most likely be of better quality and cheaper of the government, the Iowa legislature relies on a new tax, one that is ultimately not nearly enough to pick up the slack.

Scarier still, if—say—the birth certificates get too expensive, new parents might have to strain their budget in other areas and deny their kid quality diapers, nutritious food, toys or other amenities. Later, that just might explode into a new policy action which would provide those parents with those things using taxpayer money, stretching the budget even more and deny the morgue from maintaining a budget that’s still probably too small.

Okay, so it’s a little funny.

Another Lunatic

In the grand tradition of bloggers before us, David and I feel we should expand the cast of lunatics to get a more exciting dialogue going on the site (and to make it less noticeable when I skip out on blogging duties for a week). Maybe someday we will be our own Conspiracy.

Please welcome Ron Perkins as a permanent member of the blog. He will be joining us for what he calls the "broad interplay" that we have here, while still blogging on his own humbly named site.

The Magic Yacht

Why do Democrats (and Republicans, too) think the economy is magical? As my last school semester threatens to start up again, I’ve been spending the past week or so watching reruns of The West Wing, a show about the administration of a Democratic president. So naturally, there are a lot of Democratic-style proposals set forth, not the least of which concerns the virtues of progressive taxes.

The argument goes something like this: rich people use their extra money to buy yachts and middle class people use their extra money to buy college tuition. Since “society” values tuition over yachts, we should tax rich people more and give that money to everyone else. Ultimately, the argument is that this is better for the economy, and by extension, humanity in general.

Here’s the magic. Pervicacious Democrats think yachts come from a genie or some other sort of fairy tale apparatus. When rich people buy yachts (or when anyone buys anything), people have to supply and maintain it; they don’t come from no where. An increase of yacht sales employs people who make them, sell them, keep marinas, repairs boats, staffs boats and manufactures equipment that’s used in boats. These people, in turn, buy resources from those that allow them to do their job: lumberjacks, miners, steel formers, Alcoa employees, computer programmers, the people who make the machines that make the electronics and on and on and on.

Now you could say that college tuitions help people too: professors, writers, maintenance workers, publishers, security guards, construction workers and on and on and on. We could spend weeks trying to track all the people that are helped by one kind or spending versus another and we will never be able to enumerate them all; it’s just too complicated.

The point is saying that either good is a vacuum, having no additional benefits to the average person is a lie. It’s that kind of twisted logic that makes people think banks burn the money corporations put in their coffers instead of what they actually do: lend it out to people for houses, cars, small businesses and yes, even tuition. The ultimate value of a good is what the market demands, not how the average person views it, and considering it’s harder and harder to get a job with just a bachelor’s degree, maybe that’s a signal that we need more yacht buyers.