Saturday, December 26, 2009

Obama is failing

Although Obama supporters continue to tell all doubters that it is far too early to judge whether Obama has been a successful president or not, and indicate that for the foreseeable future it will still be too early, there are indications that he has indeed become a failure in spite of all his good intentions.

There are two indicators that can be pointed at that show a weakening of support for Obama. The first is a Saturday Night Live skit featuring actors impersonating Barack Obama and Hu Jintao. This is the same show that did such a convincing impersonation of Sarah Palin that many Democrats actually think Palin said she could see Russia from her porch. The second is a week long series in Doonesbury in which Gary Trudeau, using the character Mark Slackmeyer as his mouth piece, has gone on a critical rampage against Obama's policy failings.

There are some groups that would never support Obama. Republicans never would for the same reason Republicans would never support any Democrat - they are in the hated other party. Crips hate Bloods and Bloods hate Crips. In spite of the insinuations, continued to the point of absurdity, that it is all about race, the simple truth is that Republicans won't support Obama because he's a Democrat.

Libertarians find that occasionally Obama appears that he might be willing to do things right, on very rare occasions, such as when he eventually got around to doing something about the war on drugs, but overall he is as much a disappointment as he was expected to be, that all the rhetoric about hope and change was to fool the gullible as most campaign promises are.

But those examples show voices that would normally be more supportive of Obama questioning their own president.

While the bailout has given the illusion of the recession being over, it is clear that the fundamental problems are not solved. The wars continue (as Obama promised) in spite of the hopes of his supporters that he would end them. Health care is in many ways a fiasco for the Democrats, as Obama campaigned on the public option and then stated he did not do so.

The year 2010 is going to be even worse economically than 2009. Will it still be too early to judge Obama?

Friday, December 18, 2009

No True Libertarian

"You say that your philosphy is strictly against any intervention in the economy. You say any intervention is a violation of your philosophy. Here is an intervention that I declare you like. If you disagree with me then you are engaging in the 'No True Scotsman' fallacy."

Everyone should be familiar with the "No True Scotsman" fallacy. It takes the form of someone denying that a potentially embarrassing member of a group is a member of a group at all. It is quite common in discussions of communism, where each and every despotic communist regime is said to be "not really communism." In rare occasions the defender of communist thought will try to label the system under discussion as capitalist because in the Soviet Union "there were a small number of rich people who owned and controlled everything and everyone else was poor."

"No True Scotsman" is useful for anyone who belongs to a group with active and vocal extremists committing acts that would embarrass the rest of the group. Communist regimes embarrass communists. The inquisition still embarrasses Christians.

But there is another fallacy, sort of a mirror image fallacy, that also comes into play. It is the "No True Libertarian" fallacy. It is not employed by members of the group under examination. It is employed by opponents of the group under examination. "You do not spit on the poor? You’re not a true libertarian." It gets its name because it was discovered in a debate in which someone who opposed libertarianism kept decrying his opponents of not being libertarian when they didn’t hold positions he said they should hold.

Various absurd positions that libertarians "should" take were brought up; embracing slavery, a willingness to turn family members into prostitutes, a desire to live in a world similar to "Mad Max" movies, etc. When people denied the extreme anti-libertarian positions, they were described as not real libertarians. And if libertarians point out that anti-libertarian positions are indeed not consistent with any form of libertarian thought, the anti-libertarians insist that means that libertarianism is nothing more than a pick and choose ideology.

So if a position that is inconsistent with libertarianism is said to be inconsistent with libertarianism, that means libertarianism is itself inconsistent?

According to all the attributes assigned to libertarians by those who oppose it, if one counts the number of libertarians who do not hold those ideas then there really are no true libertarians anywhere in the world.

Like last year, I urge people to give to the Salvation Army. As the economy worsens even more than last year, more people are in need of effective charity. I don't agree with them theologically, but I agree with the work they do. And since the FCC is asking us to reveal whether or not we receive any benefit from endorsements we make, it's none of their damn business.

Sunday, December 13, 2009

What is a "good cop"?

There are no good police officers in the Portland Police Department of Portland, Oregon. Every single one of them is a "bad cop." Anyone who would pepper spray an eleven month old baby, or even do nothing when an eleven month old baby is pepper sprayed, is not only a bad cop but is no longer even remotely human.

Too many people have too relaxed a definition of "good cop". To them, a good cop is one who is not engaging in criminal activity. However, since a police officer's job is to apprehend those who are engaging in criminal activity, any officer who does not do that is by definition a bad cop. That includes failure to arrest fellow officers when fellow officers break the law.

There are no good cops in New York City Police Department. The officer who assaulted the critical mass cyclist was clearly a bad cop, but there were several other officers who stood around doing nothing when that happened. They did not arrest their fellow officer. Instead they initially corroborated his story, until a YouTube video gave lie to their version of events.

Given how increasingly criminal the police are acting, it is important to remember that just because a police officer does not personally break the law, it does not mean that officer is good. By failing to act they give consent to the actions of their fellow officers. For anyone short of an officer of the law, simply not breaking the law may be considered a valid definition, but police officers must be held to a higher standard due to the nature of their voluntarily chosen occupation.

There are no good cops in The Utah Highway Patrol. Instead they cleared the officer of all wrong-doing for using pain compliance and electroshock torture for someone who was not posing any sort of threat, but not giving abject obsequience to the officer either. If there was a single good cop in the whole organization, then Trooper Gardner would have been arrested for assault.

When the police start arresting the many bad apples within their own ranks, then it can be said there are good cops. Until that time their numbers are distressingly few.

Like last year, I urge people to give to the Salvation Army. As the economy worsens even more than last year, more people are in need of effective charity. I don't agree with them theologically, but I agree with the work they do. And since the FCC is asking us to reveal whether or not we receive any benefit from endorsements we make, it's none of their damn business.

Saturday, December 05, 2009

What is the free market?

"You believe the free market will take care of it."

Actually, no.

The person uttering that phrase is making an unwarranted assumption, that the free market is a centrally planned economic system just like all the others. The difference being that the person is implying that the free market is an independent self-aware quasi-omnipotent entity that does the central planning.

What "the free market" actually is, is the lack of any central planning. That's all it is. It is not an alternate method of organizing the economy. It is not replacing a physical central planner with an intangible central planner. It is simply the lack of a method of organizing the economy, the lack of a central planner. It is the millions of individuals engaging in billions of interactions and making trillions of decisions, all without being told what to do by some third party.

Given what the free market actually is, when someone is accused of trusting the free market, what that person is actually trusting is each individual to make his own decisions. Someone who "trusts the free market" trusts the people to act on their own behalf in their own best interest within the confines of their own knowledge.

The only people not trusted by someone who trusts "the free market" are those that say "I am equipped to make decisions for you." That person is a central planner, and the free market is only the lack of a central plan. Many people like that are unable to comprehend the absense of any central plan, which is why they must identify some kind of planner, somehow, in the free market, even if they have to make it up.

Like last year, I urge people to give to the Salvation Army. As the economy worsens even more than last year, more people are in need of effective charity. I don't agree with them theologically, but I agree with the work they do. And since the FCC is asking us to reveal whether or not we receive any benefit from endorsements we make, it's none of their damn business.

Sunday, November 29, 2009

Lack Friday

It is time for the Keynesian economists to predict disaster in spite of their pronouncements that the economy was finally recovering. They announced a fragile recovery and a jobless recovery. Then "Black Friday" failed to occur. The single biggest shopping day of the year happened without the massive crowds normally associated with that day.

Retailers were reporting that conditions were basically the same as any normal business day, and that by early evening the stores were fairly deserted. Although there were shoppers seeking good deals on high end items, it appeared that they were shopping for replacements for worn appliances, and not purchasing items like plasma televisions and other luxury consumer goods.

As is preached by Austrian economists, people are saving their money because they are in a recession. Many businesses look forward to "Black Friday" and the rest of the holiday season, as Christmas shopping helps sustain the businesses through the rest of the year. If the 2009 Christmas season fails to provide the profits usually associated with Christmas shopping many of the businesses that depend on it may not make it through the rest of the year.

The Keynesian solution is more stimulus. The message among those in political circles will be that people aren't spending enough.

People are saving money because it is the sensible thing to do, especially in economic hard time. The official unemployment rate is around 10%, the unofficial (and more accurate) rate is aroudn 20%, and the rate among 18 - 30 year olds is 50%. The money isn't there to be spent. Going further into debt is the very last thing peole need to do right now, even if the banks were lending.

If "Black Friday" i an indication of things to come, the situation is more accurately described as "Lack Friday". First the stores will lack customers, and then thanks to government efforts to remedy the situation the people will lack money and freedom.

Sunday, November 22, 2009

Economics for Scientists

The relationship between the social sciences and the natural sciences has always been a little strained, with social sciences constantly seeking the approval of the natural sciences. The social sciences cannot use the same methodology as the natural sciences, which causes too many natural scientists to look on the social sciences as having little to value.

That is not to say that all social sciences suffer from this problem. The sciences of anthropology and archaeology are quite well accepted, and psychology mostly so, but too far beyond that and the value, as seen by a natural scientist, diminishes rapidly.

Some of the fault for this does lie in the social sciences themselves. If one is to study psychology, the basic courses are more of a history of psychology, where each theory is studied, and then the refutation by the competing school is offered. An equivalent in the natural sciences would be for a physicist to have to study phlogiston and for a biologist to have to study the four humours. They are valuable in a history of science class, but have no actual value to someone seeking to learn science now.

Some in the social sciences feel the problem is that the issues studied aren't expressed mathematically. This is the solution adopted by Keynesians, and since that ideology is currently dominant other economists who wish official approval adopt the practice of trying to express everything in number. This includes some factors that cannot accurately be measured, such as "consumer confidence" or "satisfaction."

There is an aspect to Keynesian economics that would appeal to engineers, in that the Keynesian economic model present society as a machine, and if a certain input is inserted at one end a certain end result comes out of the other. But that alone doesn’t make Keynesian economics scientific.

The underlying basis of science is "does it work." That may sound like a strange stipulation to a person who read "Pragmatic Politics" but unlike the pseudo-pragmatists, when a scientist says "does it work" the scientist is operating from a specific premise. "Pragmatic Politics" also argued that any time someone asks that question they person asking it is acting from a particular premise of what goal the person asking it is trying to achieve. In the case of the scientist, the goal is a theory that accurately describes the real world and can be used to make accurate predictions.

It is said that when Einstein had finished developing his theories, he was quite distressed that as a consequence of his formulas black holes were predicted. He checked his work many times, but eventually came to the conclusion that the data said what the data said. As much as he personally disliked the idea of black holes, the theory was meant to reflect the world and he had to accept it as it was. Later on corroborating evidence was found that showed the mathematics were correct.

That is what made his theories scientific. They were designed to reflect the world, not the way he wished the world to be. They made predictions that could be tested. And unlike the theories that were replaced by Einstein’s theories, the tests showed that the theories accurately modeled the world.

All the currently competing schools of economics make predictions. Keynesian economics predicts that manipulation of aggregate demand can lead to a prosperous economy. Monetarist economics predicts that manipulation of the money supply can lead to a prosperous economy. And both of those have been discredited by events. If a theory is supposed to model the real world, then neither Keynesianism nor Monetarism are theories.

Once a theory has been discredited by the data, continuing to hold to that theory is no longer scientific but an act of faith.

Austrian economics, however, has been validated by events. Although it lacks the mathematics that many consider to be necessary for a scientific theory, an honest analysis shows that the predictions have been accurate. Since it is not the mathematics but the predictive power of a theory that makes it scientific, that means that Austrian economics is indeed a scientific theory of economics.

Although there are those scientists who might initially find it unappealing, if they emulate Einstein they will reluctantly embrace it because of its verified predictive power in spite of whatever political ideology they hold.

Saturday, November 14, 2009

One Healthcare Reform

Proponents of the current healthcare reform proposal in congress like to accuse critics of not offering any alternatives, of only opposing without offering anything. While that accusation is completely not true, it serve proponents of the fascist system well as a big lie, just as calling it socialist instead of fascist serves as another convenient lie.

Rather than dissect any particular part of the fascist bill, a refutation of the false charge that critics offer nothing is also useful. The reason the proponents say that critics offer nothing is because only big government solutions are allowed to be considered. Anything else is not a "constructive proposal" and thus they can get away with that big lie.

In spite of the psychological block against small government proposals being considered, it is always useful to suggest as many small government solutions as possible. That way the next time someone says that critics of fascist health care never offer solutions the critics can respond with "look at all the solutions I've offered that you refuse to consider."

Given the large number of problems, any single solution fails to address the full problem and appears short sighted. But one aspect is all that can be addressed at once.

One of the problems with the current system is that the patient is not the customer. When a doctor treats a patient, the patient isn't the customer. The insurance pays for the visit, and so the insurance is the customer. And who is the insurance company's customer? Since most people get their insurance through their employer, the employer is the customer and not the employee. It is true that sufficient employee complaints can cause an employer to switch companies, but the customer of the insurance company is the employer.

For a truly responsive insurance company, the patient needs to be the customer of the insurance company. For truly responsive health care, the patient needs to be the customer of the doctor. The only remaining question of this particular solution is how to make it possible. As proponents of fascist health care are quick to point out, the average person cannot afford a catastrophic illness.

The first part of the solution is to transfer the tax incentive for the purchase of health insurance from the employer to the employee. That way, unlike the Obama plan, people have a positive encouragement to purchase insurance instead of a punishment for failure to purchase insurance. Persuasion always being preferable to force, encouraging people to purchase insurance instead of punishing them for failure to purchase insurance is a better solution.

To make insurance affordable enough for a person to purchase it, the price needs to be brought down. That can be done through coercion or through encouragement. To do it through encouragement the best way to do it is through removing the rules that prohibit insurance companies from competing across state lines. Putting individual insurance policies in the hand of the customers while simultaneously increasing the number of companies and policies available, while giving people a tax break for purchasing insurance, will drive down the cost to the point where most people can afford it.

Another way to make insurance affordable is to remember that insurance is supposed to be for the unusual event. The way health insurance currently operates is absurd - it is comparable to using automobile insurance to pay for basic tune-ups, or even to pay for putting gas in the car.

Analyzing a standard insurance statement or doctor's visit statement, one finds that in general a large portion of a standard bill is an insurance negotiated adjustment. Another large portion is the patient co-pay. The smallest part is the payment the insurance company makes to the doctor. Ask most doctors what their cash price is and it turns out it is actually lower than the stated price for a visit.

People need to pay directly for office visits, and a good way to do that is through tax deductible healthcare savings accounts. But not the HSAs currently in use, that have an end of year use-or-lose for the funds. What is needed is a roll-over HSA, that allows people to put in more funds than needed while healthy so that the funds will be there many years later when people need more healthcare funds. This is similar to using a retirement savings account. In order to encourage use of a roll-over HSA account funds put into it should be tax free, just as in the current annual HSA.

That will give our current healthcare system another thirty years of operation before it gets as bad as it currently is.

Saturday, November 07, 2009

The empire cripples itself

Recently there was a story in the Army Times about how youths in the United States are generally unfit for military service. Too many potential recruits are either insufficiently educated, physically unfit, or have criminal records.

It is quite interesting because these youths are the products of government run taxpayer funded schools. Theoretically the government would want a population that is fit enough for military service, and as such would ensure the government run schools would provide a population that is smart enough, fit enough, and motivated enough to serve in the military.

This is one of the fundamental flaws of empire. On the one hand empire needs a population that is fit, intelligent, and motivated, so that these people can serve in ways necessary to administer the empire over other people. On the other hand, due to the repressive nature of empires back home, the empire needs a population that is under-informed, docile, and apathetic. It is very difficult to achieve both of those goals at the same time.

It is true that there is a way out of the dilemma, and that is to have a very militaristic educational system that emphasizes obedience above all else while educating in the basics of reading, writing, and arithmetic. But that is not what happened in the United States. With the emphasis being on not educating the public, the result is a public that is functionally illiterate. Michael Jackson’s funeral has more public interest than Ron Paul’s Audit the Fed bill.

It’s clear that the emphasis isn’t on education, even though nobody in the education system (other than John Taylor Gatto) will ever admit to such. It is clear because you hear complaints about “teaching to the test” and complaints about people entering the work force unqualified. Many college have a basic skills department to remedy the lack in even reading and arithmetic among entering students. If there really was a desire among the leadership in this country to produce an educated public, it could be accomplished, so therefore one must logically conclude that desire is not there.

Small wonder that among those who do seek employ in the government, too many of them are more than willing to abuse their position instead of think about the responsibilities of their position. More and more it is becoming apparent that while prosecutors have the necessary specialized knowledge of law to perform their job they have no knowledge about the philosophy of the laws they enforce and never stop to consider the ethics of their actions. More and more it is becoming apparent that too many police are no longer different from the criminals they are supposed to stop and are instead merely criminals with official permission to act. Just as the education system fails to provide soldiers, it fails to provide police.

Among the fields that require extensive thought, many of the engineering and medical students in this country are students who grew up in foreign countries and are now studying in the United States. Engineers and doctors study the humanities, but very few in politics have studied even the rudiments of science.

An empire will fail either because the public will not tolerate the domestic abuses needed to maintain an empire abroad, or because the public is too apathetic or unfit to maintain the empire abroad. It is clear which of these two paths has been chosen by the United States government.

Saturday, October 31, 2009

Bush the Socialist, Obama the Fascist

Sometime in the early 1980s the colors used to represent the two primary political parties swapped. For many years the Republicans were represented by the color Blue and the Democrats were represented by the color Red. In a way that made sense, as the Republicans were portrayed as the Blue Bloods, the "aristocracy", while the Democrats were portrayed as the ones soft on Communism.

For reasons unknown the parties switched colors, to the point where few remember that they had the other colors as recently as 1980. Now saying a state is a "Red State" is a way to indicate that it is strongly Republican or conservative.

But events since the year 2000 would lead one to conclude that perhaps the switch in colors is accurate to some extent. Bush is clearly more socialist than Obama, and Obama is clearly more fascist than Bush. It should be noted at this point that there are many purists who insist that "Socialism" can only and ever refer to ownership of the means of production, and that wealth redistribution through other means - such as welfare - doesn't count as socialism. For the sake of argument, wealth redistribution will be referred to as "welfare socialism", and from this point on any reference to "socialism" will actually refer to "welfare socialism."

More than once during the Bush presidency efforts were made to avoid economic problems through bailouts. The interesting point is that more than once Bush had checks made out directly to the people. They were not large checks, about $300 per person, but he ordered them issued directly from the treasury to the public. Keynesian advisors warned against this on the grounds that the money might be wasted on foolish expenditures such as paying off credit cards or paying other bills. That did not deter Bush in his effort to strengthen the ailing economy through efforts aimed at the common man.

While both Bush and Obama gave money directly to failing banks, Obama has only given money to the failing banks and automobile companies. A common Republican quip has been "Where's my bailout?" to show that Obama is only giving money to the wealthiest of the public, not to the common person.

On healthcare the same pattern holds. Bush authorized the largest expansion of Medicare ever, with Perscription Drug Coverage for Seniors. Obama appears ready to jettison the "public option" in favor of mandating that everyone purchase health insurance.

Little wonder there is such discontent between the base and the party leadership in the Republican Party today, that a third party candidate may win the 23rd Congressional District in New York. Likewise the anti-war movement has little to be happy about with Obama, and Fascists are well known for their militancy.

Saturday, October 24, 2009

What can I do?

It is a common question that haunts anyone who wants to increase liberty. When looking at all the ways government is advancing and liberty is diminishing, it is tempting to give in to despair. It is true that there is little that one person can do. Any large scale changes will involve large group efforts, true. So should a person give up and wait for said group efforts?

No, there is no reason to give in to despair. There is no reason to give up. There is still something that can be done. One can be prepared to ride the depression out and come out and prepare to come out on the other side.

The first thing to do is make sure that one is not fooled by the official propaganda. Anyone who has an evidence based view of economics knows that the current depression has utterly disproven Keynesian and Monetarist economics and vindicated Austrian economics. In spite of that, government economists and major media economists continue with the party line about government managed economies.

Keeping the facts in mind reveals that this is the worst time to sell gold for cash and to get further into debt. In spite of pronouncements that the depression is over, it is clear that the money pumped into the economy has done nothing more than re-inflated a few bubbles and paid off the major bankers. Using the knowledge gained by Austrian Economics, it is much easier to avoid the remaining bubbles.

Individually, the only thing a person can do is ensure his own house is in order. That's why many people advise starting a farm and other common sense measures.

Given how the police have gotten more dangerous, the best plan is not to confront them but to stay out of their sight as much as possible. Any talking back, even if in the right, is considered "contempt of cop" and results in an arrest for "disorderly conduct". A lucky person won't be tasered during the arrest for the crime of saying "what am I being arrested for?"

Of course, be armed, be ready to defend yourself. Be as prepared as possible for the various emergencies that may come up if the predictions of Austrian Economists continue to come to pass as they have done to this point. The only way to act to advance liberty is if the activist is able to act in the first place.

Saturday, October 17, 2009

The Is / Ought Fallacy

"Without Taxes, how will we pay for roads and schools and medical care?"

It is a common enough question whenever someone objects, not just to all taxes as is proper to do, not just to the current level which is excessive to all minarchists and many other thinking people, but even to proposed increases in taxes which will be used to fund new programs.

At first glance it appears to be an application of the Statist Fallacy, there is also another fallacy at play here, the Is / Ought fallacy. It is a Statist Fallacy because the assumption is that if the government doesn't provide these services than nobody will, and that by opposing the government being the provider of these services one also opposes the services being provided at all.

But it is also an is / ought fallacy. The speaker is assuming that the way things are, that the government provides these services, is the way things ought to be, and by expressing the point in that particular way the speaker is hoping to lay a verbal trap for any opponent of expanded government. One can either deny that taxes should pay for those and because of the statist fallacy agree that those should not exist, or one can agree that those services are valuable and because of the is / ought fallacy agree that the government should fund them.

A good answer is "since currently those are paid for by taxes, we currently need taxes to pay for those" and then immediately accuse the speaker of engaging in the is / ought fallacy. The inclusion of the word "currently", twice in one answer, allows the libertarian in the argument to sidestep the trap of either embracing the statist fallacy or the is / ought fallacy, and it becomes very difficult for even a determined statist to pull a quote out of context. Leaving out either instance of that word eases decontextualization and the ability to try to argue that the libertarian is actually agreeing on some level with the statist.

"Since currently those are paid for by taxes, we currently need taxes to pay for those. What a fine example of the is / ought fallacy, where since that is the way it is therefore that is the way it ought to be. Why ought it be that way? Is there no other way to fund those besides taxes?"

Friday, October 09, 2009

Traffic Lights

There is an anti-libertarian argument that, no matter how often refuted, comes up often and proceeds along these lines: Some order is necessary, such as traffic lights and speed limits. Libertarians would want to do away with traffic lights and speed limits because the government put them in place, even thought the government did so to keep us from killing each other while driving. You need some order to function as a society.

There are many errors contained in that one argument.

First of all, it is not the position of any consistent libertarian that the government should not be able to set rules for traffic on any government road. It’s simply a matter of application of property rights. A libertarian could easily defend traffic regulation by saying “whereas the government is the owner of the roads, the government has the authority to set the terms for the use of the roads.” A much more consistent libertarian argument would simply include one more word and say “whereas unfortunately the government is the owner of the roads, the government has the authority to set the terms for the use of the roads.” This argument is valid even for those who do not recognize the legitimacy of government ownership of anything because de facto the government owns them whether the legitimacy of the ownership is recognized or not.

But that does not address the deeper misunderstanding. Libertarianism is not, and never has been, against order. Libertarianism is merely opposed to externally imposed order, order brought to society at the point of a gun. Libertarians have long endorsed spontaneous order, the order that can be found inside chaotic systems such as the free market. The accusation of objection to order at all is a red herring, designed to throw people off of finding out what it is that libertarians are really objecting to.

Libertarians do not object to voluntary cooperation. In fact, for the free market (advocated by all libertarians) to function voluntary cooperation is a necessity. Buyer and seller are cooperating voluntarily, from the level of the smallest hot-dog vendor on the sidewalk and his customer to the largest corporation.

The market isn’t the only way libertarians see spontaneous order. Every day people get married and start families. While some marriages are planned, how many of them are centrally planned? The whole of society is one giant exercise in spontaneous organization.

It is only when that organization is imposed by force, externally, do libertarians object. And usually the imposition is from government. It can be from criminal organizations, but more often than not criminal organizations are pale imitations of the government.

Accusing libertarians of being anti-organization because libertarians are opposed to externally imposed organization, imposed at the point of a gun, also overlooks that the amount of chaos commonly associated with anarchy can only be created by government. As Doug Newman said, “When you let people do whatever they want, you get Woodstock; when you let governments do whatever they want, you get Auschwitz.” In the United States instead of Auschwitz so far all we’ve gotten is the anarchy (caused by government) of the reaction to hurricane Katrina.

Saturday, October 03, 2009

But are they right?

The internet has made it possible to find articles on any topic detailing both the pro-liberty and anti-liberty side of any position. That has ultimately been a good thing for the pro-liberty side as traditional sources can be bypassed for accurate material.

It often happens in internet debate that libertarians will find a relevant article on LRC or Cato or Reason (or dozens of other libertarian sites) and link to it in a debate. The reaction from those who oppose liberty is invariably "the author is biased" or "the website is biased".

Usually this successfully derails the debate. From that point onward the discussion center around the bias of the article or the bias of the hosting site.

Although it may be irksome, the best way to get the discussion back on track is to simply respond with "yes, but are they right?" Conceed any allegation of bais while simultaneously engaging the content of the article. This isn't just agreeing with the bias. Proving bias usually subsitutes for refuting an article, and "Yes, but are they right?" puts the onus back on the other person to go in and investigate the content in order to answer that question. Instead of declaring victory due to an accusation of bias the other person must either get back to the topic or conceed that the article was right.

This is also useful in reverse, The report on California's regulatory mess was posted on a government website. Libertarians are confronted with "but it's a government website you don't like government." The proper response is "yes, but are they right?" It forms a useful defense against accusations of hypocrisy with regards to using a government website - the important feature isn't if the article is from the government but is the content.

Sunday, September 27, 2009

California reports on excessive regulation

The Cost of California

A report was recently released by the State of California detailing the cost of regulation to the state's economy. The results are damning.

Regulation costs just under half a trillion dollars annually. It costs the state four million jobs. It costs the state twelve billion in taxes.

The cost to the state's economy is equal to what is currently one third of the state's GDP. The twelve billion in taxes would close the existing budget gap without resorting to fancy accounting. The four million jobs would put the state's unemployment rate below, instead of above, the national average.

This report was actually commissioned by the State of California. It was due in 2007, and it was submitted in 2007, but the governor, showing the well-known small-government leanings that are commonly associated with the Republican Party, sat on it for two years until forced to release it.

It is truly a damning report, especially given that it was released by an agency of the state government. Those who see the government as the solution to various problems are faced with the government saying that the government is the cause of problems.

Because the authors are professors of the social sciences at state universities, that gives them all the qualifications a statist would ever need - had this been done privately the criticism would be that because it is done privately there is an agenda that discredits the report. Because the report is printed in the Small Business Administration of the State of California, that gives the report all the credibility a statist would ever need - had this been printed privately the criticism would be that because it is done privately there is an agenda that discredits the report.

The Report


This study measures and reports the cost of regulation to small business in the State of California. It employs an original and unique approach using a general equilibrium framework to identify and measure the cost of regulation as measured by the loss of economic output to the State’s gross product, after controlling for variables known to influence output. It also measures second order costs resulting from regulatory activity by studying the total impact – direct, indirect, and induced. The study finds that the total cost of regulation to the State of California is $492.994 billion which is almost five times the State’s general fund budget, and almost a third of the State’s gross product. The total cost of regulation results in an employment loss of 3.8 million jobs which is a tenth of the State’s population. Since small business constitute 99.2% of all employer businesses in California, and all of non-employer business, the regulatory cost is borne almost completely by small business. The general equilibrium framework yields the following results:

• The direct cost of the regulatory environment in California is $176.966 billion in lost gross state output each year. The direct cost does not account for second order costs.

• The total loss of gross state output for California each year due to direct, indirect, and induced impact of the regulatory cost is $492.994 billion.

• In terms of employment this total output loss is equivalent to the loss of 3.8 million jobs for the state each year. A loss of 3.8 million jobs represents 10% of the total population of California. In terms of labor income, the total loss to the state from the regulatory cost is $210.471 billion. Finally the indirect business taxes that would have been generated due to the output lost arising from the regulatory cost is $16.024 billion.

• The total regulatory cost of $492.994 billion is four to four and a half times the total budget for the state of California, and almost five to six times the general fund alone. Further, given the total gross state output of $1.6 trillion for California in 2007, the lost output from regulatory costs is almost a third of the gross state output.

• The indirect business taxes lost could have helped fund many of the state’s departmental budgets. As an example, the indirect business taxes lost are 60 times the budget of the Office of Emergency Services, and would have paid for almost half the budget of the Department of Education.

• The total cost of regulation was $134,122.48 per small business in California in 2007, labor income not created or lost was $57,260.15 per small business, indirect business taxes not generated or lost were $4,359.55 per small business, and finally roughly one job lost per small business.

• The total regulatory cost of $492.994 billion translates into a total cost per household of $38,446.76 per household, or $13,052.05 per resident. The total cost per household comes close to the median household income for California.

This study provides the most comprehensive and complete analysis of the total regulatory burden in California. The study and findings have implications for policymakers and those in charge of the regulatory environment. The results also suggest that future research should attempt to understand how to minimize the intended and unintended costs of regulation. Since small businesses are the lifeblood of California’s economy constituting 99.2% of all employer businesses, efforts to make the regulatory environment more attractive will make California a more attractive state for doing business. This in turn will improve the state’s output, employment, labor income, indirect business taxes, economic climate, quality of life, living standards, and growth prospects.

Sunday, September 20, 2009

Government disease

On Lew Rockwell, one of the writers compared government to a drug on the grounds that the more government we have the more people desire yet more government. With any normal product, people eventually get sated and fewer and fewer people desire to have greater and greater quantities of given goods.

On Liberty for All, one of the writers noted that the more chaos the government creates, the more people see it as the only way to avoid chaos, because without government there would be chaos.

Libertarians, whose political philosophy starts with trying to expand the rights of the individual and therefore have less government as a consequence, are accused of having a hatred of government as a starting point.

Whenever a libertarian exercises his right to try to improve the government by reducing the size and scope of the government, those who prefer larger government offer the spurious argument "move to Somalia", although curiously the argument that those who enjoy large government should move to Cuba is never considered. The argument "move to Somalia" is quite spurious since Somalia actually suffers from government just like other countries do - every time the Somalis start to rebuild some country sends in a "peacekeeping force" to destroy everything that was built up and try to impose a government that the Somalis don't recognize. Eventually the "peacekeeping force" leaves, the puppet government collapses, and the rebuilding resumes.

The perverse relationship some people have to the government is revealed in the healthcare debate. The current system in the United States is already largely a government system, as over half the dollars spent on healthcare are spent by the government, and the rest are heavily regulated. Given that state of affairs, and that the current system has serious flaws that are crying out for reform, the only proposals that are considered as part of the debate are those that advance the government. A public option is proposed to allegedly increase compeition, when allowing insurance companies to compete across state lines and forcing states to reconginze medical licenses from other states would actually do the job without increasing the size or scope of government. But when that is mentioned in debates proponents of government medicine fail to notice that it was mentioned. They do not argue against it, they do not say it is wrong, they do not say their plan is better. They simply do not respond to it at all.

There are so many ways in which the government is responsible for the current broken system that it would take many analysts reporting from many different angles to cover them all - the entire libertarian blogosphere. But those who are addicted to government will never see that their own addiction causes the very chaos that they want their drug to cure.

Saturday, September 12, 2009

Who is not a libertarian

If an overwhelming majority of the people in an ideological group say that some person is not in that group, odds are that the overwhelming majority is correct. For instance, an overwhelming majority of Christians, in spite of their inter-denominational disputes with each other, would agree that members of other faith groups are not Christians. Even if some member of another faith, say a Hindu, were to say that he was a Christian (without changing any of his Hindu beliefs) he would not be one on his own say-so, but would instead be regarded as someone who is either lying or deluded.

There are cases that are not so clear cut, but an ideological group can be defined by the shared ideology. If one does not fit in, within the natural flexible boundaries of that ideology, then one does not fit in. There can be people who vary one way or another within ideological groups, but there comes a time when someone is actually outside the group. Libertarianism has purists, reformers, radicals, left-libertarians, right-libertarians, anarchists, moderate libertarians, but no socialists or fascists.

But in spite of it being obvious that there are those who are not libertarian, anyone can claim to be one. And sometimes those who oppose libertarianism choose to believe the claims in spite of the evidence otherwise.

Alan Greenspan has not been considered to be a libertarian by libertarians for at least two decades, possibly longer. No action taken during his tenure as Chairman of the Federal Reserve has been one that libertarians would approve of. Yet the fact that he was at one point in the past a member of Ayn Rand's inner circle and he blames the economic downturn on his allegedly free-market actions has given statists great cause to trumpet him not only as a libertarian but as one who has admitted that libertarian ideas do not work. Which libertarian ideas? He hasn't demonstrated any in years, unless the conspiracy theory is true.

He brought the economy of the United States to the Second Great Depression. He was once in Rand's inner circle. He claimed the downturn was the result of his libertarian beliefs. In spite of all the overwhelming evidence against him still being a libertarian, and in spite of the overwhelming majority of libertarians who say he is not one, he is considered one by the statists.

The objective is not to have an honest debate, but to attack libertarians through the failings of Greenspan. If the debate where honest the statist would have to admit Greenspan is not a libertarian.

Then there's Milton Friedman. He wasn't even an advocate of the free market in the first place, starting as a Keynesian before becoming a Monetarist. He was part of the Chicago School of economics, which is not a free market school. Yet many times when libertarians speak in defense of the free market, some statist will challenge libertarians to defend what Friedman did in Chile. Good or bad, his actions with regards to Pinochet cannot reflect for good or ill on libertarianism in any way.

Yet because Monetarism is less interventionist than Keynesianism, and in spite of the overwhelming evidence against it being free market, and in spite of the overwhelming majority of libertarians who say it is not, it is considered so by the statists.

Under Pinochet, people were not allowed to refuse to sell their labor. There's nothing libertarian about that. But the comparison is not made for the intent of honest debate but to shut down honest debate.

It seems that those who advocate most strongly for increased government power are the least willing to honestly engage libertarianism qua libertarianism, arguing against Alan Greenspan and MIlton Friedman instead.

Saturday, September 05, 2009

A fully private healthcare system

Although it appears that Obama may be dumping the public option (for now) many of his supporters both in and out of government are still pushing for a taxpayer funded public option. Allegedly this public option would be a Government Sponsored Enterprise, after the fashion of such success stories as FNME or FDMC. It is called "alleged" because no part of the upcoming healthcare bill that will eventually be voted on by either the House or the Senate has actually been finalized.

On a libertarian internet site (probably on Lew Rockwell but the original reference cannot be located), someone suggested that he would support the public option – including a 15% tax increase - in exchange for the private option actually being private.

The private system would be completely private. It would not be regulated in any way. It would be free of all FDA regulations, DEA regulations, and medical licensing. Anybody can be a healthcare practitioner, and can prescribe any medication. But any prescription would be considered nothing more than advice since no medications would be controlled.

So as an experiment, this idea was run by several supporters of socialist medicine.

Theoretically there should be no reason for them to oppose it. They get everything they allegedly want - full government run medicine with all the controls, paid for by those who do not want government medicine. They get free healthcare paid for by their opponents. They get all the controls they say people need. They get all the licencing, all the regulations, and all the restrictions they say people need. And they get to have those who prefer a private system pay for their public system.

The suggestion was greeted with horror.

For some reason, even though the suggestion gave them everything they say they want, they didn't want it.

They were obsessed with the question of how someone in the private system would know which medicines to take. It was suggested that people in the private system would go to any fraud who claims to be a doctor, and only wanted the medicinal freedom in order to "pop pills". Such arguments would indicate that advocates of socialist medicine need the government to prevent them from going to frauds and would need the government in order to not "pop pills".

It seems that the argument in favor of Socialist medicine is more than simply an attempt by the advocates of that system to have "free" healthcare. There is for some strange reason a desire to ensure that everyone else is in a controlled and regulated system as well, a desire to control and regulate everyone else.

Friday, August 28, 2009

Why did Switzerland surrender?

In early August, Swiss bank UBS gave in to demands by the United States to divluge the names of over 4000 accounts. Normally this would be in violation of Swiss banking secrecy laws, but somehow Secretary of State Hillary Clinton convinced the Swiss government to allow this. The Swiss reported that UBS had no real choice in turning over the names.

The mystery is why the Swiss give in. Yes, diplomatic relations between the United States and Switzerland, but the Swiss have a well-deserved reputation for neutrality and any damaging of relations is more likely to hurt the reputation of the United States than it is to hurt Switzerland. Any overt action against Switzerland by the United States would be greeted with condemnation, even if those measures were on a lower level such as economic sanctions or condemnatory UN resolutions.

In a possibly apocryphal story, a Nazi commander asked a Swiss soldier what their 500,000 man militia would do if faced with 1,000,000 storm troopers. The solder replied "shoot twice and go home." While this conversation might not have actually happened it certainly captures the essence of the Swiss resistance to threats.

Then why would the Swiss give in to demands by the IRS? What could Hillary Clinton have said to cause the Swiss to give in?

The Swiss were also in the news in June as two Japanese individuals were caught attempting to sneak bonds into that country but were captured by Italian police. The bonds were of sufficient denomination to represent a full quarter of the Japanese holdings of United States debt. These bonds were later proven to be forgeries - high quality obvious forgeries. A true forger would want to make bonds as realistic as possible, and as a result not make such a blunder.

Forgeries of this nature are unlikely to be the work of any independent criminal. They are much more likely to be the work of a government engaging in economic warfare, and having the operative get captured is the warfare equivalent of a "shot across the bow".

Could it be that the United States government was behind the forged bonds? Could Secretary of State Clinton have told the Swiss that next time the bonds would be indistinguishable from the real thing - because they'd be made by the same printing press?

What would be the advantage of the United States government distributing forged United States treasury bonds in Switzerland? Once the forged bonds are snuck in and sold, the new owners would try to redeem these bonds. The United States would decline because "some bonds from Switzerland are forgereries". Following the discovery would be an announcement by the U.S. government that any bonds in Switzerland must be verified by the U.S. government in order to be redeemed. Given how much of the rest of the world holds their wealth in dollars, and how much of it may reside in Switzerland, that would freeze the hidden wealth of most of the world and damage the Swiss banking system. Millionares world-wide would be forced to reveal hidden assets, often to their own detriment, or lose those hidden assets.

It would be a nuclear option. Did Hillary Clinton threaten Switzerland with a nuclear option?

Saturday, August 22, 2009

The Statist Fallacy

A common argument in favor of any new proposed law is that if someone opposes the law then the person who opposes the law is in favor of whatever the law is supposed to prevent. For instance, whenever someone suggest that laws against drugs be repealed then the argument is then made that anyone who makes that argument is therefore in favor of drug use. Or when someone suggests that prostitution be legal the argument is made that anyone who makes that argument is a proponent of prostitution.

Also when a new government program is proposed, if someone dares suggest that the government has no business providing a good or service then whoever dares make that suggestion doesn't want that service provided at all. For instance, anyone who dares suggest that the government has no role in providing health care is accused of wanting people to not be able to access health care.

These are two variations of the same fallacy. It is assumed that if the government isn't involved then the issue is unresolved, and anyone who opposes a government solution then opposes a solution at all.

It's a very nasty fallacy, as it often puts those who oppose government solutions on the defensive. They have to defend themselves against many spurious vice charges, such as indulgence in prostitution or drugs, or the vice of greed since they allegedly want to keep their money rather than solve some problem that the government would use that money to solve. Loaded questions such as whether anybody who opposes welfare ever gives to charity are thrown up to distract from the main argument of the program itself.

As any proponent of liberty knows, it is quite possible to oppose something and oppose laws against it at the same time, such as opposing racism and opposing thought crime laws. It is also possible to support something and oppose laws mandating it at the same tme, such as charity. The simple solution when faced with the statist fallacy is to call it for what it is. A more argumentative solution is to say "so you require a law for you to do what is right?"

Saturday, August 15, 2009

End of life medical care

It is true that there needs to be a reform of end of life medical care. Unfortunately for the country the reforms originally poffered under one of the five competing and not thoroughly defined plans promoted by President Obama offered exactly the wrong reform.

End of life counseling, death with dignity discussions and other such means aimed at helping seniors plan for the ultimate end, or even panels that decide the life value of the care and thus cut off care as some describe (and may or may not have been in any one of the five plans) are not the answer that is needed. Those reforms mean more regulation and more bureaucrats, which will ensure that the care fails to offer any actual concern for the people involved.

The problem lies not in the absense of government, but once again in government involvement.

It is well known in the medical profession that the most expensive treatments are almost always the end of life care, whether the patient be 30 or 90. The patient will start to suffer from what medical professionals call "TBF", short for "Total Body Failure." At that point there is no care that is cure. All the care will do is extend life for a few more hours, or perhaps even minutes.

But when a patient is experiencing TBF, generally the family says "Do what ever it takes to keep (him) alive." The Doctor's hands are thus tied, by law, to fulfill the wishes of the family and spend hundreds of thousands of dollars for a few more hours of life.

The one thing the doctor cannot do, without risking a malpractice suit and possible license revocation, is to say "there is nothing more I can do, so I will do nothing more." He is forbidden to say that.

Since the family is not the one paying the final bills, they belong to the patient himself, the patient's insurance if available, and probably medicare and medicaid, the family has no reason to worry about the cost of these extra hours. The bill is paid for by everyone else, either the hospital or insurance company absorbs the cost and passes it along to everyone else, or the taxpayer absorbs the cost and passes it along to everyone else.

One simple way to substantially reduce the cost of medical care is would be to reduce the regulations that forbid doctors from making this determination, but that would be opposed by statists because that would be doctors instead of bureaucrats making the decision, and that ould be less regulation instead of more. But, unlike the end of life counseling preferred by statists this would actually work.

Friday, August 07, 2009

The Missing Debate

The debate over the "Cash for Clunkers" program is interesting. It is a perfect microcosm of the debate over the entire economic progam of the Obama administration.

Those who favor the program argue that it stimulates the economy and is good for the environment. Those who oppose the program argue that is an example of the fallacy of the broken window and that it is not environmentally beneficial because while an old car only has the gas mileage environmental costs a new car has manufacture and gas mileage environmental costs.

The response from those who favor the program is not to argue any of these points. The response from those who favor the program is not to even acknowledge that the points have been made in the first place, but to repeat the original claims as if they are proven already.

Given that all the claims are already proven, there is no need to debate. Debate only gives unnecesary credibility to those who have no basis to their arguments. Never mind that the arguments against are based on some pretty realistic concerns about if the program actually works economically or environmentally, as long as the arguments aren't analyzed there is no need to worry about their content.

At least under Bush it was obvious when counter arguments were being dismissed out of hand and without thought, but under Obama the talk isn't "if you are not with us you are against us" but instead there is the suggestion of bipartisanship and all sides coming together. All sides can come together, if they all agree to do as they are told by the Obama administraiton.

Friday, July 31, 2009

An announced recovery

The economy continues to decay, but people in various media and government outlets were cheering the fact that the economy only shrank by one percent in the prior quarter, unlike the over six percent shrinkage in previous quarters. That the economy continued to get worse is considered good news because it got less worse instead of more worse.

Some, such as Bernanke, conclude that the economy will recover by the end of the year. Bernanke was saying the same thing back at the beginning of the year though, so the only real strong point he has is consistency. While unable to foresee the recession he sees that it will soon be over.

Naturally anyone familiar with Austrian Economics can poke holes in the pronouncements of recovery.

The GDP only shrank by one percent, in a quarter which saw phenominal increases in government spending. Unfortunately government spending is considered a contributing factor to the GDP instead of either an outside factor or a subtractive factor. The basic equation for the GDP is: GDP = private consumption + gross investment + government spending + (exports − imports). A corrected equation for the GDP would be GDP = private consumption + gross investment - government spending + (exports − imports).

The second formula accurately represents the drain on the economy that is the government. But that may be too controversial for most economists, and just leaving out government spending as a whole would still give a clearer picture of the GDP. GDP = private consumption + gross investment + (exports − imports).

In either case, the GDP smaller than actually reported. And that smaller GDP would indicate a larger decay of the economy considering how rapidly the federal budget is growing.

But supposing that Bernanke is right, that the economy is starting to recover. According to Austrian economics, that will mean that the USA will have to deal with the negative effects of the efforts of the government to stave off the inevitable liquidation of malinvestments. Since this was done by doubling the money supply, the negative effect will be a havling of the value of the currency. That means if the recession does indeed end in 2009, the next one begins in 2010.

Thursday, July 23, 2009

Fallacy of the Broken Window

Anyone who has studied economics is familiar with the parable of the broken window. One day in a peaceful small town some kid throws a rock through the Baker’s window. Understandably the baker is upset about this because now he has to buy a new window. A Keynesian economist comes along and declares this to be a good thing because this stimulates economic activity, as the Baker will buy a new window enabling the Glazer to make purchases he would not have otherwise been able to, creating a ripple effect throughout the economy. He calls it "The Parable of the Broken Window."

But a Misean economist comes along and calls it "The Fallacy of the Broken Window” instead of "The Parable of the Broken Window" because the Keynesian assumes the Baker's money was doing nothing and is now being put to use. The Misean says that we do not know what the Baker might have done with the money, what he would have spent it on instead. The Baker might have purchased, for example, a newer and better oven, increasing his productivity. Instead of everyone being better off, because bread is now cheaper and more plentiful, the town is really only poorer by the amount of one window. This is commonly referred to as the problem of the unseen.

Socialists and Keynesians hate the fallacy of the broken window. It undermines their entire view. Creative destruction and central planning do not create wealth if the story of the broken window is considered a fallacy instead of a parable. But for a long time the only response was to say that calling it a fallacy is wrong. But now it seems there is circulating in the discussions of central planners a new counter to "The Fallacy of the Broken Window." Some central planners are starting to call it "The Fallacy of the Fallacy of the Broken Window."

Their argument is that we do not know that he would have spent the money in a productive manner. Since we do not know that the money would have been used productively if the Baker's window were not broken, and we do know that the money was used productively since the Baker’s window was broken, the certainty of productive use in the latter situation means that the problem of the unseen is a fallacy and therefore advocating for the former situation is uninformed.

There is a major problem with that counter argument.

While it is true we do not know exactly what the Baker might have spent the money on otherwise, we do know it in a few broad categories. He would either have saved it, spent it, or given it away.

If he gives it away then the three options pass on to another person, who either spends it or saves it or give it away. Eventually the wealth will get spent or saved, so this option can be ignored as simply regression.

If he spent it, then it is a given it would have been spent in a productive manner given that people do act in their own rational self interest within the confines of their knowledge. To say it was spent in an unproductive manner is a subjective value judgment that Keynesians are not actually capable of making. This is also true if the recipient of giving the money away spends it.

Finally if he saves it, it is a use. This is the biggest Keynesian stumbling block, but as all Miseans know saving is not detrimental to the economy. Saving is how a person is able to consume in the future. The Baker might be saving up for that new oven, and in another month would have been able to purchase it, but now cannot because his savings must be spent unproductively on a new window. If the money is saved in a bank, the bank lends it out for economically productive purposes. But even if the money is saved in a box buried in the back yard it is still being put to the economically useful activity of saving for the purpose of future consumption.

The central planner's response to "The Fallacy of the Broken Window" by calling it “The Fallacy of the Fallacy of the Broken Window" is actually "The Fallacy of the Fallacy of the Fallacy of the Broken Window."

Friday, July 17, 2009

Public and Private Competition

One way those who want to "improve" the free market do so is by introducing competition in the form of a government program or agency that duplicates work done outside the government. Usually those in the afflicted field would be surprised to know that the field doesn't currently have competition. But in order to correctly analyze the claim, it is good to look at fields where the government directly competes with private enterprises.

First and foremost on any list of government activities that compete directly with private endeavors is education. At one time education was largely private, and to a great extent taxes were not used to pay for education. Yet education was available at all levels, although non-compulsory, to the point where religious groups were even offering free education to the poor. But government sponsored education has only increased. Since it is paid for by taxes the direct consumer does not directly pay for the education and therefore mistakenly considers it free.

As a result, private schools have diminished in number. While they generally provide a much higher level of education, only those who are either make major sacrifices or are wealthy can take advantage of the better education offered.

The second endeavor to be examined is in delivery of the mail. Libertarians are generally familiar with Lysander Spooner's attempt to deliver first class mail, and how the Post Office used legal coercion to shut it down. Package delivery still has private competition in the form of UPS or FedEx.

The prices for package delivery by the USPS are lower than UPS or FedEx, due to undercutting. The low price is supported by raising the rates on first class mail. Even with that undercutting those who can afford it (and in this case many but not all can) prefer to use FedEx or UPS. What makes the USPS special among cases of comparing private and public offering of services is that the user does pay for the service directly. But even then the USPS is subsidized by the Federal Government.

Another is the providing of security. It is well known that the rich do have private security in private communities or residences that respond quickly in the event of a disturbance. Those who are of average means can afford to defend themselves by the purchase of a firearm. Those who cannot afford any better rely on the police, who arrive after a crime has already been committed to make the report and try to apprehend the criminal. The rich have proactive protection, the middle class can protect themselves, and the poor have no protection.

The building of roads has been entirely taken over by the government to the point where many cannot imagine it being any other way. In the former Soviet Union people could not imagine how shoes could be distributed if the government did not do so, and wondered if those who thought a free market in shoes meant that only the rich could get shoes. There is nothing to compare the building of roads to, given that the ability of government to force everyone to pay and offer the resuliting roads for "free" has completely driven private roads out of business. Those toll roads that are managed by special grants from the states do not count as they are not free market but are corporatism.

In every case except the Post Office, the ability to force payment into the program, combined with while offering the service for "free" has driven competition out of the market for all but the very wealthy. The same is true to a lesser extent for the Post Office. This has resulted in only the wealthy being able to truly afford high quality goods or services.

The health care plans offered by President Obama include a "Public Option" where the Federal Government directly competes with private insurance companies. If history is any indication this will result in only the wealth being able to afford high quality medical insurance. Taxes will be raised to provide the service, and the public will be lied to about how the service is free. Those who advocate anything other than a program which will result in only the rich being able to afford quality insurance will be accused of wanting a program which will result in only the rich being able to afford quality insurance.

I'd like to welcome as readers the Complete Liberty Podcast, as I've just discovered that they've used two of my articles in their podcasts. I'm flattered.

Edited to add:

A critic of this article pointed out that education is somehow disproof of the proposition that public and private competition leads to only the rich being able to afford quality services. What was offered as proof wasn't primary education but colleges, which in the United States are still considered to be very good.

It is true that on the level of Masters or Doctorate the United States is of exceptionally high quality, and in some fields a Bachelor's Degree is worth more than the paper it is printed on. But as is being pointed out on Lew Rockwell's website the cost is becoming prohibitive. Students graduate with many thousands of dollars in student loans just for a Bachelor's, after scholarships and grants. Those who go for even higher degrees finance it almost entirely by borrowing. Education is becoming a way to become an indentured servant of the lending agencies.

It is true that a Bachelor's Degree holder statistically earns more over the course of his life than someone with only a High School degree. It is also true that the costs of paying for that degree are rising to the point where they may be higher than the lifetime earning differential. If that happens than the economic decision would be to forego higher education.

That would mean that thanks to public versus private competition a quality higher education is only the rich can afford.

Saturday, July 11, 2009

Secession Day in Retrospect

July fourth rolled around with many of the comments one would expect. Republicans and Democrats turned it into yet another opportunity to worship the state. Libertarians bemoaned the chasm between the original intensions of the signers of the declaration and how far this country has gone since.

But there was another thread in libertarian blogging on the subject. There were more than a few bloggers who pointed out that the signers were not trying to “work within the system” but had openly taken up arms against the government in open revolt. Those bloggers were also questioning the reluctance of modern libertarians to make such an open revolt against a government far more oppressive than the king of England was.

The question was asked, as an imperative, if libertarians had what it takes to say to the government “I’m not going to obey your laws anymore.” There are many people every day who say that. They are called “criminals” by the government. True if everyone became a criminal at once the government would fall but that is not what the authors are actually urging.

What these authors actually want is a movement to join that will actually be a revolt. If they really stood by the call to arms at this time, they would be taking up arms at this time. They would become criminals. But they do not want to go to jail for their solo efforts.

The signers were not individual criminals funding a revolt. They were politicians. They had worked their way up through the political system and were speaking on behalf of the states that they were delegates from. John Hancock, first president of the United States, was one of the wealthiest men in the colonies before the declaration was signed. Early in his political career he was one of the five selectmen of Boston. He served in various political offices until he was made president of the Continental Congress. The rest of the singers were all people of influence, prominent lawyers, doctors, military officers, shippers, educators, publishers, and politicians. They all served in offices, elected or appointed, before they were appointed as representatives – by their states – to speak for their states in the Continental Congress.

The second revolt was also led by those who had already established themselves, when the eleven Confederate States seceded. Like the secesion of 1776, the secession of 1861 was a product of those who were already withing the political system. The vote to secede took place in the legislatures of the states.

In other countries, where avenues such as that are not available, instead of prominent politicians leading an anti-government movement, other institutions where one can have influence are used as a vehicle for revolt. In many countries religious leaders and institutions are vessles for this kind of activity.

If what the authors of those blog entries really want is a movement that people can join, what they should do is find a way to start such a movement. They need to form their own militia, train it themselves, and fund it themselves. Like everyone else raised in the current system of dependency on the government, they are waiting for someone else to handle the organization aspect of this problem. The real work is to become influential enough to create this sort of movement, instead of waiting for the movement to exist and urging everyone else to join it.

Friday, July 03, 2009

California issues IOUs

While everyone else in the libertarian blogosphere is writing about how the founding fathers were rebels, traitors, and secessionists, and encouraging us to live up to their examples, I decided that while they are right my own input on this is not needed at this time. So I decided to write about something a lot more current.

First the government of California passed the single largest state tax increase in the history of the United States. Then ballot propositions are sent to the voters to extend the tax increases, which the voters reject. The propositions were rejected by all groups in California; they were rejected by blacks, whites, Hispanics, Asians, and "others", they were rejected by men and women, by Republicans and Democrats, by conservatives and moderates, and only broke even among liberals. They were most strongly rejected in Orange County and barely rejected in San Francisco County.

The rejection of the propositions threw the budget into unbalance again, and as time went on and the economy worsened (and the tax increases failed to provide a corresponding increase in revenue for reasons Miseans would understand but would confuse Keynesians) the need for a balanced budget grew more urgent as the state Comptroller warned repeatedly that the state was running out of money. In the time between the failures of the propositions to the deadline the deficit rose from a projected $16 billion to a projected $24 billion.

The deadline came and went, a budget was not passed, and so on July 2nd the State of California started issuing IOUs. This was largely because although the Republicans were more than willing to aid and abet the last tax increase the voter reaction was so strong that they thought it better to actually follow their election promises this time around.

The reaction from the politicians is the most interesting part.

In the Assembly Budget Committee, a Democrat on the committee opined that while he supported the new round of tax increases perhaps it was time for the state to start living within its means. Chairperson Noreen Evans disagreed saying "There is this mantra out there 'living within our means' and while it sound really nice it sounds really simple and it sound really responsible it's meaningless. Our means are completely within our control". She opposed any cutting of the budget on the grounds that the state can always raise taxes to cover any needed revenue.

In an interview Assemblywoman Karen Bass reacted to the Republican refusal to approve of any tax increases. The recall effort against Assemblyman Anthony Adams (as well as other Republicans who violated even indirectly their no-tax pledges) has scared the rest of the party straight. Assemblywoman Bass opined about those who dare oppose tax increases by saying "The Republicans were essentially threatened and terrorized against voting for revenue. Now [some] are facing recalls. They operate under a terrorist threat: 'You vote for revenue and your career is over.' I don't know why we allow that kind of terrorism to exist. I guess it's about free speech, but it's extremely unfair." Daring to hold politicians accountable is now a form of terrorism? She called the taxpayers of California "terrorists" for being over-taxed already and not wanting to be even more over-taxed.

Finally Proposition 13, the favorite scapegoat of all who believe in government instead of the people, is being blamed with any rationale that makes limited sense at the moment. Some say it works too well. Others say that it holds the majority hostage to the minority, as if requiring 2/3 to pass a tax increase means that the remaining 1/3 is actually in charge.

So after all of that the state is issuing IOUs instead of payments. There is no information yet on whether or not the banks will accept these interest bearing IOUs, although the likelihood of that increases with the proffered interest rate. If the banks decline to accept the IOUs the willingness of the public to receive them will plummet, as will the credit rating of the state. Where California goes, so does the rest of the nation.

Thursday, June 25, 2009

Privatization versus Sub-Contracting

It happened in an internet forum that someone tried to use sub-contracting as an example of how privatization doesn’t work. However, sub-contracting doesn’t work as an example of privatization.

The State of California, in trying to manage a state park owned by the state government, hired AIG to manage the state park. AIG hired private firefighters to perform the firefighting service in the state part, at the behest of AIG, at the behest of the State of California. Those private firefighters apparently didn’t do a very good job, and so after being paid by the state (ultimately) to do a state job on state land it is considered a failure of privatization.

A real example of privatization would not have the state involved. These private fire fighters would be hired, not by California (via AIG) but by the private owner of the private land.

The two do not compare. No matter how many intermediary agencies there are between the top and the bottom, the top level agency, the one that initiates the sub-contracting, sets the rules for the entire chain downwards.

This is evident in the way companies that get most of their business from government contracting are run. Those companies have an internal structure and practice that is in many ways as bureaucratic as the government. They may be a little less bureaucratic since they do not have to follow the full range of regulations, but adherence to many government policies are written into contracts to ensure that sub-contracting doesn’t interfere with social planning objectives.

In the private sector sub-contracting also means that the goals of the top level company are the goals that determine all contracts down the line. The difference is that the goals in the private sector are all the same, best product for the lowest price. Government contracts aren’t written to make money for the government but to adhere to some policy driven standard, thus ensuring that there will be conflicting goals in government contracting.

When a contractor fails to deliver what should be the desired result, but stays entirely within the contract, it is not the fault of a private system. It is the fault of a public system that, in this case, happened to use a sub-contractor. The fault is still in the public sector.

Sub-contracting, contracting out to private companies government functions, is not an example of the free market at work. It's more correctly referred to as corporatism.

Saturday, June 20, 2009

A bold move by the GOP?

Former Vice President Dick Cheney has come out publicly in support of gay marriage. Meanwhile President Barack Obama and the rest of the leadership of the Democratic Party have come out in favor of Civil Unions instead. While Obama could single-handedly end "don't ask don't tell" and integrate the military, he refuses to do so.

Could Cheney’s announcement be a ploy to win over the homosexual constituency away from the Democratic Party?

The Democrats love to divide people into categories, because doing so make it appear they have a demographic advantage – given that every group except White Heterosexual Able-bodied Christian Males is considered a constituency of the Democratic Party. This is done to present a case that the Republican Party is dying for demographic reasons and had better embrace all of the Democratic Party’s race baiting policies (known for Orwellian reasons as "Civil Rights") or die as a party because, unlike the “robust” Democratic Party, the Republican Party represents just one demographic.

But in spite of the absurdity and inherent racism of politicking by demographics, there are those who believe it. And those will try to make policy around it.

About the only good thing that can be said about Neoconservatism is that since it originated in the Democratic Party those who follow that belief system have little interest in laws that mandate morality. Neoconservatism is a distinct political ideology from the Religious Right. True, the Neoconservatives want a police state, but they want to police loyalty, not morality. Thus they actually are in a unique position to advocate that the Republican Party change its position on homosexual issues.

How would they do this? It would not be an easy sell. The Religious Right caucus wants nothing to do with homosexuality. While selling them on gays in the military can be done more easily the harder sell would be gay marriage.

Gays in the military can easily be covered under the need for manpower. Endless war is a Neoconservative objective, and the belief that the United States has some divine mandate and the idolatrous way the Religious Right views the government can be tailored to advocate integrated service. Greater manpower is needed to fulfill the divine mission of the United States – or so would the Neoconservatives say when selling this to the Religious Right. The Neoconservatives won't believe it, they view the Religious Right as dupes, but that’s how they would sell it.

But Gay Marriage is the major hurdle. The entire debate would have to be reframed. The Neoconservatives would have to frame it as "monogamy versus promiscuity." Given that the Religious Right believes the only appropriate sexual behavior for homosexuals is either abstinence or conversion to heterosexuality, reframing the debate in this manner would be very difficult.

That doesn’t mean that it cannot be done. It could.

And given that, one state at a time, gay marriage is becoming the norm in this country. Civil Unions, once the progressive position, is now seen as the regressive position. It is also the official position of the Democratic Party.

The Democratic Party has long taken many of its core constituencies for granted because "who else will they vote for, the Republicans?" If Cheney is indeed making that play for that voting block, the answer to that question would become "yes."

Saturday, June 13, 2009

Republicans out of Power

Republicans are never more dangerous to the cause of liberty than when they are out of power. It is when they are out of power that they might actually attract the support of libertarians, even those who do not have a short attention span.

It is well known that Republicans have a habit of stealing libertarian rhetoric. It is also very well known that Republican follow through is abysmal on that for all the rhetoric they steal they never act on it. Everyone - Republican, Democrat, and Libertarian - knows that is true, although occasionally to score points in a debate Democrats will conveniently "forget" that there is no relationship between Republican word and Republican deed in order to try to paint a false association between Libertarians and Republicans.

When Republicans are in power, the divide between word and deed is apparent to all. There was no libertarian support for No Child Left Behind or Perscription Drug Coverage for Seniors. Libertarians never support deficit spending, following the principle that total spending is equivalent to total taxation. Given that principle, when a libertarian calls for tax cuts that libertarian is also calling for spending cuts by necessity. Direct taxes are evil, but still a lesser evil that the indirect taxes of deficit spending or inflation. When a Republican calls for tax cuts that Republican is calling for more of the burden of taxes to be shifted from direct taxation to indirect taxation.

When Republicans are in power, it is very difficult to paint any sort of assocation, whether by a Republican trying to attract libertarian votes or by a Democrat trying to show a flaw in libertarianism by laying at the feet of libertarianism the faults of Republicans.

But when Republicans are out of power not only is there a shortage of direct examples of how Republicans are nothing like libertarians, that is when Republicans increase their rhetoric theft. There was no rhetoric theft when Bush was trying to defend the use of torture, and there was nearly none when he was trying to justify the baseless invasion of two different countries. There was some effort to portray the invasion as a liberation, but all attempts to paint it as such rang rather hollow.

Such an increased level of rhetoric theft coupled with a decrease in manifest counter-examples leads to some undesirable results. Those who are new to the libertarian movement, or overly forgiving of past betrayals, may be swayed to support Republicans due to the rhetoric, a particularly dangerous temptation given that both are opposing Democrats at that time. Due to having a temporary common cause some might be willing to convince themselves that "this time" the Republicans are actually better. That sometimes leads people away from being libertarian as happened during the Bush administration and the War on Terror. The remaining libertarians, seeing some of their own pulled away have to work twice as hard at trying to win people over since they have to replace those leaving while trying to grow the movement. But even the attempt to persuade people to join is hampered because any attempt to persuade people to support libertarianism is met with opposition by some Democrats who feel more free to create the false association between libertarians and Republicans.

It is when Republicans are out of power that libertarians must most strongly resist thinking well of them, and contine to judge Republicans as harshly as they did when Republicans were in power, acknowledging only the small handful that actually are libertarian because their actions match their rhetoric.

Thursday, June 04, 2009

The Social Contract

Occasionally some social planner, either from the right or the left, will react to opposition to the proposed plan by reminding people that resisting is wrong. The planner will do this by invoking the Social Contract and asserting that by living in society the person opposing the plan agreed to whatever "society" decides to do to that person. The only option, says the planner, is to leave society.

That version of the Social Contract is full of misunderstandings and fallacies.

To start with there is the basic confusion between "society" and "government." Even in a democracy the two are not the same. In a pure democracy, the government is 51% of the public. In a democratic republic the government consists of elected officials and hired bureaucrats and officers. In neither case is it true that the entire public "is" the government.

Second, the Social Contract describes the relationship between the people and the society, not the relationship between the individual and the government. While those two perspectives overlap, the key focus is that the people created a government to protect certain rights. The government is the agent of and not a party to the social contract.

According to such a Social Contract theory it is possible for the government to be the party that violates the social contract. When that happens then according to Social Contract theory the people have every right to declare the contract null and void and overthrow the government that is violating the contract.

By making the argument that people are bound by the Social Contract, the social planner is undercutting his own case. Since the planner is invariably proposing some violation of the rights of the individual in order to implement the plan, the planner is therefore proposing that the people rise up in rebellion against the planner.

In essence, the Social contract belongs to libertarians and not to statists.

But most importantly, the Social Contract is a myth. There is no such actual contract, it is an analogy used by enlightenment philosophers to try to understand the nature of the relationship between the people and the government. While the myth describes pre-government people getting together and agreeing to set up a social system, no such meeting ever occurred.

The first governments were primitive tribal governments that are descended from the primate bands of pre-human ancestors. The pre-human bands were groups of related hominids with a few leaders and several followers. The alphas were those who had first pick of any food or mates. These formed the basis of the first tribal governments, without the intervention of any meeting to establish a social contract. The first tribal government evolved into more complex structures with kings and other sorts of rulers.

Based on that perspective it becomes obvious that kings and presidents are nothing more than self-important chimpanzees who want first pick of food and mates. That rather lowers the prestige of those offices.


See a very good analysis of the content of the social contract by Kent McManigal.

Friday, May 29, 2009

California Bleeding

The voters have spoken, and have decided that not only would they voluntarily tax themselves further, they also rejected measures that provided a quick fix to budget problems without raising taxes - raiding special purpose funds that had been "underutilized" in the time leading up to the budget failure. The only measure that passed is a hit against legislator pay - a weak hit but still a hit.

There are those with an ideological bias against any restraint on government. That the voters actually stood up to the state is considered a travesty. Economic commentator Paul Krugman blames the whole mess on Proposition 13 which made it difficult to raise property taxes and impossible to reassess upwards without a change of house ownership, and requiring a 2/3 supermajority to raise taxes, which is considered holding the majority hostage to the minority. Since the Democrats do not have a 2/3 majority they are forced to come to terms with the permanent Republican minority in order for taxes to be raised. Paul Krugman is against any form of spending cuts.

Even with the requirement for a 2/3 majority, California is already one of the most heavily taxed states in the nation, showing how little the requirement for a supermajority hampered the ability to raise taxes. It should also be noted that for all of Krugman's claims to being an economist, he completely failed to predict the recession that started unofficially in 2007 and officially in 2008 - the biggest economic news of the decade.

So Governor Schwarzenegger is striking back. When forced to cut, he made some interesting choices. Some of them make sense, such as the park closures, but he also wants to have it so that if stolen property is recovered by the police they have no requirement to notify the owner that the stolen property is recovered. This would ultimately result in a new form of civil asset forfeiture, forfeiture by default.

He's also proposing a 5 percent pay cut for state employees.

Since Chapter 9 bankruptcy is only available to municipalities the only option the state has if bailouts fail is to default. It has been many years since a state defaulted on its debts, and doing so would lead to a domino effect of state debt.

That is probably why Governor Schwarzenegger is targeting his cuts at certain services. He’s not laying off auditors, but he is closing state parks. He has proposed cutting state salaries by 5% since that would mean he doesn’t have to fire state employees, but instead of firing state employees he’s cutting funding for medical care and school busses. Granted while the state should not be in those, the cuts seem designed to inconvenience the residents of the state as much as possible.

But these programs are also the reason many people believe the state exists. This is a dangerous move for Governor Schwarzenegger because if he follows through on his threats people may discover that they do not need the state to provide these services, and will wonder where their tax dollars are actually going. This could even result in a freer California.

No wonder Peter Schiff, in a sentiment shared by all liberty lovers, advised Obama to reject any bailout of California, advice Obama is likely to reject for the very same reason that any libertarians hope he takes it.