"If I were a card-carrying progressive" I would start by cutting (preferably eliminating) all corporate welfare, "community development grants" (which go to big construction firms and real estate speculators) and other government programs that primarily benefit the rich. I'd put an income limit on who was allowed to receive agricultural subsidies.
Remember, all income tax *deductions* (as opposed to credits) are perverse because they benefit the rich more than the poor, because a poor man getting a $1000 deduction only gets 15% of it, while a rich guy gets 30% or more. So I'd change all income tax deductions (primarily mortgages and health insurance) to tax credits.
For the record I *am* a card-carrying progressive, or at least a bleeding-heart libertarian. Which means I care more about the poor than Obama, Rahm, and the rest of the "let's bail out the rich and ignore the poor" gang in both parties. And I also know which policies actually work, as opposed to the "let's have rallies and riots" all-mouth no-brain crowd.
Showing posts with label Modest Proposals. Show all posts
Showing posts with label Modest Proposals. Show all posts
Thursday, March 31, 2011
Sunday, March 27, 2011
The Task Set Before Us
First, I believe that the president's power as commander-in-chief of the military is very simple to understand. He has the power to give any (lawful) order to anyone in the military, and it must be obeyed. That includes things like ordering the military to blockade, bomb, or even invade Afghanistan, Iraq, Libya, Syria, and Iran.
However, the definition of a lawful order is limited by both international law -- which means treaties that the U.S. has signed, and more importantly the "law of war" that says things like you're not allowed to harm, and in fact have a duty to protect, civilians, prisoners, and anyone else who doesn't try to harm you or disobey your orders.
Furthermore, lawful orders are restricted by the specific rules that the U.S. military follows, such as the Uniform Code of Military Justice, and that's set by Congress, as specified in the U.S. Constitution, Article I, Section 8, Paragraphs 10-16 and especially Paragraph 14, "To make Rules for the Government and Regulation of the land and naval Forces."
That means if Congress wants to specify that "No member of the armed forces of the United States shall enter Libya," they can do it. And they can certainly specify the various conditions listed in the War Powers Resolution.
That being said, I am all in favor of intervening in Libya as long as we do it good and hard. In fact, I'm in favor of intervening in Syria even better and harder, since Assad is worse than Qadaffi. And if Iranian Revolutionary Guard units are in Syria, that gives us a really good excuse to attack those units.
On the other hand, I will also repeat what I warned about before we went into Afghanistan and Iraq, which is that we need to have a clear plan, including a clear objective. Glenn Reynolds is right: "Waging war halfheartedly, on the cheap, and by committee is not a formula for success."
However, the definition of a lawful order is limited by both international law -- which means treaties that the U.S. has signed, and more importantly the "law of war" that says things like you're not allowed to harm, and in fact have a duty to protect, civilians, prisoners, and anyone else who doesn't try to harm you or disobey your orders.
Furthermore, lawful orders are restricted by the specific rules that the U.S. military follows, such as the Uniform Code of Military Justice, and that's set by Congress, as specified in the U.S. Constitution, Article I, Section 8, Paragraphs 10-16 and especially Paragraph 14, "To make Rules for the Government and Regulation of the land and naval Forces."
That means if Congress wants to specify that "No member of the armed forces of the United States shall enter Libya," they can do it. And they can certainly specify the various conditions listed in the War Powers Resolution.
That being said, I am all in favor of intervening in Libya as long as we do it good and hard. In fact, I'm in favor of intervening in Syria even better and harder, since Assad is worse than Qadaffi. And if Iranian Revolutionary Guard units are in Syria, that gives us a really good excuse to attack those units.
On the other hand, I will also repeat what I warned about before we went into Afghanistan and Iraq, which is that we need to have a clear plan, including a clear objective. Glenn Reynolds is right: "Waging war halfheartedly, on the cheap, and by committee is not a formula for success."
Sunday, March 13, 2011
Good Question!
BRIAN LEITER ON BUDGET CUTS: “At some point these acts of brazen viciousness are going to lead to a renewed philosophical interest in the question of when acts of political violence are morally justified.”
I'll tell you when they're justified: when they're against rich white establishment law professors like that guy. How much do you make a year, Brian Leiter? More than the working stiffs in the unions, I'll bet. A lot more!
Well, it's time for *you* to take a pay cut and distribute to the rest of us whatever you make above the national average. Power to the people.
We know where you live.
Up against the wall, m**********r!
(It's okay for me to attack his ethnic group, since it's my ethnic group as well -- although I'm a graduate student in economics, rather than a law professor. See 0:56 in the court scene in Woody Allen's Bananas.)
I'll tell you when they're justified: when they're against rich white establishment law professors like that guy. How much do you make a year, Brian Leiter? More than the working stiffs in the unions, I'll bet. A lot more!
Well, it's time for *you* to take a pay cut and distribute to the rest of us whatever you make above the national average. Power to the people.
We know where you live.
Up against the wall, m**********r!
(It's okay for me to attack his ethnic group, since it's my ethnic group as well -- although I'm a graduate student in economics, rather than a law professor. See 0:56 in the court scene in Woody Allen's Bananas.)
Tuesday, March 01, 2011
On Wisconsin!
As a good progressive, of course I support the State-employee unions in Wisconsin and elsewhere. (See the photo of me helping out at their protest!)
In fact, I urge them all to go out on strike for their rights immediately.
Even if this means shutting down all government schools and most other government agencies, it will be worth it!
Brothers and sisters, venceremos, we will be victorious!
In fact, I urge them all to go out on strike for their rights immediately.
Even if this means shutting down all government schools and most other government agencies, it will be worth it!
Brothers and sisters, venceremos, we will be victorious!
Wednesday, February 23, 2011
Viva Che'!
I am a democratic socialist and a follower of the ideals of Che!
Che was right, that there is no right to strike against the State. These striking teachers should be thrown into prison or even better put into labor camps to work for the public good. They could easily be replaced with teachers from so-called "private" schools or "parochial" schools (and drafting all those "private" teachers into government service, forcing them to work for the current low-wage contracts that government teachers have, would help shut down those corrupt capitalist schools).
I assume all other progressives who support Che will join me in supporting this modest proposal!
Venceremos, hermanos y hermanas!
Che was right, that there is no right to strike against the State. These striking teachers should be thrown into prison or even better put into labor camps to work for the public good. They could easily be replaced with teachers from so-called "private" schools or "parochial" schools (and drafting all those "private" teachers into government service, forcing them to work for the current low-wage contracts that government teachers have, would help shut down those corrupt capitalist schools).
I assume all other progressives who support Che will join me in supporting this modest proposal!
Venceremos, hermanos y hermanas!
Wednesday, January 26, 2011
Clint Bolick got it perfectly:
Obviously there's an opportunity for the GOP (and the LP) to point this out and hit the administration at a vulnerable spot, forcing it to abandon either "progressives" or moderates. If the administration is really inept, it might even lose both.
Another opportunity, much less obvious, is for the GOP to hammer the Democrats on Social Security. Specifically, they can say (truthfully)
This forces the Democrats to either support cutting other programs -- and they would rather cut their own throats -- or cutting benefits (which is political suicide) -- or claiming there is nothing wrong with Social Security, which isn't political suicide yet, but can easily be made into it.
Obama gave two speeches, one to his liberal base and one to the middle. Lots of inconsistencies, such as "I'm going to cut domestic spending and veto earmarks," while we "invest" in myriad new things. But I don't think most people noticed.
Obviously there's an opportunity for the GOP (and the LP) to point this out and hit the administration at a vulnerable spot, forcing it to abandon either "progressives" or moderates. If the administration is really inept, it might even lose both.
Another opportunity, much less obvious, is for the GOP to hammer the Democrats on Social Security. Specifically, they can say (truthfully)
Social Security is bankrupt. It owes more than it has, and its debts are piling up faster than money is coming in. We have to either cut benefits, or cut spending on other programs, or do nothing until the entire Social Security program collapses. *We* favor cutting spending on other programs in order to save Social Security, but if you prefer one of the other options, vote for a Democrat.
This forces the Democrats to either support cutting other programs -- and they would rather cut their own throats -- or cutting benefits (which is political suicide) -- or claiming there is nothing wrong with Social Security, which isn't political suicide yet, but can easily be made into it.
Sunday, January 09, 2011
Which Parents, When Their Child Asks for Bread, Give a Stone Instead? Amy Chua!
@cp puts it perfectly:
Matthew 7:9
Luke 11:11
How many Yale law professors would want to allow terror suspects to be denied access to food and water?I'm sorry, I consider Amy Chua's parenting methods to be dead to me. I strongly recommend the methods suggested by The One-Minute Mother and The One-Minute Father.
Matthew 7:9
Luke 11:11
Saturday, January 01, 2011
Cloward-Piven: Bring It On
Maybe I'm overlooking something here; if so, please let me know!
The Cloward-Piven strategy was to overwhelm the system with a massive amount of both protests (possibly violent) and also welfare recipients; this was supposed to cause a breakdown of both public discourse and also of public finance.
The idea was that the status quo in both politics and public programs would not be able to handle the new situation and would have to be replaced by something else.
According to Piven, the activism of the 1960s and 1970s was this strategy in action.
As I understand it, those are her claims -- and I completely agree with them so far. Her mistake is believing that the response of the system would be to give in to the demands of the activists and welfare applicants, and replace capitalism with democratic socialism.
Instead, in the 1980s and 1990s the system -- I hesitate to say "Silent Majority" -- responded by voting for right-wing Republicans and moderate Democrats, and by pushing for welfare reform.
The reasons why her strategy failed are that the number of producers must be greater than the number of parasites (or else the entire society collapses into chaos) and also that the producers tend to vote and otherwise participate in politics more than the average parasite. (There are other reasons as well, such as the fact that free-market capitalism allows upward mobility for those who are willing to work, so a temporarily-unemployed producer is on the side of the producers, rather than the parasites.)
As a hard-core political activist I'd like to encourage Ms Piven to agitate as much as possible, because I look forward to the results of her tactics. Bring it on, baby! As Lenin said, "The worse, the better."
As William F. Buckley, Jr., remarked, there may be a million violent rioters; there are a million and one lampposts.
The Cloward-Piven strategy was to overwhelm the system with a massive amount of both protests (possibly violent) and also welfare recipients; this was supposed to cause a breakdown of both public discourse and also of public finance.
The idea was that the status quo in both politics and public programs would not be able to handle the new situation and would have to be replaced by something else.
According to Piven, the activism of the 1960s and 1970s was this strategy in action.
As I understand it, those are her claims -- and I completely agree with them so far. Her mistake is believing that the response of the system would be to give in to the demands of the activists and welfare applicants, and replace capitalism with democratic socialism.
Instead, in the 1980s and 1990s the system -- I hesitate to say "Silent Majority" -- responded by voting for right-wing Republicans and moderate Democrats, and by pushing for welfare reform.
The reasons why her strategy failed are that the number of producers must be greater than the number of parasites (or else the entire society collapses into chaos) and also that the producers tend to vote and otherwise participate in politics more than the average parasite. (There are other reasons as well, such as the fact that free-market capitalism allows upward mobility for those who are willing to work, so a temporarily-unemployed producer is on the side of the producers, rather than the parasites.)
As a hard-core political activist I'd like to encourage Ms Piven to agitate as much as possible, because I look forward to the results of her tactics. Bring it on, baby! As Lenin said, "The worse, the better."
As William F. Buckley, Jr., remarked, there may be a million violent rioters; there are a million and one lampposts.
Sunday, November 07, 2010
Modest Proposals: Agenda for the 112th Congress
Social Security, Medicare, Defense, Interest, Welfare, Education, Other.
Useful links:
"A Modest Agenda for a New GOP Congress" by David H. Horwich
"How the New Congress Can Roll Back Obama’s Agenda"
"Republicans won the midterm elections. Now can they survive?"
"Top 10 challenges John Boehner will face as Speaker of the House"
By Bob Cusack
Thousands of Democrats to be jobless in Washington
By Al Kamen
"The Six Arguments You Meet in Political Hell"
"How to Cut $343 Billion from the Federal Budget"
"What Republicans Need to Do Now"
"Conservatives Treat a Foe Like a Foe"
"The Globe discovers that Massachusetts has shot itself in the foot…AGAIN"
http://datechguy.wordpress.com/2010/11/12/the-globe-discovers-that-massachusetts-has-shot-itself-in-the-foot-again/
1. Replace the current tax system with either a flat-rate income tax or a national sales tax, or some combination. This should replace both individual and corporate income tax, capital gains tax, and the Alternative Minimum Tax. A possible tax rate would be 20% or 25%.
It's not necessary to make this revenue-neutral because "starving the beast" doesn't work, and apparently raising taxes makes people more opposed to government spending!
2. Eliminate all earmarks, and all discretionary spending. The first targets should be corporate welfare and the very next targets should be all spending in "blue" areas, i.e. those which voted Democrat. Once that happens, we can expect bipartisan support for eliminating all spending in "red" areas.
Perhaps we can start by using "reverse earmarking": bills will specify that no funds for their programs can be spent in certain areas. When Democrats are faced with a choice between eliminating a program, or keeping it but having it only go to Republican areas, I expect they will see the light.
We can certainly keep government programs such as interstate highways and other transportation, national parks, the United States Postal Service, PBS and anything else, simply by making them self-supporting. Highways will have to be funded by tolls, license fees, and gasoline taxes; parks will be funded by ticket sales and donations; the USPS and PBS will simply have their subsidies eliminated.
3. Replace all current welfare and other social programs (other than Social Security, Medicare, and Medicaid) with a flat-rate demogrant of, say, $10,000 per person per year.
4. Replace Medicare and Medicaid with a comprehensive universal system that gives each person a voucher for whatever it would cost the government to give them basic health care plus catastrophic health insurance from Medicare/Medicaid, but allow people to use the voucher for private insurance, including HSAs that can roll over instead of being literally stolen at the end of each year. To clarify, people with preexisting conditions or other issues which cost more will get bigger vouchers, because the amount of the voucher will be whatever it would cost the government to provide Medicare/Medicaid for that particular person.
This could be funded out of the $10,000 per person demogrant.
5. Replace
http://www.johntreed.com/growth.html
http://www.johntreed.com/Reedhealthcare.html
Useful links:
"A Modest Agenda for a New GOP Congress" by David H. Horwich
"How the New Congress Can Roll Back Obama’s Agenda"
"Republicans won the midterm elections. Now can they survive?"
"Top 10 challenges John Boehner will face as Speaker of the House"
By Bob Cusack
Thousands of Democrats to be jobless in Washington
By Al Kamen
"The Six Arguments You Meet in Political Hell"
"How to Cut $343 Billion from the Federal Budget"
"What Republicans Need to Do Now"
"Conservatives Treat a Foe Like a Foe"
"The Globe discovers that Massachusetts has shot itself in the foot…AGAIN"
http://datechguy.wordpress.com/2010/11/12/the-globe-discovers-that-massachusetts-has-shot-itself-in-the-foot-again/
1. Replace the current tax system with either a flat-rate income tax or a national sales tax, or some combination. This should replace both individual and corporate income tax, capital gains tax, and the Alternative Minimum Tax. A possible tax rate would be 20% or 25%.
It's not necessary to make this revenue-neutral because "starving the beast" doesn't work, and apparently raising taxes makes people more opposed to government spending!
2. Eliminate all earmarks, and all discretionary spending. The first targets should be corporate welfare and the very next targets should be all spending in "blue" areas, i.e. those which voted Democrat. Once that happens, we can expect bipartisan support for eliminating all spending in "red" areas.
Perhaps we can start by using "reverse earmarking": bills will specify that no funds for their programs can be spent in certain areas. When Democrats are faced with a choice between eliminating a program, or keeping it but having it only go to Republican areas, I expect they will see the light.
We can certainly keep government programs such as interstate highways and other transportation, national parks, the United States Postal Service, PBS and anything else, simply by making them self-supporting. Highways will have to be funded by tolls, license fees, and gasoline taxes; parks will be funded by ticket sales and donations; the USPS and PBS will simply have their subsidies eliminated.
3. Replace all current welfare and other social programs (other than Social Security, Medicare, and Medicaid) with a flat-rate demogrant of, say, $10,000 per person per year.
4. Replace Medicare and Medicaid with a comprehensive universal system that gives each person a voucher for whatever it would cost the government to give them basic health care plus catastrophic health insurance from Medicare/Medicaid, but allow people to use the voucher for private insurance, including HSAs that can roll over instead of being literally stolen at the end of each year. To clarify, people with preexisting conditions or other issues which cost more will get bigger vouchers, because the amount of the voucher will be whatever it would cost the government to provide Medicare/Medicaid for that particular person.
This could be funded out of the $10,000 per person demogrant.
5. Replace
http://www.johntreed.com/growth.html
http://www.johntreed.com/Reedhealthcare.html
Sunday, July 04, 2010
Modest Proposals: A Gentlemen's Agreement on the Supreme Court
[Dogbert has been nominated to the Supreme Court:]
Senator: Do you have any opinions on the right to privacy?
Dogbert: No. In fact, I never formed an important opinion in my entire life.
Senator: You must think we're idiots!
Dogbert: Okay, I've formed one opinion, but that's all.
I personally would refuse to confirm a nominee who didn't give clear answers on how they would rule in various hypothetical cases. Furthermore, I would specifically point out their evasive answers meant they were either dishonest or incompetent, probably the former, and that's why I didn't consider them qualified.
On the other hand, I would not have any problem confirming a nominee whose opinions I disagreed with. Like many of the posters on The Volokh Conspiracy I believe that the Senate should give deference to the President's nominees.
One way of handling this would be to have a rule -- not a law but a "gentlemen's agreement" -- that each President is entitled to nominate one new justice to the Supreme Court. In other words, rather than a lifetime appointment, being a justice of the Supreme Court should be the equivalent of a 36-year term.
Like other "constitutional bargains" -- this is something we study in economics, specifically in my favorite field, public choice -- the idea behind it is that it treats both sides equally and neither of them knows whether they will be benefited or harmed by it.
If this were the case, i.e. if each of the last nine presidents had appointed one justice, it would be:
Obama (D)
Bush (R)
Bush (R)
Clinton (D)
Clinton (D)
Bush (R)
Reagan (R)
Reagan (R)
Carter (D)
In other words, the court would be divided between five Republican justices and four Democratic ones.
Senator: Do you have any opinions on the right to privacy?
Dogbert: No. In fact, I never formed an important opinion in my entire life.
Senator: You must think we're idiots!
Dogbert: Okay, I've formed one opinion, but that's all.
I personally would refuse to confirm a nominee who didn't give clear answers on how they would rule in various hypothetical cases. Furthermore, I would specifically point out their evasive answers meant they were either dishonest or incompetent, probably the former, and that's why I didn't consider them qualified.
On the other hand, I would not have any problem confirming a nominee whose opinions I disagreed with. Like many of the posters on The Volokh Conspiracy I believe that the Senate should give deference to the President's nominees.
One way of handling this would be to have a rule -- not a law but a "gentlemen's agreement" -- that each President is entitled to nominate one new justice to the Supreme Court. In other words, rather than a lifetime appointment, being a justice of the Supreme Court should be the equivalent of a 36-year term.
Like other "constitutional bargains" -- this is something we study in economics, specifically in my favorite field, public choice -- the idea behind it is that it treats both sides equally and neither of them knows whether they will be benefited or harmed by it.
If this were the case, i.e. if each of the last nine presidents had appointed one justice, it would be:
Obama (D)
Bush (R)
Bush (R)
Clinton (D)
Clinton (D)
Bush (R)
Reagan (R)
Reagan (R)
Carter (D)
In other words, the court would be divided between five Republican justices and four Democratic ones.
Friday, April 09, 2010
How To Solve The Financial Crisis
Someone asked me to recommend him some academic economics journal articles about the causes of the Financial Crisis. I demurred, and explained why:
Mainstream economics, and at least 80% of all economics, is "free-market" in the sense that it understands and approves of the free market, and only wants to interfere with it when it will actually do some good for society as a whole, and wants the intervention to be as small and as market-based as possible.
So it would only support things like a Negative Income Tax (which Milton Friedman invented), or school vouchers (which Friedman also supported), and other sorts of vouchers.
To clarify even more: The overwhelming majority of economists dislike the vast majority of current government programs, even though they are moderate-liberal Democrats themselves. (For the question of why they still support the Democrats even though they oppose their programs, I refer you to Professor Klein, whose class I'm typing this in, and also Arnold Kling. Kling says it's "culture" or "psychological identification" -- they're more comfortable with fellow-intellectuals that they disagree with, rather than rednecks that they despise. They'd rather belong to the party of Soft Heads than the party of Hard Hearts.)
So just about *any* economics journal article would be acceptable.
Second, to quote Nobel Prize-winner George Stigler, "The typical article in a professional journal is unrelated to public policy -- and often apparently unrelated to anything in reality." So from that point of view *no* journal article would be acceptable. Use blogs, or articles in "popular journals," e.g. Atlantic or The Economist, instead.
Third, people -- even experts who are generally within the same economic doctrine -- are still arguing about what went wrong, never mind how to fix it.
Bottom line: Google "financial" and "crisis" at site:econlog.econlib.org
Here's my take on what happened:
1. For a variety of reasons, some due to human miscalculation and some due to government intervention, we had a housing bubble: prices rose above a reasonable level, people kept buying anyway, and people overextended themselves buying housing on credit (zero-down mortgages).
Clear definition of a reasonable level: If bonds are paying 3% per year (33 x earnings) it's not reasonable to pay 50 x (expected) earnings for stocks. It makes no sense! It might make sense for a specific stock if you thought its expected earnings were going to skyrocket, or if you thought everyone else was about to mistakenly think its expected earnings were going to skyrocket, but not to do it across the board.
2. Eventually the bubble burst and housing prices dropped drastically. Therefore some people started defaulting on their mortgages (because they weren't worth keeping -- the debt was higher than the new value of the house) and even the mortgages that didn't default (yet) had to be re-valued and banks suddenly found their collateral for loans had disappeared and their balance sheets were horrible. For a variety of reasons, partly because the housing bubble had so many participants and partly because the risk was "spread around" by "bundling" mortgages, this meant a *lot* of banks and other financial houses were hit.
3. When the housing bubble burst, it also affected people who were relatively solvent, by dropping the value of their houses; and this affected the stock market. People *were* buying stocks by using the equity in their homes, and felt fine about it; now the equity disappeared -- it was just as if they found out their rich uncle who previously said he would leave all his wealth to them had suddenly decided to disinherit them -- started selling off stocks because they wanted cash in hand. This drove the value of stocks down, which caused even more panic selling.
4. Therefore, not only were people defaulting on mortgages but there were also people whose lives were unaffected by anything physical, anything that could be seen by watching a silent videotape of Before versus After, who felt poor and/or panicked. People who still had jobs and could meet their mortgage payments (same as before) and pay their groceries and utility bills (same as before) because all their paper wealth (the equity of their houses, and the value of their stock portfolios) had evaporated. (By the way, one extremely important thing to understand is that my vampire RPG character, Mr Grey a/k/a Caliban, lost 3/4 of his wealth in the crisis, because almost all of his wealth was in stocks and real estate -- I had established the basics of his investments when I created him back in 2002!)
5. Also, businesses were affected because capital dried up. People saved/invested less because they didn't have paper wealth, so they didn't have as much money to put into banks. (Previously, they had been getting cash by refinancing their houses, or by selling them, at inflated prices, or from the stock market, and then putting it into banks or stocks or more real estate.) And so banks didn't have as much cash on hand *and* they couldn't make any new loans anyway, because they were overextended because the value of the collateral on all their previous loans was gone. It was exactly as if tornadoes had devastated all the houses so there wasn't any collateral value left.
6. Banks reacted by drastically reducing the amount of new loans they made. Partly they raised their interest rates but mostly they just became very, very cautious; they wanted to see huge amounts of collateral before they would make a loan for anything, either homes or business loans or automobile loans or anything else. This helped cause a *real* recession (decline in employment and production and incomes, which then causes more decline, etc.) in addition to the crash of *paper* wealth (loss of value of real estate and stocks).
7. IMO the proper response by government would have been to say "Nobody is too big to fail; when you play with fire, you gonna get burn'; when you take the profits you gotta take the losses as well. We have guaranteed people's bank accounts up to $100,000 per person if they failed; we will make a special temporary increase up to $250,000 or $500,000 for the next year or two to cushion the blow so people aren't hurt *too* badly. We will also increase unemployment benefits to help those who have temporarily lost their jobs due to the recession. We will also reform the welfare system" -- hey, I'm like Rahm Emmanuel, I never want to let a good crisis go to waste, and reforming welfare to be more like a Negative Income Tax / Guaranteed Income system is something we should have done 40 years ago -- "and eliminate corporate welfare and other subsidies" -- as I always say, I don't know if we need more spending the less-fortunate but we definitely need less spending on the more-fortunate -- "and use all those savings to cut the deficit, which will boost the economy while bringing us *out* of debt instead of further into it."
8. Unfortunately, the government decided, by the most amazing coincidence, to do something to help out the people and groups who were politically powerful and well-connected. So they decided to bail out Wall Street bankers and brokers, and also the people who defaulted on their mortgages that they should never have gotten in the first place, and the non-Wall Street bankers who should never have given those mortgages in the first place -- in other words, gangs of criminals who ripped off hard-working taxpayers. I have some sympathy for poor, uneducated people who lied on their mortgage documents, but no sympathy for white-collar criminal "banksters" who told them to do it.
Mainstream economics, and at least 80% of all economics, is "free-market" in the sense that it understands and approves of the free market, and only wants to interfere with it when it will actually do some good for society as a whole, and wants the intervention to be as small and as market-based as possible.
So it would only support things like a Negative Income Tax (which Milton Friedman invented), or school vouchers (which Friedman also supported), and other sorts of vouchers.
To clarify even more: The overwhelming majority of economists dislike the vast majority of current government programs, even though they are moderate-liberal Democrats themselves. (For the question of why they still support the Democrats even though they oppose their programs, I refer you to Professor Klein, whose class I'm typing this in, and also Arnold Kling. Kling says it's "culture" or "psychological identification" -- they're more comfortable with fellow-intellectuals that they disagree with, rather than rednecks that they despise. They'd rather belong to the party of Soft Heads than the party of Hard Hearts.)
So just about *any* economics journal article would be acceptable.
Second, to quote Nobel Prize-winner George Stigler, "The typical article in a professional journal is unrelated to public policy -- and often apparently unrelated to anything in reality." So from that point of view *no* journal article would be acceptable. Use blogs, or articles in "popular journals," e.g. Atlantic or The Economist, instead.
Third, people -- even experts who are generally within the same economic doctrine -- are still arguing about what went wrong, never mind how to fix it.
Bottom line: Google "financial" and "crisis" at site:econlog.econlib.org
Here's my take on what happened:
1. For a variety of reasons, some due to human miscalculation and some due to government intervention, we had a housing bubble: prices rose above a reasonable level, people kept buying anyway, and people overextended themselves buying housing on credit (zero-down mortgages).
Clear definition of a reasonable level: If bonds are paying 3% per year (33 x earnings) it's not reasonable to pay 50 x (expected) earnings for stocks. It makes no sense! It might make sense for a specific stock if you thought its expected earnings were going to skyrocket, or if you thought everyone else was about to mistakenly think its expected earnings were going to skyrocket, but not to do it across the board.
2. Eventually the bubble burst and housing prices dropped drastically. Therefore some people started defaulting on their mortgages (because they weren't worth keeping -- the debt was higher than the new value of the house) and even the mortgages that didn't default (yet) had to be re-valued and banks suddenly found their collateral for loans had disappeared and their balance sheets were horrible. For a variety of reasons, partly because the housing bubble had so many participants and partly because the risk was "spread around" by "bundling" mortgages, this meant a *lot* of banks and other financial houses were hit.
3. When the housing bubble burst, it also affected people who were relatively solvent, by dropping the value of their houses; and this affected the stock market. People *were* buying stocks by using the equity in their homes, and felt fine about it; now the equity disappeared -- it was just as if they found out their rich uncle who previously said he would leave all his wealth to them had suddenly decided to disinherit them -- started selling off stocks because they wanted cash in hand. This drove the value of stocks down, which caused even more panic selling.
4. Therefore, not only were people defaulting on mortgages but there were also people whose lives were unaffected by anything physical, anything that could be seen by watching a silent videotape of Before versus After, who felt poor and/or panicked. People who still had jobs and could meet their mortgage payments (same as before) and pay their groceries and utility bills (same as before) because all their paper wealth (the equity of their houses, and the value of their stock portfolios) had evaporated. (By the way, one extremely important thing to understand is that my vampire RPG character, Mr Grey a/k/a Caliban, lost 3/4 of his wealth in the crisis, because almost all of his wealth was in stocks and real estate -- I had established the basics of his investments when I created him back in 2002!)
5. Also, businesses were affected because capital dried up. People saved/invested less because they didn't have paper wealth, so they didn't have as much money to put into banks. (Previously, they had been getting cash by refinancing their houses, or by selling them, at inflated prices, or from the stock market, and then putting it into banks or stocks or more real estate.) And so banks didn't have as much cash on hand *and* they couldn't make any new loans anyway, because they were overextended because the value of the collateral on all their previous loans was gone. It was exactly as if tornadoes had devastated all the houses so there wasn't any collateral value left.
6. Banks reacted by drastically reducing the amount of new loans they made. Partly they raised their interest rates but mostly they just became very, very cautious; they wanted to see huge amounts of collateral before they would make a loan for anything, either homes or business loans or automobile loans or anything else. This helped cause a *real* recession (decline in employment and production and incomes, which then causes more decline, etc.) in addition to the crash of *paper* wealth (loss of value of real estate and stocks).
7. IMO the proper response by government would have been to say "Nobody is too big to fail; when you play with fire, you gonna get burn'; when you take the profits you gotta take the losses as well. We have guaranteed people's bank accounts up to $100,000 per person if they failed; we will make a special temporary increase up to $250,000 or $500,000 for the next year or two to cushion the blow so people aren't hurt *too* badly. We will also increase unemployment benefits to help those who have temporarily lost their jobs due to the recession. We will also reform the welfare system" -- hey, I'm like Rahm Emmanuel, I never want to let a good crisis go to waste, and reforming welfare to be more like a Negative Income Tax / Guaranteed Income system is something we should have done 40 years ago -- "and eliminate corporate welfare and other subsidies" -- as I always say, I don't know if we need more spending the less-fortunate but we definitely need less spending on the more-fortunate -- "and use all those savings to cut the deficit, which will boost the economy while bringing us *out* of debt instead of further into it."
8. Unfortunately, the government decided, by the most amazing coincidence, to do something to help out the people and groups who were politically powerful and well-connected. So they decided to bail out Wall Street bankers and brokers, and also the people who defaulted on their mortgages that they should never have gotten in the first place, and the non-Wall Street bankers who should never have given those mortgages in the first place -- in other words, gangs of criminals who ripped off hard-working taxpayers. I have some sympathy for poor, uneducated people who lied on their mortgage documents, but no sympathy for white-collar criminal "banksters" who told them to do it.
Saturday, July 04, 2009
Hear, Hear
"The party's over. Neither I nor anyone else in government has a right to anything you earn or own. And you have no right to anything that I or anyone else earns or owns.
"It's okay to love your neighbor, but I have no right to force you to take care of his medical needs ... or support him money if he loses his job ... or hire him at a wage that I deem to be fair ... or help him financially, or otherwise, in any other way.
"From octomoms in California to welfare bums in Massachusetts ... from environmen-talists in Oregon to heroine addicts in New York City ... I have no right to force you to accommodate their desires just because they call them needs. And by no stretch of the imagination are anyone's "needs" rights. The only rights an individual possesses are those given to him by God."
Thursday, May 28, 2009
Prescriptions for Disaster
"I think getting doctors on a salary is the very first solution..."The original rationale for HMOs was that the insurance company would be paid a fixed amount per patient per month (although this might be modified by the patient's pre-existing medical conditions) and would be required to provide whatever medical care was necessary; therefore, they would have an incentive to do things the most economical way, i.e. through preventive medicine whenever possible.
That sounded great to me, and it still sounds like a good goal.
Unfortunately, as Adam Smith predicted (when talking about education), instead this gave an incentive for insurers to provide as little care as possible, by making the quality as low as possible, and making it as difficult as possible to obtain it.
In Bryan Caplan's class on microeconomics, he explained the concept of "moral hazard" to us, with plenty of amusing examples. I suggest this as another one.
So, how do we actually accomplish the original goal?
Thursday, April 16, 2009
PCer Than Thou
I just posted this on Ezra Levant's blog:
Rebekah wrote: "I am in a debate with someone at the moment who says that freedom of speech is a civil right, and as such we have no right to judge other cultures or regimes that deny freedom of speech. Could I ask, how would you answer this?"
Oh, I love debating against leftists. It's so much fun to see their eyes pop out when their own Politically Correct slogans are used against them!
I would use two arguments. The first is: "I believe in freedom of speech because I believe in equality. If there is no freedom of speech, that means that some people can say what they want, and some views get expressed, but other people -- minorities and the oppressed -- and other views get suppressed. Don't you believe in equal rights for everyone in society?"
If the PC leftist actually admits that he thinks "respecting other cultures" is more important than equal rights, my other argument would be: "Okay, I won't argue against that position. Instead, I'll just say that according to your own statment it's fine for Americans or Canadians or other Europeans to suppress arguments for pacifism, atheism, homosexuality, feminism, or anything else because those are against the values of Eurocentric culture."
Of course if you happen to know the particular Politically Correct causes that he supports, you should use them as examples.
As far as I can see, the only argument against that would be for the leftist to claim that Islamofascist values are actually *better* than our cultural values. If he does, you can attack him for being "judgemental" and "inegalitarian" and also debate him on the merits of our values versus his.
Rebekah wrote: "I am in a debate with someone at the moment who says that freedom of speech is a civil right, and as such we have no right to judge other cultures or regimes that deny freedom of speech. Could I ask, how would you answer this?"
Oh, I love debating against leftists. It's so much fun to see their eyes pop out when their own Politically Correct slogans are used against them!
I would use two arguments. The first is: "I believe in freedom of speech because I believe in equality. If there is no freedom of speech, that means that some people can say what they want, and some views get expressed, but other people -- minorities and the oppressed -- and other views get suppressed. Don't you believe in equal rights for everyone in society?"
If the PC leftist actually admits that he thinks "respecting other cultures" is more important than equal rights, my other argument would be: "Okay, I won't argue against that position. Instead, I'll just say that according to your own statment it's fine for Americans or Canadians or other Europeans to suppress arguments for pacifism, atheism, homosexuality, feminism, or anything else because those are against the values of Eurocentric culture."
Of course if you happen to know the particular Politically Correct causes that he supports, you should use them as examples.
As far as I can see, the only argument against that would be for the leftist to claim that Islamofascist values are actually *better* than our cultural values. If he does, you can attack him for being "judgemental" and "inegalitarian" and also debate him on the merits of our values versus his.
Monday, November 12, 2007
Burning Man
Shouldn't this be prosecuted as a hate crime??
(Whoops, my typo, it wasn't a mosque.)SAN FRANCISCO (AP) — A man accused of prematurely torching the Burning Man festival's namesake effigy in August has been arrested on suspicion of trying to set fire to a mosque, police said.
San Francisco performance artist Paul Addis, out on bail in the Burning Man charges, was taken into custody on the top steps of the Mosque of the Light of Allah around 11:40 p.m. Sunday, a police spokesperson said . . .Addis had an ammunition belt of small explosives strapped around his waist, he said.
Police were tipped by a caller who said they overheard Addis talking about a plan to set fire to the local landmark. No fire was set and there was no damage to the mosque.
Saturday, September 15, 2007
Why Conservatives Are So Cruel, Mean, And Heartless
The Americans with Disabilities Act (ADA) is an example of a law which was advocated mostly by left-wingers as a way to help those who were disadvantaged through no fault of their own, and was opposed mostly by right-wingers. The left-wingers *claimed* this was because right-wingers were selfish and/or cruel, i.e. they didn't want to help poor (unfortunate, not necessarily in poverty) people. The right wingers *claimed* that wasn't true, it was because the ADA was going to be an "undue burden" on businesses which were going to be forced to wait hand and foot -- perhaps literally -- on people with imaginary disabilities. The left-wingers *claimed* that wasn't true, it was only going to help people who really needed and deserved help.
Here's a quote from Hacklawyer's blog:
Of course, I usually advocate that tactic on *any* issue. For example, Matt Miller suggests that advocates of school vouchers offer huge increases in school funding, and huge increases in teacher salaries, in return for the "minor concession" of vouchers; the educationalist lobby (such as the National Education Association) has promised to oppose *any* legislation which includes vouchers, so this makes *them* look like the Bad Guys (which they are) because it puts *them* in the position of opposing school funding and raises for those poor, poor teachers.
Here's a quote from Hacklawyer's blog:
complaints by the traditionally disabled - the deaf, the blind, the paraplegic - have accounted for only a tiny share of these kind of ”accomodation requests.” The overwhelming majority of them comprise those who claim such dubious disabilities as ADD, visual and oral processing diabilities, dysgraphia (really bad handwriting), ”phonological processing,” dyscalculia (math disability).Personally, if I had been hired by either side, I would have advised them to MAKE LOUD ANNOUNCEMENTS AT THE TOP OF THEIR VOICES IN ALL THE NEWS MEDIA THEY COULD REACH that *they* were willing to compromise and it was all the other side's fault for being stubborn, fanatic extremists who were demanding something really unreasonable. And to actually make an offer that looks reasonable to the general public, with something in it that's toxic to the other side.
Of course, I usually advocate that tactic on *any* issue. For example, Matt Miller suggests that advocates of school vouchers offer huge increases in school funding, and huge increases in teacher salaries, in return for the "minor concession" of vouchers; the educationalist lobby (such as the National Education Association) has promised to oppose *any* legislation which includes vouchers, so this makes *them* look like the Bad Guys (which they are) because it puts *them* in the position of opposing school funding and raises for those poor, poor teachers.
Wednesday, September 05, 2007
Engage *This*
"Men journey together with view to particular advantage, and by way of providing some particular thing needed for the purposes of life, and similarly the political association seems to have come together originally, and to continue in existence, for sake of the general advantages it brings" Aristotle, Ethics, Book VIII, Chapter 9
"Organizations can therefore perform a function when there are common or group interestsm and their primary function is to advance the common interest of groups of individuals." Mancur Olson, The Logic of Collective Action: Public Goods and the Theory of Groups
"People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices. But though the law cannot hinder people of the same trade from sometimes assembling together, it ought to do nothing to facilitate such assemblies; much less to render them necessary." Adam Smith, The Wealth of Nations, Book I, Chapter X
"By a faction, I understand a number of citizens, whether amounting to a majority or a minority of the whole, who are united and actuated by some common impulse of passion, or of interest, adversed to the rights of other citizens, or to the permanent and aggregate interests of the community...As long as the reason of man continues fallible, and he is at liberty to exercise it, different opinions will be formed...The regulation of these various and interfering interests forms the principal task of modern legislation, and involves the spirit of party and faction in the necessary and ordinary operations of the government." James Madison, The Federalist No. 10
"Special interest politics is a simple game. A hundred people sit in a circle, each with his pocket full of pennies. A politician walks around the circle taking a penny from each person. No one minds; who cares about a penny? When he has gone all the way around the circle, he throws fifty cents down in front of one person who is overjoyed at the unexpected windfall. The process is repeated...After a hundred rounds everyone is a hundred cents poorer, fifty cents richer, and happy." David Friedman, The Machinery of Freedom, Chapter 27.
Before Mancur Olson published "The Logic of Collective Action" it was generally taken for granted that it was relatively easy to form groups (the "factions" mentioned in The Federalist) based on common interests, and to take collective action to further those interests; and also that the biggest (internal) problem facing a democracy was how to prevent the tyranny of the majority. In particular, the Federalist Papers assume that minority interests will be unable to control the legislature because "If a faction consists of less than a majority, relief is supplied by the republican principle, which enables the majority to defeat its sinister views by regular vote." On the other hand, "When a majority is included in a faction, the form of popular government, on the other hand, enables it to sacrifice to its ruling passion or interest both the public good and the rights of other citizens." Hence the reason the Founders wanted a republic with checks and balances rather than a democracy, and a Bill of Rights, to reduce the possibility of tyranny by the majority.
As far as I can see -- and I'm certainly open to the possibility that I'm misinterpreting or simply overlooking something -- Olson's point in "The Logic of Collective Action" was that all collective action is subject to the free-rider problem and therefore subject to the Prisoner's Dilemma. This is true virtually by definition; if "collective action" means "action taken for collective benefit" then by definition it's a public good (at least for some particular group), i.e. it's non-exclusionary; and if it's non-exclusionary, then it's subject to the Prisoner's Dilemma because it will benefit someone to "defect" (i.e. refuse to contribute/cooperate) if he can get away with it (i.e. still receive the benefits). This all makes perfect sense to me! And as he points out, "the concept of public goods is one of the oldest and most important ideas in the study of public finance." (And to quote The Federalist again, "To secure the public good and private rights against the danger of...faction, and at the same time to preserve the spirit and the form of popular government, is then the great object to which our inquiries are directed.")
Olson then suggests that one characteristic of states or governments is that they deal with public goods by means of coercion; that is, they force people to pay taxes and follow the law -- supposedly for the benefit of all -- by using force to compel obedience and/or punish dissent. He also discusses the possibility that other groups can use forms of coercion against members who "defect" and refuse to contribute to efforts made for a common goal.
This leads, of course, to the civics-textbook claim governments exist (at least partly) in order to provide public goods and that coercion is necessary in order to remedy the "market failure" that would exist due to the free-rider problem, e.g. people refusing to pay their share of the costs for things which benefit everyone in the public -- things like highways, schools, health insurance (in Canada), television and radio stations (in Britain) nuclear weapons, prisons for nonviolent drug addicts, customs agents whoo confiscate lesbian-rights literature (in Canada), police officers assigned to hang around public restrooms and arrest homosexuals, and all sorts of other wonderful things we could never pay for privately and just could never live without. (I also find it ironic that Olson uses corporate lobbying as an example of a "public good" that is underproduced -- in economic terms -- due to the free-rider problem.)
Many economists have pointed out the practical disadvantages to providing public goods through coercive means. Such goods might be produced even when the benefits to the public are not worthwhile, if they benefit the politically powerful. Later in his book -- although not in the article we're assigned -- Olson talks about how the free-rider problem allows concentrated interests to overcome diffuse interests, i.e. tyranny of a politically-powerful (because well-organized) minority over the unorganized majority.
Garrett Hardin's point in his classic essay "The Tragedy of the Commons" is that any commons suffers from the free-rider problem and Prisoner's Dilemma, because everyone has an incentive to grab as much as possible -- which is more than their fair share -- because if they don't grab it, somebody else will. John Locke recognized this over three centuries ago and came up with the "Lockean Proviso" in the Second Treatise of Government. Hardin explains how the commons' lack of ownership means a lack of enforcement of the Lockean Proviso to everyone's detriment, with specific examples.
Hardin recommends several alternatives to an unregulated commons. He advocates individual ownership when possible, otherwise (in cases such as air, flowing water, and public parks) government ownership with impartial regulations. He recognizes the state awards benefits to the politically powerful ("Bureau administrators...are singularly liable to corruption") which was Olson's point, so he recommends impartial regulations ("a government of laws and not men") based on price, merit, or equal shares for all rather than administrative fiats, and of course I agree! Bruce Ackerman's Social Justice in the Liberal State discusses how to determine whether private or communal ownership is the most economically efficient way to control a resource, and how to allocate it justly, including compensating those who are disadvantaged by whatever method is chosen; and William Blinder's Hard Heads and Soft Hearts discusses specific proposals for market-based environmental protection including emissions fees/taxes versus "cap-and-trade" permits. Currently there are many such proposals and even the Kyoto Protocol is somewhat market-based because it allows emissions trading. The biggest problem with such proposals is how to allocate allowed emissions for each nation.
Hardin also suggests that overpopulation is an example of the tragedy of the commons, because couples who have children are free riders, and therefore childbearing needs to be regulated. This argument is reasonable but mistaken, as David Friedman demonstrates in his article "Laissez-Faire in Population: The Least-Bad Solution," at least to the extent that there are no subsidies or externalities involved in raising children.
Finally, Robert Putnam (author of Bowling Alone, which inspired Meetup.com, and Better Together) has an article that talks about ways to overcome the Prisoner's Dilemma, and thereby overcome the Free Rider Problem. He analyzes evidence from local governments within Italy and finds that private "civic ties" provide a sense of community and trust (what Tom Wolfe calls a "favor bank" and Stephen Covey calls an "emotional bank account") so that people are willing to cooperate. Participants with civic ties believe it's worth the risk to trust someone else; they think the likelihood of cooperation is great enough to cooperate themselves. Putnam also found a breakdown of civic ties due to distrust in communities that are more diverse, which causes such problems as ethnic strife in the United States and, in extremis, in places such as Rwanda, the former Yugoslavia, and of course Iraq. Another reason for lack of trust is official corruption and "kleptocracy": insecure property rights and government intervention in favor of the politically favored, which in endemic in both the developing world and former communist countries -- and, to a lesser extent, in the United States as well.
In another article, "Reviving Community: What Policy-Makers Can Do to Build Social Capital in Britain and America," he suggests that governments can "rebuild social capital by subsidizing community organizations, through civics education, by instituting a scheme of voluntary national service, and through structural reforms." These may be useful, but I believe he is overlooking the vital information provided by Robert Axelrod's work on "the evolution of cooperation" which provides an experimental proof that the Prisoner's Dilemma is solvable if it's iterated. By breaking down social interactions into a series of smaller interactions, the risk is lower and non-cooperation or "defection" can be punished. Therefore people are more willing to risk trust others more than they would in an all-or-nothing gamble, and are also better able to build up trust.
In Starship Troopers Robert Heinlein asserted that a government (or other system) works as long as authority and responsibility are linked. There are several American political institutions which serve to break down this linkage via "rational ignorance." One of them is our weak party system which prevents voters from easily knowing the exact positions taken by their representatives on each issue. Another is the Presidential system rather than a parliamentary system, which prevents parties from being held accountable for the results of their platforms. A third is the "first past the post" or "winner take all" electoral system which emasculates minor parties. Finally, the ability of the state to enact programs which provide benefits to a single class or group, such as subsidies to farmers, is perhaps the single worst flaw in our system.
I believe the single greatest problem facing liberal constitutional democracies is the ability of concentrated minority interests to enact legislation against the common good. Strong parties, a parliamentary system, and proportional representation would go a long way to overcoming the causes of "rational ignorance" while a Constitutional amendment prohibiting the state from transfers or other programs unless they are universal (possibly with a means test) -- suggested by Charles Murray in In Our Hands -- would eliminate its effects.
"Organizations can therefore perform a function when there are common or group interestsm and their primary function is to advance the common interest of groups of individuals." Mancur Olson, The Logic of Collective Action: Public Goods and the Theory of Groups
"People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices. But though the law cannot hinder people of the same trade from sometimes assembling together, it ought to do nothing to facilitate such assemblies; much less to render them necessary." Adam Smith, The Wealth of Nations, Book I, Chapter X
"By a faction, I understand a number of citizens, whether amounting to a majority or a minority of the whole, who are united and actuated by some common impulse of passion, or of interest, adversed to the rights of other citizens, or to the permanent and aggregate interests of the community...As long as the reason of man continues fallible, and he is at liberty to exercise it, different opinions will be formed...The regulation of these various and interfering interests forms the principal task of modern legislation, and involves the spirit of party and faction in the necessary and ordinary operations of the government." James Madison, The Federalist No. 10
"Special interest politics is a simple game. A hundred people sit in a circle, each with his pocket full of pennies. A politician walks around the circle taking a penny from each person. No one minds; who cares about a penny? When he has gone all the way around the circle, he throws fifty cents down in front of one person who is overjoyed at the unexpected windfall. The process is repeated...After a hundred rounds everyone is a hundred cents poorer, fifty cents richer, and happy." David Friedman, The Machinery of Freedom, Chapter 27.
Before Mancur Olson published "The Logic of Collective Action" it was generally taken for granted that it was relatively easy to form groups (the "factions" mentioned in The Federalist) based on common interests, and to take collective action to further those interests; and also that the biggest (internal) problem facing a democracy was how to prevent the tyranny of the majority. In particular, the Federalist Papers assume that minority interests will be unable to control the legislature because "If a faction consists of less than a majority, relief is supplied by the republican principle, which enables the majority to defeat its sinister views by regular vote." On the other hand, "When a majority is included in a faction, the form of popular government, on the other hand, enables it to sacrifice to its ruling passion or interest both the public good and the rights of other citizens." Hence the reason the Founders wanted a republic with checks and balances rather than a democracy, and a Bill of Rights, to reduce the possibility of tyranny by the majority.
As far as I can see -- and I'm certainly open to the possibility that I'm misinterpreting or simply overlooking something -- Olson's point in "The Logic of Collective Action" was that all collective action is subject to the free-rider problem and therefore subject to the Prisoner's Dilemma. This is true virtually by definition; if "collective action" means "action taken for collective benefit" then by definition it's a public good (at least for some particular group), i.e. it's non-exclusionary; and if it's non-exclusionary, then it's subject to the Prisoner's Dilemma because it will benefit someone to "defect" (i.e. refuse to contribute/cooperate) if he can get away with it (i.e. still receive the benefits). This all makes perfect sense to me! And as he points out, "the concept of public goods is one of the oldest and most important ideas in the study of public finance." (And to quote The Federalist again, "To secure the public good and private rights against the danger of...faction, and at the same time to preserve the spirit and the form of popular government, is then the great object to which our inquiries are directed.")
Olson then suggests that one characteristic of states or governments is that they deal with public goods by means of coercion; that is, they force people to pay taxes and follow the law -- supposedly for the benefit of all -- by using force to compel obedience and/or punish dissent. He also discusses the possibility that other groups can use forms of coercion against members who "defect" and refuse to contribute to efforts made for a common goal.
This leads, of course, to the civics-textbook claim governments exist (at least partly) in order to provide public goods and that coercion is necessary in order to remedy the "market failure" that would exist due to the free-rider problem, e.g. people refusing to pay their share of the costs for things which benefit everyone in the public -- things like highways, schools, health insurance (in Canada), television and radio stations (in Britain) nuclear weapons, prisons for nonviolent drug addicts, customs agents whoo confiscate lesbian-rights literature (in Canada), police officers assigned to hang around public restrooms and arrest homosexuals, and all sorts of other wonderful things we could never pay for privately and just could never live without. (I also find it ironic that Olson uses corporate lobbying as an example of a "public good" that is underproduced -- in economic terms -- due to the free-rider problem.)
Many economists have pointed out the practical disadvantages to providing public goods through coercive means. Such goods might be produced even when the benefits to the public are not worthwhile, if they benefit the politically powerful. Later in his book -- although not in the article we're assigned -- Olson talks about how the free-rider problem allows concentrated interests to overcome diffuse interests, i.e. tyranny of a politically-powerful (because well-organized) minority over the unorganized majority.
Garrett Hardin's point in his classic essay "The Tragedy of the Commons" is that any commons suffers from the free-rider problem and Prisoner's Dilemma, because everyone has an incentive to grab as much as possible -- which is more than their fair share -- because if they don't grab it, somebody else will. John Locke recognized this over three centuries ago and came up with the "Lockean Proviso" in the Second Treatise of Government. Hardin explains how the commons' lack of ownership means a lack of enforcement of the Lockean Proviso to everyone's detriment, with specific examples.
Hardin recommends several alternatives to an unregulated commons. He advocates individual ownership when possible, otherwise (in cases such as air, flowing water, and public parks) government ownership with impartial regulations. He recognizes the state awards benefits to the politically powerful ("Bureau administrators...are singularly liable to corruption") which was Olson's point, so he recommends impartial regulations ("a government of laws and not men") based on price, merit, or equal shares for all rather than administrative fiats, and of course I agree! Bruce Ackerman's Social Justice in the Liberal State discusses how to determine whether private or communal ownership is the most economically efficient way to control a resource, and how to allocate it justly, including compensating those who are disadvantaged by whatever method is chosen; and William Blinder's Hard Heads and Soft Hearts discusses specific proposals for market-based environmental protection including emissions fees/taxes versus "cap-and-trade" permits. Currently there are many such proposals and even the Kyoto Protocol is somewhat market-based because it allows emissions trading. The biggest problem with such proposals is how to allocate allowed emissions for each nation.
Hardin also suggests that overpopulation is an example of the tragedy of the commons, because couples who have children are free riders, and therefore childbearing needs to be regulated. This argument is reasonable but mistaken, as David Friedman demonstrates in his article "Laissez-Faire in Population: The Least-Bad Solution," at least to the extent that there are no subsidies or externalities involved in raising children.
Finally, Robert Putnam (author of Bowling Alone, which inspired Meetup.com, and Better Together) has an article that talks about ways to overcome the Prisoner's Dilemma, and thereby overcome the Free Rider Problem. He analyzes evidence from local governments within Italy and finds that private "civic ties" provide a sense of community and trust (what Tom Wolfe calls a "favor bank" and Stephen Covey calls an "emotional bank account") so that people are willing to cooperate. Participants with civic ties believe it's worth the risk to trust someone else; they think the likelihood of cooperation is great enough to cooperate themselves. Putnam also found a breakdown of civic ties due to distrust in communities that are more diverse, which causes such problems as ethnic strife in the United States and, in extremis, in places such as Rwanda, the former Yugoslavia, and of course Iraq. Another reason for lack of trust is official corruption and "kleptocracy": insecure property rights and government intervention in favor of the politically favored, which in endemic in both the developing world and former communist countries -- and, to a lesser extent, in the United States as well.
In another article, "Reviving Community: What Policy-Makers Can Do to Build Social Capital in Britain and America," he suggests that governments can "rebuild social capital by subsidizing community organizations, through civics education, by instituting a scheme of voluntary national service, and through structural reforms." These may be useful, but I believe he is overlooking the vital information provided by Robert Axelrod's work on "the evolution of cooperation" which provides an experimental proof that the Prisoner's Dilemma is solvable if it's iterated. By breaking down social interactions into a series of smaller interactions, the risk is lower and non-cooperation or "defection" can be punished. Therefore people are more willing to risk trust others more than they would in an all-or-nothing gamble, and are also better able to build up trust.
In Starship Troopers Robert Heinlein asserted that a government (or other system) works as long as authority and responsibility are linked. There are several American political institutions which serve to break down this linkage via "rational ignorance." One of them is our weak party system which prevents voters from easily knowing the exact positions taken by their representatives on each issue. Another is the Presidential system rather than a parliamentary system, which prevents parties from being held accountable for the results of their platforms. A third is the "first past the post" or "winner take all" electoral system which emasculates minor parties. Finally, the ability of the state to enact programs which provide benefits to a single class or group, such as subsidies to farmers, is perhaps the single worst flaw in our system.
I believe the single greatest problem facing liberal constitutional democracies is the ability of concentrated minority interests to enact legislation against the common good. Strong parties, a parliamentary system, and proportional representation would go a long way to overcoming the causes of "rational ignorance" while a Constitutional amendment prohibiting the state from transfers or other programs unless they are universal (possibly with a means test) -- suggested by Charles Murray in In Our Hands -- would eliminate its effects.
Tuesday, August 21, 2007
No Gun? No Funeral! No Problem!
Apparently there's a minor scandal brewing in the Great White North about a website for a group called "No Gun, No Funeral."
Some people think the group wants to ban handguns in Canada but I think that's a myth; instead, I assume they want to encourage handgun ownership by having funeral homes refuse to organize funerals for people who refused to own handguns.
So I signed their petition. In fact, I wanted to help them so much I signed it twice!
My spelling was a little bit off. In fact, the second time I signed it, I wrote
Of course, what I meant to say was "I have been a therapist many times and want to make sure no hysterical women (or men) have guns because they might shoot me during a therapy session. Thank you for your project, and I hope to visit you soon to thank you in person!"
I'm sure no one could construe my comments as a threat. And even if they did, why, since I don't own any guns (as far as they know) they don't need guns to defend themselves, do they??
Some people think the group wants to ban handguns in Canada but I think that's a myth; instead, I assume they want to encourage handgun ownership by having funeral homes refuse to organize funerals for people who refused to own handguns.
So I signed their petition. In fact, I wanted to help them so much I signed it twice!
My spelling was a little bit off. In fact, the second time I signed it, I wrote
I am many times the rappist and want to help sure that no womyns have gun for stop me! Thank you for your helps! I visit you soon to thanks you!
Of course, what I meant to say was "I have been a therapist many times and want to make sure no hysterical women (or men) have guns because they might shoot me during a therapy session. Thank you for your project, and I hope to visit you soon to thank you in person!"
I'm sure no one could construe my comments as a threat. And even if they did, why, since I don't own any guns (as far as they know) they don't need guns to defend themselves, do they??
Saturday, August 04, 2007
...And I Wish For A Pony, Too!
Bruce, who blogs at Pink Sheets, has posted a comment (in response to "It's Not the Paper, Stupid!") on Jack Lail's Random Mumblings which gives some good suggestions:
Some might think this is overly optimistic, but I am an idealist and I really think it's possible, with some effort, for the MSM to rise up to the level of quality now provided by the blogosphere. I don't think it's likely to happen, but at least it's possible.
Update: this article on "Augmenting the Pros by Linking to Them" at Classical Values, and this one from Knoxnews.com. Hat tip to Instapundit, of course!
Imagine someone opening up a news agency whose highest priority is providing information without judgement. If a big news event happens, they just roll the cameras and show the scene, without commentary, without speculation, without moral lessons.
Imagine they create a culture of extreme objectivity, firing anyone for the least infraction. Where a photoshopped picture would not only result in firings, but would also provide years of open ridicule. Imagine a news organization that not only admits its errors, but places them on page 1 if they were regarding page 1 stories. What if they had a detailed introspective followup explaining how they would avoid similar errors in the future, what changes they would make?
What if they had active elements within the organization continuously seeking out any and all biases, no matter how small?
What if they allowed their customers an open forum, easily viewable by their customers, for pointing out errors, commenting on the stories, making suggestions, etc.?
Some might think this is overly optimistic, but I am an idealist and I really think it's possible, with some effort, for the MSM to rise up to the level of quality now provided by the blogosphere. I don't think it's likely to happen, but at least it's possible.
Update: this article on "Augmenting the Pros by Linking to Them" at Classical Values, and this one from Knoxnews.com. Hat tip to Instapundit, of course!
Saturday, July 14, 2007
Sousveillance is a Juvenal Activity, and an Enema of the State
David Brin calls for a "transparent society" in which everything will be known to everyone. Here is a step in that direction, a website of sousveillance i.e. "inverse surveillance" -- the poor and disadvantaged spying on, or at least monitoring, the rich and powerful. (That's why I call it "an enema of the state.")
ObLitCritCit: Lots of contemporary literary theory deals with the "panopticon"; M. Foucault's Discipline and Punish is a prominent example.
And the issue of how to prevent the authorities from being corrupt and/or tyrannical goes back at least as far as Aristotle and Juvenal. As James Hughes put it, new technology (e.g., cloning, cyborgization, A.I., nanotechnology) doesn't require new ethics, it only requires the application of old (and valid) ethics.
Update: Radley Balko has a devastating pro-sousveillance article at that hotbed of left-wing anti-authoritarianism, FoxNews.com.
Update: "Jimmy Justice" is videotaping NYPD officers breaking the law. Hat tip to Instapundit, of course!
ObLitCritCit: Lots of contemporary literary theory deals with the "panopticon"; M. Foucault's Discipline and Punish is a prominent example.
And the issue of how to prevent the authorities from being corrupt and/or tyrannical goes back at least as far as Aristotle and Juvenal. As James Hughes put it, new technology (e.g., cloning, cyborgization, A.I., nanotechnology) doesn't require new ethics, it only requires the application of old (and valid) ethics.
Update: Radley Balko has a devastating pro-sousveillance article at that hotbed of left-wing anti-authoritarianism, FoxNews.com.
Update: "Jimmy Justice" is videotaping NYPD officers breaking the law. Hat tip to Instapundit, of course!
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