31 March 2011

“Market Failure”


This approach provides a way to see the problems government has in allocating resources even remotely well: It’s not just that government gets it wrong at various points but that political processes do not have the same error detection and correction abilities that markets have. Political actors are far less likely to know when they’ve erred and to have the right incentives to correct things. Government is not only less able to get it right; it’s also less able to know when it’s got it wrong.
A whole new light is now shed on the idea of “market failure.” In this more Austrian view, markets frequently “fail” by not allocating resources optimally at a given time. But calling this a “failure” ignores the Austrian point that what markets are particularly good at is telling us that resources are not optimally allocated and providing the knowledge and incentives necessary to correct the errors. From the Austrian perspective, “failure” should refer not to suboptimal allocation at a given time, but rather the inability to detect and correct error. If we understand that the crucial question is how well alternative processes do those things, we realize that supposed market “failures” are better seen as opportunities for market successes.

“Market failure” occurs quite often in the free market because costless, infinite, perfect information does not exist.  As such, there will always be times when resources are not allocated as efficiently as possible.  What statists fail to realize is that the same holds true for state-governed markets.  Switching from a demand to a command economy doesn’t magically cause costless, infinite, perfect information to appear.  Rather, what happens is that those in charge of a command economy take on the pretense of knowledge.

Another flaw in analyzing “market failure” is analysis makes use of static models even though the market is a dynamic entity.  This usually leads to calls for intervention at the slightest sign of trouble, even though the market has repeatedly proven to be self-correcting.  A simple glance at any growth chart, whether of nations or businesses, or any other market entity, will show that growth is not perfectly linear.  Sometimes, say, a business will experience market growth; other time it will experience losses.  Some strategies will work spectacularly; others will flop like a dead fish.  Trying to pronounce judgment on a given system in response to just one small sliver of data is foolish, to say the least.

A better method of analysis is to compare a system’s historic performance in relations to its purpose/ability.  No one claims that the free market serves as a system of social justice, nor does anyone claim that it operates smoothly and flawlessly.  Really, the only claim that anyone can make is that the free market is the most efficient of allocating scarce resources to those who desire them the most.  Historically, the free market has done a very good job of accomplishing this goal, particularly in comparison to the alternatives.  America’s market slowdown in recent years is due to the government’s attempt at imposing a soft statism over the economy.

Does the free market fail occasionally?  Most certainly.  But is that failure permanent or uncorrectable?  Most certainly not.  More importantly, the free market, even with all it imperfections, is still the best method of allocating scarce resources.

Gun Control and Cost Analysis

Reason Magazine takes a crack at leftist myths:

The opponents rely on a litany of horribles. The Violence Policy Center in Washington claims that since May 2007, individuals licensed to carry guns killed 286 private citizens and 11 law enforcement officers and committed 18 mass shootings. This gory record, it asserts, destroys the myth that permit holders are generally law-abiding folks who behave responsibly.
In fact, VPC's own data, when inspected closely, doesn't dent the case for gun rights. Over the past four years, there have been more than 60,000 homicides in the United States. The slayings carried out by permit holders amount to fewer than one of every 200 murders. For every licensee who killed someone, there are more than 20,000 who didn't.
Nor does the evidence indicate that allowing people to carry pistols causes crime. Many of the shootings done by permit holders took place in their homes—where you don't need a concealed-carry license to keep a gun.
Some of the killings weren't even done with firearms: Among the cases cited by the VPC is a 2008 strangling in Florida, allegedly by a man who was licensed to carry. How can strangulation be blamed on a concealed weapon permit? If a fisherman kills someone, do we ban fishing rods?
Often, notes Florida State University criminologist Gary Kleck, the murders were premeditated or committed during the course of other serious crimes. In those cases, the license was irrelevant—unless you assume that someone willing to break the laws against murder or rape would not be willing to break another law by packing a sidearm.
What is extremely rare is a homicide committed by a permit holder in a public place in a fit of anger. Reviewing an earlier two-year database compiled by VPC, Kleck found only five cases "where possession of a carry permit may have contributed to the occurrence of the killing." Such episodes are not quite flying pigs, but almost.

Leftists are primarily concerned with population control, but it would be politically suicidal to forthrightly admit this.  Therefore, they are reduced to making utilitarian arguments against gun ownership and concealed carry permits, and this story highlights several flaws in the leftist anti-gun argument.

The biggest problem is the analytical filters.  As noted in the linked article, it is absurd to suggest that concealed carry permits play a causal role in strangulations or home shootings.  While there may be a correlative role, it is insane to even suggest that depriving people of concealed carry permits would have prevented these killings from happening. The problem, in this case, is motive, not irrelevant means.

In addition to failing to account for causation, the leftists make quite a hullabaloo over absolute numbers instead of relative numbers.  Two measures are key:  The percentage of murders that occurred because concealed carry permits were used to commit the crime and the percentage of concealed carry permit holders that commit crimes where concealed carry was integral to carrying out the crime.

Let’s say, in a hypothetical scenario, that there were ten thousand crimes in the past year, twenty thousand people had concealed carry permits, and concealed carry permits were integral part of twenty crimes.  The relationship between concealed carry permits and crime would have a correlative factor of .002 and the relationship between concealed carry permit holders and crime would be .001.  This means that there is a .2% chance that a given crime was committed by a concealed carry permit holder and that there is a .1% chance that concealed carry permit holder committed a crime. As can be seen, the correlation between crime and concealed carry is relatively weak in this scenario.

From what I can tell, it’s even weaker in the real world.  Ohio alone issued more than 60,000 concealed carry permits in 2009.  The carry rate of the population is roughly .54%.  If we extrapolate this to the country in general, then approximately 1,691,000 citizens had concealed carry permits (since the data is, to say the least, incomplete during the two years of the aforementioned study, I will hold the concealed carry rate constant).  Furthermore, the total murders committed during those two years are assumed to total 31,683 (I used the Murder and nonnegligent manslaughter data from the FBI’s CUS database for the years 2008 and 2009).  Thus, the correlation between murder and concealed carry permits is around .000158.  The correlation between concealed carry permit ownership and murder is .00000296.  T

In addition, there have been plenty of people, most notably John Lott Jr., who have argued that there are plenty of benefits to having a populace that carries concealed weapons, most notably in the form of lower crime.  There are plenty of people who dispute this work, of course, but it is clear that concealed carry, at the very least, does not lead to higher crime.  It is therefore anti-crime or neutral.

As such, concealed carry permits offer a strong potential for upside, with minimal costs.  Even if concealed carry doesn’t provide a significant reduction in crime, it is obvious that it will not contribute to it.  Therefore, the utilitarian argument against concealed carry is null.

Book Review

Hamilton’s Curse by Thomas J. DiLorenzo

If you want to know why the United States is all kinds of messed up at this point in history, this is the book to read.  IN fact, even if you think you know why the United States is in the trouble it’s currently facing, this is the book to read.

As any student of history knows, things don’t just happen.  There are always historical precedents and occurrences that lead to other precedents and occurrences, and all these have a cumulative effect.  The overbearing statist federal government of modern America can trace its roots to the ideology and actions of a man named Alexander Hamilton.

The book splits itself neatly into three parts.  In the first part, we are introduced to Hamilton, and given an overview of not only his philosophy but also his actual policies and precedents.  In part two, we see how his precedents have been carried out through history.  In part three, DiLorenzo offers some methods for undoing the damage wrought by Hamilton.

In the first part, it becomes rapidly clear that Hamilton was a staunch supporter of the large and overbearing state, and that he was quite fond of mercantilism.  This led him to creating a central bank, raising tariffs, and federalizing the debt.  By sheer coincidence, he happened to profit quite handsomely when he federalized the war debt, as did a number of his banker friends.  He also supported the whiskey tax, and was in charge of prosecuting violators.  It seems that his only objection to English control of the colonies was that it prevented Hamiltonian control of the colonies.

In the second part, we next see that Hamilton’s disciples follow his philosophy to its logical ends.  Hamilton’s chief disciple was John Marshall, head of the Supreme Court.  Many of decisions blatantly ignored constitutional limits, and attempted to federalize power.  (Incidentally, Supreme Court decisions were treated as non-binding, so it wasn’t uncommon for citizens to laugh off court injunctions.)  Lincoln was also a disciple of Hamilton’s and also supported mercantilist policies, as well as general meddling.  Like Hamilton, Lincoln was not afraid of suppressing those who disagreed with him, nor was he afraid of exercising federal power, particularly when it came to taxes.  Lincoln, by the way, was the first president to institute an income tax.

In the third part, DiLorenzo offers a way out.  Much of this revolves around the idea of taking back power, and undoing key accomplishments (like the central bank).  There are certainly a lot of goals worth working towards, but DiLorenzo doesn’t touch on very much of them, perhaps because the man knows his limits.  There is, after all, only so much you can do with a book.

In sum, DiLorenzo is an impressive historian with a knack for clear, concise writing.  It also helps that he knows a thing or two about economics.   As such, Hamilton’s Curse is a clear, lucid read that provides great insight into the events of today.

Other Sites

I have post on corporate taxation up at IMF.  An excerpt:
In the first place, it should be noted that there is a distinct difference between the nominal rate and the actual rate. The corporate tax ranges from 15% to 35% of corporate income. As should be obvious, GE isn’t paying anywhere near that. The difference between the nominal rate and the actual rate, then, is explained by two things: loopholes and tax credits.
Incidentally, conservatives will usually scream bloody murder about how high corporate tax rates discourage people from starting businesses in the states, which is true to an extent. However, if a company has offshore headquarters and a good tax attorney, then that company will be able to avoid taxes like GE currently does. It should also be noted that tax avoidance has costs, and cuts into a firm’s bottom line.
The rest is here.

30 March 2011

Yeah, That’ll Solve the Problem

Jonah Goldberg makes an immodest proposal:

Islamist extremism and oppression of women go hand in hand. And while the correlation between poverty and terrorism is often overstated, the correlation between prosperity and women's liberation is profound. Female education is tightly linked with GDP growth, lower birthrates and even higher agricultural yields.
It's also tightly linked with human freedom and decency, which is why no Islamic "spring" is possible without a feminist revolution. Countless Islamist countries practice gender apartheid and countenance wife-beating, honor killings and female genital mutilation. Islamist radicals have thrown acid in the faces of young girls for trying to go to school.

Mr. Goldberg is correct, insofar as Islamist extremism is linked to the oppression of women.  His mistake is that he thinks the solution is feminism.  Maybe he is unable to clearly see the well-documented problems wrought by feminism (e.g. the high illegitimacy rates, the high dropout rates, the high crime rates, the high degree of animosity between the sexes, the increase in government spending (particularly in regards to social spending), etc.)  Maybe he’s ignoring these things.  Maybe he is simply unable to see that matriarchal societies are mired in poverty,illiteracy, and a host of other problems.  Maybe he’s a liar.

At any rate, there is a difference between “oppression” and oppression. Mr. Goldberg is presumably referring to the latter, which is marked by abuse and unconscionable mistreatment of women.  (The former simply means that women can’t asset-strip their husbands and mooch off society.)  The solution to the problem of Islamist oppression is not feminism, but Christianity, for the problem is not patriarchy, but Islam.  Feminism is cultural poison, and will destroy men and women alike.  It cannot solve anything, save the problem of having a wealthy, spiritually wholesome society.

Feminism is too horrible a curse to be wished on even the vilest of enemies.

What Women Hate

The results of a recent survey:
Most women — 83% of respondents in this survey — are annoyed at one time or another by the posts from their Facebook connections. For these respondents, the most off-putting post was some kind of whine; a full 63% said complaining from Facebook friends was their number one pet peeve, with political chatter and bragging coming in a distant second and third.
The respondents also said at least one of their Facebook friends tended to:
  • Share too many mundane updates too often (65%)
  • “Like” too many posts (46%)
  • Inappropriately or too frequently use Facebook to promote causes (40%)
  • Project false information or images of a perfect life (40%)
Ultimately, what women hate most about Facebook is other women.  All the things that annoy women on Facebook bear an uncanny resemblance to the things that annoy women in real life.

Unelectable

That’s one way to describe Palin in light of this:
In case you missed it, small government crusader and Tea Party favorite Sarah Palin’s TLC reality show “Sarah Palin’s Alaska” received a $1.2 million subsidy from the state of Alaska. The show spent $3.6 million on production in the state, meaning that Alaskan taxpayers covered a third of the cost of the show. The show will apparently not have a second season.
I’m not suggesting that Palin planned this, or that she’s ripping off the taxpayers, or doing anything that is unethical, immoral, or illegal.  She’s simply being imprudent.  Is it really wise for a potential presidential candidate to be the star of a TV show that receives a sizable government subsidy?  Especially when said star/candidate champions cutting smaller government and lower spending?

Sarah Palin isn’t wrong.  She’s just stupid.  And that’s what makes her so unelectable.

Austrian Tautologies: Altruism


As far as I can tell, we are left exactly where we were after that first essay. No altruism to be found. If you made a "sacrifice" it was, by direct virtue of your action, "worth it to you" (at the time of the action) or you would not have taken that action. It is really just that simple. (By the way, this does nothing the render the action more, or less noble, whichever the case may be in the eyes of an observer.) As a fellow anarchist buddy of mine puts it, "altruism is praxeologically impossible." Agreed, still.

The basic argument is that the only way one would make a “sacrifice” is if one valued the results of one’s sacrifice to worth more than the costs of the sacrifice.  More simply, altruism doesn’t exist because people only act if they believe they will profit.  This is simply tautological reductionism based on Misesian rationality.

But this begs a question for Christians:  If that which is considered altruistic is actually greed, then what is the spiritual value of giving?

Accepting the definitional impossibility of altruism, I would argue that giving still has spiritual value in that it still teaches sacrifice.  Some people make sacrifices in order to afford nice cars; Christians make sacrifices in order to help others.  And even if one truly does want to help another person, it doesn’t change the fact that there are opportunity costs, so there is always sacrifice in that sense as well.

Furthermore, there is virtue in in training one’s mind to value helping others over satisfying one’s personal desires.  Even if helping others is inherently selfish, as the Austrian school of economics would define it, it is still virtuous to train one’s mind to desire to help others.

Thus, as a Christian who subscribes to Austrian economic analysis, I have little worries about the inherent spirituality of this tautological trick.  Even if I am being self-interested by helping others, it doesn’t change the fact that a) I am helping others and b) doing so willingly.  That’s what God demands of me, and that’s what I’m going to do.

Capitalism, Socialism, and Scalability


Cohen’s book proceeds as follows.  First, he has us imagine a camping trip among friends.  Food and goods are shared freely.  Everyone abides by (purportedly) socialist principles of community and equality. Everyone does his part. No one takes advantage of anyone else. No one free rides. Everyone contributes. Everyone shares.
After a while, people begin to act like capitalists (as Cohen understands realistic capitalistic behavior). Harry demands extra food because he is especially good at fishing. Sylvia demands payment when she finds a good fishing spot. Leslie demands payment for her special knowledge of how to crack nuts. Harry, Sylvia, and Leslie refuse to share without extra payment. Morgan, whose father left him a well-stocked pond 30 years ago, gloats over having better food than the others.

The fundamental flaw in this argument is that there is an assumption of scalability, which simply means that socialism, which works well on a small scale, should also work well on a large scale.  Unfortunately, this assumption is simply incorrect.

In the first place, socialism requires a large degree of knowledge in order to be systemically efficient.  When one is dealing with a small number of people (e.g. a family), it is possible to have a large degree of knowledge without necessarily possessing a large amount of knowledge.  When more people enter the people, the degree of knowledge necessary remains the same while the absolute amount of raw knowledge required increases correspondingly (e.g. 60% of 10<60% of 100).  As the famous Dr. Sowell has remarked, “economic decisions are about tradeoffs, not absolutes.”  This principle applies to determining which economic system should be used.

In the second place, socialism requires that actors within a system be close in proximity.  It is difficult to ensure that all producers are producing enough if they are scattered over a large geographic area.  It is also difficult to determine who isn’t pulling their weight if people are not close in social proximity as well, which simply means that people who aren’t “close” to one another, in a platonic sense, are not likely to know what the others do.

Again, these two factors play a significant role in determining which system to use.  For small-scale societies, like the nuclear family, the socialist system makes more sense, for the absolute knowledge demands are low, and proximity is near.  This, then, is a very economical way of determining how to distribute production and resources, based on the specific skill sets and desires of the individuals working within the small-scale society.  In fact, socialism naturally lends itself to a system of informal barter.

Socialism is not, however, well-suited to a large-scale society.  The knowledge demands are simply too great for one person, or even a large number of persons.  And since large-scale societies also require large amounts of land for sustenance, there is then not enough proximity to reinforce the necessary social norms, leading to a significant free-rider problem.  Capitalism (or, more accurately, the free market) solves this problem through the division of labor, which requires only that system participants pay attention only to those things which are directly related to their interests, thus solving the knowledge problem and, to some extent, the proximity problem.

The break-even point for these systems is unknown, but I am willing to bet that the system size strongly coincides with Dunbar’s number.  At any rate, it should be obvious that advocating wide-scale socialism based on the success of small-scale socialism is as foolish as advocating small-scale capitalism based on the success of large-scale socialism.

Note:  I use the word “capitalism” interchangeably with “free market” in this post, simply for the sake of syntactical brevity.

Survivor Indeed

I saw a copy of an email my dad received from a fellow teacher.  In it, the writer decided to create a “Survivor”-like game show wherein Michael Bloomberg, Chris Christie, Scott Walker, and other assorted left- and right-wing politicians would e forced to take a teacher’s job for one school year.  They would have special-needs students, ESL students, and other types of problem students that teachers routinely deal with.  In addition, they would have to submit lesson plans, ad take care of all the bureaucratic nonsense that teachers face on a daily basis.  If any of these politicians were able to meet the standards by the state, they would get to keep their offices.

The point in all this is that a teacher’s job is really difficult, and politicians (and constituents) just don’t understand.  Of course, the per-student cost of education has risen over the last forty years while the results leave much to be desired, and these facts are conveniently left unstated.  But teachers, as is their wont, are still complaining about being underpaid.  (Note:  I think the testing methods used by the states to determine students’ knowledge is inherently flawed, but that doesn’t mean that I think teachers are doing a good, or even mediocre, job of teaching.)

Fundamentally, though, it is obvious that teachers don’t think actually think they are underpaid.  How do I know?  Easy:  teachers haven’t quit their jobs in protest.  That teachers still haven’t sought after new jobs indicates quite clearly that teachers think that working their jobs is better than working other jobs.

Sure, current economic factors play a role in teachers’ desire to keep their jobs.  But that’s true for every worker right now.  It’s not cruel or absurd to demand that workers become more efficient at their job s during a recession.  There’s nothing wrong with a boss asking an employee to forego a raise or increase output when the company is facing hard times.  This same principle should apply to teachers.

The states are out of money and revenues are down.  The states can no longer afford to pay teachers what they used to be paid or pay for system redundancies.  And so cuts must be made somewhere.  Instead of being proactive and choosing the least painful cuts, teachers are complaining about possible pay cuts in the middle of a recession.  Keep in mind that their employers, the taxpayers, have already cut back and made their sacrifices.  Is it really too much to ask for teachers to do the same?

29 March 2011

Waste of Time

The ASI makes a misguided proposal:

The UK, like the US Federal Government does not have a balanced budget amendment. Parliament can pass a law without a supermajority as an act of parliament, only needing a simple majority. If there was a balanced budget bill, it will need to be like the German amendment. It will need to phase out deficits over a period of time and by the end of the time allocated, the Chancellor cannot spend more than he gets in, just like a normal household budget.
Obviously, Parliament can repeal a law just as easily as it can enact it – but experience has shown that this can be quite difficult for governments. At the very least, the law would be a roadblock to deficit spending. By passing a law banning deficits, we may see our government finances being put into place.

This is a blindly idealistic proposal, for it assumes that politicians will be honest, and will actually comply with attempts to curb their power.  In order for politicians to get around these constraints, they can do things in lieu of cutting spending:  they can either raise taxes, or tinker with budgeting predictions/reports.  The former is unconscionable, the latter is simply dishonest.  Neither will actually address the issue, and so the proposed act will be more symbolic than practical.

If one is serious about addressing the budget, then would do well to recommend a hard cap.  I recommend passing an amendment that limits congressional spending to $2 trillion, with at least $500 billion being dedicated o repurchasing government debt, with no adjustments allotted for inflation.  I imagine that this would solve a good portion of America’s budgetary woes.  Since this proposal is actually serious, there is little chance of its passing.

Another Reason

Do you remember when Democrats recoiled at the doctrine of preemptive war? Last night was the final reminder that, with the exception of some diehards like Rep. Dennis Kucinich (D-Ohio), Democrats when wielding power are only against Republican preemptive war. If anything, they are more promiscuous in choosing conflicts than their warmaking brethren on the other side of the aisle; just less likely to go all-in with ground troops. Does it satisfy the consciences of Bush-hating interventionists merely that Obama made more nice-sounding comments about subsuming America's lead role within a United Nations-blessed coalition? And have they thought through even for one moment the kind of bar-lowering precedent they're setting for the next Republican president to send ground troops into wherever the hell?
As I’ve maintained, there is little difference between Democrats and Republicans.  The only time either party acts on principle is when they have no power.  I didn’t vote in the 2008 presidential election because there was no difference between Bush, McCain, and Obama (by which I mean that whoever was elected would more or less endure four more years of Bush’s policies).  All three of them were/are intent on taking America down the road to serfdom.  The only difference between the three of them is/was the speed at which they would take America down that road.  Since societal collapse is inevitable, my preference is that occur sooner rather than later.

A Modest Proposal

This will make more sense once my next IMF post is published, but I propose eliminating the corporate taxes.  I say this because as I was completing my tax return, I took a look at the handy revenue chart the IRS placed in the instruction booklet.  I saw two things that really intrigued me.  First, debt accounts for 40% of the federal budget’s funding.  Second, corporate taxes account for 4% of the federal budget’s funding.  Given that corporate taxation is as much a redistributive system as anything else, it makes little sense to bear the administrative costs in light of little is actually contributed to the budget.

Income taxes account for 26% of the budget, and have a higher return on costs.  I propose, then, that corporate taxes be eliminated, and that revenue is supplanted by closing loopholes, especially for low-income tax payers.  If they are going to receive government benefits, the least they can do is pay for some of them.

Of course, this proposal will seem somewhat hypocritical in light of my next post on taxation.  I simply want to note that no matter how you analyze it, corporate taxes are simply a waste.  Not only are they costly to collect, relative to revenue, they are also costly to comply with which makes starting and running a business in America less appealing.  Eliminating corporate taxes encourages business growth and eliminates government inefficiency.  Naturally, this plan is doomed to fail.

Back in the USSA

After forcing Fejio and Daniel Chapter One to stand trial before a rigged FTC tribunal, where the outcome was predetermined, a federal appeals court in Washington looked the other way in the face of the Commission’s blatant violation of the First Amendment’s protections of free speech, association, and religious exercise. The FTC said all of Daniel Chapter One and Fejio’s speech would be restricted in the future to those statements the FTC deemed “scientifically” valid — in other words, whatever speech the FTC’s non-scientist lawyers declared permissible. [Emphasis added.]
In addition to assessing punitive fines against Daniel Chapter One and Fejio for exercising their right to free speech, the FTC also asked the district court for an injunction to censor the defendants’ radio program, Facebook page, Yahoo group, online bulletin board, and to prevent them from even linking to materials deemed illegal by Commission attorneys.
This is the long and winding road which secularism leads to.  The humanist secularist’s efforts to stamp out religion and other “irrationalities” in favor of science (or, more accurately, science fetishism) undeniably leads to ignoring basic human rights.  In this case, it has led to denying people their free speech rights.

This is especially egregious, because “science” cannot say with one hundred percent certainty that the claims made by Daniel Chapter One are incorrect.  This is because, as I have noted before, scientific truth is inherently subjective and in a constant state of flux.  The scientific truths of years gone by are now treated as jokes (anyone remember phlogistons?).  Scientific truths change and shift, and man continues to refine what little understanding of the universe he possesses.  What is to say that DC1 is wrong?  And who is to say that DC1 isn’t ahead of the time?

In sum, science the science fetishism currently on display by the FTC demonstrates just how subversive secular humanism is as a philosophy, and how anti-science the science fetishists are.  That’s what happens when man makes himself to be god. Needless to say, man sucks at the job.

UPDATE: S.M. Oliva makes some important clarifications

26 March 2011

Modern Society in Thirty Seconds

Source: Youtube

Note how the woman in this video has quite the entitlement mentality, and how the man perfectly personifies the desk-jockey beta.  Also note how, fittingly, they both use infantile voices.

25 March 2011

Maybe if He Were Mexican


Schoolcraft says they tried to dissuade him from pursuing the matter. Employees at the local passport office scared them, telling her father "If he pursued it, (he could) possibly be deported or [be] at risk of losing Social Security."

If I were this guy, I’d be inclined to laugh at this threat.  The United States doesn’t deport anyone.  Of course, he’d have even less to worry about if he were born in Mexico instead of Canada.

24 March 2011

The Eternal Adolescence of the Female Mind

Gucci Little Piggy notes the hypocrisy of women:

So while “violence is not the answer” it becomes more of a legitimate answer when someone is acting like a douchebag and spitting things at you while you’re performing on stage.  Just because this douchebag is a woman doesn’t mean that we should all of a sudden have sympathy for people who behave obnoxiously.  We should hold her in the same regard as the thousands of other people who have befallen the same fate:  “shouldn’t have spit at him” is the usual treatment.
When feminists compose their Gender Neutrality Wish List they only expect things like jobs, better pay, respect, voice, etc.  But they don’t realize that bumps and bruises come with that.  ‘Cafeteria feminism’ is what that’s called, I believe.

For what it’s worth, I have no principled opposition to hitting a woman,* particularly if she is “acting like a douchebag.”  The way I see it, if we are truly equal, than I should treat her the same way I would treat a guy doing the same thing.  Plus, I also view this sort of thing as “teachable moment,” in that I plan to teach her why acting like a douchebag is a very bad idea.  In fact, one might argue that I’m actually doing her a favor.

Anyway, the rank hypocrisy exposed by GLP demonstrates how women are stuck in a perpetually adolescent state of mind.  For, like all adolescents, women want the privileges of adulthood without any of the responsibilities.  Thus, the difference between men and women is that men eventually transition from adolescence to adulthood.

The desire for privileges without responsibilities is very dangerous, for it must fundamentally ignore reality.  Furthermore, women must be taught that this desire is absurdly unrealistic, and must be taught in much the same way that parents teach adolescents that having a car means paying for gas and insurance and so forth.

The worst thing that parents can do for their adolescent children is fail to prepare them for the realities of adulthood.  In the same vein, it is also a disservice to women to spare them from the consequences of their behavior, for it is certain that reality will eventually catch up with them.  And when it does, it will be quite painful.

* If you’re obtuse, or otherwise incapable of understanding this point, I’m simply stating that there is nothing inherently immoral about hitting a woman.  The rightness or wrongness of hitting a woman (or man) is contingent on the situation.  It is acceptable to hit someone else in the act of self-defense; it is not acceptable to instigate assault.  This rule applies equally to men and women.

Empiricism


Someday, scientists will learn that mathematical models only predict what they are constructed to predict. At that point, they will have finally intellectually evolved to the point of a 13 year-old computer programmer. Because computer models are neither studies nor are they science.

For some reason, science fetishists routinely forget that all scientific disciplines are inherently axiomatic, and that whatever truths science reveals are inherently subjective in nature.  Because of this, said fetishists tend to accept mathematical models as proof of argument, when in reality the only thing mathematical models prove are that computers are capable of logic.

It is important to remember that in order for a conclusion to be correct, the logic must be correct and the premises must be sound.  As such, if a mathematical model is proved incorrect, then it is obvious that the assumptions upon which the model the model is based are inherently flawed.  The lesson to take away from all this is that one must always question the underlying assumptions.  This is especially true in the computer age, for the logic of computer-generated mathematical models is virtually always sound.

Incidentally, this addresses a fallacy found in John Case’s post from yesterday, specifically in reference to his second “point:”
Austrian economists also argue that mathematical models and statistics are an unreliable means of analyzing and testing economic theory, and advocate deriving economic theory logically from "basic principles" – read "divinely inspired principles" – of human action.

Again, the reason why Austrians reject mathematical models is because they are inherently axiomatic.  This is why CPI and GDP are such laughable measures.  CPI excludes fuel and food costs, yet purports to measure price inflation.  Seeing as how fuel and food are fairly common purchases for all people in a given economic system, it is absurd on its face to exclude them from a metric that’s supposed to measure systemic inflation.  GDP also has its own problems; for example, government spending is seen as production, not consumption, and is considered to be as efficient in production as private production.  There are other concerns for both metrics, but it should be obvious that accepting mathematical models based on these models is foolish, to say the least.

Furthermore, given the sheer amount of knowledge that one must possess in order to build data-driven models, it is simply easier and more correct to analyze economic phenomena from a “basic principles” standpoint.  Plus, human action is easily observed, and one can generally determine why a given person behaves a certain way.  As such, it is easier to simply base policy on how humans actually behave, instead of basing it on an inherently subjective model that con only say what programmers tell it to say.  All the math in the world cannot change human nature.

Paragraphs to Ponder

This time by Mark Crovelli:
The fact that many, many police officers are indeed complete psychopaths should thus not come as a particular surprise. Indeed, the job is tailor made for the psychopath and the sociopath who is comfortable with feelings of cognitive dissonance. People with normally calibrated moral compasses would shudder to think that they would be required to lock people up in cages, electrocute them, or beat them with clubs for not doing as they are told. It would confuse and trouble the normal person to think that by putting on a blue polyester suit, mustache, and riding boots it was suddenly morally acceptable to order people around at the point of a gun (not to mention the icy shudder they would feel at the thought of wearing the ridiculous kit itself). It would horrify the normal person to think that part of his job involved smashing down strange people’s doors, taking their children, shackling them, locking them in cages, stealing their drugs and guns, and shooting them if they happen to resist.
The man with a normally calibrated moral compass is equally disturbed to contemplate that the purported justification for acting in these barbaric ways was that politicians, of all people, told them to. It is not as though God Himself or the Pope gives the police officer sanction to lock people in cages and to order them about. Quite the reverse, the sanction comes from people of such sterling moral character as the coke-snorting drunk driver, Bush II, and the drug-cartel-connected perjurer, Clinton I. The sociopath and the psychopath are not troubled by the fact that their only justification for ordering strange people around is that a pack of corrupt millionaires in Washington or Denver told them to, which is what makes such people sociopaths and psychopaths in the first place. The normal person, in contrast, is not willing to do things to other people that they clearly resent or despise, or to order them to do things they oppose, just because a politician says so.
The rest of the article can be found at LRC.

23 March 2011

How to Argue Poorly

Its principles are as follows:
1. The business cycle is a completely virtuous cycle. Slumps are the price we pay for booms. Recessions are the just punishment for the excesses of previous expansions. The fact that the rich reap the rewards regardless, and the poor are the ones punished regardless, is of no importance to the Austrian school. Every graph of the financial crises showing crashes and bubbles is just God's continuing morality play. Government intervention in this "virtuous" cycle prevents God and/or nature from rendering justice with the "tough love" everyone needs – and thus is evil. The Austrians are always in a state of continual frustration because no nation in the world seems to be willing to wait out financial crises and depressions trusting in the "magic of the market" to fix everything – that mirable dictu, keeps crashing and suffering from persistent instability. Instead of waiting for God's judgement, people – to the amazement of the "Austrians" – still resist walking calmly to the grave from starvation or homelessness!! They say: "if this is virtue, then the Devil has ascended Heaven." Nonetheless, the "virtuous business cycle of capitalism" has a certain seductive power. Not because it offers any solutions, but because it explicitly offers nothing: Welcome to God's Plan.

I have never heard any Austrian economist ever say at any time that the boom-bust cycle is a “virtuous cycle.”  It has been described as a natural cycle, where an artificial boom always leads to a bust.  And history has demonstrated that interference tends to be much, much worse than letting simply waiting for the free market to run its course (cf. FDR’s Folly).
2.  The Austrian School rejects a scientific foundation to economics. The failure of any political regime to endorse the virtuous business cycle theory of the Libertarians gives rise to all sorts of political backwardness and numbness to reality in its supporters – listening to them frequently arouses a generous desire to help them with a wake-up "dope slap," after such tortured jewels as: "the people are too stupid to understand," or "the people are entitled to nothing," and other too-vulgar-or-racist-to-repeat sentiments. So few believe them, in fact, that they have become hostile to any group or government or institutional level of analysis at all. Instead they advocate strict adherence to "methodological individualism" – analyzing human action exclusively from the perspective of individual agents. Austrian economists also argue that mathematical models and statistics are an unreliable means of analyzing and testing economic theory, and advocate deriving economic theory logically from "basic principles" – read "divinely inspired principles" – of human action. They have even given their methodology a name, "praxeology." Additionally, renouncing science altogether, the Austrians reject experimental and empirical research altogether. They reject testability and falsification en toto. The great virtue (not!) of a theory that rejects testing and falsification is, of course, that it cannot be disproved!

Actually, the complaint with the mathematical models used by mainstream economics isn’t the math; it’s the assumptions and definitions.  Also, you seem to ignore the fact that all scientific disciplines are inherently axiomatic.  This is also true for mathematics.  Anyone who has done a precursory examination of “official” statistics can easily see how Orwellian the system has become.  As such, analysis based on the official statistics is bunk, because the underlying assumptions are bunk.  Besides which, economic phenomena is simply too complex to be perfectly and completely explained by simplistic models.
3. The role of the state in Austrian and now Libertarian theory is more confused than its transparently false propositions on the business cycle. The first Austrian, von Hayek, was actually a social democrat and strongly supported standard social democratic policy on the key role of the state in providing services that were market failures. He differed only on whether the post office should be public or private. But latter day Austrians at the Von Mises Institute take this notion for a ride off the sanity cliff, calling for the end of public schools, roads, post offices, Internet, media of any kind, health care, retirement, fire stations, etc, etc, etc.
Actually, the Austrian school was founded by Menger, Bahm-Bawerk, and Wieser, so 0 for 1 there.  Also, private schools out-perform public schools, private highways out-perform public highways, private delivery (e.g. UPS, FedEx, DHL) outperforms the USPS (in fact, FedEx subcontracts for USPS because they’re so much more efficient), private providers of internet and media are superior to public-provided alternatives, private health care is measurably superior to public health care (and that’s with all the expensive regulation and taxation in place), private retirement aren’t effectively bankrupt (unlike, say, social security), and the few private fire stations that exist are superior to their public alternatives.  The Austrian argument is that the state is inferior to the market at providing pretty much any and every service and good imaginable, which is why it is unnecessary.
4. Like many cultish theories, libertarian economics rise in popularity reflects public dissatisfaction with the performance of large institutions in many areas of economic and public life. They often correctly identify corporate corruption as a source of the decay of these institutions, but rather than reform the corruption, they become captured by an attractive, but ultimately doomed, ideology that – due to its futility as a guide to leadership – strengthens the very corruption they decry.
That a theory’s devotees are cultish has no actual bearing on its validity.This use of ad hominem argumentation is reprehensible, and does not suffice as a logically valid argument.

If, as noted before, public goods (indeed, the state itself) are vastly inferior to privately provided goods, then what, exactly, is the point of reform?  Particularly since abolition is not only cheaper, but more equitably?
And why the emphasis on leadership?  People are quite capable of deciding for themselves.  And if they aren’t, it still does not follow that the state need exist.  Perhaps someone needs to study private charity in America during the 19th century (by which I mean read de Tocqueville).

In all, this attack is simply ludicrous.  It is full of falsities and half-truths, and is riddled with logical errors.  The lesson to be taken from this display of blatant stupidity is that one is should spend more time reading than writing, particularly when one is ignorant and devoid of the ability to string together a logical, coherent thought.

The Pretense of Knowledge and Educational Testing

The protests in Wisconsin, Ohio, and other states have led to a large amount of general asininity when it comes to discussing the value of teachers and public education.  There are plenty of people who think teachers, as a whole, are overpaid relative to productivity (or, conversely, under-productive relative to pay).  There are also those who think teachers aren’t being paid enough given the demands of the job.  As someone who was home schooled and enrolled in public school, and as someone whose parents are both teachers, this debate strikes fairly close to home.

One of the biggest issues I have with this debate is the citing of standardized testing performance as a proper measure of teacher value, either in the aggregate or in the specific.  The reason for this is simply because tests do not, indeed cannot, accurately assess a teacher’s performance with any degree of accuracy.  Yet, these tests are cited as gospel, which means that these tests serve primarily as a pretense of knowledge.
There are, as I see it, two major problems with standardized testing.  One problem is that the test is completely arbitrary; another is that analysis of the test cannot even begin to account for all the variables that affect performance.

The latter problem is probably the larger problem, for test performance could be affected by what a child has for breakfast, what they’re wearing when they take the test, the ambient temperature of the room in which they take the test, the amount of sleep they had the night before the test, the amount of home preparation and study, etc.  To my knowledge, these variables do play a role in test performance, though the exact extent of which is unknown.  And there are likely other variables we have not yet even considered.  Standardized testing also tends to overlook the plasticity of the human brain; in doing so it ignores that what a person “knows” (or, more accurately, can recall) varies on a daily basis.  These sorts of things are beyond teacher’s control, and play a role in test performance.

The other problem, as mentioned, is that these tests are completely arbitrary.  I do not mean this in the sense of what sort of material is tested, even though it applies.  I mean that the test structure itself is completely arbitrary.  It is administered on a certain day at a certain time under specific (and, most likely, non-replicable) conditions.  Thus, the only thing that test results prove is that those taking the test performed at a certain (arbitrary) level on a specific (arbitrary) test under a very specific set of conditions.  To extrapolate results from this is akin to writing a biography of a random person based on seeing one picture of that person.  As can be imagined, relying on analysis of test performance is incredibly foolish and dangerous, particularly if test performance is going to be the main metric for teacher evaluation.

Now, this is not to say that students are actually well-educated and highly intelligent, nor is this to say that teachers in general are underpaid and overworked.  The only point in bringing up this critique is to point out how number fetishism is a poor method of analyzing teacher (and student) performance.  In fact, I would argue that that the reliance of statistical data is evidence of the increasing science fetishism in American society, where shoddy empiricism is used as a substitute for direct observation.  This mindset reveals a greater bias for relying on that which is perceived to be objective over that which is perceived to be subjective, but that is a subject for another post.

The flaw in this sort of thinking is that it ignores the fundamental fact that educational standards are inherently subjective.  Why should knowledge of mathematics be preferred to knowledge of history?  Why should English be given priority over civics?  There are legitimate arguments to be made for preferring one subject to another, but all arguments are inherently subjective, for value is inherently subjective, and educational standards are simply a subjective value.

This naturally begs the question:  What is the best way to determine teacher and student performance?
I believe that the best way to measure the performance of both teachers and students is to rely on the more subjective method known as “management.”  In this case, the students would be evaluated by the teacher, and the teachers would be evaluated by the principal.  There would few, if any, objective metrics with which to judge teacher performance.  And, given the inherent arbitrariness of educational standards, there wouldn’t be very many truly objective was to measure student performance.

This seems unsatisfactory for a wide variety of obvious reasons, but it’s not as bad as it seems.  In the first place, this sort of arrangement was the norm for the longest time in America.  It was not until education was federalized and increasingly centralized that number fetishism began to take root.  It should be noted that the further removed the planners are from the direct results, the more they must rely on hard data.

Also, education remains a very human activity.  The subjective nature of human experience is firmly rooted in education, and will not be removed.  Schools should not be thought of as assembly lines, but rather a place in which children can grow intellectually, in pursuit of that which interests them most.  Naturally, this requires that the school system become more decentralized and more tailored to a wider variety of scholastic subsets.  Since this requires that the government cede more of its power to citizens, you can bet this will never actually happen.

The upside to a subjective approach to education is that principals would be given far more control over school management, and would have the authority to fire bad teachers and kick bad students out of school.  Of course, the principal would be more directly responsible to parents, which would place more appropriate limits on his power.  Still, he would be authorized to act more quickly and decisively in response to problems, instead of dealing with the bureaucratic paper shuffle that is the hallmark of their job.

As should be obvious, the root of the current problem is the government and its tendency to centralize power. The solution lies in admitting that educational goals are inherently subjective and best attained by allowing the power of control to be left in the hands of those most closely connected to the students.  It worked before; there’s no reason it won’t work again.

22 March 2011

Paragraphs to Ponder

From Peter J. Boettke:
The language of disaster and recovery efforts is one of centralization — a military effort is required to tackle the urgent problem. But the militarization of compassion is not very effective in achieving improvement. As my colleague Chris Coyne (author of After War and a forthcoming book on humanitarian aid) suggests in his paper “Delusions of Grandeur,” imagine you asked the firemen responding to a raging fire at a corporate building to also coordinate the provision of medical supplies and treatment, oversee the reconstruction of the building, and then rebuild the company’s supply chain after the fire was extinguished and the building rebuilt. This is precisely what happens through the creeping militarization of humanitarian efforts.
The militarization of compassion does not help strengthen families, rebuild communities, or cultivate commerce. Instead, it centralizes efforts and ignores the local knowledge that resides in individuals and that is embedded in communities. Our intuition pushes toward command and control, but the science of economics pushes against this intuition and favors the decentralized, on-the-ground information possessed by individuals — who are capable of embracing the challenges of the “cares of thinking and all the troubles of living” (as Tocqueville argued was required of a society of free and responsible individuals). The militarization of compassion may help those far away to feel they are doing their best to address the crisis, but once we get beyond the initial search-and-rescue phase and on to the second, rebuilding phase, the result is usually planned chaos.
The rest can be found at The Freeman Online.

21 March 2011

Principles of War

In which S.M. Oliva makes an observation:

 The conservative assumption is that the right to declare war is a “sovereign” power inherent in all monopoly governments. The libertarian ethic cautions that only individuals have rights; there are no legitimate “sovereign” powers that go beyond these individual rights. The group has no more right or authority than the individual. The metaphorical construct called the “United States of America” has no greater or lesser right to commit aggression against Libya then I do.

Not only is interventionism counterproductive, it’s also profoundly immoral.  Since it’s obviously wrong for one person to act in aggression towards Libya, it necessarily follows that it is wrong for a collective of people to act in aggression towards Libya.  Large numbers of people agreeing with one another do not, surprisingly, determine the morality of a behavior.  Might does not, in fact, make right.

This necessarily begs the question of what sort of military conflicts are moral.  The answer is fairly simple, and can be arrived at by considering an individual’s rights.

It is axiomatic that no person is morally compelled to endure abuse at the hands of another.  Each person owns himself and, as such, has complete autonomy insofar as exercising one’s autonomy does not interfere in another’s self-exercise of autonomy.  Within this framework, then, it is obvious that all persons are forbidden from aggressing towards another, but are allowed to defend themselves if necessary.

Within the framework of self-defense, it is necessary to point out that one’s self-defense is limited to doing so on his own property (e.g. one cannot chase a burglar off his property, and then track him down and kill him).  Further note that no one is under any moral obligation to interfere in any others’ altercations.  Also note that one cannot reasonably expect self-defense to be a viable justification for one’s actions if one instigates the conflict.  Of course, these are general rules, so the specific morality of each conflict is contingent on the specific details of the situation.

However, a general framework for justifying war can be determined.

In the first place, a policy of non-interventionism is called for.  This simply means, in the light of foreign policy, that nations should avoid instigating conflict.  There is no reason to send troops outside of this country in time of peace.  There is no reason to interfere in other nations’ affairs.

In the second place, there is no justification for a preemptive strike.  It is impossible to say with certainty in advance if a given nation will attack us.  It also immoral to assume that most will, and so we should destroy them to be safe.  Also, a policy of aggression tends to make matters worse.  In addition, a willingness to preemptively engage in war has a tendency to overestimate the probability of danger, leading to an escalation of the military-industrial complex, which starts a downward spiral of increasing hostility and aggression, which makes everyone worse off, save for the generals and the CEOs of defense contractors.

In the third place, it is generally wrong to wage a defensive war on foreign ground.  Indeed, it is definitionally impossible.

As such, the general principle for engaging in war should be that it is only in response to a specific attack, and that said war consists of killing or otherwise removing all enemies currently within the borders of one’s country.  Beyond that, there are few reasons to be engaged in conflict, particularly if said conflict is being waged outside one’s country.

What Are Children?

That seems to be a reasonable question in light of the following:
The two cases generally considered as establishing constitutional protection for parental rights are Meyer v. Nebraska (1923) and Pierce v. Society of Sisters (1925).  In the first case a Nebraska law prohibited schools from teaching a foreign language to students before eighth grade.  In the second Oregon passed a law requiring all students to attend public schools.  In both cases, the Court found the laws unconstitutional because they infringed on certain basic liberties all citizens have.
I’ve already shown how parenting is no concern of the federal government.  However, there is still the lingering question of how to best classify children as legal entities.

There are generally two approaches to this answer, at least from a legal standpoint.  Some argue that children should be classified as a type of property; others argue that children should be classified as a type of citizen.  Each argument has certain merits as well as limits.

Treating children strictly as citizens leads to the logical conclusion of holding them legally liable for their behavior.  Of course, this is undesirable if, for example, a ten-year-old child accidentally shoots and kills someone.  In this case, he would face, at the very least, a civil suit and possibly a legal suit.  Thus, this sort of approach is easily understood to have serious flaws.

On the other hand, treating children strictly as property leads to the logical outcome of parents terminating their child’s life without ever having to face legal repercussions.  The undesirability of this outcome is obvious.  Therefore, this approach is also easily understood to have serious flaws as well.

Thus, the question still remains:  What are children?  Are they property?  Are they citizens?  How should they be classified?

The answer to these questions strikes me as rather obvious:  children should be classified as (wait for it)…children.  By this, I simply mean that children should be classified as their own distinct legal category, and treated as such.  I also think it wise to rely on the traditional common law understanding of parental rights and children’s rights.  There are some instances where children are more directly comparable to property’ there are other times when children are more directly comparable to full-fledged citizens.  The law should be flexible in this area, and demonstrate wisdom and prudence at all times.  Maybe this way the issue of parental rights can be addressed properly.

The Reality of the Money Multiplier Effect

From ASI:

Indebtedness also matters: when the outstanding debt of the central government exceeds 60 percent of GDP, the fiscal multiplier is not statistically different from zero on impact and it is negative in the long run.

When you think about it, this claim should make sense.  There are only three ways for the government to raise revenue:  taxes, debt, and inflation.  Each has its own money multiplier effect (henceforth MME).

When government spending is funded only by taxes (i.e. no debt or inflation) the MME should be strongest since the government is directly redistributing resources.  There are no indirect or mixed signals, so economic actors can simply adjust directly to the government imposed distortions, which means minimal economic losses, at least in the sense of signal clarification.  I would hypothesize, however, that the MME is less powerful for public spending than for private spending (more on this later).  Basically, this is a transfer of new resources couple with minimal waste.

When government spending is fueled strictly by debt (i.e. no taxes or inflation) the MME should be essentially nonexistent.  This is because the government must now rely on individual investors to voluntarily give money to the government.  This is essentially a voluntary redistribution of resources, although this specific method of funding means foregoing the accumulation of new resources.  Thu, there are no resources to spread around.

When government spending is fueled by inflation (i.e. no taxes or debt) the MME should be nonexistent.  This is because there are no actual resources tied to spending.  The government is not appropriating resources directly, so there is no actual wealth to spread around, only currency.  As currency levels increase, purchasing power decreases, and so over time fewer resources are redistributed.  This simply means that there is a relatively weak MME in the beginning, and that it eventually peters out.

Since governments generally use all three methods to generate revenue, it stands to reason that the specific MME will depend primarily on funding.  The closer a government gets to redistributing actual resources the stronger the MME should be, and vice versa.

Unfortunately, Keynesian analysis tends to overlook one simple fact that negates MME analysis:  The MME is also present in free market operations.  This simply means that money spent at, say, Wal-Mart has a multiplicative effect throughout the general economy in much the same way that government spending does.  Money, it should be remembered, exists to facilitate trade.  People trade goods or labor for money in order trade that money for other goods or labor.

The dollar keeps cycling through the economy, being used as a medium of exchange.  Keynesians an see this when it comes to government spending.  Why can’t the see that the same is true for private spending as well?

Book “Review”

The Little Big Things by Tom Peters

There are some books that are a pleasure to read in spite of their vapidity and there are some books that are annoying to read I spite of their profundity.  The Little Big Things falls into the latter category.

I say this because Peters writes like a crack-addled retarded bonobo randomly pounding away at a keyboard.  He also writes like an eighth-grader that just discovered caps lock and HTML formatting tags, for he never misses a chance to unnecessarily capitalize, italicize, or make bold any random word.  He’s also annoyingly repetitious.  For some reason, he thinks using the word “amen” at the end of some trivial observation makes said observation more profound.  In short, he writes like an annoying, pretentious douchebag.

In spite of this, the major themes of his book are quite profound and thought-provoking.  He “argues” that most experts are pretentious idiots (agreed).  Most of the so-called economic experts missed the biggest economic developments of the past decade.  Most organizational consultants tailor their advice to interchangeable Fortune 500 companies, and most of which is nonsense anyway.  And get him started on politicians.

There is a strong focus on addressing the details that matter, like human interaction, thank you notes, fresh flowers and the like.  This strikes me as a good idea, for treating people like valuable beings can’t go wrong.  People want to believe they matter to others, so appealing to this basic desire is a really good idea.  No, there aren’t any numbers backing his claim.  But then, there aren’t any numbers disproving it, either.

Most importantly, he criticizes number fetishism for driving people to trust data over intuition.  This is particularly important, for raw data actually reveals far less than anyone likes to admit.  In fact, most research is nonsense anyway, so it’s best to simply ignore it altogether.  As such, the best policy is to do that to which most customers respond positively.

Thus, I generally agree with what he has to say, but I intensely dislike how he presents it.  It’s just not enjoyable to read.  I actually quit halfway through the book because I found it to be that horrible.  Anyway, I halfheartedly recommend this book.  There’s a lot of good stuff in here, but a more appropriate title would be “The 4chan Guide to Business.”

20 March 2011

Market Freedom is Binary

I say that market freedom is binary, because either there is market interference or there is not.  As such, I favor an all-or-nothing approach when it comes to deregulation.  (There are some exceptions to this, but they are relatively rare.  Also, I approach deregulation by industry, not in the aggregate.)

The reason for this approach stems from the nature of interference itself.  If, for example, the government decides to regulate, say, the airline industry, there will be some negative consequences to this, either in the form of higher risk, higher prices, lower supply, and so on.  The effects of this distortion are generally considered to be bad, and so a vocal group of consumers petition the government to correct this imbalance.

Naturally, correcting the ill effects of interference leads to more intervention, not less.  The consequences of each subsequent intervention lead to more problems and distortions, and require further interference.  In my view, then, partial deregulation only trades one distortion for another.   Sometimes this means that businesses make a higher profit than would otherwise have been the case; sometimes their profit is lower.  Sometimes consumer prices rise, sometimes they fall.  None of these consequences can be compared to the free market, for there is simply no way to tell what results the free market would bring about.

As such, it is simply best to completely deregulate the market all at once.  Elsewise, you’re simply trading one distortion for another.

How is this the Free Market?

One of the more inane things some proponents of free trade argue for is the signing of trade agreements.  (Some proponents are more principled, and advocate a pure laissez-faire approach; my beef is not with them).  The question that this sort of policy always begs is, how does a government signing a treaty with another government even begin to resemble the free market?

I can see how a principled policy of laissez-faire leads to true market freedom, but what I’m unable to grasp is how more government interference is a sign of freedom.  Sure, trade policies change; but at the end of the day, trade policies are still governmental interference, and bear no resemblance to the free market.

Wouldn’t it simply be more logically consistent to simply say that American trade policy is such that anyone can buy and sell here without having to collect taxes, pay taxes, or comply with regulation?  Especially if such policy is set forth without worrying about foreign reciprocation?  It seems to me that this truly would be “free trade.”

Paragraphs to Ponder

From the incomparable Karl Denninger:
Finally, a word about governments. You've now seen government idiocy on display once again exactly as we did with Katrina. When backed against the wall the sure bet is that the government will lie. They especially lie when they don't know what the truth is rather than honestly tell you "I don't know." Governments are also very slow to coordinate and act from places where they have actual authority when there are immediate, critical needs that must be addressed right now in order to prevent wider disasters. When power was lost at the nuclear plant Japan's defense forces could have been immediately brought in, generators and fuel secured, and emergency power restored. Engine-driven seawater pumps that can move massive amounts of water are standard items and could be flown in from anywhere within 12 hours and sited by chopper. There was a lot of landmass in Japan that was not damaged, and while big generators are not exactly Home Depot items the lack of immediate response in taking over from TEPCO and instituting immediate restorative action for necessary utility services to those units is the proximate cause for the Japanese being in as much trouble as they are. Remember that immediately following the scram and loss of power from the tsunami there was no radiation release and thus workers could have done whatever was necessary anywhere in the plant - including wiring up emergency electrical controls. They literally had a couple of days and squandered that time.
Thursday night an allegation surfaced that President Obama attempted to condition emergency technical assistance immediately following the event on a political outcome - specifically, the de-commissioning of one or more of the nuclear plants. This is a ridiculously incendiary allegation. If it's true then we tried to extort the Japanese government and force them to permanently close electrical generation facilities necessary for their economic health in exchange for assistance during an active and emergent crisis. If the allegation is false then the Japanese Government has severe internal problems that could ultimately lead to it's destruction - someone in the political machine there was willing to accuse one of their largest trading partners and a nation that is heavily intertwined with US Treasury financing of extortion for internal political purposes. There's no good outcome possible out of something like this being reported all over the Asian media (and it was); there's only "bad" and "really bad."
The rest is here.

18 March 2011

The Myth of Social Security

One of the more common reasons that many give for reforming Social Security instead of abolishing this blatantly unconstitutional parasitic redistributionist Ponzi scheme is that people who paid into the program “deserve” to be paid back.  In essence, those who paid in are owed a payout.  Unfortunately, this is a myth perpetuated by politicians and believed by gullible idiots.

The reason why I say those who believe that citizens deserve payouts are idiots is due to one very simple Supreme Court case:  Flemming v. Nestor.  This is a landmark case where Social Security is concerned, and every citizen needs to know the ruling and understand its implications.

The background the case is very simple.  A man named Nestor was deported from the United States in 1956 for being a communist.  He had been eligible for Social Security payments since 1955, and wished to continue receiving said payments.  His basic argument was that because he paid into the system, per the terms set forth by Section 1104 of the 1935 Social Security Act, he deserved his payment. 

Specifically, he argued that his payments were a right protected under the Fifth Amendment, which says:

No person shall be held to answer for a capital, or otherwise infamous crime, unless on a presentment or indictment of a Grand Jury, except in cases arising in the land or naval forces, or in the Militia, when in actual service in time of War or public danger; nor shall any person be subject for the same offense to be twice put in jeopardy of life or limb; nor shall be compelled in any criminal case to be a witness against himself, nor be deprived of life, liberty, or property, without due process of law; nor shall private property be taken for public use, without just compensation. [Emphasis added.]

Nestor’s argument was that the government was required to pay him his Social Security benefits.  If they refused to, they were essentially taking away what was owed him, and therefore owed him in-kind compensation.  Note that Nestor’s argument is contingent on Social Security being treated as a debt obligation, which would essentially make it an asset comparable to an annuity.

The Supreme Court decided this case in 1960, and ruled that:
2. A PERSON COVERED BY THE SOCIAL SECURITY ACT HAS NOT SUCH A RIGHT IN OLD-AGE BENEFIT PAYMENTS AS WOULD MAKE EVERY DEFEASANCE OF "ACCRUED" INTERESTS VIOLATIVE OF THE DUE PROCESS CLAUSE OF THE FIFTH AMENDMENT. PP. 608-611.
(A) THE NONCONTRACTUAL INTEREST OF AN EMPLOYEE COVERED BY THE ACT CANNOT BE SOUNDLY ANALOGIZED TO THAT OF THE HOLDER OF AN ANNUITY, WHOSE RIGHTS TO BENEFITS ARE BASED ON HIS CONTRACTUAL PREMIUM PAYMENTS. PP. 608-610.
(B) TO ENGRAFT UPON THE SOCIAL SECURITY SYSTEM A CONCEPT OF "ACCRUED PROPERTY RIGHTS" WOULD DEPRIVE IT OF THE FLEXIBILITY AND BOLDNESS IN ADJUSTMENT TO EVER-CHANGING CONDITIONS WHICH IT DEMANDS AND WHICH CONGRESS PROBABLY HAD IN MIND WHEN IT EXPRESSLY RESERVED THE RIGHT TO ALTER, AMEND OR REPEAL ANY PROVISION OF THE ACT. PP. 610-611.

The basic gist of the ruling is that systemic flexibility is built into Social Security (specifically, Section 1104) in order to ensure that the system can respond to social changes.  The logical conclusion from this assertion is that Congressional power to tweak the eligibility requirements negates citizens’ claims to benefits.

In plain English, no one is guaranteed Social Security benefits.  The payroll “contribution” is merely a tax.  All the claims of people “deserving” their Social Security check is pure bunk.  Quite simply, you pay a tax, and are guaranteed nothing in return.  You have no legal ground to demand Social Security payments.

There have been plenty of politicians who have claimed that Social Security is like a retirement account, that you get back what you pay in, plus a return on investment.  They lied.  And you are a fool if you believed them.