I’ll Gladly Pay You Tuesday – Not!

Jimmy enjoyed life. To more fully enjoy it Jimmy needed some money. Jimmy could have worked and saved and worked and saved – but that takes too long. Jimmy wanted to enjoy life NOW. So Jimmy borrowed money from Bob and promised to repay it later – he was a young man; he had plenty of time to pay it back. But Jimmy quickly burned through that loan and was unwilling to suffer the indignation of giving up his carefree lifestyle. So he asked to borrow some more – and he was given more, but at a higher interest rate that reflected Bob’s growing uncertainty about Jimmy’s ability to pay him back. This cycle continued for a while until the interest rate got high enough that Jimmy started to borrow less and less. Then came along Jimmy’s wealthier, older brother Timmy who agreed to co-sign all future loans with Jimmy. Knowing how wealthy Timmy was, Bob felt a lot better about his prospects for getting repaid, so he agreed to a lower interest rate. With this new found credit-worthiness Jimmy went on a binge of borrowing that vastly exceeded what he had done up to that point. This cycle of new Timmy-guaranteed loans continued until one day Timmy said “no more.” To help his brother out Timmy convinced Bob (owing to their strong business relationship) to take a “haircut” on the outstanding loans (that is, write down the amount owed) if Jimmy promised to get his financial affairs in order. Jimmy agreed and Bob complied. But after only a few years Jimmy was back to his old borrow and spend ways and Timmy and Bob had had enough. No more loans until Jimmy paid his loans on time. Jimmy was capable of doing this, but only by drastically cutting back his expenditures. Predictably Jimmy balked. He insisted he would not pay back anything unless Bob once again took a “haircut” and gave him more time to repay. The moral of the story? Don’t live beyond your means by borrowing from tomorrow to pay for today’s luxuries. Also, don’t lend money to those that obviously are unable or unwilling to repay it. This advice applies equally to individuals as well as to countries.

For those unfamiliar with the details of the current Greek debt crisis this little tale above illustrates in the abstract how Greece has behaved over the years. All the details are true, only the names have been changed to protect the innocent. Jimmy is Greece (Jimmy the Greek, get it?), Bob represents all those banks that have lent money to the Greek government over the years, first by buying Drachma based bonds and now EU-based Greek debt, and lastly, Timmy represents the EU itself. After the Euro was fully adopted in 2002 in the EU all member nations retired their national currency in favor of the Euro. The economically more productive countries imbued the Euro with a fiscal resilience that the economically weaker countries (such as Greece) have exploited. Like a reckless teenager using daddy’s credit card, under the Euro regime Greece has been able to borrow more and at a better rate than they ever could have under their Drachma.

Some have suggested if only the EU were more like the US Greece would not be in this bind. In the US the wealthy states subsidize the poorer states via federalized tax transfers (Social Security, welfare, infrastructure projects etc) without the poorer states “owing” anything. That, however, is in invalid comparison. Those are federal programs forced upon all the states. Greece is not in financial straights because of EU mandates. Greece is in trouble because of its own internal government spending. A more apt comparison would be the looming pension crisis in US states (e.g. California, Illinois, New Jersey, etc) where the governments of those states made promises to public worker retirees that are impossible to keep. Citizens of Georgia will be no more interested in bailing out Californian public sector pensioners than are citizens of Germany interested in bailing out a similarly profligate Greece. The pattern is universal in democracy: a gullible public showers with the most votes those politicians who promises them financial security with one hand by robbing their children’s piggy bank with the other.

Although we rubbernecking Americans may feel secure atop the perch of our SUV-sized economy while we idle past the spectacle of Keynesian-influenced deficit spending and Socialism that is Greece, our time is coming. When debt is measured in relation to a country’s tax revenue (that is, the ability to repay it) the US comes in third  – right behind Japan… and Greece. Be afraid. Be very afraid.

July 06 / 2015

Supreme Kool-Aid

The Supreme Court rendered two landmark decisions this past week. For those short on time I will parse them in the simplest of terms. In King v. Burwell (the “Obamacare” case) the Court decided that “established by the States” can mean exactly the same thing as “not established by the States.” This ranks right up there with Bill Clinton’s inability to parse the meaning of the word “is.” This linguistic pretzel betrays the court’s predilection to save Congress from themselves. The court regards Congress as a parent would a child who keeps getting into trouble: “aw, shucks silly rabbit, you mean you didn’t anticipate that a poison pill clause aimed at punishing the citizens of recalcitrant states might blow up in your face if those states remained recalcitrant? – well, don’t you worry, old Uncle Roberts will fix that right up for you with his magical judicial word-redefiner.”

In the next decision, Obergefell v. Hodges (the “gay marriage” case) the Court affirmed the principle that we should heap accolades upon our wise overlords when they deign to stop interfering in our lives. Apparently we need the state to stop other states from doing bad things – but who will protect us when the federal state does bad things? State regulation of marriage makes about as much sense as state regulation of healthcare.

Right about now the left is feeling pretty smug and self-satisfied with these decisions. But the right has had their day, and they will once again. That’s just how our system works – the lives of 300 million people must conform to the opinion of nine random people in black robes while each side cheers for their “team.” Both sides trumpet the merits of democracy – until their side loses. When that happens they are both all too happy to jettison the “democratic” results and substitute it with the opinion of 9 monarchs.

The fact that so many wait in eager anticipation for a sign of white or black smoke wafting from the judicial chimney of the Supreme Palace betrays something rather sinister. Nearly all of us are part of a cult: the cult of the State. The figurative “kool-aid” of state-love is doled out year after year at, gasp!, state run schools. There is nearly no defense against this mountain of propaganda. We grow up believing our rights come from government and therefore when the wise sages of that august institution speak, we must pay heed.

Consider a different perspective: The US Government is the functional equivalent of a private corporation that has monopolized certain segments of the economy. It maintains its market dominance and its customer base (us) through a combination of brainwashing during childhood, the illusion of control in adulthood (voting), and the for those that would rebel against paying for products it forces upon us, the overt threat of violence from a massive military complex. Cast in that light we should see that the internal policy making procedures of this company should have as much relevance to one’s life as would the operational policy decisions made at Apple, Walmart or Payless Shoe Stores. Who cares what 9 random people think? How is it that we not only allow – we welcome – other people, (the President, Congress, or the Supreme Court) telling us how to run our lives? If you want to participate in a socialized insurance system called “Obamacare” fine, be my guest. That has as much relevance to my life as does your decision to buy car insurance from Progressive and not State Farm. However, I choose to not purchase the products of U.S. Government, Inc – Social Security, Medicare, Obamacare. I also see no need to ask permission from one of its wholly owned subsidiaries (Georgia, Inc.) to get married, get a job, start a business or educate my children.

Now some might argue that I have a “social responsibility” to purchase some products (“public goods”) and that gosh-darn someone must force me to do so if I won’t. In reality, there is no such thing as “public goods” – this is simply a name that emerges from sloppy and lazy thinking from those that can’t fathom how anything other than violence could bring such products to market. And for those inclined to cite “the roads” please bear in mind it only constitutes about 1% of government spending.

I will close with this one tidbit of irony. The determination of the constitutionality of laws by the Supreme Court (“judicial review”) is itself unconstitutional. You can scour the Constitution but you will not find the authority for the court to engage in this practice.  This notion of “judicial review” was born out of the court’s ruling in Marbury v. Madison in 1803 as a matter of expediency and we’ve suffered the consequences ever since. That the dictum “the ends justify the means” guides this court’s decision should come as no surprise considering its power to render these decisions flowed from the same principle.

June 30 / 2015

Pope Francis: Lapdog of the Ruling Regime

The climate crusaders gained a “useful idiot” (look it up) in their cause this past week in one Pope Francis with the publication of his encyclical “Laudato Si’, On the Care of Our Common Home.”  Apparently the “settled science” and endless “climate shaming” over our “carbon-footprint” has been insufficient to motivate action (that is violence) at a global level – time to bring in the big guns: God. If people won’t listen to reason then let’s appeal to their sense of morality. And if that doesn’t work let’s just bombard them with vacuous nostrums that would embarrass even Deepak Chopra . Writing in his encyclical the Pope states, “There can be no renewal of our relationship with nature without a renewal of humanity itself.” Flowery prose about a collective (“our”) that exists only as metaphor underscores how our “leaders” perennially view humanity not as individuals but rather as mere clay to be pushed, prodded — and trimmed — as needed in order to reshape the world according to their vision.

As a Catholic myself (this statement now giving me a pass on the anti-Catholic label) I am dismayed by this Pope’s proclivity to not only issue papal pronouncements on issues he is ignorant of (e.g. economics, the climate) but to deliver those messages wrapped in an unabashedly pro-state and curiously un-biblical package. This Pope (and Vatican) have spewed a mountain of anti-capitalist rhetoric over the past few years that entirely misses the mark as to the cause of rising wealth inequality. It is entirely the result of big government and central banks colluding together to inflate the money supply and not, as he says, by “ideologies which uphold the absolute autonomy of markets and financial speculation.”  This is no mere pontificating on the dangers to the soul of single-minded pursuit of wealth, no, this is full on promotion of Marxist redistribution of wealth. For example from the above quote he further endorses, “…the right of control [of financial resources] to States…”. When he spoke to the UN last year he invoked the parable of Zaccheus as a way to justify the use of “political agents” that can force the “legitimate redistribution of economic benefits.” Wow. I wonder if he wears a Che Guevara t-shirt under that robe.

The Vatican even promotes the concept that evading taxes is equivalent to “stealing” from the state and the poor (because of course it’s all the state’s to begin with and their sole job is to help the poor).  I’m not sure which version of the Bible Pope Francis is reading, but in my version Zaccheus (the selfish tax collector) VOLUNTARILY chose to give to the poor. Jesus didn’t say “do this or else I’ll send the Roman guards after you”.

To underscore this Pope’s preference for state action, his new encyclical distills the fight against climate change down to a simple message: governments everywhere have a moral duty to fight climate change. Yes, you read that correctly. Fighting climate change is now a moral imperative for all mankind. The unique thing about this new flavor of “morality” is its ambiguity. Traditional moral issues (murder, rape, theft) are pretty straightforward: don’t do them. As long as I don’t murder someone, I have upheld that moral edict. But “fighting climate change”? How do I uphold that? What exactly am I supposed to do? If I drive a car that gets 30 mpg am I violating a moral tenet but not violating if it gets 40 mpg? Shall I get rid of my air conditioner (as Pope Francis has actually suggested!) in order to get in God’s good graces? Or should I just follow like a good little subject the climate edicts of my government… which may change with the prevailing winds of the latest computer model. This ambiguity should be more than sufficient to indict its moral status.

The Pope should indeed be promoting ideas of charity, peace, forgiveness, tolerance, and good stewardship. But to then endorse the authority of the state to impose these virtues upon the population is to utterly reject God’s message of salvation via the gift of free will. He gave us free will in order to allow the individual to make his or her own choices (choices which may or may not eventually lead to salvation). Apparently this Pope’s message is, “Do the right thing, but if you don’t, that guy over there (the state) will make sure you do.”

It is absolutely astounding that a Pope would make not just one but two gross theological blunders. First to cloak an ambiguous political issue in the vestments of morality and second to endorse the sacrifice of God’s gift of free will upon the altar of state sponsored utilitarianism. I don’t know whether to laugh at his brazenly sycophantic parroting of regime talking points or to cry for the untold billions that will die in the coming decades due to artificial constraints on energy production and economic output if the chicken little doomsayers like the Pope get their way.

June 24 / 2015

Too Much Choice

Bernie Sanders, the (self-described) socialist Senator from Vermont recently quipped in a CNBC interview that “You don’t necessarily need a choice of 23 underarm spray deodorants or of 18 different pairs of sneakers when children are hungry in this country.” The absurdity of this remark should be self-evident, but for those that think perhaps he has a point I thought it might be instructive to deconstruct the remark so as to reveal the base ignorance of economics and markets that lead to such thinking.

The first flaw is purely a logical one. He engages in what is known as a ‘non-sequitur’ fallacy. A true claim is made (that numerous choices exist in the market) followed by another claim (children are hungry) that supposedly is a causal result of the obviously true condition already stated (too many market choices causes children to be hungry). To more clearly illustrate the absurdity of this remark, let’s modify it slightly while retaining the spirit of his rhetoric: “You don’t necessarily need a choice of 23 types of cereal or of 18 different vegetables when children are hungry in this country.”

Marxist romanticists like Sanders still pine for a past that never was in order to justify a future we should all fear.

This notion of wasteful duplication is unabashed Marxism. It has been thoroughly debunked by over one hundred years of empirical evidence. To make this claim today is tantamount to pondering if perhaps we shouldn’t rethink this whole “earth goes around the sun” thing again. Market based economies that “allow” their citizens to pursue their own independent ends in bringing goods to the market have vastly outpaced centrally controlled command-driven economies (Russia, Cuba, North Korea, former Eastern block countries) in terms of growth, overall standard of living, and reductions in poverty. But Marxist romanticists like Sanders still pine for a past that never was in order to justify a future we should all fear.

Why do some persist in subscribing to this fantasy, that if only a wise overseer could have the final say on economic activity we would have Utopia on earth? Because on an emotional level (that is, non-thinking) it feels superficially plausible. It certainly does seem like a lot of wasteful duplicative effort for many people to all make the same good in slightly different ways and then try to sell that good to the same people. Indeed when companies merge they can become more efficient by eliminating such duplication. What Sanders is actually implying (unwittingly?) is that all businesses ultimately should be merged into a single entity so as to remove all such inefficiencies. Of course this single entity would be run by the state. That hasn’t worked out so well in the past. But hey, maybe this time they’ll get it right.

In reality, we already have a centrally planned economy; every business is individually centrally planned by those running that business. It is also true that any business that directed all employees to perform the exact same task would quickly fail. So if central planning without effort duplication works at the small scale (individual business), why would it not work at the large scale, as Mr. Sanders imagines? Scaling effects and limits on human cognition. A business with 100 employees is more than ten times complex than one with 10 employees. At some point it is simply impossibly for the human mind to manage such a complicated system. We are simply incapable of processing that amount of data and making any sort of useful decisions with it. Indeed that is the biggest challenge for any growing businesses; effective management that ensures all parts runs smoothly and work together as a cohesive whole. It is far easier to manage 5 employees than 5 million. At least in the market if a large business is poorly run (and is not bailed out by the state) losses each year will tell them they are doing something wrong. In a state run economy there is no profit/loss test to tell the state they are doing it wrong; it will just merrily go about walking straight off a cliff

The amazing thing about the market is that all of these smaller parts work together in a cohesive whole without any market level central planning – it’s simply not needed. What some view as wasteful duplication is in fact a discovery process. Bernie might as well complain about all those drug researchers wasting time with experiments that go nowhere. Why don’t they just invent the drug that works from the beginning? The market operates like a science experiment. No one person can know ahead of time what is the best computer, cell phone, deodorant, or toothpaste. Many experiment with variations and then subject those experiments to the market test. A positive result equates with profit and a negative result equates with losses. The system is a self-reinforcing feedback loop that retains what we want and removes what we don’t.

So yes Bernie, we do need those choices. We all have the right both to offer whatever we want to the market and to vote with our dollars on what we will consume from that same market. Seeing as how you are not an omnipotent being, you and the state have no right to restrict those choices in any way.

Red Card!

This past week one of my neighbors was arrested by our Homeowners Association for accepting cash in exchange for allowing mere acquaintances of their son to attend his birthday parties. The HOA felt that this base corruption might reflect poorly on the neighborhood. Oh, wait, that didn’t happen. I got that confused with the fact that the U.S. government had several officials from FIFA (an international body governing soccer (or football in the rest of the world)) arrested for apparently being “corrupt” and accepting bribes because on occasion the bribe payments happened to transit U.S.territory. The parallels are uncanny. A member of a private group violated an understood trust relationship established amongst members of that group. An outside third party then felt it was incumbent upon them to throw that violator into a cage because, well, I don’t know why – it’s really none of their business in either scenario.

The FIFA members are accused of committing “crimes” that either have no victim (money laundering) or which are entirely internal conduct matters (bribery). Murder, rape, and theft – sure, feel free to get involved. But I fail to see how simple misconduct or boorish behavior rises to the level of a compelling state interest. The flip side to this corruption scandal that has so far gone unnoticed is that for every corruptor there is a corrupted. That is to say, aren’t the high ranking government officials who paid the bribes out to these FIFA officials just as culpable? That is precisely the area a state body should investigating; the corruption of its own members.

Corruption is not a crime. Corruption is a contract violation, or more specifically, a trust violation. Party A entered into a contract with Party B whereby Party B is to act in the interests of Party A. Trust violations typically occur when there is no unobtrusive way to ensure Party B is always acting in the interests of Party A. For example, if the electorate puts a politician in office to further the interests of the community but instead that politician accepts bribes and acts contrary to said interests, this would be corruption. Should that be illegal? Should that politician be locked in a cage? Or is it not a better solution for the electorate to “fire” them immediately and take back whatever gains he may have acquired? Likewise there can be corruption in a private organization such as a business, club, church or any other similar group. If an employee takes bribes to swing business toward some particular vendor, then the employer-employee trust compact has been violated. That is a dispute between the employer and the employee. If a CEO takes bribes in order to drive business in a certain way, that is a violation of trust between him and the board of directors and ultimately the shareholders. These are all strictly private matters.

The apparent open secret of widespread corruption by top FIFA officials is certainly nothing to cheer about – but it is not a crime. It is a violation of trust that harms the name of FIFA and thus by extension all who are members of FIFA. It is these members that should be pursuing their corrupt brethren, not the US Government. Some might believe that cities that lost out on World Cup hosting bids due to corruption are victims as well, but that is not the case. Such cities are no more a “victim” than is the loser of several men competing for the affections of a single women because the “winner” lavished the women with extravagant gifts. The recourse of a losing city is the same as the recourse you or I have when we discover someone does not deal fairly – refusal to associate. If a friend, associate, or business lies to us, then we can cut them out of our lives. Good riddance.

It is in the interests of FIFA to clean up its act. They may soon find that many cities will no longer trust them and will simply refuse to participate in future FIFA events. This will erode their market dominance and thus the price they can command for participating. If they don’t reform themselves quickly then this corruption will open the door to a new, and better run, organization that can take over FIFA’s role. However, the fact that this corruption has apparently been going on for well over 20 years suggests that perhaps a mountain is being made out of a molehill. We shall see.

In any event, the arrests this week should serve as a reminder of the overpowering arrogance of the U.S.government. They have in many respects taken on the mantra of the One World Government. It exerts its dominance globally both militarily and legally. It can establish whatever arbitrary rules it wishes and then enforce such rules with virtual impunity upon any person, anywhere on the planet at any time. Let freedom ring.

June 02 / 2015

Restore Our Freedom

This Memorial Day weekend we are once again drowning in a sea of reminders of what this holiday is truly about; honoring those servicemen and women who have sacrificed their lives in pursuit of protecting our “freedom”. Memorial Day has become the secular state’s equivalent of Easter in the de facto state religion: the Church of the State. In this new religion we worship icons (the flag), we beatify the saints (former presidents) but above all we worship those in the military who involuntarily (the draft) or voluntarily sacrificed their lives upon the altar of the state. They, like Jesus through his death, gave us a gift – in this case it is the gift of “freedom” rather than salvation. Unfortunately the myth of that gift is a lie. This lie allows the political class to maintain their hold on power by simultaneously convincing the noble to serve and the gullible to vote.

Now don’t get me wrong, those who have given their lives are indeed worthy of remembrance and respect. It is the rare individual who will sacrifice not for just his own kin, but for strangers he has never met. Such men and women are true heroes. What I am addressing is the monstrous lie our own government deploys every time they send these brave souls into harms way. To those in government, the citizenry is but mere fodder, to be disposed of with as much regard as one has for Kleenex when blowing one’s nose. Ever since the draft ended (and we stopped forcing young men to kill others at gunpoint) a false narrative has been spun in order to convince those of noble hearts that they are participating in something grand, something larger than themselves, that they are securing “freedom” for their fellow man.

Although superficially plausible (the military protects our freedom) ask yourself, when is the last time this country engaged militarily with anybody that was actually threatening to encroach upon our “freedom” as it were? Was North Vietnam preparing to invade Florida? Was Saddam Hussein ready to roll into Delaware? Yes, I see you there in the back of the class with your hand up going “ooh, ooh, ooh” just busting to remind us all of Hitler or Pearl Harbor. Surely those are example wherein our military protected our “freedom”. Pearl Harbor falls into the same category as 9/11; situations where the passive-aggressive interference of the US (e.g. economic sanctions against Japan, US troops in the middle east) were the direct and proximate cause of these supposed “first strikes” that were in fact counterattacks. That is not “blaming America” to recognize this fact – but it is indeed blaming our politicians who provoked these events. Their recklessness resulted in events that caused us to sacrifice so many needlessly. But seriously, does anyone think Germany or Japan could have invaded and taken over the entire continental United States? Please.

Every military situation this country has been involved in owes its genesis to some initial act by our own government. Even the rise of Hitler is directly traceable to US involvement in World War I (thank you Woodrow Wilson!) insofar as our strong hand during armistice negotiations table made the onerous treaty of Versailles possible. This lopsided treaty punished Germany so harshly it set the stage for Hitler’s rise; absent that treaty Hitler would have remained a bitter nobody.

If we truly wish to honor those troops that have given their lives, we too must fight. We must fight to elect those that promise to pull our military back to our shores and end our ceaseless meddling in the internal affairs of other countries. The biggest threat to our freedom is not from some foreign invader but rather from our own government. We are fast on our way to becoming a 100% permission based society. Consider what freedoms we have already lost and then consider the irony of thanking veterans for protecting these dwindling “freedom”: we must ask for permission from government to get a job, take a drug, start a business, pay an employee, sell alcohol, cut hair, sell any product, teach our children, by a gun, carry a gun, buy health insurance, board a plane, leave the country, enter the country, get married, or leave belongings to loved ones when we die. Likewise no permission is needed from us if the state wishes to enter our homes, cars or persons, guns drawn, looking for “something”. “Papers please!” cannot be too far behind.

So I say to the troops, if you really want to protect my freedom, don’t do it rolling around in a Humvee in some dessert somewhere. Do it by getting yourself elected and being part of the turning of the tide on government trespasses against our freedoms.

Boulders in the Stream

The surety of the law of unintended consequences proceeding from state legislation is as steadfast as the law of gravity. Emblematic of this axiom is the massive drop  off (down 40-60%) in book sales in Israel this past year after the passage of a law intended to bolster book sales, protect small book sellers from “big chains” and of course guarantee a “living wage” to authors.  To those ignorant of basic economics and human behavior the terms of this law might appear reasonable. It guaranteed authors 8% of the sales of the first 6,000 books sold and 10% of all books thereafter while simultaneously criminalizing the discounting of books during their first 18 months of sales. Supposedly this would help the underdogs: small booksellers and new authors. Ironically it does the exact opposite. It is the unknown author that has the greatest incentive to discount heavily in order to entice someone unfamiliar with their work. It is small book sellers that are most likely to haggle or “make a deal” when someone makes a substantial purchase.

Sadly Israel is not alone in this sort of book market meddling. Quite a number of other countries (mainly in Europe) have what are known as “fixed book price agreements” type laws. These are “resale price maintenance agreements”, commonly used in the US on a voluntary basis between vendor and customer, codified into law and backed by the state. In the US if company A wants Vendors B-Z to sell a widget for $1 and Vendor D sells it for less, then the solution is simple: company A just stops selling to vendor D. But in countries where such agreements are enforced by the state, vendor D can be fined or jailed. Let that sink in: jail time for selling goods “too low.” What monsters.

The usual defense of these laws is the same tired protectionist propaganda deployed whenever an entrenched business model is threatened by a new competitor: we need the state to protect us from “unfair” competition. “Unfair” being code for “somehow these people figured out how to sell the product I’m selling for a lot less and I can’t figure out what they are doing or I’m unwilling to change my business model to compete”. For example France has a “Lang Law” which permits book publishers to set the price of the book and then forbid anyone from selling it for less than 95% off the cover price. Fast forward to 2014 and a tweak was added to this law that was targeted at Amazon.com who was both discounting their books 5% and offering free shipping. Apparently selling books into the French market for the exact same price as French bookstores is considered “unfair” if the seller is a ‘foreign’ company.

So what we have here is a real world economics experiment, akin to raising the minimum wage to $50/hour. Israel has, in effect, dialed in the $50 option on book price fixing laws. While many countries have such economic interventionist type protectionism only Israel elevated theirs to stratospherically inane levels. From this we saw quick and clear signs of damage (just as we would if the minimum wage were raised to $50/hour). However, just as with the minimum wage laws, there still exist damaging effects in those countries with more “moderate” protectionist schemes such as France. It is perhaps apropos that a French economist (Bastiat, 19th century) speaks of the “unseen” damage wrought by market interventions.

If the demand for books is inelastic then to the extent book sellers earn more, the sellers of other goods earn less, while on net the public receives fewer goods for money spent. If the demand is elastic then book sellers earn less and other vendors earn more but the public still receives fewer goods. Indeed, the Israeli example demonstrated the elasticity of book demand. After their law went into affect, book sales went down and toy sales went up (as parents passed over high priced books for more affordable toys).

The fatal conceit of the politician is the belief that they can control nature (man) by dictate: people want they want and laws are like boulders in a stream  – it may slow, but it will not stop the flow of water.

Plugging the tailpipe

Newton’s third law of physics posits that every action has an equal and opposite reaction. From the kickback on a firearm to the lift provided by chemical propellants in a rocket, nothing in this universe acts in perfect isolation. This dictum applies equally to everything in the universe; from muon to man. Human action will also induce a feedback-based response; love begets love and violence begets violence. When the actions are voluntary and un-coerced we tend to see predictable outcomes (if I am kind, you are quite likely to be kind in return, but, if I hit you, you are most likely going to hit me back). When the actions are involuntary or otherwise unduly influenced then the results become unpredictable. Economic interventionism is like plugging a car’s tailpipe to silence it; it may bring temporary silence, but the building pressure will soon be relieved. The only question is when and where.

So just as plugging a tail pipe to silence a car is a fool’s endeavor, so too are forced attempts to mold society and the economy to suit the ideological leanings of those in power. Such attempts at societal meddling always end badly, typically in the form of increasing that bad thing one was trying to eliminate. The interventionist approach has all the logical soundness of hitting people in order to reduce violence in the world, yet the politicians continue to do such things everyday. For example, paying people to be unemployed augments, rather than diminishes, the number of unemployed. Likewise, subsidies for certain industries results in a whole array of undesirable side effects. Subsidization of corn production in combination with tariff-based protection of the domestic sugar market has distorted the economy and our health. Tariff-fueled high domestic sugar prices creates an incentive for sugar users to seek a lower cost alternative, which just so happens to be state subsidized HFCS (high fructose corn syrup). The state is simultaneously constraining supply of one product and expanding supply of another to make up for the ongoing constraint. This distortion alters the market in ways that would not exist absent this intervention. It has caused HFCS to become the dominant material used in domestic food production – pushing the somewhat healthier straight sugar out the door. That the overwhelming prevalence of HCFS has recently been implicated in the obesity epidemic (and all the costs associated with obesity related health ailments) should give anyone pause the next time a politician tells you they have the perfect solution to a problem.

Another side effect of agricultural interventionism is in of all places immigration. When the government guarantees a price floor for certain agricultural goods it creates a natural incentive to over produce those goods. The excess is then dumped at low subsidized prices into other countries (such as Mexico). Farmers there can’t compete with the low prices and soon go out of business. Those farmers are now desperate for work. So they come to the US. And then people wonder why so many “illegal” immigrants are pouring into the country. Time again for the government to fix the problem they created. You’ll never go out of the tire business if you keep dumping nails in the road.

The height of absurdity though is that when those in power are faced with the reality of the damage caused by subsidies they find it easier to expand those subsidies rather than to contract them. The most inane example of this is the fact that the US government pays Brazilian cotton farmers the same subsidies it pays US cotton farmers so that they can better compete with cheap US imports.

The moral of the story here is that economic interventionism (supported by the implied violent power of the state) will cause parties to behave differently than they otherwise would absent such threats. These differences lead others into altering their behavior so as to neutralize the effects of the initial intervention in a predictable sort of feedback loop. Plugging the tailpipe merely reroutes the exhaust. Equal and opposite reactions are on net a null.

Ignorance is Bliss

Can ignorance be cause for hope? Can ignorance, to paraphrase, deliver society into a state of bliss? Perhaps not bliss, but an argument can be made for progress. About a month ago a noose was found hanging from a tree on the campus of Duke University in North Carolina. To those of us who grew up in the 20th century, a noose on a tree is about as subtle a sign of racism as a burning cross. The specter of the vilest form of collectivism, racism, had apparently poked its head from the cesspool of ideas. There were immediate protests from students, the community and the university administration. They were determined to let those who harbor such beliefs know they are not welcome at Duke or in society at large. To those who have said “nothing has changed” in this country regarding attitudes toward race and racism, I believe this response (among many) if not outright disproves that position, it certainly is an embarrassing incongruity with that narrative.

As it turns out, thankfully, there was no clandestine reemergence of the KKK or anything similar. This week it was revealed that a Duke University undergraduate student was the unwitting culprit. He was entirely unaware of the cultural and historical significance of those two objects juxtaposed against each other. Perhaps they don’t teach much history these days in high school. Perhaps he just wasn’t a very good student (although he got into Duke so he can’t be that much of academic slouch). In a letter to the Duke community he professed that his pun-rich humorous intent was to take a few selfies with the noose and text the images to his friends, suggesting they come “hang out” with him on the beautiful spring day. He then carelessly left it hanging there and went home, blissfully unaware of the firestorm that was about to erupt.

While on one hand we might lament the sheer ignorance of history demonstrated here, I think perhaps there is a silver lining: the sheer ignorance of history. It has often been said by those that have been harmed by someone that they did not know peace until they had truly forgiven their transgressor. Once that was done, they say, it was like an enormous weight was lifted from their soul. They could move on and live their lives. Society must do the same. Although society itself is an abstraction and thus can’t “forgive” anyone, it is capable of collectively forgetting – or not forgetting As long as the memories of old conflicts are passed from the old to the young like an infection, then it becomes impossible to cure the disease. We must forget to be truly free of the sins of our fathers, otherwise like an old scab picked too hard, fresh blood will flow.

This young man’s ignorance may be a hopeful sign that The Open Generation is here. The Open Generation will be blissfully unaware of the racist and sexist anachronistic attitudes of the past and will simply treat everyone the same, not because they’ve been taught that is the proper thing, but because it would not even occur to them to do otherwise. That’s not to say it will be utopia. People will still be jerks to each other, it just won’t be because of their race or sex.

His ignorance is evidence of an upbringing in an environment free of racist ideas or overtones. I myself was also raised in such an environment. Sometimes ignorance is bliss, but sometimes it causes you to lose at a game of charades. During my college days a friend of mine (who was black) became exasperatedly dumbfounded during a game of charades when he learned I had no idea “spade” was a disparaging term for a black person. He mistakenly assumed that because I was white I must be aware of such things. Sorry. I just had never heard such a thing.

As Morgan Freeman said in a 60 Minutes interview (to paraphrase), it is only when we stop talking about race and racism that it will it go away. Race is entirely irrelevant when it comes to interacting with others. Talking about it and highlighting it only serves to keep that distinguishing characteristics active in ones mind. It’s like the old mind-trick, “Don’t think about apples.” So what are you thinking about right now?

May 05 / 2015
Author Greg Morin
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Gone Fishin’

The cold-blooded murder of Walter Scott by a South Carolina deputy a few weeks ago highlights numerous issues with a monopolistic, state based approach to “law enforcement.” First and foremost is the all too common hair-trigger response some officers have when interacting with anyone who does not instantly respond to their verbal demands. The expectation seems to be: they say “jump”, you say “how high, sir!” Even the meekest of responses, like “what did I do?” are perceived as a full frontal assault on their “authority” and thus ample justification for unleashing a barrage of “shock and awe” responses. According to Sheriff Ric Bradshaw in Palm Beach (in his attempt to justify a shooting there in 2013 of an unarmed bicyclist) “There’s nothing in the rules of engagement that says we have to put our lives in jeopardy to wait to find out what this is to get killed.” Well, if you don’t want to put your lives in jeopardy might I suggest another line of work? I’m not really sure I wanted to be “protected” by someone who values their own personal safety to the exclusion of all other considerations, up to, and including shooting me dead because I “might” present a risk that they just can’t be bothered to evaluate.

Further problems inherent to the modern police state can be uncovered by evaluating the reason Scott was pulled over and why he (apparently) ran. The stated reason for the stop was a bad taillight. Ok, fine, a taillight being out is a potential safety issue. But the state response to this and similar problems is incongruous with actually ameliorating them and is rather more in alignment with using them as an excuse to impose random, burdensome tolls on unsuspecting motorists (honestly, who among us checks our taillights before we leave the driveway?). For example, in Georgia a bad taillight will garner you a $140 fine. Such fines aren’t fun for anyone but are inherently more burdensome to those in the lower income brackets. These fines hinder the victim’s ability to remedy the situation by taking money out of his or her pocket which could otherwise go toward fixing the actual safety issue. If the state were truly concerned with safety instead of issuing a ticket they would call in a “repair unit” to come to the scene, fix the problem on site and then charge the motorist whatever they would have otherwise been charged at a shop. Now that is customer service! But don’t expect that from the state or its minions. Traffic stops rarely have anything to do with safety and everything to do with revenue collection (speed traps are a well documented phenomena). Once underway they set the stage for a fishing expedition. Which brings us to the third issue.

Once a motorist is pulled over for some matter related to operation of their vehicle, the officer is then free to shift the focus from road safety to any and all matters related to other state laws (typically drug laws). In no other arena of life would people accept that the police can just randomly approach someone and ask for ID and start running background checks (“papers please”), but stick them in a moving vehicle or observe them cross an imaginary line in the dirt (“the border”) and suddenly intrusive questioning is a fait accompli. Such questioning revealed that Scott owed child support. Yes, he should have paid his child support. Yes, he should not have run (I’m reminded of the scene in JurassicPark where the lawyer runs from the T-rex into an outhouse – “Where does he think he’s going?” wryly observes Dr. Alan Grant). But just like in that movie, he ran out of fear without actually thinking it through. But I doubt any of us would have believed that running FROM the police would be perceived as a threat necessitating eight rounds in ones back.

Unfortunately the state-backed child support system sets the stage for violent confrontations. It is the state that threatens violence (to the father or his employer) for non-compliance (employers that refuse to withhold child support payments become liable for those payments). This seems like a massive amount of overkill for what is strictly a private matter. Jail should only be for murderers, rapists, and thieves. They should not become modern day debtor prisons for those unable (or unwilling) to pay child support or other types of garnishment. These issues are private matters and should be left to the parties involved to resolve them. They should not become a matter that the state hijacks. It is due to a breathtaking lack of imagination of those in power that we are left with a system that fails to recognize that people are fairly clever at solving their own problems without resorting to state backed violence.

 

April 28 / 2015
Author Greg Morin
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