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Jacob Lyles's blog
Different Libertarianisms
Submitted by Jacob Lyles on Sun, 2009-01-04 21:09.To the uninitiated all scotch tastes the same: like a mixture of coal, moss, and wood-shavings. However, the more experienced palate starts to notice subtle distinctions between vintages. The kind of wood used in the storage barrels, the weather in the area where the liquor is made, and its age all contribute to its flavor. Some scotches have overtones of heather and honey, some are smoky, some are earthy. Laphroaig makes a malt that tastes like bacon. With enough experience, a person can become a connoisseur and discover that he likes certain varieties of scotch, but not others.
Libertarianism is like scotch. When a new person is first exposed to the movement, he might think that everybody agrees on a set of principles and generally gets along. However, it is not long before he hears the word "Kochtopus" or gets laughed at for sporting a "What Would Ayn Rand Do?" armband. Our new activist begins to suspect the existence of the dark undercurrents and rivalries that color our people like a Jackson Pollock painting.
I have been around libertarians for almost a decade, and petty factional disputes are old news to me. If the mangled body of Ed Crane ever washes up in the Potomac River, I can give the police a short list of suspects. However, recently I began to notice something far more important and interesting: there are sharp philosophical differences and many incompatible ideas in the traditional libertarian cannon.
Libertarianism is like a piece of legacy software that has been patched over and over but never rewritten - a sprawling, contradictory, and sometimes surprising mess. This unsettles me. Becoming a libertarian in my formative years, it has since become part of my self-identity. But what does it mean when I call myself a “libertarian”? I am still not sure. And thus began my current odyssey in libertarian hair-splitting and navel gazing.
But this hair-splitting is important. One half of the hair is a completely different color from the other. Subtle differences in ideas can lead to large differences in how we think human society should be organized. And it is hard for me to see how people with vastly different visions of the ideal world can form part of the same movement.
My previous post on structural libertarianism versus policy libertarianism is the first part of this odyssey. I mentioned my preference for the structural vintage of libertarianism over the policy variety as the one with (barely) more practical potential. However, before anyone else jumps on the structuralist bandwagon, I should give fair warning about its faults.
The main problem with structural libertarianism is that we are heading away from the libertarian mainstream, and maybe away from libertarianism altogether. Consider the doctrine of universal rights. It states that every individual has the right to a certain degree of autonomy, at all places and at all times. It is hard to find a more central doctrine of libertarianism.
But now consider another popular libertarian idea – federalism. Federalism states that small, local communities should be able to set their own laws and policies. Advocates of federalism argue that this will create better-managed governments that more closely reflect the will of the people living under them.
But if we are to adopt federalism, then we must temper our support for universal rights. The tension between the two ideas is clear: under federalism, the laws of an area will only be as libertarian as the people living there. The libertarian's dream of a free-loving pothead utopia might be realized in Massachusetts, but I'm pretty sure that holding hands with a member of the same sex in Utah would carry a jail sentence if the federal government didn't prohibit it.
Most structural libertarian ideas involve some degree of political decentralization and suffer from the same drawback: they will create conservative theocracies. It's a profitable market niche - there are tens of millions of conservative Christians in the United States alone. If Utah were allowed to outlaw premarital sex, its property value would shoot up due to demand from evangelical fathers with pretty daughters.
So if you have something against theocracies, and most libertarians do, then maybe structural libertarianism isn't right for you. Maybe you should send your resume to the Ron Paul 2012 campaign after all.
Federalism and other structural libertarian ideas are not sold on the fact that they support universal rights, because they don't. Rather, they claim to produce governments with incentives to create better policies, or at least policies that people like. Instead of governments with incentive to produce as many wars and pork projects as possible, we might be able to create governments that try to produce the most appealing places for its customers, its residents, to live. On average, I think that rights will be better protected under most decentralized schemes, such as market anarchism. This is especially true for unpopular commercial rights like freedom of contract. But there will be theocracies, and probably racist states. And I wouldn't be surprised if there were states that only admit people with over a 1500 score on the SAT.
So as we begin to decentralize, we allow the creation of very non-libertarian states. However, we do increase variety. And we probably increase choice. We might have few tolerant libertarian paradises that let you make your own life decisions. But you will be able to choose which decisions are made for you.
There's something libertarian-sounding about a world that increases choice, even if it doesn't guarantee freedom everywhere for everybody. Some libertarians will find that distasteful. Some won't. But it's a controversy that we should probably hash out instead of ignoring.
Structuralism 2
Submitted by Jacob Lyles on Sat, 2008-12-27 18:28.In my previous post I attempted to differentiate between Policy Libertarianism and Structural Libertarianism and explain why my interest lies with the latter. Looking back, I realize that I railed on policy libertarianism quite a bit but I didn't explain why structural libertarianism is so interesting. In this post, I hope to correct that shortcoming by quoting some passages from the modern SLs that caught my attention. Then, hopefully before my classes resume, I will get around to discussing the drawbacks of structural libertarianism, and why we might want to reject libertarianism altogether in favor of a more utilitarian theory of politics.
I apologize for going back to the same sources over and over again, but as there are few structural libertarians in modern times and the old SLs didn't keep blogs that I can easily copy and paste from. I am lazy and they are serviceable, so that is what we get.
...[I]t is hard to avoid noticing two basic facts about the universe. One is that libertarianism is an extremely obvious idea. The other is that it has never been successfully implemented.
This does not prove anything. But what it suggests is that libertarianism is, as its detractors are always quick to claim, an essentially impractical ideology. I would love to live in a libertarian society. The question is: is there a path from here to there? And if we get there, will we stay there? If your answer to both questions is obviously "yes," perhaps your definition of "obvious" is not the same as mine.
The basic idea of formalism [the author's SL philosophy] is just that the main problem in human affairs is violence. The goal is to design a way for humans to interact, on a planet of remarkably limited size, without violence....
The key is to look at this not as a moral problem, but as an engineering problem. Any solution that solves the problem is acceptable. Any solution that does not solve the problem is not acceptable.
Is it possible to design a structure of government which will be stable and predictable? Hopefully, of course, stably and predictably benign? History affords no evidence of it. But history affords no evidence of semiconductors, either. There is always room for something new.
The key is that word should. When you say your government "should do X," or "should not do Y," you are speaking in the hieratic language of democracy. You are postulating some ethereal and benign higher sovereign, which can enforce promises made by the mere government to whose whims you would otherwise be subject. In reality, while your government can certainly promise to do X or not to do Y, there is no power that can hold it to this promise. Or if there is, it is that power which is your real government. Your whining should be addressed to it.
The neocameralist [another SL philosophy] structure of Patchwork realms, which are sovereign joint-stock companies, creates a different kind of should. This is the profitable should. We can say that a realm should do X rather than Y, because X is more profitable than Y. Since sovereign means sovereign, nothing can compel the realm to do X and not Y. But, with an anonymous capital structure, we can expect administrators to be generally responsible and not make obvious stupid mistakes.
Given the choice between financial responsibility and moral responsibility, I will take the latter every time. If it was possible to write a set of rules on paper and require one's children and one's children's children to comply with this bible, all sorts of eternal principles for good government and healthy living could be set out.
But we cannot construct a political structure that will enforce moral responsibility. We can construct a political structure that will enforce financial responsibility. Thus neocameralism. We might say that financial responsibility is the raw material of moral responsibility. The two are not by any means identical, but they are surprisingly similar, and the gap seems bridgeable.
When we use the profitable should, therefore, we are in the corporate strategy department. We ask: how should a Patchwork realm, or any financially responsible government, be designed to maximize the return on its capital?
Given how far all current governments stray from the libertarian vision, it is natural that some of us have considered designing or even founding a new nation. In doing so, we sometimes assume that the major failing of present nations is the mental attitudes of their residents. Thus to ensure that a political system works, we merely need to start with libertarians. This is incorrect, because much of what we don't like about current states stems from the behavior of systems - behavior which is to some degree independent of which humans are involved. As an example, the USA started with liberty-minded founders and degenerated anyway.
Continue reading the linked material for their positive visions of government. If you know of anyone else I should read, please let me know in the comments, or at first name dot last name at gmail dot com.
A Taxing Observation
Submitted by Jacob Lyles on Sat, 2008-12-27 14:55.It strikes me that taxes are lower now than they are likely to be for some time. Between social welfare policies and the entitlement shortfall, average rates aren't heading down for at least the next two decades.
Holiday Greetings
Submitted by Jacob Lyles on Thu, 2008-12-25 19:35.Merry Christmas, all. I wish you a prosperous and happy New Year.
Down with Policy Libertarianism
Submitted by Jacob Lyles on Wed, 2008-12-24 22:51.Libertarian thinkers can be plotted on many axes. Presently, the axis I am most concerned with is Policy Libertarianism vs. Structural Libertarianism.
Policy Libertarians (PLs) include the vast majority of the most visible organizations and writers in the modern libertarian movement: the Reason Foundation, the Cato Institute, the Ron Paul campaign, the LP, the Constitution Party, most libertarian economists (e.g. Milton Friedman), and single-issue organizations like Students for a Sensible Drug Policy. PLs, as their name suggests, focus their energies on inventing and advocating a list of policies that governments should follow. For example, you can find policy libertarians opposing liberal eminent domain laws, fighting for lower taxes and deregulation, supporting cultural tolerance, opposing invasive police searches, and advocating the rest of the familiar libertarian manifesto.
Structural Libertarians (SLs) are much rarer in modern times than PLs, although the opposite used to be the case. Structural libertarians include Patri Friedman, Mencius Moldbug, David Friedman, Murray Rothbard, all libertarian Public Choice economists, Lysander Spooner, and the classical liberals that libertarians have adopted as intellectual ancestors. SLs often have the same moral and policy beliefs as PLs, but they focus their energies on the alternative ways to structure a government and the effect that government structure has on its incentive to adopt good policy. At their most extreme, SLs barely sound like libertarians. Under a market-based government system (a common SL proposal), the architects of Singapore would likely find plenty of customers for a burbclave that is incredibly prosperous and clean, but where communists are sent to jail and litterbugs are viciously beaten with sticks.
The decline of the structuralists and the rise of the policyists is a phenomenon that should interest us. It is a by-product of general political trends in the modern western world. Simply: democracy has won. Democracy is considered to be righteousness and goodness and freedom, all else is tyranny. Didn't the American colonists risk their lives and fortunes to institute democracy and overthrow monarchy? And wasn't America the shining example on a hill, leading the rest of the world into a democratic century?
Today all competing political ideas acknowledge this. Conservatism, libertarianism, liberalism, environmentalism, socialism, and nationalism are all strictly policy movements. Since our government structure is assumed to be sound, they focus on advancing their agendas through electoral politics.
But what if democracy is not the impartial "marketplace of ideas" that moderns assume? What if liberal democracy contains its own unwholesome incentives and biases? In other words, what if the game is rigged?
This is why policy libertarianism seems like a weak and incomplete philosophy to me. Presumably if libertarians believe that libertarian policies are just and beneficial, then they would want to live in a world where those policies are implemented. However, if the incentives of the political system are stacked against libertarianism, then their efforts advocating libertarian policies are futile. No amount of pamphleteering and blogging will make vast amounts of people act against their self-interest. Quoting Jefferson at housewives isn't going to sway them when Obama Claus is on the television offering free college educations and health insurance. Putting 51% of the country on welfare programs and then campaigning to enlarge the payments will remain a winning strategy no matter how many DVDs of "Freedom to Fascism" are printed.
Policy libertarianism is only valid in a particular time and place, and then only if you have certain beliefs about the political system at that juncture.PL is useless otherwise. If we kidnap Ron Paul and ship him back in time to live under the Bourbon Dynasty in France, what should he do? Presumably he still thinks that libertarianism is as just and wise in Bourbon France as it is in 21st century America. Should he write florid epistles to the king, trying to convince him of the value of universal human rights? Should he try to marry a princess?
Or suppose we send Ron Paul to live under a government run by evil robots that grow humans in vats and then suck out their life force to power their machines in some physics-defying green energy scheme. Likely Ron still thinks the evil machines should respect his property rights and freedom of speech. I don't see how Ron's beliefs matter very much. He is going to have to hire a damn good lobbyist to overcome the sway of the human-vat-maker union.
Under an incompatible government structure, policy libertarianism is an impotent philosophy. As soon as your faith in liberal democracy wavers, PL looks naive. It's as useless as a lawn ornament. It's gazelle trying diplomacy with lions.
My faith in democracy is at a low ebb, so I think structural libertarianism should be given more thought and policy libertarianism less. As one of the 200 million most influential people in America and one of the 20 most influential writers on this blog, I hope I can lead the libertarian discussion in that direction.
Bankrupt City
Submitted by Jacob Lyles on Tue, 2008-12-23 18:11.From Detroit Blog, hat tip Moldbug:
Whole neighorhood blocks cleared of houses by arson and bulldozers have reverted to urban prairies, visible in satellite photos as unusually large green patches in the middle of the inner city. Sidewalks vanish beneath creeping grasses, while aluminum fences between homes become entwined with the branches of dozens of saplings growing as high as the droopy utility wires.
Alleys in parts of the city start resembling hiking trails as growth from the yards on both sides narrows their width. All around town, even smaller empty lots become thick, grassy fields, because the City doesn’t often mow in easements and right-of-way areas, allowing weeds to grow 3 feet high.
Throughout Detroit, as half the population fled in the last half-century outward towards the suburbs and later towards more rural areas, the city itself has, ironically, become more rural, with wild animals and lush green plants coexisting with an industrial, modern metropolis. Nature, driven back by progress during the city’s 300 years, has aggressively reasserted itself in recent decades, reclaiming land from which man has turned away.
Feed the Leeches More Blood - Get Better Leeches
Submitted by Jacob Lyles on Sun, 2008-12-21 03:05.I am doing a personal research project on Singapore and I noticed an interesting bit of information: in 2007, the Singapore government came under criticism when it increased the salary of its Prime Minister to about $2 million. That is certainly very different from the American philosophy on politician compensation, which holds that it should be as small as possible. Our President is paid a salary of $400,000 and our congressmen all make less than $200,000.
On a possibly related note, international organizations regularly rank Singapore as one of the least corrupt countries in the world, while the US does a little worse (however, it is still pretty good). I wonder if paying our politicians so little contributes to corruption. After all, there must be some reason why presidential candidates were willing to spend $1 billion this year to get a position that pays only $400,000, or why Rod Blagojevich was offered $500,000 for Obama's senate seat which carries a salary of less than half that sum.
The optimistic take is that the warm fuzzy feeling of public service (or more realistically, prestige) is so powerful that people are willing to sacrifice to get it. The pessimist in me thinks that they do it for non-direct benefits of the job, including future lucrative positions with lobbyist firms and industry groups that they help out while in office.
Perhaps paying politicians more would reduce the incentive for them to deal under the table. When I see the salary of the Singapore Prime Minister, I am reminded of the salary of a CEO. When I see the pay package of our politicians, I am reminded of a college athlete: they are contractually bound to receive a low compensation, but your star center didn't buy those rims with his momma's money.
Our low compensation structure reduces the appearance of corruption (and Americans have something against people that make high salaries), but it increases the probability of actual corruption.
More formally, let's define an action by a government official to be objective when his purpose is to act for the good of society (whether or not he is correct). Then define an action by a government official to be corrupt when his purpose is to use his position for private gain. The principal of good governance would hold that we should try to increase the ratio of objective actions to corrupt actions by government officials.
In this framework, an official should be well-compensated to the point so the utility of corrupt act is small. This is especially true if the cost to society of a corrupt act is large compared to the personal gain of the official. It would be cheaper to just pay him what he would have made by dealing under the table, straight from the public treasury.
Perhaps high-level officials should even be guaranteed public jobs for life to reduce the incentive to lobby for corrupt acts from other officials after they leave office. An ex-official that siphons off $billions for a lobbying firm every year is surely more expensive than one that is put up in an office somewhere in the Washington catacombs, sipping a coffee and bossing around an intern. Perhaps this is the true purpose of Presidential Libraries.
Best of all would be to eliminate the difference between public benefit and private benefit for each official by paying them according to their performance. Many industries have this already, like football quarterbacks. They are paid extra if they throw a lot of touchdowns or if their team makes the playoffs. Unfortunately, I don't know how you would design an incentive scheme for, say, a legislator. Perhaps you could pay them based on net migration to the jurisdiction they legislate for.
It strikes me that in thinking up ways to make government better, I am actually just mimicking the thought process that the compensation committee in a private government-firm would go through in some sort of market anarchy.
Secular Right
Submitted by Jacob Lyles on Fri, 2008-12-19 20:35.The new blog Secular Right is a sensation in the conservative/libertarian blogosphere. If you like that irrepressible old codger John Derbyshire, and I love me some John Derbyshire, then you will love this blog since he is responsible for its genesis. Secular Right provides such fine fair as this post showcasing contributor Heather MacDonald as she challenges people who refuse to vote for atheist candidates:
Warren would apparently feel more secure if a president said: “After consulting God, I have decided to bomb Iran,” than if he said, “After consulting my advisors, all available intelligence, and our allies, I have decided to bomb Iran.” A Warren defender would likely say that the two statements boil down to the same thing. But if consulting God merely ratifies what a president learns from his human sources, then the consultation is a meaningless superfluity.
No, a properly religious President, in Warren’s view, is presumably prepared to change his merely human-derived knowledge based on what God whispers in his ear. If he is not prepared to revise his conclusions, then his decision-making is no different from that of an atheist.
So why would Warren be so confident that God has spoken to the president and that the president has properly interpreted the message?
If the president of Iran said: “After consulting God, I have decided to bomb the United States,” Warren (and most other Americans) would presumably be utterly certain that the Iranian president had not been taken into God’s confidence. But why? Perhaps Warren is naively ethnocentric. God, in this view, would either never answer a Muslim’s prayers, or would do so only in ways that protect America.
Count me among the people that feel uncomfortable when his political leaders place too much emphasis on consulting their invisible friends.
The Anti-Climax of the Bailout Saga
Submitted by Jacob Lyles on Fri, 2008-12-19 19:57.There was plausible speculation that the auto bailout saga would come to a conclusion this week. Instead, nobody was surprised when the Bush administration decided to follow the path of least resistance and punt. The $17 billion loan provided by the White House is enough to keep GM and Chrysler in business through February, but not much further.
By now we ought to be used to doublespeak from this administration. Apparently, "I believe that good policy is not to dump [Obama] a major catastrophe in his first day in office" means that Bush is okay with dumping a major catastrophe on Obama in his second month in office. "In any scenario that comes forward after this decision-making process, all those stakeholders are going to have to make tough decisions" means that the administration is comfortable forking over taxpayer money without any concessions from the unions or commitments from management.
Since the run-up to the Iraq War, I noticed that you get a much clearer picture of reality by believing the opposite of everything said by a Bush administration official. "Urgent threats" are not urgent and hardly any threat, "vital security measures with responsible oversight that protect the privacy of ordinary Americans" are expensive and useless policies, lacking any meaningful oversight, that violate the privacy of ordinary Americans. And so it goes.
Conservatives were hopeful that a successful long-term bailout plan mimicking bankruptcy restructuring would come from the White House, which would be similar to the deal offered by Senate Republicans and rejected by the unions a few weeks ago. Instead, the Bush administration settled on a band-aid measure that passes the buck to an incoming liberal Obama administration that is likely to be perfectly comfortable letting the unions suck at the national teat with no long-term concessions.
This one last act of spinelessness by the Bush administration is a perfect symbol to remember them by.
Rampant Moldbuggery
Submitted by Jacob Lyles on Thu, 2008-12-18 23:59.I discovered the blog of Mencius Moldbug when Patri linked to this post a few months ago. You should follow that link and also this one, Mencius is well worth your time. He is one of the freshest and most interesting writers on the web, though eccentric even by libertarian standards. His ideas are promising and deserve to be presented without the less palatable garnish of his acerbic writing style.
The most compelling idea in the sprawling Moldbuggian corpus is "neocameralism". Neocameralism is a close relative to Patri's theory of Dynamic Geography in that both are forms of practical market anarchism. Its reasoning is straightforward: If you believe that government should be given incentive to govern well, then modern democracy must be thrown out. Simply trying harder to elect better candidates will not fix the familiar structural problems of democracy, such as plundering special interest groups, ever-expanding bureaucracy, and election contests with the intellectual content of an American Idol finale. However, if you think that security service providers (AKA "governments") form geographic monopolies (500,000 years of human history provides good evidence for this), then the Rothbard/Hoppe/Friedman vision of anarcho-capitalism with a competitive market in security must also be set aside as a pipe dream.
Neocameralism, then, is statist anarchism. It envisions a world filled with small monopoly states run by for-profit corporations. Neocameralism addresses many of the shortcomings of democracy and anarchy. Moldbug defends it well:
To a neocameralist, a state is a business which owns a country. A state should be managed, like any other large business, by dividing logical ownership into negotiable shares, each of which yields a precise fraction of the state's profit. (A well-run state is very profitable.) Each share has one vote, and the shareholders elect a board, which hires and fires managers.
This business's customers are its residents. A profitably-managed neocameralist state will, like any business, serve its customers efficiently and effectively. Misgovernment equals mismanagement.
For example, a neocameralist state will work hard to keep any promise it makes to its residents. Not because some even more powerful authority forces it to, but because it is very pleasant and reassuring to live in a country where the government can be trusted, and it is scary and awful to live in a country where it can't. Since trust once broken takes a long time to rebuild, a state that breaks its own laws has just given its capital a substantial haircut. Its stock is almost certain to go down.
I am provisionally convinced that a neocameralist world is likely to be more libertarian and better-governed than a world run by universal suffrage democracy. For-profit states are likely to follow libertarian economic policies, since those policies tend to create prosperous and interesting places to live. Conversely, socialism is an expensive program that attracts the indigent, not exactly prime clientèle if you are trying to turn a buck. Culturally, I expect a neocameralist world to be a patchwork of diverse burbclaves ranging from a straitlaced, caffeine-free Mormonville to a hedonistic New San Francisco. While not every state will be cosmotarian friendly, each person will have the freedom to choose where to live, presuming they meet the residence requirements of their preferred state. That sounds fair enough to me.
More importantly, my initial impression is that the logic is tight. Neocameralism seems stable and practical, or at least more so than Rothbardian anarcho-capitalism.
There are certainly difficulties with neocameralism. Transitioning to a neocameralist world is the first hurdle that springs to mind. Moldbug never clearly spells out a plausible strategy for getting from here to there. Then there is the minor matter of how shareholders in the government will keep the management under control when management presumably has all the guns. After all, in a democracy corporate shareholders can ask the government to enforce contractual obligations when management shirks its duties. Hopefully you see the problem that occurs with this model when management runs the government. Moldbug offers some technological solutions to this problem that are interesting but unsatisfying.
Still, Moldbug gives me hope that a libertarian future might be practical, which is valuable as the libertarian movement doesn't exactly have a surplus of hope. In a world that has gone through the FDR presidency, I don't see how anyone can cling to the hope that libertarianism might be achieved through a constitutional democracy. I came back from Mises University an anarchist convert, but I have since strayed from the faith due to doubts about its practicality. The arguments for dynamic geography are well-considered, but it abandons the 25% of the world's surface that humanity has historically lived on to sclerotic statism. Also, it is going to entail significant startup costs.
IANAM, (I am not a Moldbuggite), but Mencius, consider me intrigued.
Repeal Day is December 5th
Submitted by Jacob Lyles on Fri, 2008-12-05 20:17.
Happy Repeal Day, everybody! Please join me in celebrating individual liberty by tossing back a stiff shot of bourbon or sipping a comely glass of scotch.
First Planets Photographed Outside our Solar System
Submitted by Jacob Lyles on Fri, 2008-11-14 05:09.
Three big ones, about 10x the mass of Jupiter, orbiting a star ~130 light years away.
So Long, Schumpeter
Submitted by Jacob Lyles on Thu, 2008-11-13 22:34.Perhaps no destruction would be as creative as that of American automakers with their cancerous union contracts. Over at Carpe Diem, Mark Perry has a telling graph of the labor costs of the big 3 American automakers:
Ordinarily, troubled firms would cut back on labor costs. They can't.
One might think that unions have the incentive to make concessions to keep their host firm in business rather than risk the jobs of their members. However, the potential of a government bailout to feed off of is an infinitely preferable alternative that involves no sacrifice. The automakers will join the ignoble ranks of unionized firms kept alive by tax dollars, incapable of producing goods for which consumers will pay above cost.
The auto industry is frozen in time. New, innovative competitors will be kept out of the market by competition from tax-funded dinosaurs. Car companies have become an expensive, politically connected welfare agency for UAW employees.
With the Democratic Party's pro-union agenda, look for GM-efficiency and Detroit aesthetics coming soon to a corner of the nation near you.
Rent-seeking is a depressing phenomenon to watch in action.
Conquering the Final Frontier
Submitted by Jacob Lyles on Sun, 2008-09-28 20:35.They did it! With the successful launch of the Falcon 1, Space X has become the first company to launch a privately built rocket into Earth orbit.
I eagerly await the founding of an anarcho-capitalist Spacesteading Institute. Someone get Peter Thiel on the phone.
Science fiction is becoming science fact before our eyes. It's an awesome time to be alive.
Ron Paul endorses Chuck Baldwin
Submitted by Jacob Lyles on Mon, 2008-09-22 18:54.Sometimes people forget that the major strength of Bob Barr as a presidential candidate is that he is far less kooky than most libertarian politicians, less kooky than even Ron Paul. While we may get lost in dissecting the candidates' policy positions in search of the best libertarian match, we should periodically pause to remember how big of an asset non-kookiness is.
I am sure this recent action by Paul will remind people how awesome it is to have Bob Barr on our side. This libertarian is happy to have a candidate who hasn't published any race-baiting newsletters (Paul), isn't screaming about roads to Mexico and the New World Order (Baldwin and Paul), and has never advocated removing exercise equipment from prisons as a serious approach to crime control (Badnarik).
Plus, Bob's mustache is made of awesome.
The End of an Era
Submitted by Jacob Lyles on Mon, 2008-09-22 18:17.With Goldman Sachs and Morgan Stanley announcing yesterday that they would become Bank Holding Companies, we can say goodbye to the age of the independent Wall Street Investment Bank. The other players are already gone. Bear Stearns and Merrill Lynch were bought out by FDIC-regulated banks while Lehman Brothers kept its date in bankruptcy court.
The purpose of this most recent move is for these firms to adopt a lower risk and lower return business model. They will now be subject to strict risk-based capital requirements and gain two new regulators - the FDIC and the Federal Reserve. In exchange, they will have access to two stable sources of liquidity - bank deposits and permanent access to the Federal Reserve discount window. Rumor has it that Goldman will buy a retail bank soon and that Morgan is planning to sell out to Wachovia.
Neither firm likely needs the new source of funds so much as they need to convince their current lenders that they are not going anywhere. Lender perception is now more important than any tangible asset. A canceled credit line or a margin call is a kiss of death. That said, the shareholders of the new bank holding companies will appreciate having alternative funding sources rather than being held hostage to the whims of their lenders.
Wall Street's reorganization is a triumph of deregulation. Ten years ago, Glass-Steagall was in effect and it was illegal for the same company to conduct deposit-taking and investment banking activities. Since 1999, financial firms are allowed to diversify over several lines of business, making them less likely to fail. Deregulation has also increased the amount of private capital available to the financial industry in times of crisis by expanding the pool of potential buyers for troubled firms. Were the regulation still in effect, Morgan, Merrill, Bear, and likely Goldman would either join Lehman in bankruptcy court or wind up on the balance sheet of the US treasury. That particular piece of deregulation has increased the overall stability of the US financial system.
The only thing that concerns me about the trend of Investment Banks turning into diversified financial companies is that it might be an overreaction to the current crisis. They may be reducing their risk and return below a long-term optimum in response to extraordinary times, and the cost of going back will not be negligible.
Oh well, that's a problem for the shareholders to sort out. Right now they probably value company survival over return on investment.
I plan to get a debit card at the first Goldman Bank to open in my area. It would be pretty cool to have as a symbol of the new era.
Caveat: I'm not an expert, just an interested amateur. My view of the subject is colored by working for a firm that was hired to sell several troubled mortgage companies between 3rd quarter 2006 and 1st quarter 2008. The Wall Street firms currently in trouble are much more complicated than any mono-line mortgage issuer and my experience might be falsely generalized. Also, banking regulation is hopelessly complex and it's possible that I have mispoken somewhere.