Winning The Long Peace

Patri Friedman — Thu, 15 May 2008 18:46:10 -0400

The most important long-term action to prevent terrorism is to close as many as possible of the open political wounds that allow mass murderers to think of themselves as fighting for a cause, transforming largely ineffective psychopaths into potentially very effective terrorists.

Serious long term work on finding peaceful, equitable solutions to issues like Israel, or the bloody borders of Islam, or Maoist insurgency in places like Nepal should be thought of as parallel to Cold War efforts to restrict Soviet bloc power: a long haul project to be passed forwards through generations. The policy of containment was never designed to be an overnight success.

This long-term peace building process is based on the understanding that a political situation which produces effective terrorists anywhere is a problem everywhere. A clear example of this is LTTE ("Tamil Tigers") who are held responsible for the invention of suicide bombing and are currently experimenting with using light planes as bombers. It is clear that terrorist R&D is conducted globally, not locally, because they are united by technique and not by ideology. But one cannot hope to stamp out a technique of war - only to remove the perception of just cause and turn these people back into ordinary criminals.

Any individual "cause" could eventually give rise to the leadership, will and technical capability to hit America, particularly if supported by hidden nation state backers. It took 60 years for Arab anger about Israel to contribute to the US taking a serious blow, but it did eventually happen.

"The Long Peace" is an alternative model to the "Long War." The "Long War" envisages defeating terrorism by depleting terrorist resources until they no longer function effectively. However, given the relatively low start-up costs of a new terrorist group this seems likely to be a fruitless long-term strategy. The "Long Peace" suggests an alternate model: focus on converting the passive support base of terrorists by multi-decade programs to settle the conflicts which give rise to terrorism, coupled with active outreach on issues like global poverty, AIDS and the environment to get the US the broad popular support that it will take to finally win the war on terror.

Vinay Gupta, Winning The Long Peace. He has some great, concrete proposals for how the US can constructively contribute to world security:

A first concrete instance: what if American embassies the world over issued extremely hard identity credentials to people - US citizens or otherwise?

This is a function typically strongly associated with conventional nation states, but in this age of ICT, there are no technical problems in issuing a biometric identity card to any person who asks for one...Obviously such an identity credential has many positive security implications.

Outsourcing certain kinds of regulations and research is the legislative equivalent of pegging a currency to the dollar. For example, a developing world country could state that their banned chemical list will be the same as the US list of 20 years ago except in the case of new urgent discoveries.

Winning with good products instead of bombs - now that's the American way! Unlikely to ever happen, but I bet it would be far more effective. As Vinay says:

There is no human intelligence network like a population which genuinely supports America and has a vested interest in America's continued prosperity and survival.

Ronald Reagan's Farewell Address

Patri Friedman — Thu, 15 May 2008 16:20:44 -0400

I was 12 when Reagan left office, old enough to remember the excitement of having met him the previous year, but not yet interested enough in politics to understand why he was special. Via TSI board member Joe Lonsdale's blog post, I just came across the text of his farewell address, and finally got, on an emotional level, what an unusual friend to liberty Reagan was.

For example, this passage is something we could use to remember in these dark days for America's reputation:

It was back in the early '80s, at the height of the boat people. And the sailor was hard at work on the carrier Midway, which was patrolling the South China Sea. The sailor, like most American servicemen, was young, smart, and fiercely observant. The crew spied on the horizon a leaky little boat. And crammed inside were refugees from Indochina hoping to get to America. The Midway sent a small launch to bring them to the ship and safety. As the refugees made their way through the choppy seas, one spied the sailor on deck and stood up and called out to him. He yelled, "Hello, American sailor. Hello, freedom man."

A small moment with a big meaning, a moment the sailor, who wrote it in a letter, couldn't get out of his mind. And when I saw it, neither could I. Because that's what it was to be an American in the 1980s. We stood, again, for freedom. I know we always have, but in the past few years the world again, and in a way, we ourselves rediscovered it.

On convincing by example:

Once you begin a great movement, there's no telling where it will end. We meant to change a nation, and instead, we changed a world.

Countries across the globe are turning to free markets and free speech and turning away from ideologies of the past. For them, the great rediscovery of the 1980s has been that, lo and behold, the moral way of government is the practical way of government: Democracy, the profoundly good, is also the profoundly productive.

A prediction that was vindicated by history:

Nothing is less free than pure communism, and yet we have, the past few years, forged a satisfying new closeness with the Soviet Union. I've been asked if this isn't a gamble, and my answer is no because we're basing our actions not on words but deeds. The detente of the 1970s was based not on actions but promises. They'd promise to treat their own people and the people of the world better. But the gulag was still the gulag, and the state was still expansionist, and they still waged proxy wars in Africa, Asia, and Latin America.

Well, this time, so far, it's different. President Gorbachev has brought about some internal democratic reforms and begun the withdrawal from Afghanistan. He has also freed prisoners whose names I've given him every time we've met.
...
My view is that President Gorbachev is different from previous Soviet leaders. I think he knows some of the things wrong with his society and is trying to fix them.

Good advice for people, as well as nations:

We'll continue to work to make sure that the Soviet Union that eventually emerges from this process is a less threatening one. What it all boils down to is this. I want the new closeness to continue. And it will, as long as we make it clear that we will continue to act in a certain way as long as they continue to act in a helpful manner. If and when they don't, at first pull your punches. If they persist, pull the plug. It's still trust but verify. It's still play, but cut the cards. It's still watch closely. And don't be afraid to see what you see.

On America's frontier origins and Seasteading:

The past few days when I've been at that window upstairs, I've thought a bit of the "shining city upon a hill." The phrase comes from John Winthrop, who wrote it to describe the America he imagined. What he imagined was important because he was an early Pilgrim, an early freedom man. He journeyed here on what today we'd call a little wooden boat; and like the other Pilgrims, he was looking for a home that would be free.

I've spoken of the shining city all my political life, but I don't know if I ever quite communicated what I saw when I said it. But in my mind it was a tall proud city built on rocks stronger than oceans, wind-swept, God-blessed, and teeming with people of all kinds living in harmony and peace, a city with free ports that hummed with commerce and creativity, and if there had to be city walls, the walls had doors and the doors were open to anyone with the will and the heart to get here. That's how I saw it and see it still.

Thanks for the vision Ron. America's lost its way a bit, but we're working to build your shining city on the high seas.

UPDATE: You can watch or listen to the whole thing here.

Lunchbomb

Jonathan Wilde — Thu, 15 May 2008 10:36:04 -0400

Friendly reminder: today is the big fundraising day for Amit Singh. The best way you can help him win the election is to send a few bucks his way.

The world of tax-free hedge funds

Patri Friedman — Wed, 14 May 2008 14:24:27 -0400

AKA "Ivy League Universities"

Receipts = $2 billion of operating revenue + $7.3 billion of investment income + $0.6 billion of gifts to the endowment = ~$10 billion.

Operating costs = ~$3 billion.

Profit = $10 billion – $3 billion = ~$7 billion.

This explains why Harvard’s net assets increased about $7 billion in 2007, from about $35 billion to about $42 billion.

Viewed purely in terms of economics, Harvard is really a $40 billion tax-free hedge fund with a very large marketing and PR arm called Harvard University that has the job of raising the investment capital and protecting the fund’s preferential tax treatment.

The trick is that this hedge fund can’t remit earnings to investors, and has to keep them in the company’s account, renaming these retained earnings as an “endowment”. So how do the insiders extract value from this business? One way is by giving themselves cushy jobs that pay a ton of dough.

[Source: Jim Manzi]

To be fair, the fact that it can't remit earnings to investors, but must keep them in its endowment and use them to further its mission is very significant from a social standpoint. Sure, it's making tax-free profits, but those are tax-free profits that can only be spent on education and research. Which is somewhat different from private profits that are spent on consumption, or corporate profits that are partly returned to investors for consumption.

Still, I definitely don't buy the idea that money Harvard spends is better for society than corporate profits which are reinvested. I mean, sure, Harvard may invest in things which are not profitable but yet still socially beneficial (perhaps because benefits are widely dispersed). But they also invest in things which are not profitable because they have less social benefit than their cost.

The freedom to not try to make a profit lets you do things that accomplish enormous dispersed good, or are wasteful. I see no reason to think that the average result gives the world more utility than investment in private corporations. I'd guess less, actually. So the favorable tax treatment is actually encouraging malinvestment.

The Greentech Business Revolution

Jonathan Wilde — Wed, 14 May 2008 01:02:33 -0400

Nice interview with Vinod Khosla:

Q: Can I close it up with one question about the valley in general? What is the future of Silicon Valley and its competitive state versus the rest of the world?

A: I think the most powerful social force we have when it comes to solving our problems and multiplying our resources is the entrepreneurs and technologists and scientists. And the culture of Silicon Valley. It is the solution and may be the only solution. Policy can help. But policy doesn't work without technology innovation.

Look, cement's a classic example. We're trying to do cement that would be cheap enough to give away for free if carbon had a price. That could change the world's carbon picture, with one technology. If solar thermal is cheaper than coal, which is possible over the next five to 10 years, then coal would be in a very different place. Those ideas come from technologists and scientists and serious entrepreneurs. And that's why I'm actually hopeful that we can change the picture.

Leon Kass Hates Ice Cream

Micha Ghertner — Tue, 13 May 2008 12:47:39 -0400

Worst of all from this point of view are those more uncivilized forms of eating, like licking an ice cream cone--a catlike activity that has been made acceptable in informal America but that still offends those who know eating in public is offensive. ... Eating on the street--even when undertaken, say, because one is between appointments and has no other time to eat--displays [a] lack of self-control: It beckons enslavement to the belly. ... Lacking utensils for cutting and lifting to mouth, he will often be seen using his teeth for tearing off chewable portions, just like any animal. ... This doglike feeding, if one must engage in it, ought to be kept from public view, where, even if we feel no shame, others are compelled to witness our shameful behavior.

- Kass, quoted by Steven Pinker, via Hit & Run

Amit Singh for Congress

Jonathan Wilde — Tue, 13 May 2008 01:45:42 -0400

My friend Amit Singh is running for Congress in Virginia's 8th District. In the past, he's been a commenter on this blog and his DC condo served as Hotel Catallarchy for Catallarchicon I back in 2005. I can't go into any more details about what took place on those premises because he's running for Congress.

He's running as a Republican though with a definite libertarian streak. You can read more about his positions at his website. On May 15th, he's having a fund raiser which is described here. There's also a video of Amit and Ron Paul deciding on what to eat for lunch. Paul gives an Oscar-worthy performance if Oscars were given for Youtube videos.

I'll be conducting an interview with Amit in the very near future. In the meantime, those of you in the DC/Northern Virginia area should check out his website.

Ladrones estatales

Randall McElroy iii — Mon, 12 May 2008 21:08:30 -0400

Mexico's federal consumer protection agency recently determined that 10% of the country's gas stations cheat their customers, either through watering down gasoline or through modifying the software that runs the machines to make the number appear higher than the amount that leaves the pump.

It may be relevant to point out that PEMEX, Mexico's state-run petroleum company, is the only supplier for all of the country's commercial stations.

Via Vivir México

Thugs

Jonathan Wilde — Mon, 12 May 2008 12:15:54 -0400

UN Secretary-General Ban Ki-moon just made a speech I watched on CNN and said that pretty much every first world country has pledged aid to Myanmar, but the Myanmar government is resisting aid workers from entering the country. He pleaded with the Myanmar authorities to cooperate. Reporters asked Ban about sanctions which he brushed aside to focus on humanitarian efforts for the present time.

Seek And Ye Shall Find

Brandon Berg — Sun, 11 May 2008 23:50:10 -0400

In case any of you are still harboring any lingering suspicions that there might be anything at all that a Republican can say without being accused of racism:

The “hard-working Americans, white Americans” is a classic Wallace/Helms/Buchanan equation of whiteness with hard work and honesty. The opposite is either effete white intellectuals who don’t work, or lazy blacks who also don’t work. In fact, the Reagan coalition GOP even dropped the word “white,” knowing that “hard-working” and “law-abiding” already implied, in their minds, white people.

Emphasis mine. That's right. If you use terms like "hard-working" or "law-abiding," you're pandering to racists, and probably a racist yourself. This supports my hypothesis that a race card shark can "find" racism anywhere he wants.

Via Alas.

Sad Fish

Micha Ghertner — Sun, 11 May 2008 15:12:34 -0400

It's a movement to the frontier, not a retreat

Patri Friedman — Sun, 11 May 2008 00:18:47 -0400

There was a lot that Murray Rothbard and Milton Friedman disagreed about, but one thing they both agreed on was the pointlessness of libertarian "retreatism". Kevin has a good post at Polycentric Order explaining what is wrong with this viewpoint (emphasis mine):

I recently read an article by Murray Rothbard in which he expressed great contempt for groups of libertarians (and, presumably, anarchocapitalists since his version of libertarianism strongly espoused anarchy) who would go off to form a separate community.
...
Retreating, in the long term, accomplishes nothing for the philosophy and movement of anarchy. It does free one individual, to the extent that they can pull it off. But they then become invisible.
That ain't my style.

Forming a separate community under anarchic principles at sea is an entirely different sort of approach. It's based on an old axiom: Nothing sells like success.

Think about it. A seastead that was successful, autonomous, and connected to the world via internet and trade is newsworthy.
...
It would show people, rather than merely telling them, what motivated individuals can accomplish in the absence of government. I suspect that this would cause two complementary outcomes. First, especially early in the experiment, it would attract like minded people to try the same thing. As with any new frontier, some would make it, some would fail. But the frontier would again exist, and humans historically make the most advances when there is a frontier.

As part of revising the book draft, I've been working on the "Why?" section lately, and adding a lot more about the importance of the frontier. Here's an excerpt from the new section:

We cannot call merely dreamers or whiners those who see problems in society, have specific proposals for how to build a better society, and who would (if given the opportunity) join a group of like-minded people to create such a society.

These visionaries deserve better, for they are the pioneers of social innovation, who band together to start new communities with new rules. They are much like business entrepreneurs, but launching new social systems rather than companies, which makes them a key part of the evolution of human society. They still exist in the modern world, and they still have plenty of ideas about what ails society and how it might be cured. But there's a problem.

What we lack is a place for them to experiment. The original intention of the founders of the United States was for the states to serve as such experiments. But the idea of federalism is long dead, since nowadays most of government is implemented at the federal level, and even the states are far too large for easy experimentation. The main alternative, frontierism, is suffering from the lack of any modern frontier - every bit of land on the globe has been claimed by an existing government.

So society's valuable pioneers are left expressing their ideas uselessly in bars, blogs, and books, proposing better systems that will never be. Many turn their talents to business or academia, where good ideas are (sometimes) rewarded. A few become successful activists, and have some tiny positive impact on our fundamentally broken political systems. Most get frustrated and burn out, and then learn to focus on their own lives, where they can make a real difference. But deep within them still lurks the urge to blaze a new path, their pioneering spirit dimmed but not forgotten.

Them's our peeps, and they've had it rough. But we got their back.

(sorry if I seem a bit seasteading-obsessed in my posting lately. It's been taking up a big chunk of my life and mental space. Which is a good thing, even if it does make me a bit repetitive.)

Those Damned Cosmotarians!

Micha Ghertner — Sat, 10 May 2008 20:26:04 -0400

Gene Callahan on the perils of multiculturalism:

Man, those multi-culturalists! I recall the story of one Jewish dude who apparently was not satisfied with his local folkways. He imported a melange of ideas from Greek philosophy and Eastern religion into his native inheritance and came up with some weird hybrid mix. His followers, after his death, immediately became "rootless cosmopolitans," trotting all around the Mediterranean world, asserting that the culture you came from didn't matter as long as you accepted their new "globalist" creed. They sucked into their "ideology" an obviously incompatible blend of Greek philosophy, Roman civic and political ideas, and Hebrew revelation.

Good thing that nonsense had no lasting impact on the world!

The Massachusetts Resource Curse?

Curunir — Sat, 10 May 2008 15:21:37 -0400

In the field of the economics of development, one of the most fundamental questions is about the so-called resource curse . Basically, the idea is that countries with high endowments of natural resources tend to have worse governance and lower rates of economic growth (this thesis is not uncontroversial empirically, I should point out). The list of reasons why this might be true is long, but one of the primary problems with natural resources is countries endowed with them are spared the hard work of developing a prosperous market economy and can simply fund their activities with the sale of oil or diamonds.

We tend to think of this as a phenomenon that afflicts developing countries, but there's no reason that it couldn't apply to the United States just as well. To wit, Massachusetts lawmakers are now proposing a tax on college endowments:

Massachusetts lawmakers desperate for additional revenue are eyeing the endowments of deep-pocketed private colleges to bolster the state's coffers by more than $1 billion a year, asserting that the schools' rising fortunes undercut their nonprofit status.
more stories like this

Legislators have asked state finance officials to study a plan that would impose a 2.5 percent annual assessment on colleges with endowments over $1 billion, an amount now exceeded by nine Massachusetts institutions.

Now, I should start by pointing out that Massachusetts is one of the richest states in the United States, a fact much beloved of left-leaning economics commentators trumpeting the superiority of their system. The fact that they are in this kind of fiscal crisis is a disgrace.

But if you're a Massachusetts lawmaker, this is perfect. Universities have huge fixed and relatively unmovable assets (buildings, stadia, etc.). Greg Mankiw (jokingly?) suggests that Harvard move to sunnier fiscal climes:

1. Instead of expanding the university into Alston, Harvard could create a second campus in another state. Call it Harvard South. (Put it in a better climate than Boston, and I would be one of the first faculty to volunteer for the move.)

2. Transfer much of the endowment to Harvard South. Support Harvard North by slowly selling off land in Massachusetts.

3. Eventually, make Harvard South the main campus, and Harvard North the satellite. If Massachusetts state lawmakers remain hostile, close Harvard North down entirely.

Now, this isn't terribly likely to happen, though frankly I'd love to see it. When resources are fixed geographically, it's very difficult for governments to commit not to plunder. (Maybe Patri should try to get Harvard to move to a seastead.)

You see this elsewhere in America. New York can get away with crummy government service for decades because the financial industry is stuck there (one of the dark sides of economies of aggregation). I had high hopes a few years ago that the internet would help to break this trend, but I turned out to be mostly wrong, at least so far.

But nevertheless, even with fixed endowments, there's only so far the government can go. Felix Salmon claims that "Right-wingers always say that if you tax people or institutions with money they won't pay more tax, they'll just move; they're rarely proved right."

Well, maybe. I haven't seen any academic economic work on internal migration in the United States, but something sure as hell is driving people away from high tax states. Housing is probably the major driving force, but at least anecdotally, taxes are a contributing factor :

The San Francisco Business Times noted recently that Bay Area millionaires are starting to take their gold out of the Golden State. The paper writes: "The Bay Area's wealth boom is producing an explosion of millionaires--in Nevada, Wyoming and perhaps Canada. Advisers to the well-heeled say 'wealth migration'--taking the money and running--is behind a surprising drop in the number of Bay Area millionaires."

The annual loss of millionaires from the Bay Area--home to Silicon Valley--knocks this extremely rich and fertile place down near the bottom of the new millionaire list, putting it in the company of Detroit, Pittsburgh and Cleveland. Of course, the middle class has been fleeing California for years. High house prices have been the main culprit. Long commutes and deteriorating public services play a part. But the flight of millionaires is very 21st century. The cause? You guessed it. Taxes.

Continues the San Francisco Business Times: "'I'm hearing from more California baby boomers, I need to get out,' said Diane Kennedy, a Phoenix accountant and financial adviser to the wealthy. 'You can still make a lot of money in California. The problem is, then you have to pay taxes on that money,' said Kennedy, who recently helped a California client with annual income of about $1 million save $96,000 annually by making his home in Jackson Hole, Wyo. his primary residence.

Felix Salmon may think "people respond to incentives" is a right wing concept, but I don't. And even Harvard may find that when pushed far enough, it might have to go slumming down in Charlotte or Houston, like the rest of America has been doing at a high rate for years now.

Packed like lemmings into shiny metal boxes

Jonathan Wilde — Fri, 09 May 2008 13:28:49 -0400