Public posts will appear on the Community blog, and may be promoted to the front page.

AnCap Entrepreneur Network - Manifesto Draft

Building the Institutions of a Free Society


Anarcho-capitalism describes a society free of the initiation of force or fraud. Each individual has a right to his or her life, liberty, and property, and no other individual or group can legitimately violate that right.

The State is a centralized organization that inherently violates rights. It funds its activities through extortion. It restricts voluntary trade through licensure, subsidy, and prohibition. It uses its monopoly of force to erode every limitation on its power, and thereby grows until it collapses under its own weight. It demands subservience to its authority.

Many of our relationships with each other are structured through institutions. We use these to simplify our trade, to transmit our culture, to communicate, and to resolve our differences. To the extent that our institutions rely on the State, they are vulnerable. Our institutions can be corrupted as the State engulfs them, or can be destroyed when the State fails.

The Anarcho-Capitalist Entrepreneur Network exists to help individuals cooperate to design and implement organizations that respect the rights of individuals; to create organizations that are completely independent of the State. In time, we hope that such organizations become familiar enough that individuals no longer consider force or fraud a legitimate way to interact with each other.

Operating Environment

The framework of Anarcho-capitalism provides a diagnosis of current events and predictions for future financial and social situations. Generally, we blame the financial collapse of the early 21st century upon fiat currencies and regulations enforced by the State. We blame the violent deaths of hundreds of millions of humans in just the last century on the attempt of various States to establish their authority world-wide. We try to imagine the innovation and wealth that could have been part of today's voluntary economy if it had not been systematically destroyed by State coercion. This gives us a view of opportunities for and threats to our organizations that are different from views sanctioned by the State.

We expect organizations to be regulated by the choice of the participants. To the extent an individual freely chooses an organization, it thrives. We embrace an environment of competition, cooperation, and division of labor.

We do not need to confront the State directly. We can be innovative enough to find spaces where we can operate, prosper, and grow new organizations that simply make the State irrelevant.

We know that, ultimately, there is no State. It is an idea promoted by some individuals to claim legitimacy for their criminal acts of force or fraud. As each individual realizes this, and denies that legitimacy, we will offer them a rich world of institutions that make that transition increasingly easier.

Topics of discussion

  1. Contracts - What form of written agreements should we enter when there is no State to enforce them? How do we establish mediation/arbitration networks?
  2. Competition - Most of our fields will be dominated by a competitor who has established a coercive monopoly, or a few competitors licensed by the State. How do we develop, fund, market, and grow our businesses while avoiding direct confrontation with the established players?
  3. Scaling - When a State fails and its coercive enforcement mechanisms end, it leaves multiple markets open. How can we design our voluntary institutions to expand into these sectors more rapidly than those of criminal organizations?
  4. Labor - Traditional employment is a maze of price controls and regulations. What alternatives are there for individuals to sell labor with little or no capital? Can we design micro-businesses that will let the growing ranks of unemployed produce value for themselves and their customers?
  5. Money - Money forms half of nearly every transaction. For this reason, the State always tries to replace stable commodity money with tokens of promises that can never be fulfilled. How can we provide convenient methods of trade and stores of wealth that avoid State fiat money?
  6. Accounting - The State claims that the point of accounting is to reveal your revenue so it can be taxed. We believe that accounting should help you manage your organization. As fiat money collapses, how do we track our resources through massive price inflation? What are the costs of changing your accounting currency? How will accountants deal with the glut of customers that may need to simultaneously make this change? What has been the experience in other countries that have changed currency?
  7. Security - We do not imagine a world without criminal acts. We merely deny that criminal acts are ever legitimate. We believe we can defend our lives and property without committing crimes against others. As States go through a death spiral of demanding ever more resources before they fail, we can expect high rates of criminal activity that we need to confront and resolve.
  8. Communications - The Internet and the cornucopia of media resulting from it provide a mature example of an industry escaping monopoly control. What lessons can we learn? What is still left to do?
  9. Information Technology - How can we maintain privacy of our own records and effects? How can we convince our customers that we are maintaining their privacy? How can we avoid the intrusive 'solutions' offered by the State and provide secure identification, communications, and storage in a non-authoritarian, distributed environment?
  10. Physical Infrastructure - Roads, power, water, and sewage are typically claimed as monopolies by the State. How do we provide businesses that make changing your utility company as simple as changing your bank?
  11. Medicine/Education - These industries have become so distorted with bad incentives that opportunities abound. How do we avoid the Gordian knot of regulations to provide the value that customer-patients or customer-students want?
  12. Intellectual Property - Whatever the philosophical basis of intellectual property, it is difficult to enforce property rights over material which is trivial to copy and transmit. It will be more problematic when the cartel of powerful States dissolve. How do we design business models to operate in this environment?
  13. Certification - Can people imagine alternatives to such monopolies as the FDA, SEC, and USDA? How do independent certifiers provide audits of companies for financial stability, ethical operation, or adherence to manufacturing standards that give their customers confidence? How do individuals demonstrate their reputations for meeting their contractual obligations? What role can branding fill in communicating confidence?
  14. Black markets - Through regulation, the State has declared some businesses crimes de jure. Some have responded by committing crimes in fact, leading to entire market sectors dominated by violence. What can we do to de-escalate the violence in these industries and return them to voluntary cooperation? If the State outlaws more businesses (banking, firearms, alternative education, alternative medicine, food, children's toys), how do we prevent them from turning to violence in response?

See also:

AnCap Entrepreneur Network - Rough Plan
AnCap Entrepreneur Network

Cloning is not Replication

This is a bit astray from the economics I usually talk about here, but I just wanted to get something off my chest. I was reading Overcoming Bias today and ran across this passage in the comments, in a discussion of cryonics:

Yes, if you value your own life highly enough, if you have enough money, cryonics can make sense - despite the low probability of success. What I don't get is why anyone would value their own life that highly. Why not preserve enough to make a clone of yourself - and then give the clone a similar education? Are the "random" developmental details of your life *that* important - compared to the genes (in your DNA) and the memes - which can be acquired again - or better, replaced with more modern versions?

What irritates me about this is the assumption that a clone who shares the same "memes" and DNA as me would be as good as me, and that it would be no loss to replace me with it. This is, of course, nonsense. Consider the case of identical twins, who are every bit as much of a "clone" as what is being discussed here. The logic of the argument above is that a twin should be indifferent between living and dying, because after all, their genes will be propagated anyway. But no one believes this.

I take this a touch personally, because I'm an identical twin myself. And it's just stupidity to claim that somehow it'd be just swell if I dropped dead tomorrow because my DNA, which is just that awesome, would survive.

People act as if genetic clones are something mysterious. They're not; I have one already. And if every time people replaced the word "clone" with "identical twin", we'd have much more sensible discussions on these topics.

Rising Inequality as a Statistical Mirage?

I don't much care about rising inequality, but for a lot of people, it's a very important issue. And even if people disagree on the causes or the necessary policy responses (if any), everyone knows that inequality has exploded over the last 25 years or so, right?

Well, maybe not. Here's a fascinating new paper about inequality in America. From the abstract:

I show that from 1980 to 2000, college graduates have increasingly concentrated in metropolitan areas that are characterized by a high cost of housing. This implies that college graduates are increasingly exposed to a high cost of living and that the relative increase in their real wage may be smaller than the relative increase in their nominal wage. [. . .] I find that half of the documented increase in the return to college between 1980 and 2000 disappears when I use real wages. [. . . ]The empirical evidence indicates that relative demand shifts are more important than relative supply shifts, suggesting that the increase in well-being inequality between 1980 and 2000 is smaller than the increase in nominal wage inequality.

What's going on here? Well, it turns out that while it is true that the rich have been getting richer in nominal terms at a faster rate, much of that extra income is eaten up in higher rent.

This is not the only paper arguing that inequality may not have increased all that much. They are only looking at housing costs, but other goods show the same property. From a recent working paper:

We revisit the distributional consequences of increased imports from China by looking at the compositional differences in the basket of goods consumed by the poor and the rich in America. Using household data on non-durable consumption between 1994 and 2005 we document that much of the rise of income inequality has been offset by a relative decline in the price index of the poor.

Both papers are worth a read. I'm not claiming they are the end-all of the discussion on inequality, or that the issue is now settled. But it may very well have been the case that much of the increase in inequality is a statistical fiction, an artifact of how we collect and aggregate data.

Freidman and Realism Reconsidered

On Monday, I wrote a post criticizing Benjamin Friedman’s take on realism as “flatly wrong.” Friedman, who was kind enough to exchange two rounds of e-mails with me, took exception to my criticism. In retrospect, I agree that my response was overstated. I still disagree with his interpretation, but his reading is not obviously incorrect, as I implied. Certainly there is room for reasonable people to disagree about of dense texts and I was wrong to suggest that there is some obvious Platonic ideal interpretation of realism.

Friedman’s take on the realists, as he explains in his e-mail (which he kindly allowed me to quote) is that:

Realists almost exclusively agree that there are moral limits on what states can do. I guess they, like most people, would say that you are permitted almost anything in the face of destruction, but that hardly ever occurs. Morality imposes limits, compels you to do certain things (ie laws of war) in almost all circumstances. As I said before, these restrictions do not come from realist thought itself, but most realists believe in them, and classical realists at least were very clear about saying so.

He goes on to distinguish two propositions about morality, arguing that classical realists (at least some of them) accept both:

  1. The preservation of power is ultimately conducive to morality because power is needed for other ends.
  2. There are moral restrictions on action drawn from outside realism.

The first of these points is fairly uncontroversial: prudence and morality often overlap, and a really prudent agent will recognize that there are good prudential reasons for behaving morally. But I'm skeptical that a realist can commit to (2), at least not consistently.

And that, I think, is at the heart of my disagreement with Friedman’s interpretation of realism. Certainly he is right to say that (many) classical realists hold that there are limits to what states can do. And those limits are the same limits that we would get from morality. Friedman argues that this entails that realists recognize that realism is bounded by morality, that moral concerns are not irrelevant to international politics.

I’m not convinced that is correct.

As Kant tells us, there are lots of reasons why a person might behave in a manner that is consistent with morality. It might be a matter of prudence; after all, defying morality tends to make people dislike us – often so much so that they wish to do things like deprive us of life, liberty and/or property. Or we can behave morally because we like the people in question and don’t want to see them hurt. Alternatively, we might act morally simply because it’s the right thing to do and we want to do what is right.

I think that realists can accomodate morality only in that first prudential sense. That is, actual historical realists might well endorse what look like moral limits on our actions – for instance, by setting up and obeying the laws of war – but they can accept such limits only because the limits in question are not at all inconsistent with prudence.

Consider, for instance, some of the accepted rules for defining lawful combatants:

  • Must be commanded by someone who is responsible for his/her subordinates
  • Must carry arms openly
  • Must be identified by an insignia
  • Must conduct themselves in accord with the laws of war

Now, at the risk of sounding like a bit of a cynic, I'd argue that it’s perfectly consistent with prudence for a Western theorist to sign on to such requirements. After all, Western armies – which are huge and well-funded by a solid base of taxpayers and which are composed of (by and large) professional soldiers – are well-suited to follow such rules. There are perfectly good moral arguments for establishing criteria for recognizing lawful combatants (if not necessarily for those particular requirements). But there are also a host of pragmatic reasons for recognizing such criteria: it makes it easier for our soldiers to figure out whom to shoot, helps to limit post-war damage, makes it more likely that we can pursue a successful peace, and so on.

In other words, realists accept what look like moral constraints on behavior, but that they do so is purely a pragmatic (and hence highly contingent) accident. That's not necessarily problematic. I don’t particularly care why people behave morally; I care only that they do so.

The issue, though, is what realism says to do in instances where prudence and morality conflict. When morality says that it’s wrong to stand by and watch millions being slaughtered but prudence says preventing that slaughter will be frightfully expensive both in terms of the lives of our soldiers and the pockets of our taxpayers. When morality tells us that it is wrong for Badistan to wage an aggressive war on Meekton but prudence tells us that Meekton has nothing we want and is far away. There is the point at which we must ask whether morality matters. For the realist, the answer is no. The morality of warring with Badistan takes a back seat to the pragmatics. If it is in our interest to war with Badistan, we will. Otherwise, we won’t. That’s not to say that realist thought reduces the issue to some simple question, for it is not a simple one to answer at all. But it also isn’t a moral question.

Friedman’s argument, as I understand it, is that for realists, morality is a consideration even if it’s not the consideration, and therefore it’s wrong to say that realists don’t care about morality. That’s fair enough, and he’s right to criticize Chait for claiming that realists are “blind to morality.” (In Chait’s defense, Chas Freeman’s Tiananmen Square post – which is the ostensible target of Chait’s op-ed – certainly makes Freeman sound like a caricature of a realist.)

But the problem is that realists' acceptance of morality is purely contingent. Because realists are operating from a tradition in which warfare can be limited without harming our interests, it’s okay to abide by those limits. But those limits are a product of their happening to live in a particular state at a particular time. Realism, in other words, will give us a set of moral constraints when the realist in question is a product of a developed Western nation. But there is little reason for a realist who is not part of that tradition to accept those limits. Indeed, Friedman himself acknowledges that the moral restrictions "do not come from realist thought itself." Rather, they come from particular applications of realism.*

The disagreement, as I see it, boils down to this: Friedman says that it’s wrong to characterize realists as “blind to morality” because a particular set of Western realists accept that a moral reason can count as a reason for acting. I say that it’s wrong to characterize realists as being concerned with morality since the logic of realism would indicate that, should the facts on the ground change enough, realists ought (on pain of inconsistency) to reject morality out of hand.

That doesn’t make Friedman's interpretation flatly false, and I was hasty to describe him in that way. It still, IMO, makes him wrong. But, of course, this stuff would be uninteresting if we all agreed.

*Note: There might be some temptation to claim that I'm begging the question against particularist theories of morality. While I freely admit to being something of a universalist, I don't think that my objection here is to the particularist nature of realism. That is, I'm not objecting to realism on the grounds that it fails to apply a universal answer to a specific moral principle. My objection is that realism can (and arguably must, if it is to be at all consistent) reject morality in general given the right set of circumstances.

Another NY Tea Party

There is going to be another NYC Tea Party held on Mar. 13 at 11:00 am near the Wall Street Bull. I work on Fridays and will not be there.

Friedman vs. Realism

Cato's Benjamin Friedman, that is. Friedman takes Jon Chait to task for what Friedman calls "a common mistake." Specifically, Friedman says that "Chait writes that Freeman is a realist and therefore doesn’t care about morality in U.S. foreign policy." Friedman then goes on to complain about Chait's use of the word "morality."

Modifying a noun with “moral” does not make it so. Realists argue that idealism – ignoring realities that encourage tradeoffs among competing goods – is foolish, and there is nothing moral about doing foolish things in the name of morality. Realists believe that our foreign policy should be governed by an ethic of responsibility, where you do things that actually lead to good consequences, starting at home. They see the promiscuous use of power as destructive of it and therefore of all the goods it serves, including the ideological sort.

This is all true enough. But Friedman then goes on to conclude that:

Those with even passing familiarity with leading realists like E.H. Carr, Hans Morgenthau and Reinhold Niebuhr know that their goal was to create a moral foreign policy in an anarchic world.

As someone who is passingly familiar with Carr, Morgenthau and Niebuhr, I'm here to tell you that Friedman's description is just flatly false.*

The "common mistake" in this case is Friedman's. For his argument to go through, he has to assume something like:

  1. Action A is consistent with moral code C.
  2. Person P endorses A.
  3. Therefore P's actions are motivated by C.

Obviously there is no reason to think that the conclusion follows from either of those premises. Indeed, all that the argument shows is that P is acting consistently with C, not that P is in any way motivated by C. The distinction is crucial; indeed, it's the very heart of the question.

See, realism just is the view that prudential considerations are the only thing that is relevant to national security concerns; moral considerations are strictly irrelevant. Now certainly Friedman is correct in his description insofar as prudence is actually part of morality. So to that extent, a commitment to acting prudently is a commitment to acting morally. But, and here's the rub, morality and prudence don't always perfectly overlap.

Charity, for instance, is an imperfect duty (meaning, I've a moral obligation to be charitable at least some times, if not in any specific instance). And charity is required even if no one ever knows that I'm charitable and even if there is no probability that I'll ever need to receive charity from others.

Similarly, morality may well require that I place myself in some danger to assist others. If I see a mugging taking place, I have some duty to assist, even if it's nothing more than phoning the police. And that duty doesn't go away even if it does raise the chances (slightly) that the mugger will come after me.

The point here is that morality at least sometimes requires that we put the interests of others ahead of our own interests. Realists deny that nations should ever do this. Indeed, it's the central thesis of realism. I see a few alternatives to explain Friedman's post:

  1. Friedman thinks that morality and prudence always perfectly overlap.
  2. Friedman misunderstands the differences between morality and prudence.
  3. Friedman thinks that being committed to some things that are morally required is equivalent to being committed to morality generally.
  4. Friedman misunderstands what realists are arguing.
  5. Friedman is being disingenuous to take a swipe at neocons.

Of these, (3) is the fallacy of composition, and (2) and (4) assume that Friedman isn't capable of reading and understanding fairly basic texts in his field of expertise. And the principle of charity suggests that (5) should be a last option. That leaves (1), which is by far the most interesting position of the available options, though it's not one that he has defended in this post. Perhaps he will elaborate in a future post.

*UPDATE, March 4: I was too hasty in describing Friedman's position as "flatly false." Check out my updated (and, I hope, somewhat more thoughtful) post, "Friedman and Realism Reconsidered."

New York Tea Party

Today, Saturday the 28th, there will be a "Tea Party" protest being held in City Hall Park. That's 249 Broadway, New York, from 2:00 pm to 3:00 pm.

There will be socializing afterwards.

If you want to spot me then I'll be the guy with the faux pitchfork.

I'm fed up with these stimulus bills.

One Decade's Time

In 1999, federal outlays were $1.70 trillion.

In 2009, we have a $1.75 trillion deficit.

Have a nice day.

Paying for Itself

Tom Laskawy, over at Weaver's Way, takes on what he sees as Amtrak-hating Republicans. In the process, he appears to misunderstand what it means to call something a public good:

This drives me nuts. In an article by the AP on the House's omnibus budget bill comes a reference to: "the money-losing Amtrak passenger rail system"

Come on! How about the money-losing Interstate Highway System? Or the money-losing national parks? Or our money-losing VA Hospitals? Or the Mother of All Money-losers: the US Military?

At the Prospect, Ezra Klein falls for the same trap, complaining that

there's been a concerted effort over the past 30 or 40 years to paint Amtrak as uniquely wasteful because, like highways and parks and fighter jets, it loses money.

At first glance Tom and Ezra seem to have a point; we don't expect the military or our parks to literally pay for themselves. But I think that, on another level, the complaint totally misses the point of public goods.

The fact is that roads and the military actually increase our wealth. (Within reason; arguably a military that gets really damn big just becomes a sinkhole, but that's another issue.) Having a highway allows workers to get to my factory quickly and cheaply and it allows me to ship my goods cheaply and it allows you to get to the store and buy my goods more easily. Those things combine to make all of us wealthier. And, assuming that we've built our road in an area where all of these things happen on a regular basis, there's a pretty good chance that we have increased the total amount of wealth by more than the cost of the road.

Given that fact (and given the public goods problems involved in building the road in the first place), there's at least a decent libertarian case to be made for taxing people to construct the road. It's a collective investment that makes all of us better off. So in that very real sense, we do expect roads to make roads pay for themselves. The same can be said for the military; having a taxpayer-funded military keeping me safe from invasion gives me the freedom to invest more of my resources in producing widgets more cheaply and less in buying tanks to protect my inefficient but cheaper factory.

So, no, we don't think that roads and fighter jets have to literally pay for themselves. But we do think that they ought to provide more value than they cost.

Whether Amtrak does this is an open question. I mean, as someone who lives in the NE corridor, I like Amtrak. But passenger trains are mostly substitution for other available means of transit. Given that we already have roads that will get people up and down the NE corridor, the public goods argument for passenger rail is fairly weak. So it's not unreasonable to expect that various substitution-goods should have to be self-sufficient -- that trains, like the airlines with which they compete, should have to pay for themselves.

Now there is a possible public goods argument for trains, depending on how seriously one takes environmental concerns. But it's not the case, contra Ezra and Tom, that passenger rail is an obvious candidate for public good status. They would be better served by actually making that argument, rather than simply dismissing those who don't buy it as "train-hating b@stards."

UPDATE: Edited to strike out extraneous words. Next time I'll remember to proofread.

Democrats against Democracy

Here's an excerpt from a letter which appeared in the Washington Post today regarding the Orwellian-named Employee Free Choice Act under consideration in Congress:

The problem is that the election process overseen by the National Labor Relations Board has become drawn out and acrimonious, with management campaigning fiercely to deter unionization, sometimes to the extent of violating labor laws. Union sympathizers are routinely threatened or even fired, and they have little effective recourse under the law. Even when workers overcome this pressure and vote for a union, they are unable to obtain contracts one-third of the time due to management resistance.

To remedy this situation, the Congress is considering the Employee Free Choice Act. This act would accomplish three things: It would give workers the choice of using majority sign-up-- a simple, established procedure in which workers sign cards to indicate their support for a union – or staging an NLRB election; it triples damages for employers who fire union supporters or break other labor laws; and it creates a process to ensure that newly unionized employees have a fair shot at obtaining a first contract by calling for arbitration after 120 days of unsuccessful bargaining

Now, generally speaking, I try to think the best of my political opponents, since I tend to think almost all political ideas have some merit. But not this. Let's look at a few of the "best" parts of the letter.

The problem is that the election process overseen by the National Labor Relations Board has become drawn out and acrimonious, with management campaigning fiercely to deter unionization

Management campaigning "fiercely" against unionization? The horror! To be fair, the letter writers then go on to complain that some of the campaigning violates the law. One can fairly ask, though, the extent we, as an allegedly free society, want to regulate the speech employers are allowed.

But what's truly crazy is the idea that signing cards rather than elections is going to lead to a more accurate representation of employee preferences. Look, if anyone truly believes that, I have a counter proposal: Why not allow employers to ban unions after 50%+1 sign cards saying they don't want unions? If card check is a legitimate method to get at preferences, this clearly is acceptable. So how about it: Let's have a system where your boss calls you into his office and asks you to sign the union-banning card. And, gosh, I do think employee evaluation season is coming up . . .

Better yet, if we're going to follow the principle that signing cards represents preferences, and that's it's perfectly OK if only one side has this privilege, why not allow it in the United States in general? From now on, I propose that once 50%+1 of registered voters can be persuaded to sign a card, the Republican candidate for president becomes the winner. After all, it saves us the time and expense of acrimonious elections.

Now, as a skeptic of democracy, I don't necessarily think weird alternatives to elections are always wrong. But at least I have the balls to admit it. Would that the leftwing economists here, fed up with the annoyance of democracy leading to policies they don't like and proposing to do away with the roadblock of elections, would show the same courage.

Thought of the day

Since Obama has established the logical proposition that those who take federal money (e.g. CEO grandees of troubled banks) should have government impose salary caps on them, why not do the same for those home-owners that are about to be bailed out?


Deflating Populism

For today's discussion, I offer Exhibit A:

This graph shows a line staying at a low level for most of American history and then suddenly shooting upward. Many people are worried about this line because it measures a quantity that is usually considered to be a Bad Thing: credit market debt as a percentage of GDP.

I offer two hypotheses to explain this graph. The first is a favorite of right-wing populists and libertarians, and was endorsed by Mencius Moldbug (the blog proprietor who was the immediate source of Exhibit A):

Hypothesis 1: Modern American wealth is illusory. It is built on a pyramid of debt and will eventually collapse. Our economic growth is driven by borrowing more and more money. This is not sustainable.

Those familiar with Ron Paul, Pat Buchanan, or other economic populists will immediately recognize hypothesis 1. It has a certain intuitive appeal and fits well within the narrative of modern social decay preferred by the paleocons.

The second hypothesis comes from a very different perspective. To me, merely stating the second hypothesis deflates the appeal of the first:

Hypothesis 2: The timing of the explosive growth of the credit market coincides with exponential growth in commercially available computing power. Technological change drastically reduced frictional transaction costs involved in complex capital transfers, creating a greater number of profitable credit transactions at the margin. The ventures funded by these marginal transactions have generated value over time and increased average human prosperity. A large credit market is a beneficial side-effect of a healthy modern economy.

You may want to call hypothesis 2 the "skeptical", "conservative", or "Panglossian" hypothesis, depending on your point of view.

Some Republican's Don't Take the Money, or Do They?

On February 16th, Paul Begala, trying to justify the most wasteful spending bill in the history of the US wrote, in perhaps the most face punch worthy hypothetical of all time:

"Gov. Mark Sanford of South Carolina took umbrage at my writing that his approach to the economic crisis is to do nothing. I'll deal with his "ideas" in a moment, but first let me make a modest proposal:

If Republican politicians are so deeply opposed to President Obama's economic recovery plan, they should refuse to take the money. After all, if you think all that federal spending is damaging, there are easy ways to reduce it: Don't take federal money.

Gov. Sanford can lead the way. South Carolina should decline to accept any federal funds for transportation, education, health care, clean energy or any of the other ideas President Obama is advocating to fix the economy. And the rest of the GOP can follow suit."

Yeah, he essentially says, "we are going to spread the slop we expropriate from the taxpayers and if you don't like it then just back off from the trough. Oink. Oink."

His picture is in the article. Fist, smirking face, POW! Print it out. Tape it to a soft object, and punch it.

Well some Republicans have now responded, not that they have been exemplars of fiscal responsibility when in control, they at least have a guilty conscious.:

"If we were to take the unemployment reform package that they have, it would cause us to raise taxes on employment when the money runs out -- and the money will run out in a couple of years," Mississippi Gov. Haley Barbour told CNN's 'State of the Union' on Sunday."

Wow, some sanity at last. Wait a second. I read on ...

Schwarzenegger called it "a terrific package," and said he does not foresee a need for a tax hike in the future to sustain the unemployment provisions.

The fantasy lasted for maybe five seconds.

Oh, Arnie, Whatever happened to the free market, Milton Friedman, stuff? Guess you never truly understood in the first place. I know Friedman didn't. His monetarism got us into this mess, and it wasn't truly free market. Go Austrians! No not the Schwarznegger type. The other kind.

Yeah, some other republicans are mentioned as turning down the unemployment money but they don't seem to be doing so for the rest of it.

Begala was right in his estimation of Republicans that's for sure. I don't however think that makes him or the Democrats look very good. Makes them look like robbers who flung money in the mud to some groveling wino.

Isn't there some movie scene like this with some evil doer throwing change in the dirt for some hard up addict looking for a fix while giving the poor creature a humiliating tongue, or physical thrashing? Some scene where the bad guy humiliates someone also prone to vices?

No, I am not talking about Deliverance, despite the "Oink, oink, squeal like a pig". That scene more about the taxpayer.

The International

Movie PosterI decided to go see The International, simply because it had a gun battle in the Guggenheim. What could be cooler than that? The movie's poster makes sure that you remember that this is the movie with the gun battle in the Guggenheim, so evidently the advertisers knew what they were doing.

Funny thing, though. What popped into my head each time I saw the title was the Communist anthem. The association didn't make sense to me, so I didn't think much about it.

Then I saw the movie. Minor spoilers. The antagonist of the movie is not only an international bank, but entirely untouchable within the law because it has the major governments in its pocket. The bank has tremendous reach. As the poster says:They control you "They control your money. They control your government. They control your life." The bank can get away with anything and everything, and its power is almost magical - it reminds one of the machines of The Matrix, only this is not an over-the-top technofantasy but is intended to be a depiction of present-day reality. We learn that one of the characters was a hard-line communist, and this is treated within the movie as a Very Good Thing. I do not recall even the slightest hint given during this revelation or at any other point in the movie that being a hard-line communist might be anything less than admirable; on the contrary, to have left the fold is treated as a disgrace.

This is not intended to be a movie review. I only wanted to mention this aspect of the movie. If you want my assessment, it had a substantial gun battle in the Guggenheim, which is what I came to see, so I did not leave the theater feeling cheated.

UPDATE: I've been trying to find someone who understood the signs the same way I did, and sure enough, somebody did.

Instruction Manual For Life

A reminder that faith based religion is not merely about community. If it were then I wouldn't have a problem with it.

Kling on Public Goods

Writing about the housing bailout, Arnold Kling proposes a definition of public goods:

My test is this: would an overwhelming majority of Americans be willing to donate a significant amount of their personal funds to the cause of bailing out troubled homebuyers? If the answer is "no," then it is not a public good. The answer probably would be "yes" for courts, police, national defense, or cleaner air. If so, then those are indeed public goods.

I must confess, I find this a bit puzzling. Public good has a pretty clear standard meaning, and this just isn't it. As Paul Samuelson initially describes them, public goods are those that, once provided, can be consumed by others at no additional marginal cost. In other words, a public good is one that people certainly value but also one that it is rational to free ride on. In other words, by the standard understanding of "public good," they are, by definition, things that no rational actor should be willing to pony up for.

So Kling's definition really makes no sense at all. If enough people actually pony up to make a service happen, then that providing that service wasn't a public goods problem in the first place. Certainly lots of the ancaps here at DR will like that view. But I don't think that's really Kling's position.

Indeed, even from a practical point of view, Kling's definition is, well, slightly crazy. He's more-or-less giving the government carte blanche to spend on anything, just so long as it's popular. His definition makes Social Security (which is tremendously popular) into a public good. In fact, properly framed (i.e., "Would you be willing to donate to keep entire neighborhoods from collapsing?" or maybe "Would you be willing to donate to keep the economy from worsening?") even the housing bailout might pass the test. There is, after all, nothing in the test about a proposal actually being true. The test is just whether people would donate to a cause.

A for effort?

Via Vox Populi:

Nearly two-thirds of the students surveyed said that if they explained to a professor that they were trying hard, that should be taken into account in their grade. Jason Greenwood, a senior kinesiology major at the University of Maryland echoed that view.

“I think putting in a lot of effort should merit a high grade,” Mr. Greenwood said. “What else is there really than the effort that you put in?”

“If you put in all the effort you have and get a C, what is the point?” he added. “If someone goes to every class and reads every chapter in the book and does everything the teacher asks of them and more, then they should be getting an A like their effort deserves. If your maximum effort can only be average in a teacher’s mind, then something is wrong.”

While we might want to acknowledge effort in some way, giving an A for effort implies that effort is as good as accomplishment. And of course, it isn't.

Where else do we see manifested the notion that effort is as good as accomplishment? Some expressions:

  • "It's the thought that counts."
  • "It's not whether you win or lose, but how you play the game."
  • "Everyone's a winner."

Not to deny that there is at least some truth in the first two, but we say these things to console losers. We ought to be very suspicious of the things we say to console ourselves or other people. Some other manifestations of this notion:

  • Participation in political demonstrations. While demonstrations can sometimes accomplish things, I believe that for the most part participation in demonstrations is about visibly making an effort without regard for its effectiveness.
  • Recycling and other environmental-conscious activity. A lot of it does not withstand close scrutiny, and yet it persists, which suggests that it is primarily about making an effort.
  • Political discussion. Via Econlog, John Nash made the point:

    Then gradually I began to intellectually reject some of the delusionally influenced lines of thinking which had been characteristic of my orientation. This began, most recognizably, with the rejection of politically-oriented thinking as essentially a hopeless waste of intellectual effort.

    I think there's a lot of truth to that.

  • The Transportation Security Administration. This is a highly visible effort whose dubious effectiveness has not dented it.

How much does the stimulus weigh?

It will mostly be spent electronically, or in printed checks which can be for large amounts, but what if it was in actual US currency?

I'll round off the amount to $800bil (obviously I'm not including interest, or other stimulus and bailout bills, or the fact that a good chunk of the "temporary" spending, is likely to be permanent)

A dollar bill weighs a gram. That makes it convenient to use metric measurements. So I'll give the weight in metric tons. $800bil would weigh 800 billion grams, or 800 million kilograms, or 800,000 metric tons. (roughly the weight of all 10 Nimitz class aircraft carriers)

If you want that in a more convenient form using 100 dollar bills it would be 8000 metric tons (about the weight of a cruiser).

What if it was in pennies. A penny weighs 2.5 grams.

1000 grams makes a kilogram, 1000 kilograms is a metric ton, so its 1,000,000 grams per metric ton.

1,000,000 grams divided by 2.5 (2.5 grams per penny) is 400,000. So you have 400,000 pennies per metric ton. Divide by 100 and you get 4000. So a ton of pennies is $4000.

800 billion divided by 4000, is 200 million.

So the stimulus in pennies would weight 200 million metric tons (roughly the weight of all the garbage produced in the US per year, a fitting weight comparison for this bill don't you think?)

Earlier I did different calculations based on a trillion dollar stimulus. That would be a dollar a second for over 31,000 years, or if you lay the bills end to end they would reach from the earth to the sun.

Waste, or The Survival of Nonsense

Why are corrective management books like this necessary? How is it that managers have the freedom to waste precious company resources pursuing management fads that don't work? In principle, one might expect wasteful management fads to be weeded out by the pressure of market competition.

Some possible explanations:

  1. It's not actually all that wasteful. (I doubt this.)
  2. The actual market is nowhere near a competitive equilibrium. (I consider this probable but I think it can be broken down into many contributing factors.)
  3. The market conditions are changing all the time, keeping the market from reaching equilibrium.
  4. Companies differ from other companies by many factors, and management stupidity at one company may in effect be subsidized by excellence in some other aspect of the company. It can take a long time separate out the producers within a company from the parasites and saboteurs.
  5. Government favor may be permanently impeding competition, permanently subsidizing management stupidity in favored companies.
  6. Perfect alignment of selfish interests and company interests is never possible, and the pursuit of management fads may be a permanent cost of doing business even in equilibrium much as theft of office supplies is a permanent cost of doing business. Management fads may tend to benefit their instigators at the expense of everyone else.
  7. Management fads may be a corporate form of ritual and superstition, so the explanations of ritual and superstition may be transferrable to management fads.

Liberals and Leftists

My post on liberaltarianism sparked some discussion of the distinction between liberals and leftists. In several of my comments, I attempted to lay out the difference, as I see it. I'm not sure that I ever do so all that rigorously or systematically. Fortunately, a piece by Sheri Berman in the latest issue of Dissent sheds light on the distinction.

In outlining her take on the history of the left, Berman writes:

Crudely stated, Marxism had three core points: that capitalism was a great transforming force in history, destroying the old feudal order and generating untold wealth and productivity; that it was based on terrible inequality, exploitation, and conflict; and that it would ultimately and naturally be transcended by the arrival of communism...Everyone on the left agreed with Marx on the first two points. By the late nineteenth century, however, some of its sharpest minds began to disagree on the third.

I think it's that second point that distinguishes liberals (of the sort Will and Jonathan and I are interested in bringing into an alliance) and the leftists who are favorite targets of many libertarians (and rightly so, IMO). See, I think leftists really do hold that capitalism is based on "terrible inequality, exploitation, and conflict." Welfare liberals, on the other hand, don't think that at all.

To put the point another way, leftists (at least the intellectually honest ones) are quite willing to admit that capitalism has produced some unalloyed good in the world. But a leftist thinks that such progress is the result of a system that, at least on some level, is fundamentally wrong. A free market might well create a lot of wealth, but it does so at the cost of harming some members of society. And so for a leftist, the market is at best something to be tolerated.

Welfare liberals, I think, see the market differently. A liberal disputes the notion that the market is inherently exploitative or that the inequality it produces is a terrible thing. Rawls, for instance, is perfectly willing to countenance inequality in the just society, just so long as the promise of the rising tide lifting all boats is more than a nice-sounding metaphor. And even the stridently partisan Paul Krugman defends child labor in foreign sweatshops as reasonable, given the available alternatives.

It's possible to think that the market is a fundamentally good thing while also seeing those who inevitably fall through the cracks as a public goods problem. One can defend some sort of safety net without thinking that markets are built on the backs of the exploited. That's the type of person I'd call a liberal.