Posted by: erichosemann | September 12, 2011

The Who and Economics

I’m inclined to believe that when we search popular culture for positive references to our preferred political viewpoint, we are searching for an affirmation deeper and more personal than what those references are capable of delivering.

When I began to feel this way was when my enthusiasm for conservatism began to wane. A very big part of the conservative imagination is devoted to sifting through popular culture for those elements sympathetic to it. I now see this as a waste of time and energy, and also sign that my faith in conservative ideas was based on emotional reflex, not logical rigor. Economics alone was responsible for my shift towards a more radical libertarianism, because economics demands a rigorous approach to fact and argument for those who desire proper and honest practice of it. At least the economics I like. I don’t know about yours.

Having said all that, there is nothing like the triumphant feeling one gets from remembering just how accurately Pete Townshend captured the bullshittedness of agricultural subsidies in pop song format.

The lyrics are below. Take a listen here.

I’ve got a spade and a pick-axe
And a hundred miles square of land to churn about
My old horse is weary but sincerely
I believe that he can pull a plough
Well I’ve moved into the jungle of the agriculture rumble,
To grow my own food
And I’ll dig and plough and scrape the weeds
Till I succeed in seeing cabbage growing through

Now I’m a farmer, and I’m digging, digging, digging, digging, digging
Now I’m a farmer, and I’m digging, digging, digging, digging, digging
It’s alarming how charming it is to be a-farming
How calming and balming the effect of the air

Well, I farmed for a year and grew a crop of corn
That stretched as far as the eye can see
That’s a whole lot of cornflakes,
Near enough to feed New York till 1973
Cultivation is my station and the nation
Buys my corn from me immediately
And holding sixty thousand bucks, I watch as dumper trucks
Tip New York’s corn flakes in the sea

Now I’m a farmer, and I’m digging, digging, digging, digging, digging
Now I’m a farmer, and I’m digging, digging, digging, digging, digging
It’s alarming how charming it is to be a-farming
How calming and balming the effect of the air

Now look here son
The right thing to say
Isn’t necessarily what you want to say
The right thing to do
Isn’t necessarily what you want to do
The right things to grow
Ain’t necessarily what you want to grow
Your own happiness
Doesn’t necessarily teach you what you want to know

Well I’m suntanned and deep, so’s the horse
And my hands are deeply grained
Old horse is a-grazing, it’s amazing
Just how lazily he took the strain
Well my pick and spade are rusty,
Because I’m paid on trust to leave my square of cornfield bare

It’s alarming how charming it is to be a-farming
How calming and balming the effect of the air

When you grow what I grow
Tomatoes, potatoes, stew, eggplants …
Potatoes, tomatoes … gourds

I know, right? It’s awesome. If you don’t think it is, it’s just because you haven’t warmed up to it yet. It’s tuneful enough Mr. Farmaid himself John Mellecamp would probably sing it completely oblivious to the irony.

Cultivation is my station and the nation
Buys my corn from me immediately
And holding sixty thousand bucks, I watch as dumper trucks
Tip New York’s corn flakes in the sea

You don’t need to know what Pete Townshend’s politics are to know he understands what price floors do in a world of scarcity and inequality. They create surpluses, surpluses that look like trash in one part of the world, even though there are starving people in another that would gladly eat that trash. And this song was released almost 40 years ago, when there was a hell of a lot more starving than in the world today.

And once we’ve used up every last spade and pick axe and lame old horse—Townshend’s slang for marginal resources perhaps best used elsewhere—what do we do?

Well my pick and spade are rusty, Because I’m paid on trust to leave my square of cornfield bare.”

Indeed my friends, indeed.

Posted by: erichosemann | September 5, 2011

Politics Without Romance

Nobel Laureate James Buchanan described public choice theory as “politics without romance.” By this I take him to mean that public choice theory strips from politics its sweeping visions and rhetorical grandeur. Not only is public choice theory a means of stealing fire from politics, it is a means of extinguishing that fire completely. Without his rhetorical fire the politician becomes what he once was, or at least in our system what he was supposed to be: a servant.

Rhetoric, intentions and promises are tools of the political trade. They are what politicians use to convince the rest of us that they alone are capable of identifying and solving our problems. That politicians trade on promises, not results, is not unique to them. It is a characteristic they share with much of modern advertising. The advertiser promises you a smiling family provided you purchase a certain cookie or ice cream, or laundry detergent. The politician promises you a smiling family provided you vote for him, so that he may get the chance to give you a higher minimum wage, or free healthcare. The similarity ends at your right to refuse the fruits of these promises. If you purchase the cookie or ice cream or laundry detergent and it fails to satisfy you and your family, you can return it, and often get your money back. At the very least you are completely free not to purchase it ever again, and even tell your friends somewhat exaggerated stories about how bad the cookie tasted, or how poorly the laundry detergent cleaned your clothes. You cannot return a bad public policy, even one you did not vote for. It becomes law, and in most cases begets hundreds if not thousands of bureaucrats with a vested interest in seeing the policy thrive regardless of its real costs to you or society.

Public choice neutralizes political rhetoric by assuming behavioral symmetry between public and private actors. If we must criticize the private entrepreneur for being self-interested, then we must do the same for the public servant, so called. They are both human—according to public choice theory, there is no mechanism within politics that transforms the human heart. Public choice also assumes that people respond to incentives in political institutions just as they do in market institutions. Implicit in this assumption is that there may be within our democratic system institutions preventing politicians from acting in the interest of those they supposedly serve. In other words, their spineless pandering is not entirely their fault; temptation is rife in a system of concentrated benefits and disbursed costs.

Imagine a politics without romance. Imagine political seasons not charged with cheap emotional pandering and patriotic chest-puffing. How would politicians respond to a public that had no use for their secret rhetorical fire? I imagine many would go home—term limits might be voluntarily imposed. Few would want a job in which the supervisors clearly understood the employee’s limitations and his likelihood of being distracted or bought off. Demand for campaign financing would dry up because the nature of the political job would have fundamentally changed. No longer would it be acceptable to make one promise to get elected and then neglect that promise to stay elected. Coalitions formed across parties or across the public and private sectors would melt away, their ability to wrest profits by disbursing costs effectively eliminated. The dead-weight loss of government would be much reduced.

I do not know if such a world is possible. I would like to think it is.

Posted by: erichosemann | August 24, 2011

Militias and Militarized Law Enforcement

The bogeyman of right-wing militias figures prominently in the political imaginations of progressive politicians and pundits. The supposed phenomenon of anti-government groups, “sovereign citizen’s councils” and neo-Nazi gangs arming themselves to wreak havoc on the innocent, diverse partakers of the American dream often appears in the run-up to national elections—and shortly afterward depending on who wins. It is debatable whether these groups exist in numbers greater than those police could collect at drunken redneck bacchanalia in secluded hayfields or ad hoc gun expos underneath state park barbecue shelters. Most likely their numbers are inversely proportional to the breathlessness with which the mainstream media reports their violent intentions. For the record, I am one hundred percent against right-wing hate group violence used on anyone. Whether or not—and to whatever paltry degree—it might exist. Just for the record.

I’m against violence of any kind, as a matter of fact, except that violence marshaled to protect one’s self and property. This does not include pre-emptive strikes on neighborhood bullies or drug dealers, however big the neighborhood or powerful the drug. It does include the kind of violence perpetrated by the government using overwhelming force and military armor on people officially presumed innocent, such as that featured in this discussion of the no-knock raid ending in the death of Jose Guerena.

As Radley Balko points out, the official version of the cause of the raid on Jose Guerena’s home changed repeatedly after it was botched, which suggests the directive to carry it out wasn’t air tight. Judging by his name—unless it’s a carefully crafted, right-wing extremist nom de plume—Guerena wasn’t a member of a paramilitary, right-wing hate group, yet the firepower arrayed against him that morning suggests someone thought he was, or at least that he was armed as if he was. Guerena was a peaceful working class fellow only tangentially related, if that, to people the police suspected of committing crimes. In this era of increasing suspicion of hateful phantom militias, our local law enforcement has drastically changed the way they interact with people who are—all together, folks—presumed innocent.

Events like the Guerena raid are not isolated incidents, as this Reason.com archive shows. Peruse the archive and you will find evidence that local constabularies have been arming themselves at Uncle Sam’s behest, and at discount rates. You will find too that the number of raids like that on the Guerena home has increased more than ten-fold since the early 80s, to some 50,000 a year. 50,000 a year. That’s 137 such raids a day. I’m not sure that many drunken redneck bacchanalia occur as frequently, much less that many legally sanctioned, bring-grandma-and-the-kids style gun expos.

So the media and the federal government periodically froth over right-wing will’o’the wisps supposedly armed and ready to rock, but virtually clam up when local law enforcement suits up and actually rocks out all over innocent people, their homes and pets.

This apparent hypocrisy seems easy to explain, from a libertarian’s point of view at least. It is not the guns, or the flash bang grenades, or the turreted armored personnel carriers—it never really was. It is all about who has them. For the most part, progressives and conservatives are okay with a government monopoly on force. The late actor Ron Silver, a self-described liberal led to neo-conservatism by 9/11, related his visceral reaction to an Air Force flyover during the Clinton inaugural. At first disgusted with the blatant show of force, he calmed down once he realized “These jets are ours now.” Before his death, Silver trotted out this anecdote to highlight the supposed hypocrisy of modern liberals, implying that only conservatives are capable of appreciating and correctly using government force. This is not the case.

Progressives and conservatives alike claim special powers of restraint and wisdom when it comes to waging war, whether on their fellow citizens or foreign peoples. Bi-partisan rhetoric identifying as “war” the kind of force necessary to shrink everything from drug use to waist lines has transformed the once localized phenomenon of SWAT teams to a nation spanning epidemic. Both progressives and conservatives are to blame for this because both categorically condone government monopoly of the use of force, and each election cycle they vie for the opportunity to show us all how qualified they are to manage that monopoly.

I’m not against having a police force, or even the use of paramilitary tactics to fight certain kinds of crime. I am an agnostic about claims that government monopoly of force is the best way to assure domestic peace, and I am unimpressed by claims that we should blindly trust the judgment of law enforcement officers simply because they serve that monopoly. It is not unreasonable to question that monopoly, or to suggest alternatives. It is unreasonable to blindly assert that paramilitary groups of one ideology are amassed against us while ignoring the bipartisan paramilitary groups already finding ways to abridge our rights and more efficiently kill and imprison us.

Posted by: erichosemann | August 18, 2011

Is Education a Public Good?

What is a public good? A public good is something that is both non-excludable in provision and non-rivalrous in consumption. That is, a public good is a good the suppliers of which cannot keep additional people from consuming once it is supplied and can be consumed by additional consumers without diminishing the quantity supplied.

Boiled down, it amounts to this: public goods are those goods individuals might be unwilling to provide because charging per head is too difficult. Consumers can sneak some on the sly without leaving any incriminating evidence, or at least what evidence they might leave is difficult to detect without the producer spending a lot of money.

Whether or not something is a public good is not a function of whether or not it is provided by government. People provide public goods all the time, sometimes not even knowing that they do. Each time I tidy up my landscaping and mow my lawn, passersby and neighbors get to enjoy it free of charge. There is no way feasible to me to charge people for exploiting the aesthetic value I provide. Furthermore, my bushes don’t wilt, nor does my grass turn brown if the number of people enjoying the pastoral beauty of my front lawn increases to a steady stream of cars, bikes and chartered buses.

Radio broadcasts are another public good. There is no cost-effective way for a radio station to hunt down people who listen without paying, and the number of listeners can increase without the radio signal breaking down.

Public roads are one example of a public good provided by governments. Once they are built, there is no way to keep people who have not financed them from using them. Municipalities overcome this problem by taxing their citizens to pay for them. Public roads are non-rivalrous enough until traffic increases. Could roads be provided by private entities? Yes—they would operate as toll roads. Governments already operate toll roads to more accurately reflect the cost of their use.

National defense is commonly used as an example of a public good, even though it is not entirely clear that it is. Once an army is established and charged with defending a particular area, it is difficult to make sure all the people in that area pay for whatever portion of defense they enjoy. Like public roads, defense is non-rivalrous to a point. Increases in territory or population can make consuming defense difficult.

What are public schools? Are they a public good?

I think the more important question to ask, given the definition I provided at the outset, is “Is education a public good?” Most people would agree that it is, under the belief that a society improves when it has more people who are more educated. Our government leaders have made it a priority to educate as many people as possible, and they have tried to make sure each person receives the highest amount of education possible.

Is this the right way to look at it? I don’t think so. Educating someone may not be a public good, because it is never up to the educator how well the educated uses her new knowledge. Educating someone is not as simple as fertilizing your lawn once a year and keeping the boxwoods tidy. Your lawn won’t drop out of college to sit in a coffee shop and read Proust for a year, and your boxwoods aren’t going to take up with the wrong crowd. In fact, in a world of relative individual freedom and relatively limited government, educating someone so that they use that education exactly as you intended is impossible.

Suppliers of education in the public school system can exclude certain consumers through assessment tests and course plans designed for “gifted” students.  A teacher can give a student just that amount of education he deems necessary. A school district can restrict access to reading materials in schools, and local governments can ban books outright.

Consumers of education in the public school system can certainly diminish the quantity—and quality—of education supplied by crowding classrooms.

Perhaps education is not a public good. Is learning? I think learning is. Learning something on one’s own, or allowing oneself to be taught, come closer to the definition of public goods. Just as I don’t mow my lawn for my neighbor’s benefit but they benefit nevertheless, I educate myself for no one’s benefit but my own, and yet my increased understanding has positive spillover effects for others. I may become more circumspect in my criticism of others, or I may become a better manager once understanding opportunity cost. If I keep my mental landscape tidy, I will have no choice but to benefit others, even though I do so only for my own benefit.

UPDATE: http://www.usatoday.com/news/education/2011-08-22-book-ban-schools_n.htm

Posted by: erichosemann | August 17, 2011

Doctor Compensation–By Whom?

I started this post way back in October of 2009:

Every once in a while, I’ll listen to NPR’s Marketplace Morning Report on the way in to work.

They have a cute little feature called “The Marketplace Globalist Quiz.” Today’s question? How much do American doctors make compared to doctors in other wealthy countries?

Take a listen.

The segment begins at about 4 minutes 18 seconds into the broadcast.

This playful little discussion is confused, and the context of the quiz is misleading. The federal government spends a lot on health care. If you buy into the entirely plausible idea that the consumer determines the structure of production, then the federal government plays a role in determining doctor compensation proportional to the amount it spends on health care. The quizzer and quizzee should offer some caveats about health care budgets in “countries like Switzerland and France.” Perhaps they spend less than the U.S. government, perhaps more. There are assuredly more variables involved, but a cutesy little quiz comparing doctor compensation is the furthest thing from prima facie evidence that U.S. doctors are over—or under—paid.

When the consumer alone determines the structure of production, the consumer gets what he wants: iPods, Bluetooth devices, inexpensive footwear of high quality, hi-definition television and year-round supplies of cheap fruits and vegetables. When the government determines the structure of production, it gets what it wants, too. Only what government “wants” is much different from what consumers want, since governments can’t “want” anything, only people can. Government’s “wants,” in our case, are supposed to be what people want as expressed through the democratic system. What else do we get when government “wants” something? Three—make that four—wars. TSA groping. Bailouts. QE1, QE2 and possibly QE3. (There’s a federal register’s worth of more, but you get my point.) In short, doctor compensation is not purely the result of consumer demand. If it was, perhaps it would be lower, perhaps higher. Certainly it would more accurately reflect consumer desire for health care across a range of available goods.

Posted by: erichosemann | August 14, 2011

Who Do You Think You Are?

One of the most frequent comebacks I’ve gotten when I assert my opinions in favor of freedom—right along with “How do you know what you’re saying is true?”—is “Who do you think you are to hold such opinions, much less utter them?”

For years this comeback left me flummoxed. I thought I was arguing in good faith and I presumed those I was speaking to were as well. Perhaps speaking isn’t the most precise word to use; there may have been some shouting, I freely admit. In any case, I didn’t understand that such questions are really last ditch efforts—nuclear options, if you will—to end the argument once and for all. If you can’t get around your opponent’s appeals to fact and principle, categorically denounce them and question your opponent’s very right to think or speak contrary to you.

In the realm of private debate, this is inconsequential. We can all hold or not hold opinions. We can all abstain from voicing them or we can shout them from the hill tops. In all cases we alone bear the costs or benefits of voicing our opinions. Family members and friends will rally around us or fall out of touch once they hear that we’re raging progressives or libertarians or passive milquetoasts.

Most if not all votes are cast based on opinion, yet the approach most people have toward how their family and friends vote is relatively laissez faire. Sure—they’re morons for publicly opposing or promoting school choice or lower taxes, but it’s their right to vote their opinion and our obligation to leave them alone about it. Of course, the lead up to voting day is filled with denunciations and character assassination of politicians and their supporters, but once the screen is pulled across the ballot booth, that’s that.

But voting, unlike holding forth at your office Christmas party or family dinner table, isn’t just a matter of stating one’s preferences. It’s a means of allocating resources, and when resources are allocated for one thing, they can’t be used for another. That foregone use is the real cost of a resource, and it is reflected the resource’s money price. Resource allocation has costs, whether done politically with votes or economically with dollars. Furthermore, legislation often has negative, unforeseen costs associated with it. So there are costs associated with voting. Do voters bear them? Or rather, does each voter bear the same costs and enjoy the same benefits associated with every piece of legislation? Hardly.

Theorists of many political persuasions agree that the hands-off approach to expressing one’s preferences through voting is a net benefit of the democratic system. They could be right. A considerable amount of the democratic system’s appeal comes from its ability to guide resources from many citizens to one group of voters via opinions expressed at the ballot box. That is, it’s ability to concentrate benefits and disburse costs.

What this means is that those voters well acquainted with the political system get their opinions turned into policy at someone else’s expense. The costs of implementing a policy as well as the costs incurred if the policy fails are not born directly by its supporters but by taxpayers as a whole. What’s more, proponents of a piece of legislation or supporters of a politician have no guarantees the legislation or politician will turn out as advertised, yet they are free to enter the ballot box and determine how someone else’s resources will be used.

Who do they think they are?

Posted by: erichosemann | October 25, 2010

Tapping Against The Prison Wall

I came up with the title of this post a few years ago when the financial crisis hit.  I hadn’t read Darkness at Noon in full yet, or I read excerpts of it somewhere, or maybe I was thinking back to comic books about POWs that I read as a boy.

At the time I came up with this title the dominant theme amongst armchair theorists was why are derivatives and mortgage backed securities so darned complex?  As bad as it sounds to admit it now, I wasn’t surprised.  I really wasn’t surprised.  What surprised me was how incredulous people were about the complexity of those financial “instruments,” because when you think about it, if you take away everything a modern person has, clothe him in dishrags and leave him to rot in a moldy, damp 5 x 5 cell, he will still find a way to communicate to the outside world.  He’ll find out whether he has neighbors, and then he’ll set to talking with them, even if it means developing a way to translate “Today is my daughter’s fifth birthday” into a series of wall taps with tin cup or a finger nail.

If a person can learn to communicate with almost nothing at his disposal, why is it a surprise that a person can develop something with “tranches” that produces income from five hundred different mortgages of varying risk and value if they’re surround by four computer screens, a plate of half-eaten danish and a belly full of Starbucks?

Posted by: erichosemann | October 21, 2010

Thoughts on Garet Garrett’s The Cinder Buggy

Garrett’s The Cinder Buggy read like a gothic romance rather inartfully and naively interspersed with Algeresque bootstrap pulling and passages glorifying entrepreneurs as at once fortune tellers and gods.  I enjoyed reading it but I believed none of it.

I enjoyed it because Garrett’s language is pleasurable to read.  His descriptions of some of capitalism’s wealthy but morally decrepit retinue are funny and sad, such as this one, from page 290:

“But after they had invested their money in banks and railroads they still had nothing really to do. They built themselves castles, in some cases two or three each, and seldom if ever lived in them because they were so lonesome. One transplanted a full grown forest and it died; he did it again with like result, and a third time, and then he was weary. He never went back to see. They got rid of their old wives and bought new and more expensive ones. Even that made no perceptible hole in their wealth. They tried horses and art and swamped everything they touched. Gambling they forgot. One developed a peacock madness, never wore the same garments more than an hour; his dressing room resembled a clothing store, with hundreds of suits lying on long tables in pressed piles. One had a phantasy for living out the myth of Pan and ceased to be spoken of anywhere. One travelled ceaselessly and carried with him a private orchestra that played him awake and attended his bath. He died presently under the delusion that he had lost all his money and all his friends, which was only half true.

They disappeared.

Blasted prodigies!

Children of the steel age, overwhelmed in its cinders.”

I didn’t believe any of it in small part because of this passage, from page 327, that as far as I remember is one of only two inflamed skeins of Wasp racism:

“The steel age widened the gap between brain and muscle. It required a higher kind of imagination at the top and a lower grade of labor below. There was no such labor here,-at least, nowhere near enough. Hence an impouring [sic] of Hungarians, Slavs, Polacks and other inferior European types,-hairy, brutish, with slanting foreheads.”

Who needs that kind of language, apart from progressive eugenicists such as Woodrow Wilson and clumsy capitalists  searching for reasons labor went sour?

I didn’t believe any of it in larger part because of this passage, from page 290:

“And here were men like John to say: “Give us a tariff protection of six-tenths of a cent a pound for ten years and we will not only make all our own steel wire hereafter but wire for all the world,”-who got it and did it.”

What?!? “Give us a tarriff protection of six-tenths of a cent a pound?”  Any one who has read half a dozen pages of Bastiat, from almost any of his volumes, will tell you that tariffs are a libertarian no-no.  A big no-no. So in effect, these fictional early steel barons said to the government:   “Have the consumer absorb the cost of making us price competitive, and we’ll master the world market.”

Think it about this in the context of Hayek’s dedication in The Constitution of Liberty: “To the unknown civilization that is growing in America.” How much wealthier would America be if its consumers were not coerced into subsidizing the welfare of its wealthiest citizens?  How much different would our present, once unknown civilization be had its productive powers not been sapped by protectionism?

This passage blows the bottom out of Garrett’s premise that mighty, forward thinking Promethean industrialists and financiers conquered the elements of earth and human self-interest to midwife the glorious steel age.  They took a tin cup to Uncle Sam is what they did!

I was more surprised to read this brief passage than I was to read Mises defending the draft in Human Action!


Posted by: erichosemann | October 19, 2010

Garet Garrett and the Extended Order

From The Cinder Buggy:

All that the great law of becoming requires is that men shall work. They cannot go wrong really. They cannot make wrong things. The pattern is foreordained.”

Posted by: erichosemann | October 18, 2010

Elinor Ostrom & the Chilean Miners

This piece by Brendan O’Neill at Spiked got me to thinking about communities, common resources, and of course, Elinor Ostrom.  All I really know about Elinor Ostrom’s work comes from this short video:

In spite of my eminent–or immanent?–ignorance I think her description of people unable to “roam and steal” with “a time and place that is theirs” applies to the 33 miners in Chile.

How so?

The miners in their dark entrapment were faced with fixed resources of mental stamina and psychological endurance. They figured out how to manage those resources on their own, by putting together a rudimentary governing structure that regulated the amount of time they worked, played, and griped.

Experts from above–quite literally, and pun very much intended–were convinced that what the miners needed for survival was something very different from what the miners were able to create for themselves.  This isn’t unusual; it’s what experts do.  What’s freakish and disturbing is these experts tried to withhold whatever succor they could provide the miners in order to force the miners’ behavior into theoretical molds.

The miners’ experience seems to me a very real social experiment illustrating how individuals manage common-pool resources and how they devise ways to delineate the boundary–or border, if you prefer–between them and the experts determined to manage their behavior.  At first it may seem pointless to say that the miners needed to distinguish themselves from the experts on the surface.  After all, thousands of feet of the earth’s crust separated the two groups.  But if you think about it a little, formally identifying who is a miner and who is an expert may have been crucial in helping them build the solidarity needed to govern their behavior and stave off madness.  I imagine many conversations taking place along the lines of “Are you going to trust some surface-bound egghead with mere theories, or your miner brothers, who have worked here for decades and know how to survive?”

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