Coyote Blog

Leading "progressive" blogger Markos Moulitsas is trying to tempt libertarians to the progressive cause.  He tries to convince libertarians that growing corporate power should scare them more than government power.  Uh, no.  Hammer of Truth has a good rejoinder:

Moulitsas still cites corporate power over people as a problem, and
still fails to recognize that corporations gain their undue power from
government. Government is the enabler, empowering corporations to step
on individuals and small businesses through both regulations and
subsidies. It's only by restraining government that corporations can be
held in check, and it's unfortuate that Moulitsas hasn't figured this
out yet.

Nearly every government law, from anti-trust to trade law to licensing, generally is written to benefit incumbents who make campaign contributions against upstart competition.  Also, by the way, corporations can't send people with guns to your house if you don't cooperate with their will. 

I have in the past been at the executive level of several Fortune 50 companies, and this notion of corporate power is hilarious.  In each case, our situation seemed like that of a wounded, lumbering elephant, trying to stay just ahead of a back of small but swift predators.  Sure, our very size meant that sometimes we did damage from our thrashing around, but to somehow call this power is absurd.  We were constantly fighting against our own size to try to hold on to what market we had.

Finally, with corporations, including the current great Satan Wal-Mart, I can always choose not to shop or work there.  The IRS and the US Congress offer me no similar protection from their control.

More good stuff along the same lines from Catallarchy.

In this older post, I went into more depth on why progressives never will like capitalism, because they are too conservative (little-c).  At the end of the day, progressives like Kos want to reduce risk, variability, unpredictability and general "messiness".  These goals carry too high a price in terms of lost freedom and lost upside for humanity.

For lack of a better term, I call myself a libertarian with a small-l.  I do not, despite this term, feel much allegiance to the formal Libertarian Party.  I tend to like their platforms more than those of the major parties, but many of their candidates seem unserious to me.

Today I got my first press release from the local LP candidate for Governor.  And what is it about?  The LP candidate jumps into the fray on the Arizona 9/11 Memorial:

Libertarian nominee for Governor, Barry Hess weighs in on the only
thing Democrat Janet Napolitano and Republican Len Munsil can find to
disagree about - the great Arizona 9-11 memorial debate.

When asked for his input, Mr. Hess replied, "It doesn't surprise me
that this is all they can come up with to distinguish themselves as a
reason to vote for them.  The problem is that neither one of them ever
seems to posses the ability to go to the root of the issue.  The very
first thing they should have determined is, what is it?  Is it a
tribute to the innocent lives lost on 9-11, or is it a memorial of the
event?
                
If it is a tribute to the innocent
dead, then the politically-charged slogans are clearly misplaced and
should be removed.  If it is a monument memorializing a tragic event
that is surrounded by a multitude of dubious official explanations of
what actually happened when innocent lives were caught up in something
bigger than them and lost in a politically-induced inevitability, then
the outrage expressed in the slogans is well, and rightfully placed.
                
Why didn't the Republican or the Democrat first establish what it is
supposed to be?  Because they are both just using it as a soapbox, and
it's shameful they would each use it in an attempt to garner votes.
The public really should reflect on the fact that if these are the best
candidates the Republican & Democrat parties could come up with,
maybe neither is their best option for Governor."

When I read the first line, I thought Mr. Hess was going to rightly criticize the major party candidates for focusing on trivia.  But no, he jumps right in himself.  I'm not a big fan of how the memorial turned out, but while the memorial was officially sanctioned by the governor, it was at least all privately funded.  We seem to have many other issues in a state where the government is building the new Berlin Wall that I would think a good libertarian would be more concerned about.

Here would have been my response:

"While the major party candidates focus all their attention on the content of a single
piece of privately-funded sculpture in downtown Phoenix, Warren Meyer criticized both
candidates for their support of a government-funded half-billion dollar monument to
mediocre football and corporate welfare out in Glendale."

Postscript:  By the way, this government-funded facility is used for its core purpose just 11 days out of the year  (Fiesta Bowl, 2 pre-season games, 8 regular season games) which gives it an occupancy  of 3%.  Supporters will argue that it is used for other events (e.g. a home and garden show) but these events could be held at existing facilities costing 1/10 the amount of Glendale Stadium.  To somehow take credit for these other events is disingenuous, because their move to Glendale likely cannibalizes the revenue of some other government facility, like the convention center.  Most of the cost of the stadium -- visitor amenities, locker rooms, sliding roof, sliding grass floor, seats, etc -- are for football only.  More about why I hate the public funding of stadiums here.

This is one of the oddest false dichotomies I have seen in a long time:

Since 1992, the National Election Study
has asked respondents four questions that collectively make up an
"authoritarian index." The four questions ask you to specify which of
two attributes you value more in children:

1. Independence vs respect for elders

2. Self-reliance vs. obedience

3. Curiosity vs. good manners

4. Being considerate vs. being well behaved

The first item in each pair marks you as less
authoritarian and the second item marks you as more authoritarian.
After you've answered all four, the scores are added up and normalized
on a scale from 0 to 1, with 1 being the most authoritarian.

It will come as no surprise that authoritarians tend to vote
Republican. What may surprise you, though, is that this has only become
true in recent years.

I am sure this does not "surprise" Kevin Drum's leftish readers, since they so want to think of themselves as freedom- and individual-rights-loving vs. the mean old Republicans, whom I certainly have no desire to defend on this score.

But are these weird false dichotomies or what? 

Why is independence the opposite of respect for elders?  Isn't this like saying Kleenex is the opposite of pudding?  Isn't the opposite of "independence" actually "the desire to mooch off other people"?  Why isn't the opposite of "self reliance" in fact the "desire to have the government run your life for you?"  I mean, I personally have strived (striven??) to have my kids simultaneouly be both curious and have good-manners. 

And is Drum really trying to argue that Democrats are all about the stuff on the left side while Republicans are for all the stuff on the right?  Who in the world is going to believe that the folks who, for example, support Social Security because they think individuals can't be trusted to manage their own retirement savings, are the spokesmen for "independence" and "self-reliance."  As I said in my comments to the post:

As a libertarian, I am thrilled to see you championing the cause of anti-authoritarianism and self-reliance.  I am sure that this means
that we will soon see your opposition to telling people what wages are
acceptable, what features their car must have, where they can and can't
smoke, who they can or can't hire and fire, where they can get their
health care, what schools they are forced to fund, how much fat can be
in their diet, what drug risk trade-offs are acceptable, how steep
their wheelchair ramps have to be, how energy efficient their
appliances have to be, what minimum percentages of minorites must be at
their school in their workforce, why they shouldn't be allowed to shop
at Walmart or buy from Chinese manufacturers, what lisence they need to
braid hair or to sell caskets, etc.

On a number of occasions, I have pointed to the strong echos of Italian-style fascism in Roosevelt's New Deal, particularly in the National Recovery Act, which was practically a copy of Mussolini's political-economic model.  David Gordon reviews a new book called the Three New Deals which delves deeper into this parallel development on matters of state control of the economy between Roosevelt, Hitler, and Mussolini.

Roosevelt never had much
use for Hitler, but Mussolini was another matter. "'I don't mind
telling you in confidence,' FDR remarked to a White House
correspondent, 'that I am keeping in fairly close touch with that
admirable Italian gentleman'" (p. 31). Rexford Tugwell, a leading
adviser to the president, had difficulty containing his enthusiasm for
Mussolini's program to modernize Italy: "It's the cleanest "¦ most
efficiently operating piece of social machinery I've ever seen. It
makes me envious" (p. 32, quoting Tugwell).

Why did these
contemporaries sees an affinity between Roosevelt and the two leading
European dictators, while most people today view them as polar
opposites? People read history backwards: they project the fierce
antagonisms of World War II, when America battled the Axis, to an
earlier period. At the time, what impressed many observers, including
as we have seen the principal actors themselves, was a new style of
leadership common to America, Germany, and Italy.

Once more we must avoid a
common misconception. Because of the ruthless crimes of Hitler and his
Italian ally, it is mistakenly assumed that the dictators were for the
most part hated and feared by the people they ruled. Quite the
contrary, they were in those pre-war years the objects of considerable
adulation. A leader who embodied the spirit of the people had
superseded the old bureaucratic apparatus of government.

He also gives us a good hint as to why so many people on the left today are trying to find way to paint the American economy as somehow broken or at some historical low point:

He concludes the book by recalling John T. Flynn's great book of 1944, As We Go Marching.

Flynn, comparing the New Deal with fascism, foresaw a problem that still faces us today.

But willingly or
unwillingly, Flynn argued, the New Deal had put itself into the
position of needing a state of permanent crisis or, indeed, permanent
war to justify its social interventions. "It is born in crisis, lives
on crises, and cannot survive the era of crisis"¦.

How can you resist that title?  I took this from Stephen Ambrose's wonderful Citizen Soldiers:

Patton entered the town [of Bitburg, Germany] from the south while the fighting was still going on at the northern edge of town.  "In spite of the fact that the shells were falling with considerable regularity, I saw five Germans, three women and two men, re-roofing a house.  They were not even waiting for Lend-Lease, as would be the case in several other countries I could mention [including France]."   Dozens of GIs make the same point:  in Italy and France, the residents left the rubble in the streets, waiting for someone else to clean it up, while in Germany the residents were cleaning up as soon as the battle passed their villages.

Does this make anyone else think of Katrina and New Orleans?  I guess they don't call it the French Quarter for nothing.

I just don't know why conservatives are so afraid to let folks like Khatami speak in the US.  Sure, he is a lying dictatorial human-rights-suppressing scumbag, but so what?  Its good to let people like this speak as much as they want.  They always give themselves away.  There were counter-protests and lots of debate about Iran in the news and on the nets, and that is as it should be.

I suppose conservatives real fear is that the press will, as they sometimes do, throw away their usual skepticism and cynicism and report his remarks as if they were those of a statesman rather than a thug on a PR mission.  But that's a different problem, and not a good enough excuse to suspend free speech, even for a man who granted it to no one else in his own country.  (I have never bought into the "media bias" critique, either conservative or liberal, in the press, because this seems to imply some active conspiracy exists to manage the news to some end.  Rather, I think it is more fair to say that reporters tend to apply too little skepticism to stories with which they are sympathetic.  For example, many reporters think homelessness is a big problem, so they were willing to uncritically accept inflated and baseless numbers for the size of the homeless population, numbers they would have fact-checked the hell out of if they had come from, say, an oil company to whom they are unsympathetic or skeptical of.)

On the same topic, I don't know why conservatives are so worried about this story of an increase in students from Saudi Arabia.   It used to be that we had confidence that people from oppressive countries would have their eyes opened by living in the US.  We have always believed that intellectually, freedom was more compelling than dictatorial control, and would win over hearts and minds of immigrants.  Our foreign policy with China, for example, is counting on engagement to change China.  Have we given up on this?

I hate the term "pro-business."  In my mind, it helps to define what is wrong with the political choices we are presented with in this country.  All of us in civics class were taught the statist "heads I win, tails you lose" political spectrum from left to right.  On this spectrum, everyone is in favor of government intervention and the sacrifice of one group of people to another.  The only thing that varies across the scale is who is the beneficiary of the plunder and the targeted areas of intervention.  For years, most of the politicians who have called themselves "pro-business" were not free market capitalists -- they spent much of their time in office sending their businessman-buddies slices of pork, zoning variations, special permission to trash other people's property (e.g. via pollution) etc.

Beyond the fact that we small government libertarians and anarcho-capitalists are given no spot on the civics class political spectrum, I have always been frustrated at being lumped together with "pro-business" politicians, and have been asked to defend (which I won't and can't) various subsidies and corporate welfare.  An example of my attacks on this type of corporate welfare crap are here and here.

So, without further comment, I present this great except from an article by Gary North of the Mises Institute:

The idea that businessmen are strong defenders of the free
enterprise system is one which is believed only by those who have never
studied the history of private enterprise in the Western, industrial
nations. What businessmen are paid to worry about is profit. The
problem for the survival of a market economy arises when the voters
permit or encourage the expansion of government power to such an extent
that private businesses can gain short-term profits through the
intervention into the competitive market by state officials. Offer the
typical businessman the opportunity to escape the constant pressures of
market competition, and few of them are able to withstand the
temptation. In fact, they are rewarded for taking the step of calling
in the civil government.

The government's officials approve, but more to the point, from the
point of view of the businessman's understanding of his role,
shareholders and new investors also approve, since the favored
enterprise is initially blessed with increased earnings per share. The
business leader has his decision confirmed by the crucial standards of
reference in the market, namely, rising profits and rising share prices
on the stock market. No one pays the entrepreneur to be ideologically
pure. Almost everyone pays him to turn a profit.

This being the case, those within the government possess an
extremely potent device for expanding political power. By a
comprehensive program of direct political intervention into the market,
government officials can steadily reduce the opposition of businessmen
to the transformation of the market into a bureaucratic, regulated, and
even centrally-directed organization. Bureaucracy replaces
entrepreneurship as the principal form of economic planning.
Bureaucrats can use the time-honored pair of motivational approaches:
the carrot and the stick. The carrot is by far the most effective
device when dealing with profit-seeking businessmen.

Those individual enterprises that are expected to benefit from some
new government program have every short-run financial incentive to
promote the intervention, while those whose interests are likely to be
affected adversely "” rival firms, foreign enterprises, and especially
consumers "” find it expensive to organize their opposition, since the
adverse effects are either not recognized as stemming from the
particular government program, or else the potential opponents are
scattered over too wide an area to be organized inexpensively. The
efforts of the potential short-run beneficiaries are concentrated and
immediately profitable; the efforts of the potential losers are
dispersed and usually ineffective.

Many marketing analysts will argue that the famous Pepsi challenge advertisements helped Coke as much as Pepsi, by defining it in consumers minds as the standard to which other beverages should be compared, and by giving it nearly as many mentions to support name recognition as Pepsi gave itself.   The GAO reports that anti-drug advertising may be encountering the same type failure:

A Government Accountability Office report on research tracking the
impact of the federal government's $1.2 billion anti-drug ad campaign concludes
that "the evaluation provides credible evidence that the campaign was
not effective in reducing youth drug use, either during the entire
period of the campaign [1998 to 2004] or during the period from 2002 to
2004 when the campaign was redirected and focused on marijuana use."
The GAO adds that "exposure to the advertisements generally did not
lead youth to disapprove of using drugs and may have promoted
perceptions among exposed youth that others' drug use was
normal....Westat's evaluation indicates that exposure to the campaign
did not prevent initiation of marijuana use and had no effect on
curtailing current users' marijuana use, despite youth recall of and
favorable assessments of advertisements." In fact, during some periods
and for some subgroups, exposure to the ads was significantly
associated with an increased tendency to smoke pot.

I was excited this week to find a copy of the original 1968 version of Paul Ehrlich's "The Population Bomb."  I have been itching to find such a copy so I can demonstrate just how wrong and wrong-headed his zero-sum limits-to-growth thinking is. 

Now, one may ask, why even bother?  You could argue that thoughtful folks have dismissed Paul Ehrlich and his ilk for years, particularly after Julian Simon owned him in their famous bet.  However, I find two compelling reasons to take the time to fisk a forty-year-old book:

• Paul Ehrlich and his brethren actually have not been disowned by much of the intelligentsia.  The media still breathlessly reprints Ehrlich's and his cohorts' predictions of disaster, despite the fact that all their past predictions have utterly failed to come true.
• The fundamental mistakes he makes in his analysis are constantly repeated today.  These mistakes include:
• Static analysis - blind projection of trendlines without any allowance for individuals actually doing something to alter those trends, particularly in response to pricing signals.  This leads not only to predictions of disaster, but to the consistent conclusion that only governments coercing individuals on a massive scale can avert dire consequences for humanity
• Zero confidence in humanity - every analysis implicitly contains the assumption that we will never know how to do more than we know how to do today.  Kind of an anti-Kurzweil mentality
• Zero-sum economics - the common misconception that wealth can only come at the expense of poverty elsewhere.

I have not had a chance to dig into it, but I will leave you with this tasty teaser from the back cover:

MANKIND'S INALIENABLE RIGHTS

1. The right to eat well
2. The right to drink pure water
3. The right to breathe clean air
4. The right to decent, uncrowded shelter
5. The right to enjoy natural beauty
6. The right to avoid regimentation
7. The right to avoid pesticide poisoning
8. The right to freedom from thermonuclear war
9. The right to limit families
10. The right to educate our children
11. The right to have grandchildren

Well, that seems to cover it.  Anyone want to bet I don't find anything about property rights in this book?  Gotta go read the book now, since I have so many questions now:  Is it OK if someone kills me with a conventional bomb rather than a nuclear one?  Can I sue McDonald's on the basis that yesterday's lunch was a violation of my right to eat well?  And just how do I force my kids to have sex and procreate?  I can't wait to find out.

I am way overdue promoting the Carnival of Liberty.  This week it is hosted by Target Centermass, and it has a nice selection of posts related to free markets and individual rights.  As the Carnival of the Capitalists has shifted more towards investing and personal finance submissions, this newer carnival has lots of good posts on fundamental issues of Life, Liberty, and Property.

A while back I lamented that so few people actually strive to maintain a consistent personal philosophy, rather than a hodge-podge of isolated political views.  In this context, I thought the profile of "progressive" Markos Moulitsas Zuniga (the Daily Kos) by the sympathetic progressive-liberal Washington Monthly was interesting.  For example:

The younger-than-35 liberal professionals who account for most of his
audience seem an ideologically satisfied group, with no fundamental
paradigm"”changing demands to make of the Democratic Party. They don't
believe strongly, as successive generations of progressives have, that
the Democratic Party must develop more government programs to help the
poor, or that racial and ethnic minorities are wildly underrepresented,
or that the party is in need of a fundamental reform towards the
pragmatic center"”or at least they don't believe so in any kind of
consistent or organized manner. As this generation begins to move into
positions of power within the progressive movement and the Democratic
Party, they don't pose much of a challenge on issues or substance. So
the tactical critique takes center stage.
Moulitsas's sensibility suits his generation perfectly. But it also
comes with a built-in cost. Moulitsas is just basically uninterested in
the intellectual and philosophical debates that lie behind the daily
political trench warfare. By his own admission, he just doesn't care
about policy. It's here that the correlation between sports and
politics breaks down. In sports, as Vince Lombardi is said to have put
it, "Winning isn't everything, it's the only thing." When the season is
over, you hang up your cleats and wait for the next season. But in
politics, that's not the case"”you have to govern, and if you don't
govern well, you won't get reelected. So while tactics and message are
crucial, most voters will ultimately demand from politicians ideas that
give them a sense of what a party is going to do once in power. Wanting
to win very badly is an admirable and necessary quality in politics,
and Moulitsas is right that Democrats have needed it in greater
quantity. But it is not really a political philosophy.

This article tends to reinforce a notion I have had of late, that is a trend toward political party as fashion statement.  For example, I get the impression that many of Kos's audience call themselves Democrats more because of the statement they think it makes about themselves rather than a thought-out comparison of the various party's positions and how they stack up vs. their own thought-out philosophy.  I am starting to sense that people choose parties for their brand-image rather than for the actual positions or people who represent them.  Democrat might mean "I am smarter than you", "I am with-it and cool", "I am dynamic" while Republican might mean "I am patriotic", "I am moral", "I am level-headed".  By the way, don't send me mail for the wrong reasons -- I am not saying the parties actually consistently meet these images, I am just saying that a large number of people seem to adopt their party to make these kind of statements about themselves.

Postscript:  If you think I am exaggerating, then someone needs to explain to me how a Democratic president can send us to war in Bosnia with Republicans opposing and then have a Republican president send us to war in Iraq with Democrats opposing when at the 40,000 foot level they are the same freaking war (US intervention to unseat a genocidal dictator with at best unclear UN mandate and opposition from key European nations).  I keep coming back to the simplistic explanation that the default political position is "I got my guy's back no matter what, and you guys suck no matter what", which I admit effectively compares the current political discourse to the chants at a Michigan-Ohio State football game, but I'm going to go with it.

PPS-  As a good libertarian, though, I am happy to know that young progressives are not necessarily pushing for more state control.

I wanted to stream digital music from my main computer in my home office to my main stereo system in the den.  After some research, I chose version 3 of Squeezebox from Slim Devices.  They have taken an open architecture approach that I like, and have a proven history of steadily improving their product.  Most true audiophiles I sought advice from use this device (this is an audio-only device, no video or jpegs streamed).  I am currently converting my entire CD collection to lossless FLAC format audio files using EAC, which seems to be the audiophile favorite for ripping (and it is free).  FLAC compression seems to result in albums 250-450 meg, meaning my 400 CD's will need about 140 gig, which I have available.  I will ditch most of my mp3 files, saving only a subset for iPod rotation.  New mpg files, or whatever rules in the future, can be made directly from the FLAC.

The box itself is small and well-designed.  Setup was a breeze, once I fixed a setting on my firewall.  Now I can point my remote at this box and scroll easily through my music collection (along with a number of Internet radio stations).  No flipping through CD's or yelling at the kids for not alphabetizing them right.  You can browse or search by title, artist, or album.

In addition to controlling it with a remote, I can control it with any computer on the network.  Right now, I choose songs on a laptop in the kitchen, which sends music from the computer in the office to the amp and speakers in the den.  Awesome.  Their web site says that you can also browse your music and choose what's playing from a web enabled PDA, but I have not tried it yet.

Here is the blogger vanity part:  In addition to an array of other screensavers, you can have the device connect to any online RSS feed and scroll the contents marquee-style across the screen.  All day I have had my blog feed scrolling across the device, interspersed with NY Times and ESPN headlines.

OK, I confess, I enjoy Las Vegas.  I mean, after a while, the smoke and the noise and the weirdness make me ready to go home, but I do enjoy an evening walking up and down the strip, checking out the sites and the people, followed by a long night of blackjack and free drinks.

Vedran Vuk looks at the government run casinos in Canada in comparison with their US counterparts, and is unimpressed.

A policy so offensive resides in Niagara Falls' casinos that I shiver at the
thought of it. Of course, I speak of the policy of no "free" alcoholic
beverages. Free drinks in casinos is something that we have come to take for
granted in our free-market-driven casino industry.

Many people go to casinos exclusively for the free drinks. But of course we
can't have anything enjoyable in socialism. One beer is US$7. Furthermore, the
classic cheap and delicious casino buffet was nowhere to be seen. The buffet had
few choices, tasted like roasted nutria, and cost about US$12....

This can be most seen at the Texas Hold 'Em Poker tables at which I had the
pleasure of waiting an hour and a half before being permitted to play. There are
ten tables, seven dealers, and four people managing the waiting list.

An inefficiency such as this would never go on long in a real casino. What is
the purpose of the four managers when all the casino needs is dealers?! Is there
even a need for one manager of the waiting list? God forbid that the
commie casino would do anything that might be efficient and profit
maximizing.

With no shareholders to answer to and no real competition, there is no
incentive to get more dealers instead of waiting-list managers. The bloated
staff of Canada's commie casinos is typical of the kind of patronage schemes
that infect all government enterprises. The end result is me waiting for ninety
minutes, during which time the casino is making no money from me.

While it comes as no surprise to me, Republicans are making it official:  After dallying with small government notions in the eighties and nineties, under George Bush they are refocusing themselves on statism.  Going forward, Republicans see themselves locked in an arms race with Democrats over who can spend more and advocate more statist controls.

This news comes to us via conservative David Brooks, via Volokh:

[Brooks] rejects Bartlett's charge that Bush has betrayed conservatism. According to
Brooks, "Bush hasn't abandoned conservatism; he's modernized and saved it." As
Brooks tells the story, "conservatism was adrift and bereft of ideas" until
President Bush came along.

Almost single-handedly, Bush reconnected with the positive and
idealistic instincts of middle-class Americans. He did it by recasting
conservatism more significantly than anyone had since Ronald Reagan. He rejected
the prejudice that the private sector is good and the public sector is bad, and
he tried to use government to encourage responsible citizenship and community
service. He sought to mobilize government so the children of prisoners can build
their lives, so parents can get data to measure their school's performance, so
millions of AIDS victims in Africa can live another day, so people around the
world can dream of freedom.

"Government should help people improve their lives, not run their lives,"
Bush said. This is not the Government-Is-the-Problem philosophy of the mid-'90s,
but the philosophy of a governing majority party in a country where people look
to government to play a positive but not overbearing role in their lives.

Barf.  The last sentence contains a pure contradiction:  There is no way for government to play any role, positive or negative, without being overbearing, at least to some.  There is no way for the government to improve some lives without running others.

Despite what politicians may argue, the government has only one unique quality no one else can match.  They are not uniquely smart, or uniquely capable, or uniquely compassionate, or uniquely efficient, or even uniquely able to run large organizations.  Their only unique capability is to deal with people by force, and to use force and the threat of force and imprisonment to compel individuals to do things they would no choose to do themselves.

This unique ability to use force is necessary to the government in fulfilling its core roles of protecting us from the use of force from outside our borders (military) and protecting its citizens from the use of force or fraud by other citizens (police and courts).  When the government uses its unique ability to coerce in other spheres, there are always winners and losers.  That is because by definition the government is using force to cause an outcome or a decision that people would not have made on their own, based on their own self-interest and of their own free will.  So when politicians blithely say things like "help people improve their lives", what they ALWAYS mean is using force to compel someone to do something they would not have to do in a free society.   

For this reason, there is no such thing as having the government "play a positive but not overbearing role in their lives".  The best you can hope for with such an activist government system is to hope that the government plays a net-positive role in your life, while being overbearing to others.  Which pretty much sums up why politics are so high stakes today - if government is about sacrificing one group to another, I want my guy in there so he can be overbearing to some other group for the benefit of mine.

I dealt with these same themes a couple of days ago in this post, where I said "the entire Republican and Democratic platform each boil down to 'we
support government intervention except where our major donors oppose
it'".  My summary statement on the full range of government interference with free individual decision-making is here.

Update:  While Marginal Revolution is still optomistic for libertarians, they point out that "progressives" see the opportunity now for real expansion of socialism in this country

Democrat Matt
Yglesias writes:

If you did have a progressive president, there's no longer a
particularly large amount of popular resistance to expanding the activist state.
Even most Republicans don't especially care about small government.

It may surprise some readers to know that I am a conflict avoider when it comes to arguing politics in social gatherings.  There are a variety of reasons for this, not the least of which is often a desire to escape substantive issues in the off-hours of my life. 

However, one important reason I don't like discussing current events or other weighty issues with people (particularly in groups) is that many of the people I meet don't really have an underlying philosophy, but rather a hodge-podge of political positions stitched together from a variety of sources.  This makes it almost impossible to have a substantive conversation with them.

When I have a disagreement with someone on matters of politics or economics or whatever, there are really only two satisfying outcomes:

1. To discover that we share the same basic premises and philosophy, but have reached different conclusions from these premises.  Trying to figure out where we diverge is an interesting and generally informative exercise
2. To discover that we have very different fundamental premises or assumptions about the nature of existence.  While perhaps not satisfying, this can at least save a lot of useless discussion.  For example, if you believe that we are all born with an obligation or requirement, kind of like original sin, to provide our fellow man with material comforts, while I do not, there is not a lot of point in the two of us arguing about redistributive taxation.

Unfortunately, it is impossible to reach either of these conclusions with people who have no underlying philosophy that drives their ethics and political positions.  I remember one discussion with a woman who was taking all all comers over abortion, defending a woman's right to choose for her body.  So I asked her if she was therefore opposed to the government ban on breast implants.  "No, that's different, those are totally frivolous.  Women shouldn't have breast implants, its demeaning".  But, I asked,  isn't the FDA telling women what they can and can't put in their bodies.  "But its necessary, she says, because people don't always know enough to make the right decisions".  So, I follow-ed up, its part of the FDA's job to hold up drugs like the morning-after pill?  "No, that's just christian-right bullshit".

How can you argue with this, when there is no consistent underlying philosophy?  Essentially her position boils down to "I support government intervention except when I oppose it".  And this is not unusual.  In fact, the positions she took are entirely consistent with the positions on these same issues taken at the NOW web site.  Hell, the entire Republican and Democratic platform each boil down to "we support government intervention except where our major donors oppose it".

The reason for this brief, really tangential rant was this morning when I was reading through some recent emails from a trade group I belong to called the NACS, or the National Association of Convenience Stores.  Because of changes in the market, the NACS represents a large percentage of the gasoline retailers in this country.  In the last two weeks, the NACS has:

1. Opposed government "price gouging" regulations aimed at how gas stations price their product.
2. Advocated government intervention in the pricing of credit card processing services, arguing that gas stations are getting gouged by banks today

Could anything be more stark?  There are no values here, no philosophy, no core assumptions about the nature of man and man's existence.  Just a bald desire to be left alone yourself, but have the government intervene in your favor with everyone you do business with.

PS:  Credit card processing rates piss me off as well, but you don't see me asking for the government to intervene.

Cafe Hayek points out that Rep. Earl Blumenauer wants to make sure that New Orleans is rebuilt with a strong urban planning vision.  Since Mr. Blumenauer represents Portland, Oregon, the city beloved of planners that has been planned into having some of the highest priced housing and worst traffic of any city of its size in America, I presume he wants something similar for New Orleans (Portland was also the city that thought it had solved global warming).

Here is my urban plan for New Orleans:  Every person who owns property can build whatever the hell they want on it.  If other people want something else built on that property, and value this outcome enough, they can buy the property from its owner.  This novel concept is called "private property rights" and falls under the broader category of what are called "constitutionally protected individual rights" or even more broadly, "freedom".  It is a concept that used to be taken for granted in this country and but now is seldom even taught in schools. 

For the property owned by the government, well, they are going to build whatever dumbshit thing they want to on it anyway, so I'll just root for their choice to be fairly inexpensive.  We here in Phoenix built a half-billion dollar stadium for the for-god-sakes Arizona Cardinals that is used for its core purpose 3 hours a day for 8 days a year.  It couldn't be worse, could it?

Technorati Tags:  Katrina, Economics

I gave my take on why this Katrina disaster does not somehow validate statist technocracy, as has been argued, here and here.  I am willing to admit that Colby Cosh says it better:

So let's just recap briefly, shall we? We've got a million or so human beings
living in a low-lying area created in the first place by government engineers.
The local government of New Orleans, apprised of an approaching storm, summarily
orders everybody out of the city about 36 hours too late without lifting a
finger to provide the means to do so. At the last minute it occurs to somebody
to herd those left behind into a large government-built structure, the
Superdome; no supplies are on hand for its inhabitants, and the structure itself
is rendered--according to the government's assessment--permanently useless. Even
though the storm misses the city, government-built levees fail in unforeseen and
catastrophic ways. Many of the New Orleans cops opportunistically quit their
jobs, many more simply fail to show up for work, others take the lead in looting
supplies from storm-stricken neighbourhoods, and just a few have the notable
good grace to shoot themselves in the head. The federal government announces
that assistance is on its way, sometime; local and state authorities--who have
the clear-cut burden of "first response" under federal guidelines nobody seems
to have read--beg for the feds to hurry up while (a) engaging in bureaucratic
pissing-matches behind the scenes and (b) making life difficult for the private
agencies who are beating the feds to the scene. Eventually the federal
government shows up with the National Guard, and to the uniform indignation and
surprise of those who have been screaming for it, the Guard turns out to have a
troubling tendency to point weapons in the general direction of civilians and
reporters. I'm not real clear on who starts doing what around mid-week, but the
various hydra-heads of government start developing amusing hobbies; confiscating
guns from civilians, demanding that photographers stop documenting the aftermath
of America's worst natural disaster in a century, enforcing this demand by
seizing cameras at gunpoint, shutting down low-power broadcasting stations in
shelters, and stealing supplies from relief agencies and private citizens. In
the wake of all this, there is probably no single provision of the U.S.
Constitution left untrampled, the Posse Comitatus Act appears destined for a
necktie party, and the 49% of Americans who have been complaining for five years
about George W. Bush being a dictator are now vexed to the point of utter
incoherence because for the last fortnight he has failed to do a sufficiently
convincing impression of a dictator.

So, unsurprisingly, Paul Krugman and others are arguing that Katrina is a vindication for large-government liberals  (One would think we would love GWB, who has been a better large-government builder than Clinton, but that is another topic).  Anyway, I think it is worth thinking for a second about the federal government and hurricanes.  I will divide the post into two parts:  Preparedness and Response, and show that in fact, large central-government thinking is at the heart of many of the problems that are being faced.

Disaster Preparedness
I cannot come up with any justification for the US Government taking the lead role in local disaster preparation or protection.  The types of disasters are just too wide and varied:  Tidal waves in Hawaii, earthquakes in LA, mudslides in San Diego, fires in the west, tornados in the plains, hurricanes on the gulf coast, blizzards in the north, etc. etc.  And why would anyone want the feds taking over their local disaster plans anyway?  Do you really want to rely on the hope that a national organization has the same priority on your local risks that you do?  The resources, the knowledge, and the incentive to prepare for emergencies are all local, and such preparation should be done as locally as possible.

The only reason locals would even tolerate federal involvement in disaster preparedness is $$$.  Every local politician loves federal dollars.  And even a hardcore libertarian like myself is probably willing to admit that some of the preparedness investments truly are public goods.  Take levees for example.  I am willing to have them as public goods.  However, no one can convince me that levees whose sole purpose in life is to protect New Orleans are federal public goods.  Why do I need to pay for them?  Why don't New Orleans people bear the full cost of their choice to live below sea level?  My family chooses to live in a place that is relatively free of disasters (though if the Colorado River dries up you can come visit our bleached bones as we are consumed by the desert).  Why should I subsidize people's choice to live in a location that sits in mother nature's cross-hairs?

But beyond my cantankerous libertarian desire not to subsidize you, those of you who live in disaster areas should demand to take responsibility for your own preparedness.  The feds are never going to value your safety the same way you do (as evidenced in part by the 40-year ongoing fight for levee funding in New Orleans) and are never going to understand your local problems like you do.  In fact, the illusion of federal responsibility for disaster preparedness is awful.  It gives irresponsible local authorities an excuse to do nothing and a way to cover their ass.  It creates a classic moral hazard and sense of false security.

I have resisted saying this for a week or so out of respect for the plight of individuals still struggling in Louisiana and Mississippi:  If one divides the world into the ants and the grasshoppers (per the classic fable), New Orleans and Louisiana would make the consensus all-grasshopper team.  They have lived in a stew of bad and corrupt government for years, mixed with a healthy dose of Huey Long-style patronage that created expectations that "you would be taken care of".  Their state officials have for years not only been grasshoppers, but have demanded that they be supported by the ants, and seem lost and confused that the ants didn't protect them somehow from Katrina.

Disaster Response
Its probably good to have a national body that can help focus resources from around the nation onto local regions that have been devastated by some disaster.  But here is the key point.  The federal government itself is never, ever going to have the resources stockpiled somewhere to handle a disaster of this magnitude.  They can't have the doctors on staff, the firemen waiting around, the medical supplies in a big warehouse, a field full of porta-potties ready to deploy, etc. etc.  There is just too much needed, and the exact needs are too uncertain.

What they can do, though, is understand that in an emergency, Americans from all over the country are always willing to help, to volunteer their time or skills or money to aid the victims.  More than anything, the Fed's role needs to be to remove barriers from these resources gettting to the the right places as fast as possible, and to backstop these private efforts with federal resources like the military.  Take the example of refugees.  There are over a million from this hurricane.  Of those, at least 90% will be helped privately, either from their own funds or friends or family or private generosity.  Probably more like 95+%, if you include resources offered by local governments.  The feds role then is to help the remaining 5% find food and shelter.  Note, though, that the problem is not dealing with 100% of the problem, it is dealing with the 5% the leaks through bottom-up efforts, while removing barriers that might stand in the way of bottom-up efforts helping the other 95%.

Unfortunately, the feds don't think this way.  Most feds, including Krugman type large government folks, distrust private and bottom up efforts.  They are top-down technocrats, putting an emphasis on process and control rather than bottom-up initiative.  I wrote much much more about the failed technocratic response to Katrina here.  I think one can argue the reason that the refugee situation for 95% of the people worked well is that these folks quickly got out of the sphere of influence of the FEMA folks -- in other words, they got far enough away to escape FEMA control.  Can you imagine what a total disaster would be occurring if FEMA tried to control the relocation of all 1 million people?  But on the LA and MS gulf coast, FEMA is exercising total control, actually preventing private initiative from helping people, and everyone is the worse for it.  I encourage you to read more in this post about valuing control over results, but I will leave you with this one anecdote that sums up the big government technocratic top-down world Mr. Krugman longs for:

As federal officials tried to get some control over the deteriorating
situation in New Orleans, chaos was being replaced with bureaucratic rules that
inhibited private relief organizations' efforts.

"We've tried desperately to rescue 250 people trapped in a Salvation Army
facility. They've been trapped in there since the flood came in. Many are on
dialysis machines," said Maj. George Hood, national communications secretary for
the relief organization.

"Yesterday we rented big fan boats to pull them out and the National Guard
would not let us enter the city," he said. The reason: a new plan to evacuate
the embattled city grid by grid - and the Salvation Army's facility didn't fall
in the right grid that day, Hood said in a telephone interview from Jackson,
Miss.

"No, it doesn't make sense," he said.

Technorati Tags:  Katrina, Economics

Preface:  Over the years, technocrats have always had a distaste for capitalism.  Their desire has always been the curb to bottom-up disorder and inherent chaos of succesful capitalism with top-down order and control.  In the early half of the 20th centruy, the leading economic argument against capitalism was technocratic-fascist:  That capitalism and competition were wasteful and disorderly and should be replaced with a more orderly state control.  The ultimate legislative result of this thinking was FDR's National Industrial Recovery Act, his emulation of Mussolini-style corporate fascism which was fortunately struck down by the Supreme Court.

While numerous large-scale failures of state economic control have mostly beaten back the technocratic argument, we can still see the fundamental failure of this approach in the last few weeks with the government's handling of the Katrina recovery:

A few days ago I had thoughts on top-down vs. bottom-up approaches to hurricane relief.  After watching the relief effort over the last couple of days, I am more convinced than ever that part of the problem (but certainly not all of it) with the relief effort is the technocratic top-down "stay-in-control" focus of its leadership.  Take stories like this:

Lots of
people including yours truly have volunteered to bring (including food,
generators, food, etc., to be self sufficient for a week or so) the most
important thing which is a boat but have been told NO under no uncertain terms.
"My" town is under water, people are in critical condition, and I have skill
sets and assets - including a boat which will come out of the hole in 14 inches
of water - and we are being denied the opportunity to help. And quite frankly,
that REALLY PISSES ME OFF.

And this:

A visibly angry Mayor Daley said the city had offered emergency,
medical and technical help to the federal government as early as Sunday
to assist people in the areas stricken by Hurricane Katrina, but as of
Friday, the only things the feds said they wanted was a single tank
truck.
[...]
Daley said the city offered 36 members of the firefighters' technical
rescue teams, eight emergency medical technicians, search-and-rescue
equipment, more than 100 police officers as well as police vehicles and
two boats, 29 clinical and 117 non-clinical health workers, a mobile
clinic and eight trained personnel, 140 Streets and Sanitation workers
and 29 trucks, plus other supplies. City personnel are willing to
operate self-sufficiently and would not depend on local authorities for
food, water, shelter and other supplies, he said.

While turning down offers to help, when everyone agrees not enough is being done, may seem unthinkable, these are actually predictable outcomes from a bureaucracy of technocrats.  Technocrats value process over results, order and predictability over achievement.  More important than having problems fixed is having an ordered process, having everything and everyone under control.  In this context, you can imagine their revulsion at the thought of having private citizens running around on their own in the disaster area trying to help people.  We don't know where they are!  We don't know what they are doing!  They are not part of our process!  Its too chaotic! Its not under control!

Nearly everyone who is in government has a technocratic impulse - after all, if they believed that bottom up efforts by private citizens working on their own was the way to get things done, they would not be in government trying to override those efforts.  But most emergency organizations are off the scale in this regard.  99% of their time, they don't actually have an emergency to deal with - they are planning.  They are creating elaborate logistics plans and procedures and deployment plans.  Planners, rather than people of action, gravitate to these organizations.  So, once a disaster really hits, the planners run around in circles, hit by the dual problem of 1) their beautiful plans are now obsolete, since any good general can tell you that no plan ever survives first contact with the enemy and 2) they are by nature still planners, trying to get order and process underway and create a new updated plan, rather than just getting every possible resource out there fixing the dang problem.

The army has had to deal with this conundrum for years.  How do you have soldiers who are good planners before a battle, but men of action and initiative once the battle is underway?  How do you run a fundamentally top-down organization such that when it matters, individuals will take the initiative to do what needs to be done?  Its a really hard problem.

Unfortunately, I fear that the lessons from this hurricane and its aftermath will be that we need more top-down rules and authority rather than less.  It is the technocrats on the sidelines who are most appalled by the screw-ups, and will demand more of whatever next time.

Here is an example of what I think we should do instead.  Let's accept that we can't plan for everything, can't have every resource stockpiled for an emergency, and that our biggest resource is our private citizenry.  Let's provide rules of engagement for 3rd parties to come into the disaster area and help with minimum supervision.  There might be different rules for trained rescue people and untrained private citizens.  Here is an example of the type of thing that might work better:

Every private citizen with a boat larger than X and a draft less than Y who would like to help can bring their boat and three days food and clothing to such and such boat ramp.  All municipal firefighters and rescue teams that want to help, come to such and such building, check in, and we will assign you a sector.  Rescue crews need to bring their own food, equipment, and waterproof paint to mark the buildings you have searched.  Then, go out to the boat ramp, find a boat and driver in the pool there, and go.  FEMA will bring in a fuel truck to refuel boats and will indemnify all boat owners for damages.  All survivors found should be brought back to the dock, and ambulances will be standing by.

Update: OK, I know some of you don't believe that this is a control issue for the bureaucrats.  Well, here is more evidence, from the Red Cross web site, via Instapundit.

Hurricane Katrina: Why is the Red Cross not in New Orleans?

• Access
  to New Orleans is controlled by the National Guard and local
  authorities and while we are in constant contact with them, we simply
  cannot enter New Orleans against their orders.
• The state Homeland Security Department had requested--and
  continues to request--that the American Red Cross not come back into
  New Orleans following the hurricane. Our presence would keep people
  from evacuating and encourage others to come into the city.

Update #2:  Still reluctant to believe that control over the process is more prized by bureaucrats than results?  Try this, from CNN and via Instapundit:

Volunteer physicians are pouring in to
care for the sick, but red tape is keeping hundreds of others from
caring for Hurricane Katrina survivors while health problems rise.

Among
the doctors stymied from helping out are 100 surgeons and paramedics in
a state-of-the-art mobile hospital, developed with millions of tax
dollars for just such emergencies, marooned in rural Mississippi.

"The
bell was rung, the e-mails were sent off. ...We all got off work and
deployed," said one of the frustrated surgeons, Dr. Preston "Chip" Rich
of the University of North Carolina at Chapel Hill.

"We have
tried so hard to do the right thing. It took us 30 hours to get here,"
he said. That government officials can't straighten out the mess and
get them assigned to a relief effort now that they're just a few miles
away "is just mind-boggling," he said....

It travels in a convoy that includes
two 53-foot trailers, which as of Sunday afternoon was parked on a
gravel lot 70 miles north of New Orleans because Louisiana officials
for several days would not let them deploy to the flooded city, Rich
said....

As they talked with
Mississippi officials about prospects of helping out there, other
doctors complained that their offers of help also were turned away.

A
primary care physician from Ohio called and e-mailed the U.S.
Department of Health and Human Services after seeing a notice on the
American Medical Association's Web site about volunteer doctors being
needed.

An e-mail reply told him to watch CNN that night, where
U.S. Health and Human Services Secretary Michael Leavitt was to
announce a Web address for doctors to enter their names in a database.

"How crazy is that?" he complained in an e-mail to his daughter.

Dr.
Jeffrey Guy, a trauma surgeon at Vanderbilt University who has been in
contact with the mobile hospital doctors, told The Associated Press in
a telephone interview, "There are entire hospitals that are contacting
me, saying, 'We need to take on patients," ' but they can't get through
the bureaucracy.

"The crime of this story is, you've got millions
of dollars in assets and it's not deployed," he said. "We mount a
better response in a Third World country."

Update #3:  Yes, there's more.  The Salvation Army has also been blocked, and the reason?  Their efforts did not fit snugly into the technocrats plans (via Cafe Hayek):

As federal officials tried to get some control over the deteriorating
situation in New Orleans, chaos was being replaced with bureaucratic rules that
inhibited private relief organizations' efforts.

"We've tried desperately to rescue 250 people trapped in a Salvation Army
facility. They've been trapped in there since the flood came in. Many are on
dialysis machines," said Maj. George Hood, national communications secretary for
the relief organization.

"Yesterday we rented big fan boats to pull them out and the National Guard
would not let us enter the city," he said. The reason: a new plan to evacuate
the embattled city grid by grid - and the Salvation Army's facility didn't fall
in the right grid that day, Hood said in a telephone interview from Jackson,
Miss.

"No, it doesn't make sense," he said.

Update #4:  I can't help myself.  Here is another:

The Fox News Channel's Major Garrett was just on my show extending the
story he had just reported on Brit Hume's show: The Red Cross is
confirming to Garrett that it had prepositioned water, food, blankets
and hygiene products for delivery to the Superdome and the Convention
Center in the immediate aftermath of the hurricane, but were blocked from delivering those supplies by orders of the Louisiana state government, which did not want to attract people to the Superdome and/or Convention Center.

Update #whatever-I-am-up-to: Welcome Instapundit readers!  I have posted a follow-up on big government and disaster preparedness here.

Technorati Tags:  Katrina, Economics

The other day, I posted on a NY Times editorial that attempted to make the point that a .

This aggressively ridiculous position is none-the-less repeated by statists every day in many contexts.  Today I will focus on a post by David Sirota on the Huffington Blog.  Its premise is that government ownership of commercial assets is more conducive to freedom that private ownership.  I could probably have found a more serious writer to Fisk, but I am bored this afternoon and needed some fun.  Besides, its fun to see someone actively channeling some of the minor characters in Atlas Shrugged.

First, to be fair, I have to start with a strong point of agreement with Mr. Sirota:  Both of us are frustrated with the corporate welfare, subsidies, eminent domain land grabs, new stadiums, and incumbent protection laws handed by all levels of government to various corporations.  Mr. Sirota cites the stadium example in particular, which has always been a pet peeve of mine as well:

Usually, government is in the business of handing over huge amounts of
our taxpayer money to corporations, so that the corporations can just
take all the profits, and charge whatever they want to the customers.
That's been the backbone of the recent spate of high-profile stadium
deals, whereby city and state governments just fork over cash to private pro sports teams,
while getting no share of the massive profits in return, and letting
those teams charge higher and higher ticket prices to the fans whose
tax dollars are supporting them.

I feel fairly well protected on the price angle by the fact that I can just choose to not go to the games, but he is right that the government is handing over stadium money with little to show for it in return.

But this is where he and I diverge.  My answer is to stop crony capitalism, and to stop using government money and regulatory authority to support favored businesses.  Mr. Sirota goes the other direction, which one might call "in for a penny, in for a pound", of having the government continue investing in businesses but to do so on the government's own account.

ordinary Americans are realizing that there's an alternative path,
whereby community ownership of certain economic institutions and
businesses are a pretty good deal. Instead of allowing Corporate
America to reap the windfalls of everything, more and more communities
are trying to get a piece of the action "“ all while making sure the
public is adequately served, and not abused.

The highest profile example of this is in municipal broadband, where city governments are developing taxpayer-owned high speed Internet networks.
Instead of allowing Verizon or other corporations to control Internet
access and rake in all the profits from it, these communities are
making Internet access a public utility and sharing in the profits.
These communities can make some money at it, while doing the public a
service by keeping rates low.

I will accept his chosen example of broadband networks. I will also, for today, give the author a break and not challenge the bizarre notion that replacing a private company like Verizon who has a 5-10% profit margin with an inefficient government bureaucracy can yield substantial cost savings for customers AND fat profits for the municipal government.  In fact, I will leave the obvious efficiency arguments behind entirely and only discuss the morality, the right and wrong involved in his proposition.

Ownership and Capital Investment
Corporations like Verizon are owned by communities of millions of ordinary people through a mechanism we call "stocks".  Even the few large shareholders of Verizon tend to be investment funds, which are really just vehicles for aggregating ownership of many many ordinary people via mutual funds and/or the pension obligations they back.  Owners of Verizon provide capital to the company through their stock investment in an uncoreced transaction and of their own free will.  Their ownership is evidenced by actual paper shares, and is portable, such that they retain ownership anywhere they live, even overseas.  Investors at any time, if they don't like the company's performance or prospects, are able to cash out at the market price, and companies routinely return a portion of their surplus to them in the form of dividends.  Investors elect a board of directors to steward their investment in the company, and can throw these directors out any year with a 51% vote.  The company they have invested in must provide them clear reports quarterly using GAAP accounting rules about how their investment is fairing.

Contrast this to a municipal-owned broadband network.  In some sense, all members of the municipality have an ownership interest in the network, but they receive no documented evidence or guarantee of this ownership.  Local citizens are required by law to contribute capital to the enterprise via their taxes.  Their investment is mandated by the state, is not optional, and non-investment (via non-payment of taxes) is met with a prison sentence.  Once their money is invested, they may not sell their interest or in any way recover their investment.  History has shown that surpluses in municipal owned business seldom exist, but when they do, they are never returned to the citizens, but are spent in other government functions at the whim of the local authorities.  If the citizen moves, he loses any benefit of his investment.  Municipal authorities seldom produce financial statements for these enterprises, and, when they do, they would never pass GAAP muster.  Since the author mentions Enron, I will say that Enron had cleaner financial statements than most government entities.

The author clearly prefers the latter.  Does someone who chooses the latter over the former really care about freedom and individual rights?

Competition and Evolution

A private company, particularly in an industry like broadband with rapid technology change, is constantly subject to getting beaten by a competitor with better technology or a lower cost position.  In the absence of government intervention, the private company has to constantly match competitive technology changes and cost improvements, or die.  Its interesting that the author would choose broadband, because the corpses of literally hundreds of failed broadband companies litter the American landscape.  Broadband has historically been a brutal business, with most companies failing to repay their investment in their infrastructure.  I will confess that many of the major communications players have been slow to move in this area, but in large part it has been government incumbent protection, not market incentives, that have slowed progress.  Wireless broadband providers and equipment producers have to move rapidly -- they have already migrated from proprietary designs to A to B to G and now to N in just five years or so.  A private company without government protection in this environment is faced with two choices:  constantly upgrade, or die.

Now, lets look at municipally-owned broadband company.  Like the private company, it will have to make a large start-up investment to get the infrastructure in place.  Also like the private company, repaying this investment (and thereby avoiding hitting their taxpayers with new charges each month for operations, ala Amtrak) will require putting a lot of volume on the network.  Finally, also like the private company, it will be facing new technologies and new potential competitors almost before the network is complete.  So what does it do?  It could begin to reinvest in the infrastructure, earning the ire of local citizens because it goes back for yet more taxes for the development.  It could cut prices and drive for market share, lengthening the time before it breaks even and eliminates the tax subsidy it will require. 

Or, it has a third option that the private company does not have:  It can use its government authority to block new entrants.  I will tell you right now - the government will use this third option every single time.  Take another large government network business: The Post Office.  The USPS tried like hell to get the government to block Fedex, and almost succeeded.  The government continues to block competition to the USPS for first class local mail.  Heck, the USPS has tried at various times to argue that it should have authority over email and the Internet.  The government blocks new cigarette manufacturers to protect the settlement money it gets from the old-line tobacco companies and it blocks usage of Love Field in Dallas to protect D/FW airport.  Bureaucracies never, ever let themeselves die, and there is no way a municipal broadband business will ever let itself be killed by a competitor - that competitor will be blocked, even if that likely means that local broadband consumers have to stick with higher costs and outdated technologies.

Gee, that sounds great, huh?

Pricing
My sense is that this is what gets the socialists and community ownership guys excited.  You can see from the quotes above, the author sees the world of private enterprise as this enormous price gouging domain, with no accountability on prices.  Though he does not say it explicitly, I am sure if asked he would say that private corporations have no accountability to the public (ie consumers)on pricing, whereas the local municipal government would.  This pricing issue is I think at the heart of his support for public over private ownership:

People know corporations right now have far too much power
and far too much leeway to rip off ordinary citizens - but there is a
feeling that that's "just a fact of life." The Community Ownership
movement shows it doesn't have to be a fact of life, and that there is
an alternative

The obvious response is that private companies have a tremendous accountability on price, from two directions.  First, consumers, if prices are too high, can choose not to buy.  Second, if prices remain "too high" for long, then competitors emerge to undercut them.  Like most socialists or "progressives", the author doesn't understand or trust these mechanisms - he prefers top down rather than bottom-up accountability.

In this sense, he prefers the comfort of the municipal business where elected officials that the consumer votes for set prices, and trusts these elections to provide more accountability than the market  (how ). Even forgetting that government inefficiency will make price savings impossible in such a thin margin business, how can anyone look at Congress or this administration and believe that electoral accountability is stronger than the market.  Do you really feel that you can do more about to affect government set rates like local sales tax rates than you can in response to say rising cell phone rates?  If I don't like my cell phone rate, I can switch plans, switch companies, or switch to other technologies (land lines, VOIP, etc).  If I don't like the sales tax rate, the best I can do is move to New Hampshire.

Conclusion

Wow, this piece really went on for a long time, and certainly far longer than Mr. Sirota's article deserved.  As a final comment on the author's grasp of reality, note this quote, where he refers to:

the out-of-touch confines of the Beltway where free market extremism reigns supreme

LOL.  I would love to find even a little bit of free market extremism inside the Beltway.  And if by free-market extremism he means crony capitalism of the sort I described at the top of the post, well, he should be more careful with his word choice. 

For too long, our side has rolled over and died when it comes to
questions about how to manage the free market so that it works for
ordinary people.

Here is a hint - if you want to participate in the profits of the free market just like the fat cats, try this.

As a note, I had this post ready last Thursday, but with the terrorist attacks in London, the regular G-8 protesters sort of dropped off the radar screen.

For years now, I have struggled trying to categorize what philosophy motivates the brick-throwing protesters that seem a regular part of G-8 summits ever since they ripped up Seattle several years ago.   To say they are against Globalization does not answer the question, since what exactly does that mean, given that the protest movement itself is global and multinational in nature. 

To some extent, the protests of course just Marxism returning under a different guise.  However, even when compared to socialist reality avoidance, the arguments of the protesters seemed really hard to follow.  Part of the problem is that many of the protesters are violent anarchists and out-and-out criminals who want nothing more than violence and destruction.  However, there are people and groups who seem to be trying to accomplish something, and who resent being associated with these criminals.  After reading a number of different web sites of the protesters (many are really, really hard to parse logically), I have come up with the following basic argument shared by the core of the protesters.

1. They want to help the poor and outright poverty-stricken nations of the world
2. Many want the wealthiest nations (G8) to help these poverty-stricken nations, both because they blame the wealthy nations for this poverty, and because the wealthy nations are seen as the ones with the means to do something
3. They want to help these nations by encouraging the poorer nations to avoid any of the techniques or economic models the G8 used to get wealthy and successful in the first place

There is nothing particularly new about arguments 1 and 2; however, it was recognizing part 3 of the argument that helped me realize why I could never understand what they wanted.  In a nutshell, they want to fix poverty in the third world by disavowing everything -- private property rights, individual enterprise, free commerce, entrepreneurship, individual freedoms, etc. -- that made the G8 not impoverished.  Rich nations, you have to help the poor nations, but whatever you do, don't allow they to emulate what you did to get rich. 

This is so nutty its unbelievable.  If they were camping outside of the G8's door and saying that we want you to drop trade barriers on our goods and help us foster entrepreneurship and we want your help promoting private investment in our economy and infrastructure, I could understand perfectly.  This is like activists camping outside of Jack Welch's door looking for him to help the poor by funding programs to teach children to drop out of school and avoid getting a jobs.

I discussed suggestion on providing aid to Africa here and here.  A good companion article to this piece is this one on why progressives are too conservative to like capitalism.  Here is the part that is relevant to development:

However, when we move to fields such as commerce, progressives stop
trusting individual decision-making.  Progressives who support the
right to a person making unfettered choices in sexual partners don't
trust people to make their own choice on seat belt use.  Progressives
who support the right of fifteen year old girls to make decisions about
abortion without parental notification do not trust these same girls
later in life to make their own investment choices with their Social
Security funds.  And, Progressives who support the right of third
worlders to strap on a backpack of TNT and explode themselves in the
public market don't trust these same third worlders to make the right
decision in choosing to work in the local Nike shoe plant.

Beyond just the concept of individual decision-making, progressives
are hugely uncomfortable with capitalism.  Ironically, though
progressives want to posture as being "dynamic", the fact is that
capitalism is in fact too dynamic for them.  Industries rise and fall,
jobs are won and lost, recessions give way to booms.  Progressives want
comfort and certainty.  They want to lock things down the way they are.
They want to know that such and such job will be there tomorrow and
next decade, and will always pay at least X amount.  That is why, in
the end, progressives are all statists, because, to paraphrase Hayek,
only a government with totalitarian powers can bring the order and
certainty and control of individual decision-making that they crave.

Progressive elements in this country have always tried to freeze
commerce, to lock this country's economy down in its then-current
patterns.  Progressives in the late 19th century were terrified the
American economy was shifting from agriculture to industry.  They
wanted to stop this, to cement in place patterns where 80-90% of
Americans worked on farms.  I, for one, am glad they failed, since for
all of the soft glow we have in this country around our description of
the family farmer, farming was and can still be a brutal, dawn to dusk
endeavor that never really rewards the work people put into it....

More recently, progressives have turned their economic attention to
lesser developed nations.  Progressives go nuts on the topic of
Globalization.  Without tight security, G7 and IMF conferences have and
would devolve into riots and destruction at the hands of progressives,
as happened famously in Seattle.  Analyzing the Globalization movement
is a bit hard, as rational discourse is not always a huge part of the
"scene", and what is said is not always logical or internally
consistent.  The one thing I can make of this is that progressives
intensely dislike the change that is occurring rapidly in
third world economies, particularly since these changes are often
driven by commerce and capitalists.

Progressives do not like American factories appearing in third world
countries, paying locals wages progressives feel are too low, and
disrupting agrarian economies with which progressives were more
comfortable.  But these changes are all the sum of actions by
individuals, so it is illustrative to think about what is going on in
these countries at the individual level. 

One morning, a rice farmer in southeast Asia might faces a choice.
He can continue a life of brutal, back-breaking labor from dawn to dusk
for what is essentially subsistence earnings.  He can continue to see a
large number of his children die young from malnutrition and disease.
He can continue a lifestyle so static, so devoid of opportunity for
advancement, that it is nearly identical to the life led by his
ancestors in the same spot a thousand years ago.

Or, he can go to the local Nike factory, work long hours (but
certainly no longer than he worked in the field) for low pay (but
certainly more than he was making subsistence farming) and take a shot
at changing his life.  And you know what, many men (and women) in his
position choose the Nike factory.  And progressives hate this.  They
distrust this choice.  They distrust the change.  And, at its heart,
that is what globalization is all about - a deep seated conservatism
that distrusts the decision-making of individuals and fears change,
change that ironically might finally pull people out of untold
generations of utter poverty.

Scratch a progressive, you will find a totalitarian.  That is why progressives support totalitarians like Chavez in Venezuela and why you find "progressives" supporting brutal Muslim totalitarian apartheid states.  That is why you will hear a lot from protesters about Nike wages being too low, but nothing about the impact totalitarians like Robert Mugabe have on creating poverty.  By the way, I am willing to offer them some help spotting dictatorships if they need it.

To their point that poor nations got that way because of rich nations, their argument relies on a zero-sum mercantilist view of economics that I deconstruct here.  Their other argument is that western colonialism ruined the poor nations, but if that is true, why do they attack the US the most, which had the fewest colonies of any of the G8, instead of France, which made the worst mess of its colonies?

Today, as linked by Hit and Run, the Washingtonian lists a number of blogs that are popular with journalists.  I have no particular problem with the list -- I read many of the same blogs myself.  However, this description of the libertarian blog at Reasons's Hit and Run struck me as odd (emphasis added):

The libertarians behind Reason magazine strike back with
moderate commentary on a variety of topics ranging from public
television to Gwen Stefani's "Hollaback Girl."

I am not sure that many Republicans or Democrats would consider Reason to be moderate.  Its hard to believe that any of us anarcho-capitalist make-government-and-taxes-go-away libertarians would ever be confused with moderates.  Reason has in the last month taken stands against the drug war, against any government intervention into property rights, against the Patriot act, in defense of steroid use, and favoring legalization of prostitution and continued legality of pornography.  Not many red-staters or blue-staters would call that moderate.  It may be consistent, in that it is against statism and for the primacy of individual decision-making, but libertarianism tends to be extreme and uncompromising in these views.  And, while most libertarians are not moderate, most moderates are not libertarians -- those who generally call themselves moderate tend to do so because they pick and choose bits of statism from both political parties. 

But there is an explanation for the word "moderate", and it goes back to the crappy civics lessons we all have gotten.  As I wrote before, those civics lessons were the statist's wet-dream, portraying the range of political thought on a linear scale from socialism on the left to fascism on the right.  In other words, our political choices are defined as running from statist control to... statist control.  In this framework, anyone who is not a commie or a Nazi are put somewhere in the middle, which has been shorthanded "moderates".

This is obviously a stupid framework, and breaks down when libertarians come into the picture.  More modern self-assessment frameworks use grids of at least two dimensions, with at least one dimension being the degree (from none to total) that one accepts state authority over the individual.

Update:  Oops, I missed the fact that some of the Reason writers themselves had much the same reaction. 

You still hear William Henry Vanderbilt's quote all the time today.  Generally, it is used to comment on situations where public companies dishonor themselves by fraudulently providing poor products and services.  Interestingly, doing a Google search on the term, I also see a lot of usage for it as applied to government as opposed to industry.

Anyway, it is ironic that the origins of the quote are very different than the current usage.  Vanderbilt's New York Central had just canceled an experimental high-speed high-service train from New York to Chicago.  A reporter asked him "Don't you run it (the train) for the public benefit?" and Vanderbilt very reasonably replied:

The public be damned.  I am working for my stockholders. If the public want the
train, why don't they pay for it?

In reality, Mr. Vanderbilt was eliminating a product that had proven unpopular in the marketplace.  His notion of fiduciary responsibility is not only appropriate, but in certain contexts can be argued to be legally required, at least today.  If some reporter today was stupid enough to ask the CEO of a failed dot-com this question (ie, why are you going out of business, why don't you just keep losing money for the public good) would we really criticize the CEO for giving the moron a smartass answer?  Accepting that Mr. Vanderbilt's answer was wrong is to accept that Mr. Vanderbilt should be a slave to public opinion, not as expressed by individuals in their purchasing decisions, but as expressed by an ill-defined elite who seemed to support the service for its aesthetic value.  And by the way, how had a service that didn't even exist a decade earlier, and only existed through the creativity of the NY Central, suddenly become an essential public service and expectation?

By the 20th Century, the high speed Chicago to New York express train  was bread and butter to the NY Central and its arch-rival the Pennsylvania.  In the end, cutting this service turned out to be just a temporary suspension of a product ahead of its time.

Several people say that I have missed the point in my post here - that the issue is
with mobility, particularly in multiple generations.   They argue that
the rich of the next generation are likely to be the kids of the rich
of this generation, that success now depends on education and
connections that only the wealthiest can buy for their kids.   

A couple of thoughts on this.  First, the Times's own data (plus
many other studies) doesn't bear this out, particularly with new
immigrants.  Thomas Sowell addresses this in more depth here and here,
and suggests that the explanation may lie more in values and
aspirations than in purchased stuff.  Marginal Revolution, for example,
had this thoroughly depressing story featuring a study by Harvard economist Roland Fryer on the social pressures in many African-American and Hispanic neighborhoods to under-perform in school.

My other thought on this is that to the extent social mobility is
slowing in this country, our public education system is a major
culprit.  Forget for a moment about quality issues.  Schools have
increasingly emphasized self-esteem over achievement and competition.
Standards are lowered, and the value of exceeding standards or
improving performance is downplayed.  Without other influences,
students will walk out of public schools with a value system vis a vis
achievement and competition and performance that leaves them totally
unprepared for the real world.  I am reminded of one of Bill Gates' pieces of advice to graduates: 

Rule 8: Your school may have done away with winners and losers, but life HAS
NOT. In some schools they have abolished failing grades and they'll give you as
MANY TIMES as you want to get the right answer. This doesn't bear the slightest
resemblance to ANYTHING in real life.

Kids with parents who have achieved in some way in the world are likely
to overcome this by the example and exhortations of their parents.  But
what happens to kids without this example?  Or kids (lacking voucher
programs) who can't afford to escape the public school system cult of
mediocrity for high-achievement private schools or home schooling?

Ironically, the very people who bemoan income inequality and lack of
mobility are the very same people who have gutted the public education
system.  These are the people who deal with inequality by flattening
down the peaks, which is exactly what they have done in schools,
eliminating valedictorians and substituting social promotions.

The NY Times has somehow decided that one of America's real problems is widening income distribution, or more specifically, the exponentially increasing wealth of the top tenth of one percent of US earners.  The series seems to be running to about 47 episodes (actually 10), but a key article is here, entitled "Richest Are Leaving Even the Rich Far Behind,"  There are a number of ways to attack this article.  One is to fisk their really abused and misused numbers, which George Reisman does here on the Mises Economics Blog. 

Lets accept that the very very rich are getting richer.  So lets move from there to the question of...

"so what?"

The Times is a little weak on the "so what".  I presume that in their intellectual-statist readership,  it is an axiom that rich people suck and rich people getting richer sucks more.  However, it is possible to pull out four things the Times extended editorial-masquerading-as-a-news-story finds bad about increasing income inequality:

• As the rich get richer, there is less money left for the rest of us
• The process of the rich getting richer reduces opportunities for the rest of us
• Having very rich people around make the rest of us feel bad
• The rich are only getting richer because the rest of us are subsidizing them through tax policy

It has been a while since I have really gotten carried away writing about a topic (at least three or four days) so I will now proceed to address each of these in turn and in some detail.

As the rich get richer, there is less money left for the rest of us.  At the end of the day - this is what is in most people's minds when they decry aggregations of wealth.  There are many, many people in the world, even in this country, who think of wealth as a fixed pie, as a zero sum game where one person's victory requires another persons loss.

If we were living in 17th century France, where the rich nobility got that way by taxing the crap out of the working peasantry, this would probably be an adequate view of reality.  Wealth came from the land and its products, whose supply, given no technology improvements for decades, were both relatively fixed.  This zero sum view of commerce led to a mercantilist view of the world economy, where it was thought that wealth was fixed, and that the only thing that could be done to it was to move it around, or tax it, or steal it, or loot it.

But we don't live in 17th century France.  We live in a modern, dynamic capitalist society where wealth is created.  One proof of this is so obvious that it amazes me anyone clings to the implicit zero sum economy assumption:  Compare the US in 2000 to the US in 1900.  We are so much wealthier top to bottom in our society than in 1900 its not even worth spending much time on the proof.  This is not just in real dollar terms, but in things that affect ones life, from average life span to leisure time to entertainment to technology.  People who live in the poorest 20 percentile today have things -- such as a lifespan over 70, access to cancer cures, cars, computers, VCRs -- that not even the richest one half of one percent had in 1900.  The poorest 20 percentile in this country would be the upper middle class or even the rich in many countries of the world today.

Michael Dell and Bill Gates are both in that evil 1/10 of 1% of richest people.  But how did they get that way?  They made their fortunes by providing me with this incredible tool on my desk that was unimaginable when I was born 40+ years ago, but now is pedestrian.  Right now I am typing on a Dell computer using Microsoft Windows, which I bought from the suppliers for a mutually agreeable price in a totally uncoerced manner.  My computer provides me with thousands of dollars of value - in productivity, in entertainment, in the ability to do new things that could never be done before (e.g. blog).  Most of this value I keep for myself; some, about $1200 in this case, went to the suppliers of labor and materials to build and program this thing.  And a small portion, less than $100, went towards the fortunes of Mr. Dell and Mr. Gates who had the vision to build the businesses they did.  The PC I have creates new value all around:  Thousands of dollars of new value for me the user and  hundreds of dollars in the form of jobs and new markets for suppliers.  Mr. Dell and Mr. Gates keep just a small portion of all that value created.  At some level, they are working cheap. And any one of us, had we had the vision, could have piggy-backed on Mr Gate's or Mr. Dell's wealth creation by buying stock in their firms.

The process of the rich getting richer reduces opportunities for the rest of us.  Since the "zero sum" argument is so easy to disprove, proponents of rich=bad have morphed their argument to this one.  This accusation comes up several times in the NY Times series, but is hard to refute mainly because the authors never explain the mechanism that they think is at work here or show any shred of proof.  The articles cite folks such as Warren Buffett, George Soros, and Ted Turner.  But how has their fortune-making reduced my personal opportunities one iota? 

Do I have less opportunity because Warren Buffet has made good investing decisions?  Heck, one can argue that any American has always had the opportunity to gain wealth in direct proportion to Buffet at any time, merely by buying Berkshire Hathaway stock.

How about Ted Turner.  Do I have less opportunities to improve myself because Ted Turner got rich creating CNN?  I guess I could facetiosly argue that by his creating CNN, others can no longer create a 24-hour cable news service because he has locked up the market, but Fox has disproved even this narrow argument.

What about George Soros?  I guess you could argue that from time to time my Sony Walkman was a buck or two more or less expensive because of some currency game he was playing in the markets, but I don't see how my opportunity has been reduced.  A better argument is that Soros's being wealthy might really threaten my opportunity if only because he funds so many statist-socialist causes with his billions.

In fact, this is one of those black-is-white arguments.  The reality is exactly the opposite.  When most rich people get rich (with the exception maybe of Peter Angelos and other tort lawyers) they do so by creating new value and thereby opportunity.  While all these folks may be really wealthy, in reality the wealth they have amassed is but a small percentage of the wealth and value that they created.  Where did the rest go?  To all of us, of course, in the form of jobs, and tools, and longer lifespans, and better entertainment.

Having very rich people around make the rest of us feel bad.  OK, this sounds like a problem for group therapy, but you see it in print all the time.  The disparity of incomes is "troubling" and could lead to "resentment".  If one were living in Venezuela or Nigeria or some country where, like 17th century France, wealth came from looting rather than the free exchange of goods, then I would agree that the income disparity would be troubling.  Shoot, if people were much wealthier than I because they were using the legal system to loot the rest of us, I would be pissed off (ironically, this is the case with the billionaire tort lawyers, but this is the last group that the Times will ever challenge). 

However, in this country, where most of the very rich got that way through hard work and better ideas, the result of free and uncoerced commerce, why be resentful?  Sure, I would love to have a G-V aircraft and hot Swedish wife [ed note:  oops, my wife might read this] like Tiger Woods, but lacking these, I have zero desire to deny them to Tiger.  I don't even begrudge super-tramp Paris Hilton her millions (but she did inspire me to change my will so my kids don't inherit from me until they are well past their majority).  Heck, I have spent whole vacations touring the discarded toys of the super-rich (e.g. mansions in Newport, RI).  What fun would there be without a moving target to aspire to?

So why do the Times and some many intellectualls legitimize this envy?  This type of envy has driven anti-semitism and in fact all sorts of racism through the ages.

The rich are only getting richer because the rest of us are subsidizing them through tax policy.  Around my house, I joke that everything, at least in my family's opinion, turns out to be my fault.  The equivilent at the NY Times is that everything is Bush's fault, and in particular, the fault of Bush's tax cuts.  The Mises article cited above does a pretty good job of fisking the argument that the tax system post-cuts favors the rich.  I took on took this notion here and here.  The Times "analysis" makes two major mistakes:

• Social Security Tax hide and seek:  The NY Times article shows the very wealthy paying lower marginal rates than lower level earners.  As I pointed out here, this is entirely because they are including social security taxes in their analysis and that the taxes are capped at $90,000.  If you look at only income taxes, then marginal rates do not drop at higher incomes.

The left's argument here is highly contradictory.  When wanting to make the "rich are not paying enough" argument, they include Social Security taxes, knowing that since those taxes are regressive, they make it look like the rich are somehow getting off easy.  However, when discussing Social Security, the don't want to think of them as taxes - because they want Social Security to be insurance with premiums rather than a transfer program with taxes. 

• Bracket Creep: The TImes points out that the income tax rate for the super rich is no higher than the rate for the merely rich or even $100,000 earners.  The implication is that the super rich are somehow getting a better deal.  But in fact, the problem is that the definition of rich, vis a vis taxes, has been lowered through the years.  The whole history of the income tax is to sell a tax as applying only to the very very rich, and then broadening the applicability over time.  The federal income tax followed this path, as has the AMT.  More recently, the top rate on California income taxes is seeing the same creep.  The statist trick is to apply a rate to the super rich, then creep it down so eventually it applies to everyone.  Then, they cry that - hey, the super rich aren't paying more than the middle class, so they institute a new higher super rich rate.  Rinse and repeat.

Conclusion.  I will leave you with the lyrics from Rush's The Trees:

There is unrest in the forest
There is trouble with the trees
For the maples want more sunlight
And the oaks ignore their pleas

The trouble with the maples
(and they're quite convinced they're right)
They say the oaks are just too lofty
And they grab up all the light
But the oaks can't help their feelings
If they like the way they're made
And they wonder why the maples
Can't be happy in their shade?

There is trouble in the forest
And the creatures all have fled
As the maples scream `oppression!`
And the oaks, just shake their heads

So the maples formed a union
And demanded equal rights
'the oaks are just too greedy
We will make them give us light'
Now there's no more oak oppression
For they passed a noble law
And the trees are all kept equal
By hatchet,
Axe,
And saw ...

Update:  Several people said I missed the point about mobility, rather than just the rich getting richer.  I respond to this here.