Coyote Blog

Another of the issues I have moved a lot on in life has been trade sanctions.  Back in the day, I was all for sanctioning the cr*p out of any country run by bad people, which is a pretty long list.  Now, I am convinced this approach is totally counter-productive.  First, the story via WSJ:

The U.S. is evaluating whether to impose tougher sanctions against Venezuela’s military and vital oil industry, a senior Trump administration official said Monday, as it seeks to ratchet up pressure on authoritarian leader Nicolás Maduro to hold free and fair elections.

The Trump administration is considering a range of measures including curtailing the flow of Venezuelan oil to the U.S., the official said, in what could be the harshest blow to the country's money supply. No final decision has been made.

The U.S. has already penalized a host of Venezuelan government heads, its gold sector and has blocked investors from renegotiating Caracas’s defaulted debt. The U.S. administration has held off on more draconian efforts like an oil embargo, weighing the humanitarian cost for economically devastated Venezuela, which depends almost entirely on crude exports. The U.S. also has been analyzing any potential harm to American businesses that buy Venezuelan crude.

Now, however, the Trump administration aims to up the ante after Mr. Maduro last week defied international calls to resign and was sworn in for a new six-year term following a May re-election that some 60 countries deemed fraudulent.

“Until now, we have been going around the edges,“ the official told The Wall Street Journal. “Now it’s a new dynamic. We are no longer going to be tinkering along the edges. Nowadays, everything will be put on the table.”

I have made this point in the past, but very few folks on the warming-panic side of the climate debate actually are familiar with even the most basic outlines of what skeptics argue.  The climate debate is one of the worst examples I can think of where partisans gain their only knowledge of what the other side is saying from slanted and ill-informed descriptions of the opponents by their own side.  This is roughly like my informing myself of Hillary Clinton's political positions solely from listening to Rush Limbaugh.

YouTube has adopted a policy of putting information / warning labels on videos by climate skeptics.  Here is a screen shot, the YouTube addition is in the beige box:

This is the only example I know of YouTube doing this -- for example, you can't find information labels on, say, 9/11 Truther videos reading "steel doesn't have to melt to fail" or on Bernie Sanders socialist videos saying "adopting Marxism led to the deaths of tens of millions of people in the 20th century."  So I guess we climate skeptics are considered by Google to be the worst of the worst on the truth scale.

But the truly hilarious part is that I don't disagree with this statement one bit**.  Neither does any other prominent skeptic I know of.  In fact, I have queued up the video to the 19:30 mark and you can watch me say exactly this.

Clearly, Google does not actually know what climate skeptics say.  In fact, much of the video (which despite being 2 years old is still my current position on the topic and a good introduction to the climate debate) is about this very topic -- how what skeptics actually say and what warmists say what we way are so different, and how that SNAFU's the climate debate.  One of my most popular articles in Forbes was on the same topic.

Postscript:  I am not a conspiracy theorist, and try not to assign arcane outcomes in chaotic systems to subterfuge.  But I do find it odd that when I Google myself, in the fourth position is random critique of one of my climate articles.  There have been much more intelligent critiques of me historically than this one, and this particular critique garnered far fewer reads and inbound links than the original article, which shows up nowhere in the search.  I am not persuaded that Google is putting its thumb on the scale in favor of critiques of skeptics, but I could be.

**Though I might quibble with equating climate change and global warming.  They are obviously related but certainly not equivalents.

There was a funny sideshow to the recent Supreme Court Janus v. AFSCME decision.  That decision essentially made it impossible for local or state governments to require that all employees pay support to certain public employee unions, even if they are not a member of that union and/or don't support that union's activities and, particularly, that union's political speech.  Progressives, many of whom feel increasingly confident to admit that they are socialists, rushed to point out that this was a death knell for these unions because of the free rider problem.  If workers who benefitted from the union's collective bargaining activities were not forced to pay, then what incentive exists for any one employee to pay the union if they still will enjoy the benefits without paying.  Soon, everyone will become a free rider and the union will die.  America's most famous socialist Bernie Sanders demonstrates that he understands the free rider problem completely in this

Sanders’ bill, called the Workplace Democracy Act, would remove several of the major barriers to organized labor’s growth.

It would ban “right to work” laws, which allow employees to opt out of paying union dues even though the union must still bargain on their behalf, leading to what unions call “free-riding.”

A while back Bernie Sanders proposed a plan for "government jobs for all" -- a guarantee that the government would hire you at $15 an hour plus benefits and medical care.  All a worker has to do is bother to show up each day to get paid.

The Saudis have done something similar for years.  And now that the program has been in place for a generation, no one in the country has the skills or motivation to do productive private work any more

Nobu’s challenge points to one of the biggest obstacles to Saudi Arabia’s grand economic makeover: How to put Saudis to work.

The architect of Saudi Arabia’s economic overhaul, Crown Prince Mohammed bin Salman, wants to rev up growth and create more opportunities for citizens. Companies, however, are struggling to meet the government’s demands to employ them.

For decades, expatriate workers from countries such as India and the Philippines helped sustain Saudi Arabia’s high living standards by doing jobs Saudis wouldn’t do in kitchens, at construction sites and behind store counters. The oil-rich monarchy endowed citizens with what were essentially jobs for life in the public sector, which means the labor force doesn’t always have the skills, and sometimes lacks the motivation, to fill private-sector jobs.

The pressure to meet the quotas has pushed companies to offer Saudis better salaries and shorter working hours. Some businesses, risking fines and visa troubles, hire Saudis who count on the registered workforce but just sit at home.  Abdulmohsen, an executive at a Saudi logistics company, estimated that half of the Saudis on his payroll are employees in name only.

Free markets are governed and regulated by consumers.  If suppliers offer something, and consumers like it and like how that particular supplier provides it more than other choices they have, the supplier will likely prosper.  If suppliers attempt to offer consumers something they don't want or need, or already have enough of from acceptable sources, the supplier will likely wither and disappear.  That is how free markets work.  Scratch a Bernie Sanders supporter and you will find someone who does not understand this basic fact of consumer sovereignty.

Regulators generally are operating from a theory that says there is some sort of failure in the market, that consumers are not able to make the right choices or are not offered the choices they really want and only the use of force by regulators can fix this failure.  In practice, regulators have no way of mandating a product or service that producers cannot economically or technically provide (see: exit from Obamacare exchanges) and so all they actually do is limit choice by pruning products or services or individual features the regulators don't think consumers should be offered.   They substitute the judgement of a handful of people for the judgement of thousands, or millions, and ignore that there is not some single Platonic ideal of a product out there, but thousands or millions of ideals based on the varied preferences of millions of people.

A reader sends me a fabulous example of this from the Socialist Republic of Cambridge, Mass.

Month after month, in public meeting after public meeting, a trendy pizza mini-chain based in Washington, D.C., hacked its way through a thicket of bureaucratic crimson tape in the hopes of opening up shop in a vacant Harvard Square storefront. But when the chain, called &pizza, arrived at the Cambridge Board of Zoning Appeal in April, the thicket turned into a jungle.

Harvard Square already has plenty of pizza, board chairman Constantine Alexander declared, and though a majority of the board signed off on &pizza’s plans, approval required a four-vote supermajority. Citing the existence of five supposedly similar pizza joints in the area, as well as concerns about traffic congestion, a potential “change in established neighborhood character,” and even the color of the restaurant’s proposed signage, Alexander and cochair Brendan Sullivan dissented.

“A pizza is a pizza is a pizza,” Alexander said at one point during the April hearing, sounding suspiciously like someone who doesn’t eat much pizza or give much thought to the eating habits of the 22,000 or so college students who live in the city.

A city ordinance dictates that any new fast-food place should be approved only if it “fulfills a need for such a service in the neighborhood or in the city.” But the notion that an unelected city board should be conducting market research using some sort of inscrutable eye test to decide precisely what kind of cuisine is appropriate for Harvard Square stretches that to the point of absurdity.

As much as Bernie would like to blame the money laundering and money-hiding in the Panama papers on capitalism, in fact the vast majority of clients in those papers appear to be from socialist and strongly interventionist, populist governments.

Socialist countries tend still have winners and losers just like capitalist countries.  However, those winners and losers are not determined by success in making products and services in the marketplace, but in success in reaching a leadership position in the government or cozying up to those in government.  Soviet government elite had special privileges and special stores not accessible by ordinary Russians.  The Castro brothers and Hugo Chavez's daughter are among the richest people in the western hemisphere.

However, these wealthy leaders now have two problems.  First, they likely spend most of their time spouting egalitarian claptrap, so that they would like to hide their wealth in order to mask the obvious consistency problem.  Perhaps more importantly, their socialist policies have likely destroyed the country's economy -- there is, for example, no place any sane person would want to invest a billion dollars in Venezuela.  They need to get their money out of the country but because everyone else in a socialist country is also trying to get their money out, the self-same leader has likely instituted capital controls.  So the leader needs to put his or her money in a different country where it can actually be invested productively, and in doing so must evade their own capital controls.

Don Boudreaux writes:

This note is to an angry young man who describes Bernie Sanders as his and his girlfriend’s “hero” and as “the only candidate following humane economics.”  Sigh.

Mr. Claudio Morello

Mr. Morello:

Thanks for your e-mail.

You find my arguments against a $15 per hour minimum wage to be “totally uncompelling” because “labor is not a commodity like bread and electronics.”  In your view, “labor should not be subject to the bloodless laws of economics.”

I get this sort of comment all the time about it being wrong, even inhuman, to treat labor as a commodity subject to the laws of supply and demand.  I generally have two responses:

1. For the guy who was just pushed out of a 10th story window, I am sure a more "humane" law of gravity would see him wafted gently to earth -- but all his wishing for such an alternate reality is not going to have it happen.
2. Forgetting public policy for a moment, to the extent that you (the commenter) relies on other people hiring you to stay alive in this world, I can think of few things that would improve your well-being more than attempting to develop a basic understanding of why your labor might have more or less value to someone else.  Refusing to do so, or even refusing to acknowledge that your labor has some sort of economic value at all, would be like trying to launch rockets to mars while refusing to acknowledge the rules of celestial mechanics. .  Refusing to even think about why labor (and skills) might or might not have value in different situations seems to be a recipe for pretty low earnings over time.

The other day John Hinderaker of Powerline wrote:

If someone proposes that next year we should import 10,000 unskilled immigrants from Pakistan, the first question we should ask is: why do we need them? But that is the one question that no one ever seems to pose.

This is a terrible question and to my eye shows just how close Conservatives come to accepting many of the assumptions of Socialism.

Socialists seldom think in terms of individuals, but instead talk about the economy as some great big machine that they get to run.  We all remember Bernie Sanders saying

“You don’t necessarily need a choice of 23 underarm spray deodorants or of 18 different pairs of sneakers when children are hungry in this country”

When Hinderaker is asking if we need more immigrants, or Sanders is asking if we need more deoderant choices, they are both working from an assumption that some authoritarian gets to sit at the top and make these choices for us.

The question "do we need immigrants" is actually senseless. Who is "we"? Who gets to make decisions for "we"? Only a socialist thinks this way. In a free society, the questions that matter are "Do I want to hire this immigrant?" or, as an immigrant, "do I want to take the chance of moving to an unfamiliar country to try to better my life." If I wish to hire someone from another country and they wish to move here and take the job, what the hell does it matter if John Hinderaker thinks this person is "needed"? I have decided I need a certain immigrant for my business, and the immigrant has decided that moving here is a good tradeoff for him.  In capitalism, that should be a done deal.

Could the immigrant or I be wrong about my employment offer being a good idea? Sure.  But authoritarian government second-guessing of individual decisions is supposed to be a progressive-socialist game, and here is a prominent Conservative doing exactly the same thing.  If Bernie Sanders wanted to require me to get government permission to produce a new flavor of deodorant, Hinderaker would be outraged.  But never-the-less he similarly wants me to get government permission (actually he wants to deny me government permission) to hire the employee I want to hire.

All this "Amercan jobs for Americans" thing may sound nice, and get head nods at the local Rotary, but what it actually means is that individual business people like myself have to be limited to hiring from a government-approved list.  Doesn't sound much like the free markets and small government Conservatives claim to want.

Hinderaker quotes approvingly from David Frum

However one assesses [the Farook family] chain and its consequences, it seems clear that the large majority of legal immigrants choose to come—or, more exactly, are chosen by their relatives—for their own reasons. They are not selected by the United States to advance some national interest. Illegal immigrants are of course entirely self-selected, as are asylum seekers. …

Donald Trump’s noisy complaints that immigration is out of control are literally true. Nobody is making conscious decisions about who is wanted and who is not, about how much immigration to accept and what kind to prioritize—not even for the portion of U.S. migration conducted according to law, much less for the larger portion that is not.

Doing things for one's own reasons.  Self-Selection.  Lack of government control.  Lack of government decisions about who or what is wanted.  Lack of national priorities.  These all sound like ... capitalism and a free society.   Replace the word immigration with any other term and Conservatives would blast these two sentences and Bernie Sanders and Barack Obama would vigorously nod.  I could write a $15 minimum wage screed using almost these identical words from Frum.    Here, let me try:

However one assesses [the John Smith] $8 wage and its consequences, it seems clear that the large majority of employers set wages for their own reasons. These wages are not set by the United States to advance some national interest. The wage rates are entirely self-selected by employers and employees.

Bernie Sanders's noisy complaints that wage rates and income inequality are out of control are literally true. Nobody in government is making conscious decisions about who is hired and for how much, about how much income to accept and what kind to prioritize.

Postscript:  Yes, I know that Conservatives are all worked up because 1 in a 1,000 or so of our immigrants might be murderers.  You know what, one in a thousand Americans born every day will likely grow up to be murderers, but we don't ban sex.  We accept the consequences that we get a few bad apples along with a lot of awesome productive people.

I would also ask Conservatives this -- why don't you think the Left's desire to ban gun ownership to head off mass shootings is fair?  I would suggest one reason is that it is unfair to ban legal gun ownership for 1,000 good people because one will use their gun to commit a murder.  If you agree with this statement, explain why your argument against immigration is different from the Left's call to ban gun ownership.

Left & Right each hope to ban large group (Gun owners & Muslims, respectively) from US because 0.1% of them might be dangerous @instapundit

— Coyoteblog (@Coyoteblog) December 11, 2015

I am going to reprise parts of an article I wrote in Forbes several years ago, because I think the conclusions are particularly relevant given the Democrats' discussion of income inequality and the Scandinavian economic model.

When folks like Bernie Sanders say that we have more income inequality than Sweden or Denmark, this is certainly true. By just about any test, such as Gini ratios, we have a much wider range of incomes.

However, we Sanders implies that this greater income equality means the poor are better off in these countries, he is very probably wrong.  Because the data tends to show that while the middle class in the US is richer than the middle class in Denmark, and the rich in the US are richer than the rich in Denmark, the poor in the US are not poorer than those in Denmark.

And isn't this what we really care about?  The absolute well-being of the poor?

I am not a trained economist or economic researcher, but I have looked for a while for a data source to get at this.  I can find Gini ratios all over the place, but how do I compare the absolute well-being of poor in one country to poor in another?

The first clue that I was maybe on the right track was this chart that actually came from a left-wing group trying to promote the idea of reducing income inequality.  The chart is hard to read (the study is no longer online and all I have is a bad screenshot), but it seemed to show that the poor in the US were no worse off than the poor in Denmark and Sweeden

So the data had to be there somewhere.  Finally I found a set of data that seemed to does the trick.  I used data from the LIS Cross-National Data Center.  I cannot vouch for their data quality, but it is the same data set used by several folks on the Left (John Cassidy and Kevin Drum) to highlight inequality issues, so I used the same data source.  I then compared the US to several other countries, looking at the absolute well-being of folks at different income percentile levels.  I have used both exchange rates and purchasing price parity (PPP) for the comparison but my feeling is that PPP is a better approach when we are comparing consumer well-being.

You can click through the Forbes article to see all the comparisons, but I will focus here on Sweden and Denmark since they are very much in the policy-making discussion on income inequality.  As usual, you can click to enlarge:

What does this mean?  If the data is correct, it means that all the way down to at least the 10th percentile poorest people, the poor in the US are as well or better off than the poor in Denmark and Sweden.  And everyone else, including those at the 20th and 25th percentile we would still likely call "poor", are way better off in the US.

All this talk about reducing income inequality by emulating Denmark is thus not about making the poor better off, but just about cutting the rich and middle class down to size.

I was thinking about the crazy populist nuttiness of Donald Trump and the misguided focus of Black Lives Matter and the musty socialism of Bernie Sanders.  As I drive around Europe and see ruins of castles and palaces, it occurred to me that we had almost always been saddled with an aristocracy exercising power over us.  Sometimes they won that position through violence and military action, and sometimes by birth.

But it struck me that we have a new sort of aristocracy today:  the Aristocracy of Hucksterism.  These new aristocrats are just as wealthy and powerful as the old sort, but they have found a new way to gain power -- By suckering millions of people to simply hand it to them.   And when they inevitably fail, and make things worse for everyone, they additionally manage to convince people that they root cause of the failure is that they had not been given enough power.

My new column is up at Forbes, and discusses the proposal by a number of Congressmen for a Constitutional Amendment to strip corporations of speech and other rights.  The post is hard to excerpt but here is just a bit:

This is why this proposed Amendment is so absurd.  In effect, it would mean that we all enjoy the full range of Constitutional rights, except when we agree to assemble and cooperate -- then we lose them all.   If I as an individual bake bread in my kitchen for resale, I could still petition the state to modify regulations relevant to my activity.  If I then join together with my neighbor in a cooperative venture to bake and resell bread, does it really make sense that I would then lose my right to petition the government?

Worse, the proposed Amendment does not limit its scope to just the First Amendment.  It means that individuals, when on corporate property, might have no protection from unreasonable searches and seizures;  corporations would have no guarantee of due process or of a jury trial in civil suits;  corporate assets would no longer be protected from eminent domain seizure without compensation.  Under this provision, the Federal government could seize Apple Computer if it so desired (or even quarter troops in the Apple offices!).  This all sounds like a stalking horse for Socialism, which might seem overwrought until one realizes that Bernie Sanders is the sponsor of a similar proposal in the Senate....

Of all the possible approaches to reducing the ability of private citizens to manipulate government policy to their personal benefit, this is in fact likely the worst.  As mentioned above, there are many different avenues to exercising influence and power, of which election spending and advertising is just one.  But election spending is the most transparent of all of these approaches.  This proposed amendment would in effect substitute highly visible advertising and electioneering with backroom deals and political patronage that is far more hidden from the public eye.  A cynical person might argue that this is exactly the goal.

Not much I even need to add to this, via Riehl World View:

On Tuesday, the Senate health committee voted 12-11 in favor of a two-page amendment courtesy of Republican Tom Coburn that would require all Members and their staffs to enroll in any new government-run health plan. Yet all Democrats -- with the exceptions of acting chairman Chris Dodd, Barbara Mikulski and Ted Kennedy via proxy -- voted nay.

In other words, Sherrod Brown and Sheldon Whitehouse won't themselves join a plan that "will offer benefits that are as good as those available through private insurance plans -- or better," as the Ohio and Rhode Island liberals put it in a recent op-ed. And even a self-described socialist like Vermont's Bernie Sanders, who supports a government-only system, wouldn't sign himself up.

Does anyone else find this reminiscent of Obama's decision to send accept a scholarship for his own education, send his kids to private school in DC, and then, nearly as his first action as President, kill the voucher program that let other African American kids in DC go to private school.