Coyote Blog

You do have property rights ... right up to the point where someone with political pull wants to change the use of your property.

In Tempe, AZ, an intersection has been empty for a number of years after a gas station went out of business.  A local entrepreneur acquired rights to the land to build a car wash.  The city approved all his various permits and he was just starting to build when a powerful local developer who owned a strip mall next door decided he did not want a car wash next door to his businesses, and sought to rally the local community against the car wash with fears of traffic and poisonous chemicals.  The result?

After nearly three hours of debate, the Tempe City Council revoked permits for a Quick Quack Car Wash planned at Baseline Road and McClintock Drive.

The Council Chamber was standing-room only Thursday as more than 40 residents spoke. Opponents were in the majority by a 3-to-1 margin.

The residents' concerns largely revolved around noise and traffic. Those residents in favor of the development said a car wash was an upgrade from the old gas station that use to be at the corner.

Michael Pollack, who owns the nearby Peter Piper Pizza Plaza along with other commercial properties in the East Valley, hired an attorney to appeal the city's Design Review Board decision to grant permits for the car wash.

"I have nothing against ducks," Pollack told the council. "I would love to see something that harmonizes with that area."

Like residents, Pollack was concerned about noise and how a car wash would impact property values — points that representatives from Quick Quack said were unfounded.

Of course they are being generous here to the real influencer, pretending that Pollack was merely one more person in the community with concerns rather than the person who likely organized much of the opposition.

By the way, here is the Mr. Pollack's super-lovely strip mall he is concerned about "harmonizing" with

Don Boudreaux has a great quote from Bastiat today that seems to apply:

Admit it, what is worrying you is right and justice; what is worrying you is ownership – not yours, of course, but that of others.  You find it difficult to accept that others are free to dispose of their property (the only way to be an owner); you want to dispose of your property . . . and theirs.

A while back I wrote "Why haven't we heard any of these concerns?  Because the freaking Left is no longer capable of making any public argument that is not based on race or gender."

A classic example of this is Nancy MacLean's new book Democracy in Chains.  She has apparently detected the great conspiracy behind the modern Right, which according do her is a racist backlash against the civil rights movement.  And the person at the heart of this conspiracy is... economist James Buchanan?

For those who don't know, which is probably most of the folks in this country, Buchanan won the Nobel Prize in economics for his development of public choice theory.  If you are unfamiliar with this body of work, I encourage you to investigate it, but in short it analyzes government officials as self-interested and subject to all the same incentives as ordinary people.   This is in contrast to highly idealized analyses that consider government agents as perfectly serving the public and judges proposed government actions by their stated goals, rather than their likely operations as run by real human beings.  It was developed in part as a reaction to  market critics who would cite real world issues in complex markets and compare them to idealized results of hypothetical government regulations.  It tends to explain things like special interest politics, regulatory capture, cronyism, and rent-seeking much better than traditional, rosier theories of government.  For example

So the Progressive Left tends to hate public choice theory.  They have nearly infinite faith in government action and don't like to hear about its limitations.  So it is not surprising that MacLean would write a thoughtful, scholarly critique of public choice theory, backed by a variety of economic evidence.  HAH!  Just kidding.  This is 2017.  Academics in the social sciences, mostly on the Left, don't operate that way.  The only approach they know to refuting such a theory is to link it with racism.  And so that is what she attempts.  This is part of the summary from Amazon:

“[A] vibrant intellectual history of the radical right . . .” – The Atlantic

“This sixty-year campaign to make libertarianism mainstream and eventually take the government itself is at the heart of Democracy in Chains. . . . If you're worried about what all this means for America's future, you should be” – NPR

“Riveting” – O, The Oprah Magazine (Top 20 Books to Read This Summer)

An explosive exposé of the right’s relentless campaign to eliminate unions, suppress voting, privatize public education, and change the Constitution.

Behind today’s headlines of billionaires taking over our government is a secretive political establishment with long, deep, and troubling roots. The capitalist radical right has been working not simply to change who rules, but to fundamentally alter the rules of democratic governance. But billionaires did not launch this movement; a white intellectual in the embattled Jim Crow South did. Democracy in Chains names its true architect—the Nobel Prize-winning political economist James McGill Buchanan—and dissects the operation he and his colleagues designed over six decades to alter every branch of government to disempower the majority.

In a brilliant and engrossing narrative, Nancy MacLean shows how Buchanan forged his ideas about government in a last gasp attempt to preserve the white elite’s power in the wake of Brown v. Board of Education. In response to the widening of American democracy, he developed a brilliant, if diabolical, plan to undermine the ability of the majority to use its numbers to level the playing field between the rich and powerful and the rest of us.

Corporate donors and their right-wing foundations were only too eager to support Buchanan’s work in teaching others how to divide America into “makers” and “takers.” And when a multibillionaire on a messianic mission to rewrite the social contract of the modern world, Charles Koch, discovered Buchanan, he created a vast, relentless, and multi-armed machine to carry out Buchanan’s strategy.

Hah, this is the Progressive Left, so you just knew the Kochs had to be implicated as well.  A couple of thoughts

• My first response is:  if only.  It would be fabulous if, say, the Republican Party was constructed on top of the work of Buchanan and public choice theory. Alas, it is not
• The links to racism the books rests on are simply a joke, but typical of the quality of public discourse today.  You see it all the time.  Coyote gave money to the Cato Institute.  Joe Racist and Jane Hatemonger also gave money to Cato.  So Coyote has been "linked" to these bad people, and therefor must believe everything they do.**
• Yet another in a long line of books about how libertarians are plotting to enslave you by devolving power to the individual and leaving you alone
• Don Boudreaux has been collecting a lot of links to critiques of the book.  Beyond the silly vast-right-wing-conspiracy level of scholarship, apparently MacLean edited a lot of the key quotes she uses in the book to essentially reverse their meaning.

** This is an aspect of Progressive thought today that I think is not discussed enough.  I used to make common cause with folks on the Left and the Right on individual issues.  This is becoming increasingly hard, particularly with the Progressive Left, because they tend to demand conformity with them on issues x, y, z before they will work with you on issue w.  I had to step down from a leadership role in an effort to legalize gay marriage in AZ because I did not agree with groups like HRC on things like climate change.  Progressives then assume everyone else is following this totalitarian principle, so if later I make common cause with the Right, say on school choice, I am branded as being anti-immigration.  That is silly, given what I have written, but to them actual words I have written are irrelevant -- what is important is that I did one thing one time on one issue with someone on the Right, so I am now branded with whatever political baggage the Right might have.

Years ago I wrote a post called "I don't necessarily treasure the right to vote" wherein a discussed a number of individual freedoms that were far more important than voting.

The other day, Don Boudreaux said it more succinctly:

Freedom is not a synonym for the right to vote in fair and open elections.  Fair and open elections with a wide franchise might – might – be a useful instrument for promoting freedom.  But contrary to much shallow thinking, the right to participate in such elections is not itself “freedom.”  Freedom is the right to choose and act as you please, with this right bound only by the equal right of every other peaceful individual to do the same.  (Or to quote Thomas Sowell, “Freedom … is the right of ordinary people to find elbow room for themselves and a refuge from the rampaging presumptions of their ‘betters.'”  I would add that freedom requires also elbow room from the rampaging presumptions – and from the enviousness, ignorance, myopia, and even the good intentions – of one’s peers and, indeed, from those of everyone.)

This was an interesting profile of Trump featuring his ghostwriter on Art of the Deal.  Frequent readers will know that even years before he came on the Presidential stage, I was never taken in by the Trump-is-a-great-businessman meme  (most recently here).

In the New Yorker article, Trump's ghost says that Trump is not nearly as smart as he is made out to be, he is petty and childish and vain and self-absorbed.  He apparently makes promises he never keeps and has made a mess of a number of his businesses.  He has a short attention span and a shallow understanding of most issues.

Which all leads me to ask -- how does this make him any different from most other politicians, including the one he is running against for President?  Is he unique in these qualities or merely unique in his inability or unwillingness to hide them?  Does he have more skeletons in his closet, or does he just engender less personal loyalty so that more of his insiders speak out?

Don Boudreaux quoted a great bit from H.L Mencken the other day:

The state – or, to make the matter more concrete, the government – consists of a gang of men exactly like you and me.  They have, taking one with another, no special talent for the business of government; they have only a talent for getting and holding office.  Their principal device to that end is to search out groups who pant and pine for something they can’t get, and to promise to give it to them.  Nine times out of ten that promise is worth nothing.  The tenth time it is made good by looting A to satisfy B.  In other words, government is a broker in pillage, and every election is a sort of advance auction sale of stolen goods.

From Eugenics and Economics in the Progressive Era by Thomas C. Leonard (link via Don Boudreaux, I think).

It was a scholarly fashion, circa 1890, to declare the U.S. frontier “closed” and to sound a Malthusian alarm about excess American population growth. But the professional economists who wrote on immigration increasingly emphasized not the quantity of immigrants, but their quality. “If we could leave out of account the question of race and eugenics,” Irving Fisher (1921, pp. 226–227) said in his presidential address to the Eugenics Research Association, “I should, as an economist, be inclined to the view that unrestricted immigration . . . is economically advantageous to the country as a whole . . . .” But, cautioned Fisher, “the core of the problem of immigration is . . . one of race and eugenics,” the problem of the Anglo-Saxon racial stock being overwhelmed by racially inferior “defectives, delinquents and dependents.”

Fear and dislike of immigrants certainly were not new in the Progressive Era. But leading professional economists were among the first to provide scientific respectability for immigration restriction on racial grounds.2 They justified racebased immigration restriction as a remedy for “race suicide,” a Progressive Era term for the process by which racially superior stock (“natives”) is outbred by a more prolific, but racially inferior stock (immigrants).

Note that the authors of the time were not using race as we do -- by "other races" whose immigration into the US was going to destroy us, they meant Southern Italy, Russia, Austria, Hungary, and the rest of Eastern Europe.   Fifty years earlier, they would have meant the Irish.   All of who we would today consider part of the backbone of America.  Why do we have to take these ideas seriously today when they have been wrong so consistently in the past?

I operate recreation areas in the US Forest Service and from time to time get criticized that my profit adds cost to the management of the facilities, and that the government would clearly be better off with a non-profit running the parks since they don't take a profit.  What they miss is that non-profits historically do a terrible job at what I do.  They begin in a burst of enthusiasm but then taper off into disorder.    Think about any non-profit you have ever been a part of.  Could they consistently run a 24/7/365 service operation to high standards?

Don Boudreaux has a great quote today that touches on this very issue

from page 114 of the 5th edition (2015) of Thomas Sowell’s Basic Economics:

While capitalism has a visible cost – profit – that does not exist under socialism, socialism has an invisible cost – inefficiency – that gets weeded out by losses and bankruptcy under capitalism.  The fact that most goods are more widely affordable in a capitalist economy implies that profit is less costly than inefficiency.  Put differently, profit is a price paid for efficiency.

It is also the "price" paid for innovation.

Don Boudreaux loves to try to teach with analogies.  Sometimes they work for me, sometimes they don't.  I really liked this one.    Suppose you were tasked with selling a food product that 100,000,000 people would buy.  Anything at all interesting - sushi, a spicy southwestern dish, a nice pork tenderloin - would only appeal to a niche.  To get something that appeals to 100,000,000 you have to hit some lowest common denominator.

Eventually, you settle upon something that is unquestionably bland and common and uninspiring – something like a plain hamburger, or perhaps a dish of mild meatloaf with mashed potatoes topped only with butter.  Anything more exotic than such offerings will, while being much preferred by a few million of the people whose patronage you’re trying to win, will be rejected by a majority of the people.

The same rules, he argues, apply to Presidential candidates

No one should be surprised that candidates for the U.S. presidency transact mostly in platitudes and are forever performing deeds on the campaign trail that any self-respecting person with independent judgment and a genuine sense and appreciation of his or her uniqueness would never in a million years dream of doing.  And the closer a candidate gets to the political promised land, the more intense becomes the pressure for him or her to be the political equivalent of a Bud Lite.

Via Don Boudreaux:

Bluecravat found something telling that I missed a few months ago, namely, Paul Krugman explaining back in August that one potential cause of the high unemployment rate in France is that country’s “high minimum wage.”  As Bluecravat exclaims after quoting from Krugman’s August post: “Excuse me?  What was that?  Minimum wage levels impact employment?”

Of course, it could be that France’s minimum wage is too high compared to the one that Krugman advocates for the U.S.  Krugman supports Pres. Obama’s call for a $10.10 hourly minimum wage.  So how does the employment-discouraging minimum wage in France compare to the allegedly prosperity-enhancing, non-employment-discouraging minimum wage that Krugman, Obama, et al., support for the U.S.?  According to Bluecravat, France’s current minimum wage, when adjusted for purchasing-power parity, is $9.30 per hour, a rate that is lower than the minimum-wage rate advocated by Krugman, Obama, et al.

The minimum wage is terrible anti-poverty policy.  The thing to remember is that A. The majority of minimum wage earners are not poor (or in the poorest 20%); and B.  The majority of the poor don't earn minimum wage.  In most cases, the poor are poor because they don't get enough hours or don't have a job at all, a situation that will only be made worse with a higher minimum wage.

During the period that  Occupy Wall Street was making the news, I often said that I agreed with many of their problem diagnoses but absolutely disagreed with their proposed solutions.  They, like I, decried the abuse of government power via Cronyism by private parties, e.g. protection and bailout of Wall Street bankers.  Their solution, though, to increase government power never made any sense to me.

Here is Michael Huemer via Don Boudreaux:

Predatory behavior does not occur merely because human beings are selfish.  It occurs because human beings are selfish and some human beings are much more powerful than others.  Powerful, selfish people use their positions to exploit and abuse those much weaker than themselves.  The standard solutions to the problem of human predation all start by cementing the very condition most likely to cause predatory behavior – the concentration of power – and only then do they try to steer away from its natural consequences.  The alternative is to begin with an extreme decentralization of coercive power.

I am finally back and I have mostly climbed on top of the hosting and web attack issues we have been having.  I honestly think site performance will be better, at the cost of a bit of caching that might delay new posts for a few minutes.

Many thanks to the Young Republicans of Dekalb County who hosted a fun event in Atlanta.  I particularly enjoyed meeting Don Boudreaux, whose writing I have admired for some time.  Hopefully they will have a video of the talk I can post soon.

Over the next few days I am playing with site widths to try to overcome some problems displaying on certain mobile devices.  I have been told I should give up and restart with a mobile-friendly newer template but statements like that are just raw meat, making it more likely I bang my head against the older template to try to make it work.

I am speaking at an event this Friday in the Atlanta area held by the Dekalb Young Republicans called "Cutting the Red Tape: A Forum on Overbearing Government Regulations".   Even better than my presence, I will be sharing the stage with Don Boudreaux of George Mason University and Cafe Hayek.  Anyone who has read this site will know I link Don at least once a week so it will be fun to meet him in the flesh.  Here are the full details:

When:
Oct. 17th, 2014 at 7:30 PM

Where:

Atlanta Perimeter Marriott Center

246 Perimeter Center Pkwy NE, Atlanta, GA 30346

Free Parking

Again, it is open to anyone (as proven by the fact that I am neither young nor a Republican and they are letting me speak).

I will quote from Don Boudreaux (who was in turn commenting on his own quote of the day, which happened to be from Brink Lindsey, my old college roommate).

In other words, very many people – nearly everyone on the political left, yet plenty also on the political right – remain creationists.  They continue to fail to grasp the nuances, deep meaning, and full implications of the science of spontaneous order that first flowered among scholars in 18th-century Scotland.

Reacting to the unbelievable economic ignorance he has seen in recent campaign ads, Don Boudreaux writes

If astronomy operated similarly to politics, the world’s top astronomers would compete furiously amongst themselves to see who could most effectively assure the general public that the sun orbits around a stationary flat earth – a flat earth that was created just 4,000 years ago and which sits atop a tower of turtles.

Don Boudreaux asks:

Here’s a quick question for anyone who takes seriously politicians’ pronouncements about what particular industries are “vital” or are “of the future” or are “crucial to meeting consumers’ needs”: Why do virtually none of these politicians, when they leave office, found their own non-political firms? Why do virtually none of these politicians, when they leave office, found their own non-political firms – firms that specialize neither in granting clients access to incumbent politicians nor in projects that depend upon getting subsidies or other favors from those same politicians?

This question occurred to me a few days ago upon hearing that former president Bill Clinton was off somewhere talking about something to some group concerned about some issue.  His career now is to make lots of money as a sort of high-brow social healer – to emit platitudes, attend state funerals, and (pardon my switch of imagery) be a show-pony for politically correct causes.  The post-Oval Office careers of every other recent president – to the extent that they haven’t simply retired to the golf course or the study – have been largely the same, with the groups and causes served by their attentions differing only as one former president’s political affiliations differ from those of another former president.

One guy comes to mind who had a sniff of the White House and then went on to run his own business:  George McGovern.  And though its just a small Inn that will never be even a blip on the economic radar screen, it has driven McGovern dangerously close to being a libertarian.  Actually, that might be a misnomer.  He probably is still a liberal, but from the days when liberals actually cared about individual freedom and saw aggregations of power in the government to be at least as scary as those in the private world.  Take this for example:

Under the guise of protecting us from ourselves, the right and the left are becoming ever more aggressive in regulating behavior. Much paternalist scrutiny has recently centered on personal economics...

Since leaving office I've written about public policy from a new perspective: outside looking in. I've come to realize that protecting freedom of choice in our everyday lives is essential to maintaining a healthy civil society.

Why do we think we are helping adult consumers by taking away their options? We don't take away cars because we don't like some people speeding. We allow state lotteries despite knowing some people are betting their grocery money. Everyone is exposed to economic risks of some kind. But we don't operate mindlessly in trying to smooth out every theoretical wrinkle in life.

The nature of freedom of choice is that some people will misuse their responsibility and hurt themselves in the process. We should do our best to educate them, but without diminishing choice for everyone else.

The only other place I have heard this recently on the Left was, perhaps not coincidentally, from that other child of 60's liberal politics, Jerry Brown

To the Members of the California State Senate:

I am returning Senate Bill 105 without my signature.

This measure would impose criminal penalties on a child under the age of 18 and his or her parents if the child skis or snowboards without a helmet.

While I appreciate the value of wearing a ski helmet, I am concerned about the continuing and seemingly inexorable transfer of authority from parents to the state. Not every human problem deserves a law.

I believe parents have the ability and responsibility to make good choices for their children.

Sincerely,
Edmund J. Brown

Postscript:  The answer to Don's question is one of two.  Either a)  They are not up to it.  And/or b) There is a hell of a lot more wealth that can be captured through the exercise of government power than through private enterprise.

Don Boudreaux had these two rejoinders to the notion that the GM bailout is a success simply because GM is making a profit.

Economically literate opponents of the Detroit bailout never denied that pumping hundreds of millions of taxpayer dollars into Detroit automakers would restore those companies to health.  Instead, they argued, first, that bailing out Detroit takes resources from other valuable uses.  Because he doesn’t even recognize that other valuable uses were sacrificed by this bailout, Mr. Dionne offers no reason to think that the value of saving Detroit automakers exceeds the value of what was sacrificed to do so.  No legitimate declaration that the bailout is successful is possible, however, without evidence that the value of what was saved exceeds the value of what was sacrificed.

Economically literate bailout opponents argued also that it sets a bad precedent.  By signaling to big corporations that government stands ready to pay the tab for the consequences of their poor decisions, big corporations will more likely make poor decisions in the future.  It’s far too early for Mr. Dionne to conclude that this prediction is mistaken.

I would offer a third concern -- that the government has kept hundreds of thousands of skilled workers and billions of dollars of physical assets under the management of the same group that have decidedly underutilized these assets in the past.  A bankruptcy without Federal intervention would likely have shifted assets and skilled workers into new companies with different management teams and cultures pursuing different strategies with different information.

I always have trouble explaining this issue to people.   Think of a sports team with great players but a lousy coach and management team.  Having the government ensure that the lousy management stays in control of the great players is a waste for everyone.  I explained it more in depth in this post, where I concluded

A corporation has physical plant (like factories) and workers of various skill levels who have productive potential.  These physical and human assets are overlaid with what we generally shortcut as "management" but which includes not just the actual humans currently managing the company but the organization approach, the culture, the management processes, its systems, the traditions, its contracts, its unions, the intellectual property, etc. etc.  In fact, by calling all this summed together "management", we falsely create the impression that it can easily be changed out, by firing the overpaid bums and getting new smarter guys.  This is not the case – Just ask Ross Perot.  You could fire the top 20 guys at GM and replace them all with the consensus all-brilliant team and I still am not sure they could fix it.

All these management factors, from the managers themselves to process to history to culture could better be called the corporate DNA...

So what if GM dies?  Letting the GM’s of the world die is one of the best possible things we can do for our economy and the wealth of our nation.  Assuming GM’s DNA has a less than one multiplier, then releasing GM’s assets from GM’s control actually increases value.  Talented engineers, after some admittedly painful personal dislocation, find jobs designing things people want and value.  Their output has more value, which in the long run helps everyone, including themselves.

The alternative to not letting GM die is, well, Europe (and Japan).  A LOT of Europe’s productive assets are locked up in a few very large corporations with close ties to the state which are not allowed to fail, which are subsidized, protected from competition, etc.  In conjunction with European laws that limit labor mobility, protecting corporate dinosaurs has locked all of Europe’s most productive human and physical assets into organizations with DNA multipliers less than one.

One of the things I struggle with in arguing for ending the government schools monopoly is a lack of imagination.  In most people's lifetimes, there has never been a robust network of private school options to fit all needs and budgets, so folks assume that that such choices can't exist -- that there is some structural failure of capitalism that would prevent these choices from existing rather than structural government factors that have prevented them from existing.

Don Boudreaux has a nice analogy that helps make the logic of school choice clearer.

I asked Don Boudreaux his opinion of the best primer on public choice theory, a topic of interest to many libertarians.  He recommended William Mitchell & Randy Simmons, Beyond Politics (1994).  I have ordered a used copy from Amazon and will give my thoughts on it once I have had a chance to peruse it.

Coyote, November 10

But what is really happening here is that the dollar is being devalued.  This is one of the semantic quirks that make me laugh "” when Argentina or Zimbabwe do this, its called devaluation.  When a western nation does it, it is called quantitative easing.

Don Boudreaux today:

Fed Chairman Ben Bernanke, fresh from injecting hundreds of billions of new U.S. currency units into the economy "“ and from planning the injection of yet an additional 600 billion such units "“ criticizes the Chinese government for injecting hundreds of billions of new Chinese currency units into the economy ("Bernanke Takes Aim at China," Nov. 18).  Apparently, when Beijing increases the supply of Chinese currency it does so as part of what Prof. Bernanke ominously labels a "strategy of currency undervaluation," but when Uncle Sam does the same thing with U.S. currency units it's called "quantitative easing" and "a move in the right direction."

Every one of these members of the House Subcommittee on Commerce, Trade, and Consumer Protection voted to pass this absurd law out of committee except Rep. John Barrow, D-Ga.

Bobby L. Rush, Illinois, Chairman

Jan Schakowsky, IL, Vice Chair	George Radanovich, CA, Ranking Member
John P. Sarbanes, MD	Cliff Stearns, FL
Betty Sutton, OH	Ed Whitfield, KY
Frank Pallone, Jr., NJ	Joseph R. Pitts, PA
Bart Gordon, TN	Mary Bono Mack, CA
Bart Stupak, MI	Lee Terry, NE
Gene Green, TX	Sue Wilkins Myrick, NC
Charles A. Gonzalez, TX	John Sullivan, OK
Anthony D. Weiner, NY	Tim Murphy, PA
Jim Matheson, UT	Phil Gingrey, GA
G. K. Butterfield, NC	Steve Scalise, LA
John Barrow, GA (voted NO!)
Doris O. Matsui, CA
Kathy Castor, FL
Zachary T. Space, OH
Bruce L. Braley, IA
Diana DeGette, CO

Hat tip: Don Boudreaux

Don Boudreaux has a nice summary of the problems with a lot of product safety problems.

You write as if "safe" is an objectively determinable and unique fact, such as whether or not your newspaper's paid circulation exceeds 500,000 or whether or not your sister is pregnant.  But "safe" is not objective in this way.  Because no product is 100 percent certain never to cause even the slightest harm (or 100 percent certain to cause harm), the question "Is this product safe?" has no correct single answer.  It has correct answers as varied as the number of that product's potential users.  No product is "safe" or "unsafe" in the abstract.

Perhaps your tolerance for risk is higher than mine.  Perhaps the pleasure I get from using a product is less than yours.  If so, should I be permitted to prevent you from using that product because, for me, the product is insufficiently safe?  My evaluation of the product's safety is correct only for me, not for you.  And matters don't change if I'm a government official.

I was listening to a lecture on the politics of reconstruction when I encountered something that seemed quite quaint.   By 1877, a lot of the country was tiring of reconstruction, and was ready to move on.  Southern Democrats were taking the opportunity to re-take control of their states (through voter intimidation and outright murder) and, unfortunately, institute a race-based social system that would be enforced by government officials for almost a hundred years.

In this background, enter the contested Presidential election between Republican Hayes and Democrat Tilden.  The electoral college vote turned on three close southern races that no one to this day probably knows who really won, particularly if one factors in the voter intimidation in those states.  Never-the-less, Republicans found themselves in control of the vote counting and later the special committee to investigate and certify the election, and predictably Republican Hayes was certified the winner.

Southern Democrats were ticked off, and threatened to throw every wrench they could into seating the new government.  So, in a back room compromise, Democrats exchanged agreement on accepting Hayes as President for agreement by Republicans to pull troops out of the South and effectively allow Southern Democrats leeway to do whatever they liked with blacks in the South.

This is all grossly simplified, but what caught my attention was one side-bargain of the deal.  The Southern Democrats wanted a cabinet position under Hayes.  What did they want?  State, maybe War?  No, they wanted the Postmaster position.  The reason was that the Postmaster had by far the most patronage positions to award of any of the Cabinet positions, because it employed so many civil service positions.

Doesn't handing out a few jobs as rewards to your political supporters seem such a quaint form of political corruption today?  Now, of course, with the power to tax or regulate whole industries out of business, or to step on one group of competitors in favor of another set in a high-stakes market, this seems so benign.  I wish that were all we had to worry about today.  Instead, we have a President who can, without any enabling legislation, take two of the largest corporations in American (GM and Chrysler), cancel the debts owed to their secured creditors, and then hand control of these companies to his strongest political supporters (the UAW) -- an act of political patronage that makes a joke of selling a few postmaster positions.

Update: Don Boudreaux discusses the rise of government-controlled fire fighting in the context of political patronage.

Sometimes I snap at someone for their criticism of a particular politician.  Typically, they assume I am doing so because I support that politician.  But in reality, I am using just sick of the implication that somehow other politicians would have been much better.  I absolutely agree with Don Boudreaux's comment:

Fareed Zakaria (author of a truly fine book and columnist for the
Washington Post) rightly argues that Sarah Palin is unqualified to be
president of the United States (and, hence, by extension, unqualified
to be V-P). Mr. Zakaria is correct that Gov. Palin's recent answer to a
question about the economy "is nonsense - a vapid emptying out of every
catchphrase about economics that came into her head." He's correct also
that she's unfit to be entrusted with the power of the modern
presidency.

But Mr. Zakaria is incorrect to suppose that these traits separate
Gov. Palin from other candidates for high political office. Calls by
Senators McCain and Obama for cracking down on "speculators" are full
of classic and wrongheaded catchphrases, as is Sen. Obama's vocal
skepticism about free trade. Gov. Palin is merely less skilled in
passing off inanities and claptrap as profundities.

Someone noticed that just before certain stocks crash in value, there is a lot of short-selling.  So the US government has banned short-selling, at least temporarily.  Classic cargo-cult logic. 

Boy this sure makes perfect sense in a time when we are concerned about speculative bubbles -- let's ban one of the most important tools that exist for bubbles to be shortened and made less, uh, bubbly.  Here is why (very briefly and non-technically) short-selling takes the edge off speculative excesses.

At the start of the bubble, a particular asset (be it an equity or a commodity like oil) is owned by a mix of people who have different expectations about future price movements.  For whatever reasons, in a bubble, a subset of the market develops rapidly rising expectations about the value of the asset.  They start buying the asset, and the price starts rising.  As the price rises, and these bulls buy in, folks who owned the asset previously and are less bullish about the future will sell to the new buyers.  The very fact of the rising price of the asset from this buying reinforces the bulls' feeling that the sky is the limit for prices, and bulls buy in even more. 

Let's fast forward to a point where the price has risen to some stratospheric levels vs. the previous pricing as well as historical norms or ratios.  The ownership base for the asset is now disproportionately
made up of those sky-is-the-limit bulls, while everyone who thought
these guys were overly optimistic and a bit wonky have sold out. 99.9% of the world now thinks the asset is grossly overvalued.  But how does it come to earth?  After all, the only way the price can drop is if some owners sell, and all the owners are super-bulls who are unlikely to do so.  As a result, the bubble might continue and grow long after most of the world has seen the insanity of it.

Thus, we have short-selling.  Short-selling allows the other 99.9% who are not owners to sell part of the asset anyway, casting their financial vote for the value of the company.  Short-selling shortens bubbles, hastens the reckoning, and in the process generally reduces the wreckage on the back end.

Update:  From Don Boudreaux:

To ban short-selling of stocks is to short-circuit an important
mechanism through which people share their knowledge and expectations
with others.  Banning a mechanism that better allows share prices to
reflect the expectation that the underlying assets are not worth as
much as current market prices suggest does nothing to change the
underlying reality.  Such a ban merely distorts knowledge of this
reality

As a followup to my point on oil prices, here are a selection of posts on oil prices and speculation that have caught my eye of late:

McQ writes about the charge of "inactive" oil leases, which Democrats attempted to use as an excuse for not opening up new lease areas for drilling

Tyler Cowen has a big roundup on the topic, with many links, and Alex Tabarrok has a follow-up.  Cowen discusses rising oil prices in the context of Julian Simon here.

Michael Giberson also addresses speculation, while observing that non-industrial buyers have not increased their position in the futures market as oil prices have risen

Don Boudreaux has thoughts on drilling restrictions

Finally, via Scrappleface:

When the U.S. Supreme Court reconvenes on the first Monday in
October, the nine Justices may consider whether the Constitutional
preamble clause "secure the Blessings of Liberty to ourselves and our Posterity" guarantees an individual right to drill for oil.

Now that the court, in a 5-4 ruling on the Heller case, has upheld
the Second Amendment right of "the people," not just state-run
militias, to keep and bear arms, some scholars say the court may be
willing to go the next logical step and recognize the peoples' right to
acquire their own fuel.

Bravo, Don Boudreaux (responding to the typical anti-libertarian attack that we are just "shills" for large corporations:

If I were a shill for industry...I would oppose free markets. Free markets, after all, are markets open
to competition that invariably keeps the profits of existing firms from
remaining excessive and, often, even bankrupts firms once thought to be
invincible industry leaders. Existing firms almost all deplore
competition in their industries. They seek government regulations that
hamstring rivals and potential rivals. And, of course, firms are
forever pleading for "protection" from foreign competition.

I just wrote a book ("Globalization") in which I make a strong and
principled case for completely free trade - not free trade sometimes,
for some firms, under some circumstances, with some qualifications, but
free trade always, for all firms, under all circumstances, and with no
qualifications.

Whether my book's case for unalloyed free trade is correct or not,
it is surely not the sort of book that causes the heads of many
corporate CEOs to nod in eager agreement. The typical reaction of
business people whenever they hear or read me make my case for
genuinely free trade is to say something like, "Professor Boudreaux,
you don't understand the peculiarities of my industry." And then each executive launches into a laundry list of excuses for why Congress should protect his industry from foreign rivals.