Coyote Blog

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.

So Seattle made a public policy change that caused lower-skill, lower-wage employment to lag way behind employment of wealthier, higher-skill folks.

One would expect the Progressive Left to freak out in opposition to this policy.  But in fact this policy is their absolutely most cherished, favorite public policy intervention -- the minimum wage.  As reported earlier, the city of Seattle engaged an economic study of the minimum wage change using some of the best data ever made available for such a study.  This was the result (table 3, in which I removed low-wage employment from all employment to get low wage and all other employment)

Last night, Van Jones (among likely many others on the Progressive Left) lamented, "How am I going to explain the election [Trump's victory] to my kids?"

Well, as someone who has always respected the Constitution, I would tell my kids that the folks who wrote the Constitution spent a lot of time thinking about how to make the system robust against tyrants.  Their solution was a system of checks and balances that prevented a single person in the Presidency acting against the general wishes of the country.  The President is bound both by Congress and the judiciary, but also by law (particularly restrictions in the Bill of Rights).

The last couple of Presidents, with the aid of a sometimes supine Congress and judiciary, have pushed the boundaries of these limitations, expanding Presidential power, and in certain spheres attempted to rule by decree.  Folks like Van Jones were way up in the forefront of folks cheering on this power grab, at least under President Obama, as long as it was their guy grabbing for power.  What should Jones tell his kids?  Perhaps he could say that for well-intentioned reasons, he helped increase the power of the President, but in doing so forgot that folks he disagrees with would likely someday inherit that power.

As I wrote years and years ago:

• Technocratic idealists ALWAYS lose control of the game.  It may feel good at first when the trains start running on time, but the technocrats are soon swept away by the thugs, and the patina of idealism is swept away, and only fascism is left.  Interestingly, the technocrats always cry "our only mistake was letting those other guys take control".  No, the mistake was accepting the right to use force on another man.  Everything after that was inevitable.

Sarah Baker has some nice thoughts along these lines at the Liberty Papers, but I will leave you with her first one:

This is how libertarians feel after every election. We learn to live with it. So will you.

I am exhausted with folks, particularly on the Progressive Left, judging themselves and each other based on their intentions.  Your intentions mean virtually nothing.  I suppose it is better to have good intentions than bad, but beyond that results, particularly in the public policy arena, are what should matter.  And the results of most Progressive well-intentioned legislation are generally terrible.  For example, as I wrote earlier today, poverty in this country is mainly caused by lack of work rather than low wage hours, but Progressives preen over their good intentions in introducing higher and higher minimum wages that will only serve to reduce the work hours of low-skilled poor people.

Via Mark Perry comes this great article on Progressive good intentions in Seattle collapsing into rubble.  It does not except well, so I recommend you check it out, but I will summarize it.

Begin with a libertarian goal that should be agreeable to most Progressives -- people should be able to live the way they wish.  Add a classic Progressive goal -- we need more low income housing.  Throw in a favored Progressive lifestyle -- we want to live in high density urban settings without owning a car.

From this is born the great idea of micro-housing, or one room apartments averaging less than 150 square feet.  For young folks, they are nicer versions of the dorms they just left at college, with their own bathroom and kitchenette.

Ahh, but then throw in a number of other concerns of the Progressive Left, as administered by a city government in Seattle dominated by the Progressive Left.  We don't want these poor people exploited!  So we need to set minimum standards for the size and amenities of apartments.  We need to make sure they are safe!  So they must go through extensive design reviews.  We need to respect the community!  So existing residents are given the ability to comment or even veto projects.  We can't trust these evil corporations building these things on their own!  So all new construction is subject to planning and zoning.  But we still need to keep rents low!  So maximum rents are set at a number below what can be obtained, particularly given all these other new rules.

As a result, new micro-housing development has come to a halt.  A Progressive lifestyle achieving Progressive goals is killed by Progressive regulatory concerns and fears of exploitation.  How about those good intentions, where did they get you?

The moral of this story comes back to the very first item I listed, that people should be able to live the way they wish.  Progressives feel like they believe this, but in practice they don't.  They don't trust individuals to make decisions for themselves, because their core philosophy is dominated by the concept of exploitation of the powerless by the powerful, which in a free society means that they view individuals as idiotic, weak-willed suckers who are easily led to their own doom by the first clever corporation that comes along.

Postscript:  Here is a general lesson for on housing affordability:  If you give existing homeowners and residents the right (through the political process, through zoning, through community standards) to control how other people use their property, they are always, always, always going to oppose those other people doing anything new with that property.  If you destroy property rights in favor of some sort of quasi-communal ownership, as is in the case in San Francisco, you don't get some beautiful utopia -- you get stasis.  You don't get progressive experimentation, you get absolute conservatism (little c).  You get the world frozen in stone, except for prices that continue to rise as no new housing is built.  Which interestingly, is a theme of one of my first posts over a decade ago when I wrote that Progressives Don't Like Capitalism Because They Are Too Conservative.

Postscript #2:  So, following the logic above, one can think of building restrictions and zoning as a form of cronyism.  Classic cronyism is providing subsidies to politically favored companies and restricting the ability of new competitors to arise to compete with them, granting them an effective monopoly and the ability to jack up their prices.  So what do we do with housing?  We give massive subsidies to home-owners and restrict competition from new housing that might reduce their home value, thus granting current homeowners an effective monopoly and the ability to jack up their prices.  I challenge anyone to tell me that rising home prices in Palo Alto are not driven by the exact same government actions for favored constituents as are rising prices for Epipens.

Postscript #3:  I will ask a question using Progressive terminology -- you were worried about these young renters and their power imbalance vs. development companies and landlords.  So how much more powerful are they now with a thousand fewer rental units on the market?  Consumers have power when supply is plentiful.  Anything done to reduce supply is going to reduce consumer power.

New York is proposing a $15 minimum wage for any fast-food restaurants that are part of a national chain with 30 or more stores.  How this survives any sort of equal protection test is beyond me -- if I own a restaurant and call it "coyote's place" I don't have to pay $15, but if I own a single restaurant where I pay franchise fees to McDonald's, I do.

Let's leave the inevitable court challenges on fairness aside.  Of all the possible industries, I wonder why the focus on just fast food and on just large franchises.  Some of it is obviously mindless Progressive soak the rich thinking, and some of it is a liberal distaste for any foods that are not kale.  Is it just because the fast food workers have been the most vocal?  If so, that is pretty lame the the government is merely focusing on the squeaky wheel, a real indictment of any pretensions technocratic politicians have to legislating intelligently.

But I wonder if it is something else.  Pick a progressive on the street, and in the unlikely event they can name any economic study, that study will probably be Card and Krueger's study of the effect of a minimum wage increase in New Jersey.   Sixty bazillion studies have confirmed what most of us know in our bones to be true, that raising the price of labor decreases demand for that labor.  Card and Krueger said it did not -- and that a minimum wage increase may have even increased demand for labor -- which pretty much has made it the economic bible of the Progressive Left.

What intrigues me is that Card and Krueger specifically looked at the effect of the minimum wage on large chain fast food stores.  In this study (I will explain the likely reason in a moment) they found that when the minimum wage increased for all businesses in New Jersey, the employment at large chain fast food restaurants went up.

So I wonder if the Progressives making this ruling in New York thought to themselves -- "we want to raise the minimum wage.  Well, the one place where we KNOW it will have no negative effect from Card and Krueger is on large fast food chains, so...."

By the way, there are a lot of critiques of Card & Krueger's study.  The most powerful in my mind is that when a minimum wage is raised, often the largest volume and highest productivity companies in any given business will absorb it the best.  One explanation of the Card & Krueger result is that the minimum wage slammed employment in small ma and pa restaurants, driving business to the larger volume restaurants and chains.  As a whole, in this theory, the industry saw a net loss in employment and a shift in employment from smaller to larger firms.  By measuring only the effect on larger firms, Card and Krueger completely missed what was going on.

One of the problems with making predictions about bad public policy is that sometimes you have to wait 20-30 years until after the policy was passed to see all the negative consequences play out, by which time people have forgotten about the initial policy changes that caused all the disruption.

But I got to skip those 30 years in San Francisco.  I never really paid that much attention to the city until I read a book called "Season of the Witch" written by a progressive about life in San Francisco in the 60's and 70's.  As I wrote previously:

What struck me most were the policies these folks on the Progressive Left had on housing.  They had three simultaneous policy goals:

1. Limit San Francisco from building upward (taller).  San Francisco is a bit like Manhattan in that the really desirable part where everyone wants to live is pretty small.  There was (and I suppose still is) a desire by landowners to build taller buildings, to house more people on the same bit of  valuable land.  Progressives (along with many others across the political spectrum) were fighting to have the city prevent this increased density as a threat to San Francisco's "character".
2. Reduce population density in existing buildings.  Progressive reformers were seeking to get rid of crazy-crowded rooming houses like those in Chinatown
3. Control and cap rents.  This was the "next thing" that Harvey Milk, for example, was working on just before he was shot -- bringing rent controls to San Francisco.

My first thought was to wonder how a person could hold these three goals in mind without recognizing the inevitable consequences, but I guess it's that cognitive dissonance that keeps socialism alive.   But it should not be hard to figure out what the outcome should be of combining: a) some of the most desirable real estate in the country with b) an effective cap on density and thus capacity and c) caps on rents.  Rental housing is going to be shifted to privately owned units (coops and condos) and prices of those are going to skyrocket.  You are going to end up with real estate only the rich can afford to purchases and a shortage of rental properties at any price.  Those people with grandfathered controlled rents will be stuck there, without any mobility.

Since reading the book, I have paid attention to stories on the rental market in San Francisco.  In short, it is just as screwed up as would have expected 40 years ago when both density and rent caps were put in place.

As San Francisco's housing crisis continues to pit long-term residents against the recent influx of affluent tech employees, Airbnb and other short-term rentals have become a source of tension. Today San Francisco Mayor Ed Lee and Supervisor Mark Farrell hoped to ease some of that tension by introducing reforms to the city's short-term rental laws that put a 120 day yearly cap on all short-term rentals. The package of amendments also introduced the creation of a new Office of Short-Term Rental Administration and Enforcement for the city staff to "coordinate in the administration and aggressive enforcement of the law."

Airbnb and other short-term rental services have come under fire in San Francisco because they take rental units off an already limited housing market. The current law caps short-term rentals at 90 days when the host is not present. If the host is present -- for example a room rental in an occupied home -- there is no yearly cap. Today's amendment package sets caps for both types of rentals. Mayor Lee said in a statement, "this legislation will help keep our City more affordable for homesharers, preserve rental housing for San Franciscans, protect neighborhood character and streamline permitting and enforcement under a fair set of regulations."

This is from a tech site that has developed a reputation, at least with me, for being astoundingly ignorant of even basic economics, so one has to make some guesses at what is going on here.  For example, it seems odd to say that renting a space on a short term lease rather than long-term somehow takes rental units off the market.  They are still being rented, are they not?  How could one describe them as being taken off the market?

My guess at what is going on here is that short-term rentals are likely exempt from some of the most onerous portions of San Francisco tenant law.   Likely, renting short-term allows one to bypass rent controls and charge more.  It also likely gives one some relief from the city and the state's horrendous tenant protections that make it virtually impossible to evict a tenant.  You lease to someone in SF, and you are stuck with them for life like a shark with a remora on his back, even if that tenant refuses to pay rent for years or constantly trashes the apartment.

San Francisco has created a system where they are absolutely guaranteed to have a shortage of rental properties.  Rather than address those laws that create the problem, politicians put their whole effort -- creating brand new agencies, no less -- to stop entrepreneurs from circumventing the madness and trying to provide housing.

Postscript:  The war against wealthy tech workers in SF is in full swing.  What SF would really like to do, I think, is close its borders and institute immigration controls to keep these folks out.  I know there are many parts of the world, including unfortunately our country, that work to keep poor uneducated immigrants seeking opportunity out.  But has there ever been a time or place in history where a particular place worked so hard to keep out rich educated immigrants seeking only to spend their money?

There should be a word for "entirely predictable unintended consequences".  The Germans have come up with some good words for complex ideas, like schadenfreude, so maybe we can outsource the task to them.

Anyway, I just finished a book called Season of the Witch, about San Francisco in the 1960's and 1970's.   Churchill once said that “The Balkans produce more history than they can consume” and I am reminded of this quote when reading about San Francisco in these two decades.  Written by a Progressive sympathetic to San Francisco's bleeding leftist edge (the author cannot mention Ronald Reagan without also expressing his disdain), it is never-the-less pretty hard-hitting when things go off the rails (e.g. the enablement of Jim Jones by the entire leftist power structure).

Much of the narrative is about the great influx of lost youth and seekers of alternative lifestyles into the city; the attendant social, crime, and drug issues this created; and a quest for tolerance and social peace.   As such, it is not a book about political or economic policy per se, it's more about the people involved.  But we do get glimpses of the policies that key players like Harvey Milk, Dianne Feinstein, and Willie Brown were advocating.

What struck me most were the policies these folks on the Progressive Left had on housing.  They had three simultaneous policy goals:

1. Limit San Francisco from building upward (taller).  San Francisco is a bit like Manhattan in that the really desirable part where everyone wants to live is pretty small.  There was (and I suppose still is) a desire by landowners to build taller buildings, to house more people on the same bit of  valuable land.  Progressives (along with many others across the political spectrum) were fighting to have the city prevent this increased density as a threat to San Francisco's "character".
2. Reduce population density in existing buildings.  Progressive reformers were seeking to get rid of crazy-crowded rooming houses like those in Chinatown
3. Control and cap rents.  This was the "next thing" that Harvey Milk, for example, was working on just before he was shot -- bringing rent controls to San Francisco.

My first thought was to wonder how a person could hold these three goals in mind without recognizing the inevitable consequences, but I guess it's that cognitive dissonance that keeps socialism alive.   But it should not be hard to figure out what the outcome should be of combining: a) some of the most desirable real estate in the country with b) an effective cap on density and thus capacity and c) caps on rents.  Rental housing is going to be shifted to privately owned units (coops and condos) and prices of those are going to skyrocket.  You are going to end up with real estate only the rich can afford to purchases and a shortage of rental properties at any price.  Those people with grandfathered controlled rents will be stuck there, without any mobility.

So I was reading this the other day.  It turns out there is a severe shortage of affordable rental properties in San Francisco, and lately there have been a record number of conversions of rental properties to private ownership.

With the area economy rebounding, San Francisco is in the midst of a housing crisis as many residents are evicted from their apartments. With rents strictly regulated, an increasing number of San Francisco owners are getting out of the rental business and cashing out their properties to turn them into co-ops. Steven Greenhut argues that rent control actually forces prices upward, especially over the long term, by diminishing the supply of available rental housing.

Update:  One recurring theme through the book is that progressive elements in SF saw their government and particularly their police force as "bullies".  They used this term a lot -- and they were right.  So it is interesting today to see all these progressives and how they act with power.  Turns out, they are all bullies too, just on different issues.

By the way, the Dirty Harry movies are way more interesting after reading this book.  Season of the Witch is what all this looked like to a progressive.  The Dirty Harry movies are what the same events looked like from a different perspective.