Revenge on Energy Providers
by neolibertarian
Summoning a Medieval-inspired rage against the financially important but socially digusting elements of society, leftists continue to thunder for a pound of flesh from the oil companies.
Even though corn prices have risen from $3 to $6 a bushel in the last few years and agricultural lobbyists just secured a pork-brimming agri-bill to guarantee price supports, trade protections and subsidies anyway, the left reserves all anger for the oil companies.
Of course, this is an incredibly emotional and reason-free impulse, as embodied (in a moment entirely lacking in self-awareness) by Derrick Z. Jackson in an op-ed for the Boston Globe. It's appropriately and ridiculously titled, "Getting Big Oil to feel our pain," which might as well be titled "Showing World Jewry How Mad We Germans Are About Versailles." I didn't realize that taxes and regulations should be meted out solely to make other people feel as though their irrational hatreds are being properly expressed and affirmed. Probably the worst part of the rant is here:In fact, Peter Robertson, vice chairman of Chevron, blatantly told the Senate panel, "I feel very proud of what we do."
Who will wipe the smirk off their faces?
That just says it all, doesn't it? Wiping the smirk off of some rich guy's face for the audacity of being proud to provide energy to the world economy. Might as well set up the stakes and get the fires a-burning, because Derrick Z. Jackson wants to show a Chevron VP how angry he is.
Whenever politicians talk about increasing employment and economic growth, who do you think provides the energy for that? Who is going to provide the energy that will transport those workers? Who is going to provide the energy to transport the goods and services those workers are to provide?
When the politicians passed a silly stimulus package to make the economic statistics artificially inflate (so they could show constituents they were 'doing something'), who do you think provides the energy? Those people have to make their way to the stores by car, bus or taxi and those stores have to order supplies in by truck, train or plane.
Now that energy is more expensive, guys like Derrick Z. Jackson want someone to blame - which is not just an irrational and immoral use of state power, but an absolutely counter-productive task as well. Energy companies are pulling in maybe 4 cents on the dollar, or perhaps 16 cents of a $4 gallon of gas. The US government alone takes something like 18 cents a gallon and the states take in more on top of that.
It's noteworthy that since a low in the 90s of something like $12 or $15 a barrel for oil (maybe less?) we've now hit a high of over $100, yet gas is not nine or ten times more expensive. Of course, many other factors feed into the cost of a gallon of gas, but it's hard to miss the fact that oil is so expensive. Are the oil companies secretly manipulating the spot-market rates? Almost impossible for somebody who doesn't have a lasting control over the natural resources in question.
Derrick Z. Jackson is made, and even though oil companies are engaging in voluntary trade that benefits both sides, he needs to make sure that his jealousy and outrage are translated into the most draconian expressions the government has available, punishing oil companies for not undercharging themselves and their shareholders into bankruptcy.
Obama and Talking to Enemies
by neolibertarian
I really like that Barack Obama was willing to go against orthodoxy and argue that America should always be willing to parley with its enemies. I disagree with the policy and the arguments for it, but the fact that he's willing to challenge conventional wisdom is commendable. The fallacy of tradition is often one of the weakest yet most sacred of logical fallacies.
Of course, I'm pretty sure Krauthammer has it right that this was not planned and was more of a spur of the moment, dogpile on Bush instance. It's also notable that all of his advisors are either hedging ('he meant mid-level representatives') or outright correcting Obama's statements - even though Obama has been both forceful and explicit in his pledge to meet with dictators, specifically mentioning Ahmadinejad.
Many of Obama's arguments for this policy are embarrassingly bad. He often uses historical examples, such as Reagan and Kennedy.
But Kennedy's summit with Khrushchev was a failure that probably encouraged the Soviets to be more aggressive, thinking that Kennedy was weak and easy to compromise. That summit is often blamed as a factor behind the Soviets putting nukes in Cuba.
And Reagan's summits with Gorbachev followed his previously critical stance toward the USSR, and even with Gorby he refused to abandon missile defense.
This doesn't mean that diplomacy and compromises are always bad, as they certainly provide countless positive results. But simply going to talk to any enemy, no matter what, is naivete or vanity.
If elected, President Obama's time would be far more productively spent supporting our allies than indulging the vanity of camera-hungry leaders like Chavez and Ahamdinejad. Instead of a Tyrants Tour, maybe Obama could spend his first year as President supporting our friends and allies around the world - meeting with reformers, dissidents, and the leaders of allied countries. It would make for a positive message that stressed the benefits of friendship with the US.
Of course, left out of the discussion is trade and commerce. For some reason, political observers find the character issue fascinating - wimp versus nuanced; courageous versus cowboy - and forget that the most important thing the US can do with other countries (except the specific ones we might go to arms against) is trade. Saying you want to forge a common bond with the world by limiting carbon emissions is one thing. Actually giving the people of the world access to the US market is far more meaningful.
While I'm sure the rest of the world is very pissy about Iraq and the US military even existing, and that a lot of diplomats and activists really care about the ABM, Kyoto or ICC treaties, the most impactful part of US-global relations is trade. Obama thinks the US should use its massive power to tilt trade in favor of itself. Even though we're by far one of the richest and most prosperous countries in human history, and even though trade creates benefits all around that are often far in excess of its temporary drawbacks, Obama still thinks that the US economy should be managed for the benefit of Americans - much to the detriment of everyone else.
Improving relations with the rest of the world is a lot more than just talking to dictators and diplomats. Ask him for the ability to compete fairly in the US market and suddenly Mr. Hope-of-the-World Obama clams up.
SF's Unrepentant Moralism
by neolibertarian
Coyote blog brings up the SF plan to force people to recycle or risk losing garbage services.
I agree with his point, this is stupid and wasteful from an economic perspective, especially since time is such a valuable resource. The economic justifications (more jobs, higher income from scrap sales, whatever else) are simply added to paper over the program. The idea of a practical justification offers a common-sense veneer to what is a profoundly religious-emotional policy direction; a lot of people out here have certain social preferences regarding business and consumerism and they want to see them legislated. Pretending that it makes some sort of fiscal sense gives cover to guys like Newsom (a relative moderate for SF) to advance the position. Although in SF even the moderates like Newsom and his Board of Supervisors allies tend to be pretty hawkish on the environment.
I'll add to morganovich's list the ban on using city funds to purchase bottled water (a practice they want to force on city restaurants) on the theory that: the plastic is bad, the transportation involved in shipping it is bad, dams and reservoirs like Hetch Hetchy are bad and it's morally wrong to profit off the sale of natural resources. Newsom also said city water is cleaner than bottled water, abandoning all but the last pretense of tolerance and openly admitting that the San Francisco City and County government is the ultimate arbiter in matters of economics, morality and now taste buds.
I'm a little surprised that SF business owners aren't more hesitant on these green issues. Businesses here differentiate themselves based on their greeniness (in addition to their authenticity or exclusivity) in ways that businesses in other areas pride themselves on quality products or good customer service (something clearly not native to the Bay Area). There's a pizza place in Marin County that is entirely solar-powered (well, it contributes solar to the grid during bright periods and draws power in exchange during dim periods) and tons of people go to it solely for the greeniness of it. I go because the pizza's pretty good, like Italy meets New York. But if governments around here are going to force everybody draw from solar energy, then that establishment will have lost its edge - a big loss both for the hundreds of thousands they shelled out to buy the panels and for the money they've spent on promotional boxes and other materials with the solar bragging rights printed on them.
Of course, there's something in the culture here about bossing people around. Even being on a cell phone in pbulic, especially on some form of public transportation, can bring intense stares. On several occasions I've seen people stand up on buses and literally try to stare somebody into hanging up, which usually works. One lady was so mad that every time a guy on his cell phone would say something (he was a little loud compared to the people here, who can be shy and whisper quiet) she would open her eyes wide, lift her eyebrows, and jerk up out of her seat to stare at him. It was very fluid and aggressive and she came off like some sort of psycho killer with the flaring eyes. But the point is that she felt like she needed to be the moral arbiter and boss that guy around - who does he think he is, speaking slightly louder than normal IN PUBLIC?
People are very prone to lectures here. My girlfriend, a very conscientious person, was lectured at a laundromat when she removed someone's abandoned undergarment from a dryer and it fell on the floor. The lecturer at first pretended to think that it was her garment and he was helping her retrieve, but when she denied ownership he started edging quickly into a (low-volume) lecture delivered bare inches from her face. If you let your dog chase pigeons in the City, beware the lectures from passersby defending the pigeons from your assault. Earlier this week in my parking garage I was told (while carrying a newly purchased plastic shelf set) by a very self-satisfied middle-aged woman that "I just don't do Wal-Mart."
It's a beautiful area with a nice, cool climate that suits me well, but the people here - though often polite and interactive - can be narrow-minded, moralizing busybodies with a lecture always at the ready.
Democrats Embrace Protectionism
by neolibertarian
The Democrats, being both extremely insecure against charges of insufficient patriotism and being extremely awkward in their continuing push for faux-socialism, are moving more wholeheartedly against their supposed internationalist credibility.
We're supposed to believe that, because the Democrats want to cave in to pressure on the war in Iraq and in 2003 they wanted to listen to whatever France and Germany said, they must be more popular in the rest of the world. While it seems fairly clear that leaving Iraq would earn us no friends and alienate allies in the region (now tasked with fighting Iran's influence alone), I don't see how the Democrats' protectionism is going to win friends.
Obama and Clinton both promised a few weeks ago that if they could not secure agreement from Mexico and Canada to renegotiate NAFTA, they would both use their authority (as President) to withdraw from the agreement. Of course, Mexico and Canada are both sovereign countries that can't just be forced into obligations and that have their own problems with free trade. The difference is that Canada and Mexico want to make trade freer, whereas Obama and Clinton want trade to be less free.
I recall that in 2004 John Kerry made some very xenophobic comments about opening firehouses and schools in Iraq and closing them in America. In other words, the Democrats want us to help poor people as long as those poor people are in America; foreigners can go to hell. Nobody much picked up on this line, which I think displays a severe moral and philosophical failing of the mainstream Democrats.
Well that tactic is back and stronger than ever, now amplified with a general repudiation of globalization. In complaining about a government appropriation that went to a joint US-EU partnership, Rahm Emanuel had this to say:Having made sure that Iraq gets new schools, roads, bridges and dams that we deny America, now we are making sure that France gets the jobs that Americans used to have...
This is a dreadfully fascinating statement that should be recognized as xenophobic, isolationist and protectionist. Any politician who uttered the same words but with 'black people' inserted for France and 'white people' inserted for Americans would be run out of national politics on a rail. Rahm Emanuel is a stirring up primal hatreds for the sake of cheap political points and the foggy prospect of a minor and temporary political gain.
LaRouche and Buchanan seem to grow ever stronger in the Democratic party's philosophy. So why are people who style themselves as cosmopolitan, international, educated and tolerant so busy trashing foreign trade, foreign outsourcing and foreign receipt of US aid? In my opinion, a few reasons.
First, leftists are insecure about having their patriotism questioned. They think it's extremely unfair (even as many of them openly admit to their ambivalence and hostility toward the US) and they nurse wounds over it. Second, leftists are already opposed to spending money on Iraq and opposed to capitalism's ever-shifting markets that sometimes result in US job losses.
Since it requires no actual policy changes, this is merely a matter of linking the issues to shore up a weak point. They turn their opposition to the Iraq war -a perceived soft spot on the patriotism front- into the REAL patriotism. In other words, "we're SO pro-America that we don't want to spend on foreigners." Then they take opposition to globalization, corporations and capitalism and turn it into patriotism as well.
The result is not at all pretty and displays both intellectual dishonesty and an arrogant disrespect for those unfortunate enough to be caught on the wrong side of their rants.
In the end, we find three things:
1. The party against angering the rest of the world thinks that all the global economy should be subverted to the whims of America, no matter how loudly they oppose that.
2. The party against forgetting the basic physical needs of the poor wants to let the foreign poor twist in the wind for domestic political concerns.
3. The party against questioning another's patriotism will impugn your patriotism if you disagree with their isolationist and socialist agendas.
Don't yell at me for painting Democrats with a broad brush. Any Democrat who doesn't think that House Democratic Caucus Chair Emanuel's xenophobia should represent the whole party can direct complaints to him at the Democratic Caucus: call 202-225-1400.
If anybody does bother to call, you might ask how the Democrats can heal wounds with the world while restricting their access to our markets and telling them that foreigners don't deserve jobs as much as Americans do.
San Francisco Hates Competition
by neolibertarian
Coyote referenced the SF anti-chain ordinance that punishes chains (I think a chain is defined as having 10 or more national locations) when they try to build in the city. He correctly points out that it should be considered unconstitutional and that it's anti-wealth and anti-consumer. Of course, this town is just crazy.
Case in point, there was a local movement to stop a Starbucks from moving into the Richmond district on Geary Blvd. The movement gathered petition signatures and just last week was successful in stopping the big bad chain from offering a popular product in a City that has Starbucks EVERYWHERE. There are probably a dozen Starbucks locations within six blocks of my office downtown, plus tons of Peet's Coffee locations.
But aside from the silliness of blocking a chain coffee store in a town that loves chain coffee stores is the absurd reasoning they used to block the change. The activists wanted to preserve the community, but the Starbucks was going into a freaking Toyota service center. Is that really the San Francisco feel that everybody craves? Just more silliness.
While keeping out chain stores is absurd and unfree, it gets a lot more press than San Francisco's housing regulations. The housing regulations, though, are far more damaging. They require a certain percentage of units be below-market and the rest can be 'market rate.' The result is that the market rate housing goes up because the investors need to draw on the regular units to afford the cheap units. Some activists want to require that a majority on units in new housing developments be 'below-market,' maybe even a two to one ratio. This kind of socialist price control never bodes well and always ill effects. The same people here complain about building large high-rises and want everybody to live in the City and walk or ride a bikes. They actually oppose new parking spaces! Crazy freaking town.
If they really want to live up to their environmental ideals and have fewer people drive then they should make it easier to live in the city by stopping their price-increasing socialist policies and allow more units to develop.
Or, better yet, stop worrying whether a Toyota Service Center will have chain coffee and worry more about why the murder rate is so high.
Update: I posted a comment on Coyote's thread.
Living in the area, I have to say that San Francisco is a truly beautiful place, especially as viewed from across the bay. But driving around it can be pretty inconvenient, parking is often a nightmare even for residents, and trying to find a drive-thru or a public restroom can be hell.
The reasoning behind all the crazy and stupid laws is always either xenophobic (we're special and better than other places) or enviro-fascist (cars are evil and people driving them need to be assaulted and threatened with bikes, like Critical Mass).
I think that the crazy, natural process of building housing is what made SF beautiful and interesting. Artificially engineering that look is, to me, like distressing or antiquing a piece of furniture. Sure, that false-distressed look makes it fashionable, but it's just fake. If you really want SF or any place to look interesting then repeal zoning laws. Let people build Second Empire monstrosities next to Art Deco apartments next to whatever. That would give the place tons of character, plus it would be free and constitutional.
The one addition I would make is that the views should be commoditized. The view of the water is both very valuable and very contentious. By allowing people to own the views we could reflect the fact that a Pacific Heights house was purchased in part for the view. I don't know how to go about implementing it, but it seems like the best way to deal with the conflict over how high buildings by the bay can be.
Economic Principles of Charity
by neolibertarian
Charity is for soothing your conscience. I put that assertion up front, because if it were actually meant first to help others, hopefully people would put more thought into how they go about charity.
First, it's often considered a good deed to go to an impoverished, destitute area and build houses, schools and other buildings. This is a waste, especially in regard to third world countries with high unemployment. Places like that may need supplies, but they don't need the unskilled labor that assembles the buildings. They have so many unemployed people that giving the gift of free labor is almost insulting; labor they have.
We should apply the principles of opportunity cost and comparative advantage to charity.
Comparative advantage tells us a story. If person A and person B both know how to produce two goods, cheese and wine, then they should each focus on what they do best. If person A is better at producing cheese and wine both than person B, but better at producing cheese than wine, then person A should make cheese. Even though person B can't do cheese or wine as well as person A, person B is better at wine production than cheese production, so should focus on wine. So even though person A is better at both than person B, they both gain by focusing on their respective individual strengths. Person A could make more cheese than person B, but could be even more productive by making wine and trading it for cheese. This is a simplified illustration of why free trade works.
A related theory is opportunity cost. The opportunity cost for person A of making cheese is making wine (in this hypothetical two-goods world). If person A could make $100,000 worth of wine in a year and $70,000 worth of cheese in the same period, the opportunity cost of making cheese over wine is $30,000. Person A would lose $30,000 making cheese instead of wine, compared to what he could have made (though in absolute terms he may have made money, he made less than he could have). Other factors could be introduced, such as the personal joys, social benefits or invest benefits of cheese over wine, and person A can weigh these in his decision. Just from a simplistic monetary view, however, person A would be better off making wine.
If charity is really about helping others and not about feeling good about yourself, it makes more sense to work your normal job and just send a check to charity. This is especially pronounced for those who make more money working. The further your salary is from the cost of simple labor (whether it's building homes or feeding the homeless) then the more pronounced the loss to charity gets.
Charities would be better off with the equivalent of a surgeon's weekly take-home pay than with a week of his unskilled labor throwing mashed potatoes on a tray in a shelter. Even if as a result they had to pay people to help out, they would probably be better off if rich people stayed at work and sent a check instead of halting work to 'help out.'
It's probably true, though, that a lot of charity work is done for selfish personal reasons like self-satisfaction, an altruistic image with others, or something else besides charity itself.
Rather than giving your time by going to a shelter or a foreign country and 'helping out,' people (this is truer the higher your income) would simply pledge to turn over their income for a certain period of days or weeks.
Additionally, aid would better targeted at foreigners, where the need is far more pronounced and the exchange rate is with you. A dollar contribution goes much further in sub-Saharan Africa than in urban Chicago. Besides the exchange rate, the need itself is much greater in places like sub-Saharan Africa (even though just a few decades ago Africa as a continent exported food, yet now imports it).
Unfortunately, organizations like United Way cater to the bigotry of provincialism by promising that your contributions stay "within your community." Isn't my community all of humanity? Once we're talking about people I've never met, why do I care about the local poor more than the foreign poor? I mean, if my contributions are about getting bums out of sight in my neighborhood, then provincial charity makes tons of sense (it's not necessarily illegitimate to have this motivation, though it is extremely selfish and insensitive). But if I really want to help people because of my love for the downtrodden, then I should want my dollars to first go to places where good nutrition is scarce and where vaccines are needed to stave off endemics - not where the community center needs new carpet or where people need to move from an apartment to a house.
A big part of the problem is that the charity mindset is very much in the past, the Middle Ages and earlier, even while the economy is well beyond that. Our impression of good works and charity is getting your hands dirty, mingling with the people, handing out bread and so forth. If we want to model ourselves after some idealized image of Charitable Man, then so be it. But for those who want to do good more than look good, it's time to apply a few economic principles:
- don't give charity in the form of something that's already cheaply available, like food aid to a food-producing nation, or unskilled labor or a high-unemployment country
- remember opportunity cost and comparative advantage, focus on what you're best at by going to work and then donate the proceeds to charity; they'll have more money to focus on what they do best: charity
- go where the need is, not where the people speak the same language as you; the American poor have access to Medicare and food stamps, but the foreign poor don't
Or, ignore my advice; spend a few hours next Thanksgiving at a shelter and feel good about yourself, and don't think about what contributions from your income could have bought in terms of blankets, meals or vaccinations.
Steve Jobs: Plus Five Cool Points
by neolibertarian
Just after making news last week for publicly criticizing the recording industry and flirting with the idea of trading music without DRM, Steve Jobs (the Apple CEO) criticized teachers' unions (via Club For Growth).AUSTIN — Apple Inc. CEO Steve Jobs lambasted teacher unions today, claiming no amount of technology in the classroom would improve public schools until principals could fire bad teachers.
Jobs compared schools to businesses with principals serving as CEOs.
"What kind of person could you get to run a small business if you told them that when they came in they couldn't get rid of people that they thought weren't any good?" he asked to loud applause during an education reform conference.
"Not really great ones because if you're really smart you go, 'I can't win.'"
In a rare joint appearance, Jobs shared the stage with competitor Michael Dell, founder and CEO of Dell Inc. Both spoke to the gathering about the potential for bringing technological advances to classrooms.
"I believe that what is wrong with our schools in this nation is that they have become unionized in the worst possible way," Jobs said.
"This unionization and lifetime employment of K-12 teachers is off-the-charts crazy."
Awesome. Good job, Jobs. Maybe I'll have to rethink this whole Mac thing.
Dell, on the other hand, came to the defense of blood-sucking unions, saying they improved working conditions for teachers. Apparently Dell thinks that somehow pre-union educators worked in an environment akin to The Jungle by Upton Sinclair. Since when do people with bachelors' degrees qualify as an oppressed underclass?Dell responded that unions were created because "the employer was treating his employees unfairly and that was not good."
"So now you have these enterprises where they take good care of their people. The employees won, they do really well and succeed."
Dell also blamed problems in public schools on the lack of a competitive job market for principals.
I am writing this blog, ashamedly, on a Dell. My last computer was also a Dell. What a topsy-turvy world! Up is down! Black is white! Sigh.
Jobs had a really cool idea to add about education.Earlier in the panel discussion, Jobs told the crowd about his vision for textbook-free schools in the future. Textbooks would be replaced with a free, online information source that was constantly updated by experts, much like the online encyclopedia Wikipedia.
"I think we'd have far more current material available to our students, and we'd be freeing up a tremendous amount of funds that we could buy delivery vehicles with — computers, faster Internet, things like that," Jobs said. "And I also think we'd get some of the best minds in the country contributing."
This makes tones of sense. Since schools are already buying computers, giving students and educators access to knowledge is a no-brainer. I use Wikipedia almost every day, though students should have access to something more professional and a little more thoroughly fact-checked (not that professionalism has made old-style media any more reliable than new-style media, but it would be nice to have more safeguards when it comes to children, who shouldn't be expected to be as skeptical as adults).
What I really appreciate is that it could eliminate the drawbacks of textbooks: their slowness to update (requiring a whole new purchase) and their limited storage capacity for detailed information (limited by weight), as well as the infinitely superior indexing abilities of computers versus printed text. I would've appreciated, as a student, more in-depth information on some subjects, and neither the teachers nor the textbooks were always able to deliver.
The real problem with a textbook-free student body is that textbooks are versatile and inexpensive. They go lots of places, including home, and don't require the investment either up-front or in maintenance that a computer does. Until e-Ink gets a lot cheaper, it will be hard to overcome the advantages of textbooks.
The idea of having some professional mega-encyclopedia (Megalopedia!) is a great one, even if it can't yet replace textbooks. Schools could buy it bundled in packages with other services like Lexis-Nexis (which is quite expensive). The benefit is that students could go in-depth and learn about tons of subjects with ease. The cost would be moderated downward by the fact that Wikipedia is enormous and free.
National Health Spending
by neolibertarian
As repeated in this column (via Coyote) Americans spend more of our GDP on health care than other countries, we're often told. I'm willing to accept that this is substantively true, and I'm willing to accept the argument by libertarians, including Coyote, that this figure is inflated somewhat due to cost-insensitivity of health consumers. I would further add that medical licensing contributes to higher costs, since it means only the most-educated and most expensive practitioners are licensed, and that the United States health consumers bear much of the burden for researching drugs since pharmaceutical companies make lower profits elsewhere. What I don't concede is that simply spending more than other countries, adjusted for population and wealth, is necessarily bad.
We have numerous interest groups telling us that we need to spend more on per-pupil spending in order to improve education. If a study came out saying that Americans spent twice as much of our GDP on elementary and secondary education as any other country then these groups would hypothetically claim victory. Of course, in reality the teachers' unions will always demand more money and more protections, but at least in theory what they want is more spending.
Why is it that, prima facie, more spending in education is a sign of progress and more spending in health care is a sign of failure?
If Americans put more into health care, then Americans will generally have far better health care. We already see that this is to some degree true, just because there are no months-long waiting lists for life-saving treatments like in Canada and Europe. Shouldn't we be happy that there's more money going to health care, instead of bragging that when it came to saving lives, we're proud to cut corners? I'm not saying that being inexpensive is bad, but if you have the money to afford it, your health seems like it should be high on the list for dollars.
The solution to health care is not, as the above-cited column identified, to eliminate the profit motive. Besides being impossibly socialist, this is also going to make it so that the best minds spend less time and energy on health care. It's not just doctors and nurses, but it's also the engineers, scientists, chemists and entrepreneurs who pour money into researching better technologies, better medicines, better treatments and better machines. Without a return on investment in the medical field, the time and energies of the people who advance medical science will generally be redirected into more profitable areas.
The profit motive is precisely what moves pharmaceutical companies to make wonder drugs, and moves medical equipment companies to pursue better MRI machines, better needles, better artificial organs. These things are important to us, they save our lives and the lives of our loved ones. As such, we will pay mightily to have them, and the profit motive is what draws researchers and capitalists to invest in them. Without the profit motive, we'd need massive infusions of government funding or charitable donations to even start to make up for the lost venture capital.
We should want money to be readily available in health care, as long as we're willing to bear the burden. That doesn't mean spending itself is always good; money shouldn't be readily wasted. But better too much than too little investment in life-saving.
The solution is to increase the choice of consumers.
Health Savings Account should be uncapped, so people have more income to make their own health-care purchases; half those using existing limited HSAs were previously uninsured.
There should be no minimum requirements for insurance products; if people want $10,000 deductibles and don't want to have coverage for acupuncture, IVF, chiropractors, or substance abuse treatment (all of which CA requires insurers to offer), then that should be their choice. More people will be able to afford insurance if the government stops forcing them to choose between expensive plans or no insurance.
Insurance shouldn't be for expected medical expenses, only for the unexpected. Your car insurance doesn't cover oil changes and the gasoline bill, and your homeowner insurance doesn't cover light bulbs and the electric bill. Medical insurance should be for catastrophes, not for just visiting the doctor. Insurance would be cheaper and individuals would be direct consumers of health care, instead of paying for the insurance company to pay for the health care. This would probably lower costs somewhat, as individuals become more cost-sensitive to their health care consumption.
It's also important to significantly loosen medical licensing and drug licensing requirements. Individuals should be able to go to inexpensive clinics where the staff is trained but not necessarily licensed in the formal manner, especially for relatively routine procedures like a few stitches or getting a cast. People should also get access to drugs that potentially could improve their health or save their lives. Eugene Volokh calls this "medical self-defense" but "freedom" works just as well.
It's also critical that jury awards be capped. Every state has some limits on the punishment that a criminal can receive for crime, recognizing that life imprisonment is severe punishment for stealing a candy bar. It's only fair that punitive damages claims should also be capped in some manner (say, certain fixed dollar amounts, or maybe fixed percentages of the actual damages). This would make it safer to do business without the risk of a jury destroying your career, your business or your product.
The important thing to remember is that simply spending a lot on health care is not necessarily bad; the amount we spend in a particular industry is often a good reflection of how highly we value the fruits of that industry. Instead of wagging fingers at medical-field capitalists, wag your fingers at tight-fisted socialists who cause shortages and rationing through their anti-market and anti-health escapades.
Competition in Government Functions
by neolibertarian
Governments generally provide slow and unfriendly service, at whatever fees they want to charge, and to be grossly overpaid for the inconvenience. I won't bother to rehash the evidence on this point at this time.
The solution for the poor customer service of the government is to end the monopoly of government agencies, wherever practicable. This isn't a perfect solution to the problems of government, just a possible way to improve the delivery of functions the government (often illegitimately) performs.
The first is not as controversial, at least among libertarians, and certainly isn't all that new: Schools should be privatized, sold to charitable organizations, faith-based organizations, educational concerns, or other interested parties. The teachers' unions are frightened of this because ending the school monopoly takes away so much of their power and increases pressure on educators to perform, but government kills creativity and squashes innovation.
People are creative, intelligent and crafty; we should be putting those attributes to work on constantly finding new ways to improve education. Getting bloated, non-responsive, irresponsible government as far from the delivery of education as possible is one way to do this. More critically, the government shouldn't be allowed to tell us what to value and what to think; it does both of these things in school, and I can recall many times in even elementary school when I was told to dislike guns and cigarettes and alcohol and to value other things. The parents should be allowed to make those choices and exerting pressure directly on the schools to that end. Even if they choose wrongly from a factual standpoint, like utilizing schools that don't teach evolution, it's better that they were free (besides which, evolution has truth on its side, and next to truth the government is pitifully weak).
Outside education, general government licensing offices should be re-designed so that they can also be largely privatized; just like private accounting firms and computer programs exist to help you interact with the government in filing taxes, we could have private agencies and services that interact with the DMV, the alcohol commission or whatever else for you. Just like the DMV and other agencies take some of their operating costs out of the fees you pay, the private alternatives could as well - though taxes would have to be cut, somewhat, since the government agencies get some of their money from taxes but private alternatives would have to self-fund from fees. As a compromise offer, there could possibly be some subsidy from the state for poor people, though poor people don't get subsidies in licensing fees as it is, I should note.
So you'd go to an interaction agency, they'd be friendly and fast, offer clear explanations and spend some time explaining the licensing process to you, and then behind the scenes they'd interact with the DMV or other licensing board (ideally, by just faxing the completed forms and fees to the government). The normal government office might have to be accessible to the public as well, but at least then there'd be some competition and the lines would be shorter (it's possible the government office would get WORSE, since it'd mean less work and those guys rarely get fired anyway).
Rather than dividing and specializing into disparate offices and agencies, free-market licensing outfits could combine their offered services; you could do one-stop shopping for licensing needs, which would be especially helpful for small businesses. Imagine wanting to start a small business and being able to find a person willing to, for a fee, tell you the necessary regulatory requirements, fill them out and file them for you, thus saving you time as well money by avoiding mistakes. This isn't all that different from what some business lawyers do, but it wouldn't require a law degree and thus could be done more inexpensively.
This may take numerous acts of government to make it possible, and in some cases it would probably be illegal under current law. But I don't see why you should be able to pay somebody to do your taxes and not pay somebody to get your various business licenses for you.
The model I've described (not for schools, but for licensing and other government bureaucracy) is scarcely different from an attorney or a CPA. A third party entity, contracted by the citizen for a wage or commission, acts on behalf of the citizen in interactions with the government. Very simple.
I'm not talking anything super-crazy here. The government has a monopoly, and we need to find ways to increase the free-market buffer between government bureaucrats and actual human beings in the American public. Maybe then we could get some decent customer service out of them.
Needless to say it would be far better if essentially all these regulations were made voluntary, if not abolished, but it's better than the status quo.
I'm linking this post to my post on making a workable future for unions, because they both strike me as similar.Related Posts (on one page):
- Competition in Government Functions
- How To Save Unions
Institutionalized Circle of Theft
by neolibertarian
1. The government hires employees who become members of a public employees' union.
2. The employees' salaries (paid for by taxes) get union dues deducted and sent to the unions.
3. The unions spend much of this money lobbying for the government to hire more employees, and spends the rest getting pro-government politicians elected.
4. More employees are hired, thus providing more dues to the unions, and thereby providing greater job security to the politicians who support them.
The politicians get support, the unions get power and the employees get job security and criminally-bloated paychecks and retirement benefits. The rest of us have to work harder and harder to pay the progressively higher taxes that finance the ill-gotten gains of the public employees.
Moreso than the private sector or the average person, public employees are surly, defensive, lazy, unambitious, cranky and self-righteous. They get paid, on average, more than the private sector would pay - and are infamous for absenteeism and laziness.
You want to be apathetic? Do it on somebody else's dime. Get a job, you bums.
How To Save Unions
by neolibertarian
It came to me today how labor unions can save themselves from slow, agonizing extinction. Of course, it's very possible that they will continue to stagger along for a very long time; advantageous laws, patronage from politicians and a nostalgic place in the hearts of many leftists can make a powerful impact. But as I see it, unions are clearly dying; their membership is way down, and even unions know they're in trouble: that's why several of the biggest unions split off to form the Change To Win coalition.
My idea is that, instead of pursuing monopoly power through government grant, unions should compete in offering services to members and businesses. Labor unions should model themselves as specialized employment agencies.
It works very simply. Structurally, construction jobs are temporary. Even if they last a year or more, you need to create a skilled and knowledgeable workforce from the start of work and then fire them when the job is over. This sort of contract work lends itself to a temp-agency style, since you can't hold onto a mainstay workforce but rather need to quickly create and then dispose of one. But unlike temp agencies, the remodeled unions (I'll call them Labor Agencies for the rest of this post) would have to offer businesses the opportunity to hire higher-skilled workers. Instead of general office work, people skills, light typing, phones, etc., you'd need trained carpenters, pipefitters, crane operators, etc.
The Labor Agencies could offer businesses a chance to browse through a listing of available, highly-trained craftsmen - Agency members. This is valuable to businesses, who would have clear access to skilled labor.
This is inherently valuable to to Labor Agency members as well, of course. They'd be listed for jobs and be offered more work (ideally). The Agencies could go further, though. They could get group rates on tools and equipments (everything from work boots to specialized drills) thus helping their members stay on top of the technological curve for less money. Agencies could also offer discounted training programs and classes, so that their members stay up to date on new materials, methods and practices - including continuing education in their respective fields (the way lawyers and doctors have to stay informed of new developments in law or treatments). Training could also be a method of pseudo-apprenticeship, where recent HS grads could learn the skills to become the next generation of skilled laborers.
Having educated members makes the agency look good to the business clients to whom it's offering skilled labor. Offering training and product discounts to members makes the agency look good to prospective members. Greasing the wheels between employers and potential employees is good for both.
Obviously, my aim is that these Labor Agencies would not seek to set prices the way they currently try to do. Instead of trying to bully employers into endless benefits and nuisance work rules, Labor Agencies would avoid such overt interference in the market. The agencies would be a marketplace, in that employers would try to bid low for labor and laborers would seek to sell high. In either case, the agency would not be fighting a losing battle against economics.
How would the agency gain revenue? Good question. There are several options. I'll list the ones that come to mind, though it would probably be impractical to pursue all of these options.
- Charging laborers for membership perks. Given the access to job listings, to discount rates on work equipment (like a CostCo or Sam's Club) and to continuing professional education, this is not unreasonable. It might be better to make listing free (encouraging every skilled laborer to join the list) and only charge for access to the discounted equipment and the continuing education.
- Charging businesses to place qualified laborers with a job. This is where real-life temp agencies make money and this makes the most sense to me.
- Taking a portion of the income from sales of work equipment or from the tuition paid for continuing education. This is a hidden-charge version of charging for membership, and is less reliable (not all members will take advantage of these products, and not with the regularity of simple membership). It would drive up the costs of providing these two benefits, when the advantage is supposed to be how inexpensive they could be.
The best combination is probably charging businesses for placement (like a temp agency) and charging members for the benefits of membership (again, like CostCo). Another benefit to provide for members is group health insurance. People will be more likely to join with the offer of regular health insurance. I know a number of staffing/temp agencies offer decent group health care, so it's probably quite doable.
In any case, unions are dying and it makes the most sense to try and offer value to potential members and to potential clients, rather than throwing tens of millions into election fights.
Then and Now: Progress and Stasis
by neolibertarian
In the time of John Quincy Adams' presidency and Henry Clay's candidacies, those favoring economic growth, social progress and national achievement were in favor of limited public investment to attain those goals. This included a nationally-chartered Bank of the US, investments in canals and highways (known as 'internal improvements'), tariffs set protectively higher than the level needed for basic government funds, and even endowments for science and the useful arts (like the Smithsonian, or an American astronomical observatory).
Those who opposed these measures, most notably Andrew Jackson, generally did so from a perspective of being anti-growth, anti-business, anti-paper money, anti-banks and to some degree anti-capitalist.
It's interesting and confusing to us in modern times to see that the pro-capitalism politicians wanted government intervention to help push along their economic vision and the anti-capitalism politicians wanted to limit the size of government itself. The roles are reversed today, probably because technology and capitalism have worked together so well. Those against economic change want the government to come in and slow things down, as opposed to the Clay-Adams National Republicans who wanted government to speed things up.
The tactics may have changed, but the Democrats are still much more cautious of economic freedom and change than the Republicans.
Fighting Poverty or Fighting Wealth?
by neolibertarian
The traditional self-interpretation of leftists is that they are the (only) ones who fight against systemic poverty. They condescend to help those miserable souls who are permanently mired in poverty. Without the help of their betters, how will the wretched ever survive?
Of course, more often this cover story is peeled back to display a raw, unprincipled class-warfare struggle. Rather than genuinely wanting to fight poverty, leftists often seem more fixated on fighting (or disparaging) wealth.
Unfortunately, Janna Goodrich almost completely forgot the help-the-poor talking points in this article (vie Coyote), and revealed her conflicted feelings in her hurt-the-rich efforts. Here's a substantial quote from a post about recent Democratic efforts to cut interest on student loans:Yet education is one of the best engines for upward mobility and poor students cannot afford to pay for higher education on their own. Their families don't have the physical collateral to borrow money in the private financial markets nor the savings to pay for the tuition outright. Financial markets are incomplete in the sense that a student cannot acquire a loan against the collateral of future earning power (except with the help of the government and the rules and regulations to ensure such help). Hence, poor students need either loans guaranteed and/or subsidized by someone or grants and scholarships.
The "rugged individual" would naturally just saddle the horse, ride off to college, and work full-time through his or her college (most likely a very long and often interrupted) career but such rugged individuals are few, jobs paying enough for this are even fewer, and the whole setup would cause a lot of these individuals to become rather ragged. Not exactly the best case to guarantee upward mobility.
But assuming that upward mobility is desirable in a society, who should pay for it? People with degrees earn more, on average, than those without them. It would seem sensible to have the students themselves pay back most of their financial aid as happens in a loan-based system.
On the other hand, the wealthier students often get their educational expenses completely funded by their families. It is as if we gave the wealthier students grants and the poorer students loans. But if we gave poorer students mostly grant-based aid we'd be asking for the rest of the society to subsidize those who are one day going to be wealthier than the average citizen. Two different concepts of fairness or equality are at play here and I'm not sure if both of them could be achieved at the same time.
--J. Goodrich
I'll summarize her journey for you and map out where it is in the blockquote.
A) first two paragraphs - poor people need us to help them pay for college
B) third paragraph - poor people that go to college will get money and become the enemy
C) first two sentences of fourth paragraph - they aren't rich yet, and they need our help
D) third sentence of fourth paragraph - they will become rich, they should help themselves
Newsflash: poverty is bad. If people get out of it, then we should see it as an unalloyed good, not as a mixed blessing. If you're a leftist, and think that the government should spend money and coercion on things you support, then you should like the government pushing its weight around here.
Now, as it happens, I agree with her statement that the students should pay back their own loans (or, as it happens, get family, friends, spouses or charitable organizations to help them out) rather than using government fiat to lower the rates or public funds to pay it off. Public funds added to college education just make it easier for colleges to charge more. Reducing the rate of return on college loans makes it harder to attract investors to pay for it. Don't screw with the market - especially since college loans, though often enormous in amount, are not a terrible burden on credit reports.
It's just hilarious to watch her thoughts go around in circles, thinking that in all cases she should support the poor and despise the rich. This is akin to racial affirmative action, except the protected category changes here while race is considered permanent; those poor today could be tomorrow's wealthy. God forbid we should ever see a poor person propelled to industry and prosperity. Nope. They should humbly toil along and wait for the Congress to pass more benefits mandates and minimum wage laws.
Of course, even more than opposing wealth, Democrats want to solidify the central planning power of government. Rather than let poor people get out of onerous tax burdens (it's frustrating to see even $50 taken out of a weekly paycheck for withholding when that could be groceries for a couple people for a week), Democrats want to raise the minimum wage. The minimum wage hike WILL hurt the poor, whether it's through unemployment, inflation or benefits reductions. But cutting taxes that people pay (especially the Earned Income Tax Credit) would give poor people room to breath without any of those ailments. The most direct cost is simply the lost revenue to the government (assuming that ensuing economic growth doesn't offset it, to borrow from Laffer).
It's a good thing when the poor get more money. The best way to help the poor get richer is to cut the taxes and regulations that block them. That includes cutting those taxes and laws against businesses that make it more difficult to hire people, or that make it necessary to raise the cost of goods that people wish to buy (even if a poor person makes no extra dollars from one year to the next, if the costs of goods goes down, then his or her relative financial situation is improved).
Of course, cutting taxes and letting the market take effect prevents the central planner from taking the credit, so that's right out the window for lefties.
How Ignorance Hurts
by neolibertarian
Senator Byron Dorgan and Senator-Elect Sherrod Brown had an op-ed in WaPo yesterday bashing an open trade policy. Fortunately, tons of people have already debunked their arguments.
These guys hit on almost all the arguments against more open trade (except for overt racism against foreign workers and blaming a Jewish conspiracy). I normally don't buy into line-by-line fisking because it can detract from the cohesiveness of both my opponent's argument and of my rebuttal. But I'd like to refute nearly everything they said (even as others beat me to it - see CFG for a few). I'll post the entirety of their opinion piece, and then I'll do a rebuttal.How Free Trade Hurts
By Byron Dorgan and Sherrod Brown
Saturday, December 23, 2006; Page A21
Fewer and fewer Americans support our government's trade policy. They see a shrinking middle class, lost jobs and exploding trade deficits.
Yet supporters of free trade continue to push for more of the same -- more job-killing trade agreements, greater tax breaks for large corporations that export jobs and larger government incentives for outsourcing.
Last month voters around the country said they want something very different. They voted for candidates who stood up for the middle class and who spoke out for fair trade. They did so because they understand what's at stake.
Over the past 100 years, Americans have built a thriving middle class. It's the envy of the world, and it didn't come easily.
At the turn of the 20th century, child labor was common; working conditions were often abysmal; there were no enforced workplace health, safety or environmental requirements; no unemployment insurance; and no workers' compensation. Workers were attacked and killed for the sole reason that they wanted to form a union; there was no 40-hour week, minimum wage, job security, overtime pay or virtually any other limit on the exploitation of employees.
America was split dramatically between the haves and have-nots. It was a harsh work world for many: nasty, brutish and, too often, short.
Worker activism, new laws and court decisions changed all that during the past century. As they did, a middle class grew and thrived. By mid-century, it became the engine that drove an ever-expanding economy in which benefits were shared by tens of millions of Americans. The American Dream of a secure, well-paid job with benefits, a nice house and a high-quality public education seemed within reach of everyone who worked hard and played by the rules.
That is what's at stake when we talk about trade policy: America's middle class and the American Dream.
The new mobility of capital and technology, coupled with the revolution in information technology, makes production of goods possible throughout much of the world. But much of the world at the beginning of the 21st century looks a lot like the United States did 100 years ago: Workers are grossly underpaid, exploited and abused, and they have virtually no rights. Many, including children, work 10, 12, 14 hours a day, six or seven days a week, for only a few dollars a day.
The result has been a global race to the bottom as corporations troll the world for the cheapest labor, the fewest health, safety and environmental regulations, and the governments most unfriendly to labor rights. U.S. trade agreements paved the way for this race: While rejecting protections for workers or the environment, they protected investors and corporate interests.
The results of such trade agreements are skyrocketing trade deficits -- more than $800 billion this year alone -- and downward pressure on income and benefits for American workers. Why? Because these agreements enable countries to ship what their low-wage workers produce to the United States while blocking many U.S. products from entering their countries.
Equally important, by enabling this kind of trade, the agreements force U.S. workers to accept cuts in their pay and benefits so their employers can compete with low-wage foreign producers. And those workers are the lucky ones. Millions of others have lost their jobs as corporations moved overseas to build the same products with cheap foreign labor. It is no coincidence that salaries and wages today are the lowest percentage of gross domestic product since the government began keeping track of this in 1947.
It took a century to build a thriving middle class and economic security here in America. We need to protect that for which we have sacrificed.
We must insist that all trade agreements have labor, environmental and other protections so that American workers can compete on a level playing field. Trade agreements must also be reciprocal. The American market is the most desirable in the world. Every country wants access to it. That gives us a great deal of leverage, if only we'd use it. Barriers to U.S. products overseas should not be tolerated.
Free-trade agreements have protected drug companies, international investors and Hollywood films, yet failed to protect our communities, our workers and our environment.
We believe there is a better way. Fair trade is not the enemy of more trade. It's how we expand international trade without reversing U.S. economic progress.
Byron Dorgan is a Democratic senator from North Dakota. Rep. Sherrod Brown is a Democratic senator-elect from Ohio.
To begin with, the Bandwagon Fallacy either implies or proves that many people (often a majority) support or oppose a given belief or action. Since everybody else is on the bandwagon, you'd better be, too. That should never matter here, since the right to trade with foreigners should be the same as the right to speak or the right to move or the right to trade with your co-nationals. Free trade is a freedom, not a group decision to be made by consensus. People who don't like it can separate themselves by whatever means they have personally available - but lobbying the government to use force isn't a valid option. So no matter how many union members and Democratic party activists are against free trade, the bandwagon can never be enough to justify limiting a freedom like commerce.
Throughout the opinion piece, the two politicians refer continually to the hallowed Middle Class. They seem to worship the thing, but wallow in the delusion that somehow it's less than a century old - and that it's the product of concerted effort by enlightened activists steering state policy. Neither is true. The formal middle class includes all Americans - since no American is a titled aristocrat and no American is a bonded serf or peasant. We are all free to choose occupation and homestead, provided we can obtain them lawfully. But in the cruder sense of ranking people's incomes (which is both somewhat arbitrary and largely irrelevant to modern life) America has had a middle class since before the revolution. Property and financial independence were obtained by most white males, from colonial times well into the 19th century. While factory work did diminish the likelihood of land ownership and of self-employment, we can say that the middle class clearly existed even in 18th century America.
It's ironic to hear these two politicians criticizing government incentives for outsourcing. Anti-trade activists tend to be the biggest advocates of policies that make outsourcing attractive - this is precisely the reason they so oppose outsourcing and free trade. If people and businesses are free to leave, then that creates a real and definite limit to the number of punishments and controls regulators can inflict on businesses. Just as East Germany had to build a wall and point its guards and police inwards in order to prevent Germans from fleeing the oppressive state, anti-trade activists want to craft rules and use force in order to prevent business and talent from fleeing the corrupting grasp of their regulations and dictates. If they really wanted to stop government incentives to outsource, they could start with reducing the same sort of 'labor and environmental' controls that they advocate in the opinion piece. By making businesses pay well over what labor is worth, they push businesses to find less expensive labor elsewhere. By making businesses wait for notoriously slow and inefficient regulatory approvals and making them avoid construction that might indirectly threaten some species of grub, they make newly industrializing economies look more attractive. They don't want to abandon these regulations, though - they want to STRENGTHEN them by preventing the companies from escaping.
Their poor attempts at sympathy do not come off well to anybody paying close attention. They don't like what corporations are doing in employing foreign workers. Well, fine, but do you think it's going to improve if you lay off all those foreigners? Depending on the industry, the product and the country, firing one American worker will generally allow the hiring of more than one foreign worker. So in the trade-off, they're saying that an American getting his job back is worth several foreigners losing theirs. Isn't that sympathetic of them.
It's very ignorant, though, to assume that somehow children working 60-hour weeks in a factory is worse than children working 60-hour weeks in some agricultural position - picking fruits, wading through rice paddies, raising cattle, etc. These are the occupations of children in agricultural economies, and it wasn't long ago that many people in Ohio and North Dakota would have put their children to whatever work they could do. It's just condescending and mildly racist to assume that somehow, pre-West, pre-colonization, pre-corporation, these foreign workers were happily and freely working a life of subsistence farming, some years a crop too big to harvest, some years a crop too small to survive with. Yes, surely a return to a past without medical technology and without industry or employment is better; even as employment is precisely what white people in America need, it's what black and brown people in Asia don't need? I'm sure everybody would like to get paid more and have a more pleasant work environment, but don't deny that steady, year-round employment in NIEs is a boon both to those economies and to their people. Just as jobs mean opportunity in America, they mean opportunity in Asia.
Dorgan and Brown drag up the 'trade deficit' line. This is an especially tired one. First, the trade deficit is merely a metric, a statistic. It is not automatically accurate just because it's measured. It miscounts certain transactions, like when factories from foreign interests are built in the US, or when foreign deposits are made in US banks or investments. Second, it assumes that somehow "THE US" is a single entity, and each "FOREIGN COUNTRY" is a singular entity, and that the debt is held by some unnamed representative of each player. It doesn't work that way. There's not necessarily any actual debt here, merely a trade transaction that metrics say benefit one country or another. The free market shows, though, that these individual transactions are beneficial or the businesses and investors would not have made them. The 'trade deficit' is just statistical hocus-pocus - and if anything, Americans are benefiting magnificently from it in the form of less expensive goods and services. (see my crisis report here, for information on a truly horrific trade balance).
The opinion piece argues that America needs to make sure that it engages in reciprocal trade policy, meaning that we make sure their barriers are down concomitant with ours. There are two problems with that. First, the times when we engage in unilateral free trade or unilateral trade-barrier reduction (aside from benefiting Americans with lower-priced products) are generally occasions where America is being magnanimous with a weaker friend. This is the case in the last couple decades of US trade policy to the Caribbean. But second, it's really hypocritical to talk about reciprocity when US and Western trade policy is so stingy about agricultural trade barriers. North Dakota is an especially prominent beneficiary in this regard, being home to a large number of sugar beet producers and sugar being a heavily protected commodity. If these two politicians want to make sure it's all fair, then let us drop the protections for agriculture that are strangling producers in the NIEs in Africa and elsewhere.
They end the article by reiterating the nationalist and isolationist elements of their protectionist thesis. They are motivated by improving the lot of some Americans -specifically Americans who organize in unions and other overpaid laboring professions that are losing out to more competitively-priced foreign labor- at the expense of the rest of Americans (who enjoy lower-priced goods and a healthier economy) and foreign workers (who enjoy having jobs). They may claim it's for the good of all, or at least the good of all 'middle class' Americans, but in actuality this is merely an interest group trying to get special favors and exemptions.
This isn't about a 'level playing field.' This is about special rules meant to benefit a special interest at the expense of all other players.
My Phone Is Against Me
by neolibertarian
After a little over a year of being without a cell phone, I just got a new one. My provider (its name rhymes with singular) is decent. My concern is more the options on the phone like text messages and internet. I'm looking for ways to preemptively disable texts and GPRS internet and the like, because it's easy to stumble into them. I pushed the most obvious button on the keypad and it sent me to wireless internet - charged at a rate of a penny a kb.
That's not too bad a rate, but it is annoying to think that I could accidentally or unknowingly fall into charges. It's especially weird that the main button, the one most obvious and appealing to hit in the process of fiddling with the phone to familiarize myself with it, starts charging me within two or three seconds of hitting it.
What bothers me is how frivolous and unnecessary the charges are, but also how they're metered to usage. It must be an OCD part of my personality that hates the idea of being charged by the minute and thus having to be active, or maybe it's just always being conscious that every moment has to be worth the price paid. I greatly prefer unlimited-style plans - like cable, internet, etc. That's also why I like to find unlimited-style phone deals.
I believe sprint long distance had the first unlimited long distance plan - then canceled it. Presumably they found that the cost was too great. I personally had the Verizon Freedom and then the MCI Neighborhood - on a sidenote, I was solicited from one to the other, and it's interesting the rules and processes that exist to try and keep that type of situation fair for consumers. It was nice having unlimited long distance, especially when your total long distance time is hours upon hours, and I imagine I probably profited from the arrangement more than almost any other consumer of the plan. One time Verizon fucked up and thought I had some other long distance plan. When I tallied up over $700 in charges by their false accounting, they shut my phone off. I had to call and complain and get them to turn my phone off, since I should have a flat rate.
In that situation, I clearly saved money with the unlimited flat-rate over the per-usage plans. But even if I were told that I'd on average save money with the usage plan, I enjoy the certainty of the flat rate. The money isn't even so much the point as having to keep close watch on it.
Of course, most economists will tell you that such a situation has the effect of discouraging cost-imposed limits on usage, and that charging by usage rather than flat rate can help conserve a given resource because users will be sensitive to its costs. Users desensitized to the increasing cost of a good will lower their usage in response; with increased used of a good (I'm really discussing services here, like wireless internet) there's bound to be decreasing utility at the margins. So while a wireless webber might find great use in checking e-mail on the go or in keeping up on the latest news, the wireless internet is less attractive for other services like plain ol' browsing. With the decreasing marginal utility, and with increasing costs, users will be more deterred from using the wireless web than those who are sheltered from proportioned costs.
I just want to be able to screw around with the buttons on my phone without thinking I'll get all sorts of charges.
Guilds Again
by neolibertarian
The majority of the history of state involvement in the free market involves privileging one group against the others. Though the reason presented nowadays is always somehow tailored as being to benefit the people at large, the act of choosing sides is essentially inseparable from the intervention.
Raising tariffs picks domestic producers over others. Raising licensing requirements picks existing professionals over future ones. And raising wages picks skilled laborers over unskilled ones.
That's the exclusionary effect of a minimum wage hike, and that's why a number of Congressmen supported the Davis-Bacon Act's provision for a prevailing wage. The migration of blacks to the North, and of Northern businesses importing temporary black (and sometimes other non-white) labor, meant that black people were visibly and unashamedly employed at honest jobs. Clearly, no good person could accept the outrage of different-looking people coming to your town to construct useful buildings and other works; something had to be done!
The prevailing wage at the time effectively meant the union wage prevailed, due to the formula used (just like Maryland's law on health care was unofficially targeted right at Wal-Mart, without being specific). Black people often found it difficult to join unions, unions being by their nature exclusionary and often based on national-origin rules (Irish unions, Italian unions, etc.). Moreover, black workers were often less skilled than union workers, and if you had to pay high wages then you might as well go with the highest-skilled worker for that wage.
The effect of Davis-Bacon was to retard black employment and to discourage blacks from seeking further employment in the North. It helped, of course, that Yankee recruiters operating in the South to recruit black workers were often heavily regulated restricted from operating entirely by Jim Crow statutes (if Jim Crow deprived black people of free speech and the right to bear arms, why not also deprive them of good job opportunities).
And so it is that Michael Dukakis has come to propose using the exclusionary, group-privileging effects of wage controls against (presumably Hispanic) immigrants. Coyote has already responded well - I highly recommend reading it. I'm not sure I would go so far as to call it blatantly racist, if only in the name of restraint and charitable debate. But it's definitely hard to reserve judgment on somebody like this. I just wanted to add a couple of things.
First, I'm glad that Democrats and socialists will come out against immigration. It helps Republicans see their natural place is for freedom and markets. It also shows that many Democrats espouse thoroughly controlling and unfree policies all the time. Somehow he thinks that the Republicans' border security issues will be circumvented without realizing his own government crackdown on wages could be and currently is being circumvented every day.
Second, it's annoying that Dukakis cites Massachusetts and California as the models for emulation. Why should, say, South Dakota, Wyoming, or most of the South, with lower property values and median incomes than MA and CA, be expected to raise the minimum wage to such a high level? Even if we accept the socialist precept that wages can be dictated by the state, and accept the moronic idea that somehow the government's dictation will work for good ends, do we really think that thrusting the states with the lowest cost of living into minimum-wage parity with the highest-cost of living states is a reasonable idea?
Third, most importantly (and also most relevantly to Coyote's charge of racism), a lot of immigrants make over minimum wage as day workers. Those gardeners you see mowing lawns and such are working for more than eight dollars. Giving a price hike isn't going to affect them. And a lot of day laborers don't work hourly; I have a coworker who once worked a Saturday picking oranges at a mangrove with a lot of Mexicans, and pointed out that they got paid by the volume, not by the hour.
I think it would be really funny if the only two effects of the wage hike were that more Mexicans wanted to come get jobs here (since the traditional Democratic argument is that the minimum wage is only good and makes jobs better, not that it reduces their availability) and that remittances to Mexico shot up.
And last, this is typical socialist thinking. Somehow Dukakis can look at the economy and assume both that his policy prescription will fix the situation and only affect this situation. But the economy is linked at any number of points. If you raise wages on, say, farmworkers, then what do you think will happen? The cost of produce will have to go up. That means everybody who is a consumer of produce or of produce-derived products -effectively every American- will have to pay more. The economy is linked, and regulations have a nasty habit of spreading their effects beyond the initial purpose.
Thank goodness Dukakis got stomped in '88.
The Job
by neolibertarian
Ok, I have this thing about blogging on my job. I respect the persepctive of employers not wanting their employees to project a poor or unwanted image of the company online. The chance that a blog might become famous for trashing its author's employer - or might become famous for another reason but associate the employer with some controversial habit of the author - is enough for employers to not be happy about blogging.
Out of respect for employers, I have a mental policy to avoid blogging about them. But since I just got a new job, I'd like to mention something about a previous employer.
First, although I don't think bloggers need to make disclosures before expressing opinions the way financial analysts divulge their own investments, I will offer this out of courtesy: I'll still get two paychecks and will work another 28 hours for my employer, and might get another check or two for various benefits cashing out.
My current and soon-to-be-former employer is Publix, a supermarket chain in the Southeast. What I really respect about them is their use of incentives. They give bonuses, both for Christmas and for inventory, based on store performance. So after inventory they determine how well the store is doing overall, and determine bonuses off of that. Moreso than anything else, though, is that they're employee-owned. Employees get stock based on how many hours they worked, and the stocks pay dividends. The employees own the stock, and therefore the company. This enables people working semi-skilled service jobs to retire in relative comfort and to amass relative wealth. There's one story of a part-time meat cutter who retired a millionaire based on her stock holdings from Publix.
That sort of plan does two things. One, since bonuses and stocks are based on how well a store is doing, it gives employees an incentive to keep their part of the store in top shape. Rather than simply going on the offer of promotions and raises and the threat of termination, bonuses and stock incentives give you more carrots. It also encourages the kind of employees who will stay for years and years, allowing Publix to attract and retain qualified, serious employees. Simply paying high wages might attract people, but not necessarily those in for the long haul.
My new job is working for a political campaign. Since politics is short-horizon, volatile, and widespread on the Internet, I'll reserve my comments until at least the election. I might not even mention anything then, though, since politicians still have to get re-elected.
Gasoline Irrationality
by neolibertarian
Coyote wonders if gas consumers behave irrationally. I'd say they certainly appear to do so, at least some do in some ways.
An extremely relevant anecodte occurs when I overhear two old people (Florida, especially SW FL, is positively overrun with people 55 and over) having a conversation about gas sometime around Hurricane Wilma. Everyone was scared of gas hikes and shortages and gas lines. So the lady talking (a NY, NYer in her 60s or so) was saying that whenever she can she gets a fill-up, even if she's only filling up an eighth of a tank. She's responding negatively to the price indicator. The fact that prices were high and trending upward made her want to buy MORE gas, and to spend more time (and, incidentally, more gas) to go and get it.
When I asked her why, she looked at me like I'm a stupid kid and said that there might be a shortage and she wanted to have some. I changed my mind about starting an argument over it, since I wasn't invited into the conversation (though I knew both of the conversers, if only very casually).
Her behavior is exactly what's not supposed to happen in an ideal economic situation, at least her purchasing behavior. Now maybe she conserved her fuel by making fewer trips or by making shorter trips, or both. But the higher prices went the more she was afraid of a shortage. So high prices actually encouraged her to buy, whereas lower prices would've calmed her urge to buy.
Prices are supposed to discourage buying (not as a primarily-intended effect, but as a natural and useful side effect) but on gas, some older people are so fearful that they hoard. It doesn't help the situation that it was hurricane season in the region that a year earlier had been beaten up by three hurricanes (and a fourth smashing other parts of the state and the Gulf Coast).
I'll bet some economists often make exceptions for hoarding-like situations. But the fact that she couldn't see a broader picture, or realize how short-sighted and emotional she was being, led her to buy high-priced gas every time the car dropped off the F.
Old people often seem motivated by fear, to me. A huge number of old people seem to exist in perpetual, subdued fear of another Depression. My college roommate's grandma told him to go to grad school to avoid the draft. And lots of old people fear gas lines like the 70s. [Of course, gas lines from the 70s were the result of rationing, price controls, and hoarding egged on by government scare tactics - all for another post.]
More than hoarding, though, the likely economist explanation would be speculation. She was speculating that higher prices indicated a future shortage, and thus bought the gas since it was worth $3.50 a gallon (or whatever it was) compared to no gas. She wouldn't have stated it that way exactly, but it at least provides a good framework for understanding her decision.
Still seemed damned foolish to me. It would've been smarter to just fill up an extra gas can in case of shortage and drive sparingly in the mean time. Going to the gas station everyday for two gallons is a waste of time and of money (albeit small amounts, if the station is on your path already). She may have been engaging in a rational behavior (speculating) but she did it in an unwise and emotional manner.
On another note, college tuition and fashionable clothes don't quite fit the traditional mold either; higher priced education and fashion wear both seem to draw more interested parties.
FTC Chair Makes Reasoned Analysis
by neolibertarian
Deborah Platt Majoras is the head of the Federal Trade Commission, and she has a very sober and practical analysis of the pending anti-gounging law:
Legislation to outlaw gas-price gouging could distort market signals, leaving motorists worse off in the long run, Federal Trade Commission Chairman Deborah Platt Majoras told the Senate Commerce Committee on Tuesday. Majoras, in prepared testimony, said the FTC's examiniation of anti-gouging legislative proposals also found that the practice is difficult to define. "For all these reasons, the commission cannot say that federal price-gouging legislation would produce a net benefit for consumers," Majoras said. The House passed legislation earlier this month that would require the agency to come up with a definition of "price gouging" and would levy multi-million dollar fines and criminal penalties against oil companies and executives that engage in the practice.
Great arguments, simple reasoning; it would hurt consumers and it would hurt producers. She was fairly restrained in her statements, but that's probably indicative of her position being appointed and not elected. Making free market statements that bump heads with a populist-Republican consensus for centralized regulation isn't a very good idea, as Gregory Mankiw learned.
It's encouraging to hear that the chair of the federal agency that likely be tasked with enforcing an anti-gouging law is willing to say that it isn't a good law. Of course, the reason Congress wants to pass such a law is unchanged - they see an issue to stand on, so they're looking for something to do to capitalize on it. I guess the pay-off from publicly advancing liberty isn't as obvious to politicians as the electoral pay-off from stoking populism against it.
Politicians Don't Care About Gas Prices
by neolibertarian
Lots of news today about prices consumers pay at the pump and how it affects families and businesses. Of course what's unstated is the level of taxes, state and federal, at the pump. While Congress is busy spending the general federal revenue on any and all pork projects with the right zip codes in their addresses, they could be cutting taxes on gas and using other taxes to fund highway maintenance and construction.
They are not concerned with the prices we pay, at least not if it means cutting taxes. They are intensely concerned with grandstanding and using this issue to expand their power - collectively and individually. Rather than doing things that would genuinely lower prices for gas consumers, like deregulating energy production, cutting taxes and so forth, they want to hold on to those powers for the government. Instead, they seek to expand their powers by bullying energy providers into lowering prices and even making laws against gouging. Both Frist and Hastert have petitioned Justice to look into gouging.
Of course nobody seems to know what gouging is except that it's a profit somebody makes and somebody else wants. We can already see where this is going. The politicians have already argued that they can tax oil companies to take away their profits and then spend that money on the rest of us. Of course, that will just increase prices (unless Congress goes for price controls) and the money will get spent on whatever Congress wants - and then we'll be told that the History of Swine Slaughtering museum in Benson, NC is money spent on The People.
So they will expand powers collectively, increasing the amount they have to waste in revenue and increasing the power they wield over the economy and individuals. They will also serve themselves individually, using demagoguery and pork spending as reasons for their reelection.
It would be far more to the point to cut the taxes consumers are paying and to encourage state governments to do the same (maybe including a highway-funding penalty for states that correspondingly raise gas taxes in the aftermath of federal cut). But that would mean they had less to spend and less of a role in events that don't concern them.
Rule 1 for being in Congress: everything is your concern.
Rule 2 for being in Congress: everything is in your power.
Rule 3 for being in Congress: nobody else can solve problems without your involvement, be they private individuals or government entities, and even if your involvement is nothing more than hearings.
Remember these three rules and you have all the values and priorities of your local member of Congress.
