Toward a Risk-Free Economy

If the real economy — which produces goods and services — could be disconnected from financial markets, the Great Depression (and thus the New Deal) and the Great Recession (and thus TARP and “stimulus”) would not be part of history. The problem is that financial markets are a necessary part of the real economy — unless your idea of an economy is one that functions without money, banking (as we know it), credit, and risk-pooling (e.g., insurance companies and corporations).

Money is the root of all financial crises because it eases the buying and selling of goods and services. That sounds good, but money also enables its holders to more readily change their minds about what and when they buy and sell. When Farmer Joe trades wheat to Farmer Jake in exchange for butter, he does so, in part, because wheat isn’t nearly as portable as money. If Farmer Joe gets money for his wheat, there’s no telling what he’ll do with the money from one day to the next. He might even decide to save some of it, thus depriving Farmer Jake of sales that he was counting on and triggering a Keynsian rollback in aggregate demand.

Banks would be okay, as long as they are warehouses for goods and are not in the business of holding money and lending it out. Instead of paying interest, banks would charge customers for storage services.

Why shouldn’t banks lend money? Because lending by banks is a form of credit, and credit is to be eschewed. If money is the root of all financial crises, credit is the thing that allows money to do its dirty work. When borrowers don’t repay their loans, banks (and other lenders) go belly-up, which just triggers another kind of Keynsian rollback in aggregate demand. Government actions to make lenders whole simply transfer the risk of lending from particular depositors and investors to taxpayers at large, whose natural reaction is to spend less now because they can see higher taxes in their future.

Risk-pooling goes hand-in-hand with credit. People who pool their money to underwrite risky propositions (e.g., business ventures) do so knowing that not all propositions will succeed. Obviously, the thing to do is to back only those propositions that are ensured of success, but there’s no way to do that. Solution: Don’t allow risk pooling because it’s too, well, risky.

So there you have it, a prescription for a risk-free economy: no money, no credit, no banking, no risk-pooling. Just plod down the road to Farmer Jake’s place and trade some of your wheat for some of his butter. And don’t worry about the fact that you live in a thatched hut with a dirt floor, drive a rickety cart which is pulled by a rickety donkey, dig potatoes out of the ground, and eat those potatoes (with a little butter) by the dim light of a few home-made candles.

Wait a minute! There’s still the risk of bad weather, which could stunt or ruin your wheat crop. I guess there’s no such thing as a risk-free economy, is there? But don’t tell that to the regulators, you’ll spoil their fun.

Defining Treasonous Speech

Eugene Volokh, writing in the wake of the Supreme Court’s decision in Holder v. Humanitarian Aid Project, digs into his archive for a list of five alternative ways of defining treasonous speech. The alternatives range from restrictive (#1) to lenient (#5).

My archive includes a five-year-old post in which I comment on Volokh’s five alternatives. In that post, I state a preference for this option:

2. Speech is unprotected only when the speaker has the purpose of aiding the enemy, and is paid for such speech. This, though, would be an odd distinction in U.S. constitutional law, given that speech is routinely protected despite being done for money. Most writers, filmmakers, journalists, and other speakers are paid for their speech.

Now, five years later, I lean toward Volokh’s least lenient alternative:

1. Speech is unprotected whenever the speaker has the purpose of aiding the enemy (and perhaps there’s some evidence that the speech is indeed likely to provide some at least modest aid). That seemed to be the court’s view in Gillars: “The First Amendment does not protect one from accountability for words as such. It depends upon their use. It protects the free expression of thought and belief as a part of the liberty of the individual as a human personality. But words which reasonably viewed constitute acts in furtherance of a program of an enemy to which the speaker adheres and to which he gives aid with intent to betray his own country, are not rid of criminal character merely because they are words.” This exception would justify punishing any speech that falls within the statutory and constitutional definition of “treason.”

How can I be so hard on speech that aids a foreign enemy and yet so supportive of free speech in the context of domestic affairs (e.g., see this post)? The terms “foreign enemy” and “domestic affairs” ought to be a clue. As I say here, in the context of illegal immigration, “the United States exists primarily for the purpose of protecting its citizens and their liberty rights.”

We must not give foreign enemies the same rights as American citizens. If we do, we run the grave risk of losing our own rights.

Zones of Liberty

Arnold Kling offers some suggestions for slowing or reversing our present decline into totalitarianism. One of his suggestions begins with this:

[E]nable people to escape the power of monopoly government. This could be all-out escape, as in seasteading or charter cities. Or it could be incremental escape, as I propose in Unchecked and Unbalanced, with vouchers, charter communities, and competitive government, meaning mutual associations and standard-setting bodies in which people enter and exit voluntarily.

I like the idea of charter communities, which I see as a form of competitive government. I call my version zones of liberty. These would be experiments in liberty. If successful, they would lead the way to the kind of federalism envisaged by the Framers of the original Constitution.

The 50 States (and their constituent municipalities) are incompatible with the kind of federalism envisioned by the Framers. Today’s State and municipal governments are too bureaucratic and too beholden to special interests; they have become smaller versions of the federal government. For, in today’s populous States and municipalities, coalitions of minority interests are able to tyrannize the populace. (The average State today controls the destinies of 25 times as many persons as did the average State of 1790.) Those Americans who “vote with their feet” through internal migrration do not escape to regimes of liberty so much as they escape to regimes that are less tyrannical than the ones in which they had been living.

The kind of federalism envisioned by the Framers — and the kind of federalism necessary to liberty — would require the devolution to small communities and neighborhoods of all but a few powers: war-making, the conduct of foreign affairs, and the regulation of inter-community commerce for the sole purpose of ensuring against the erection of barriers to trade. With that kind of federalism, the free markets of ideas and commerce would enable individuals to live in those communities and neighborhoods that best serve their particular conceptions of liberty.

What do I have in mind? A zone of liberty would be something like a “new city” — with a big difference. Uninhabited land would be acquired by a wealthy lover (or lovers) of liberty, who would establish a development authority for the sole purpose of selling the land in the zone. The zone would be populated initially by immigrants from other parts of the United States. The immigrants would buy parcels of land from the development authority, and on those parcels they could build homes or businesses of their choosing. Buyers of parcels would be allowed to attach perpetual covenants to the parcels they acquire, and to subdivide their parcels with (or without) the covenants attached. All homes and businesses would have to be owned by residents of the zone, in order to ensure a close connection between property interests and governance of the zone.

Infrastructure would be provided by competing vendors of energy, telecommunications, and transportation services (including roads and their appurtenances). Rights-of-way would be created through negotiations between vendors and property owners. All other goods and services — including education and medical care — would be provided by competing vendors. No vendor, whether or not a resident of the zone, would be subject to any regulation, save the threat of civil suits and prosecution for criminal acts (e.g., fraud). Any homeowner or business owner could import or export any article or service from or to any place, including another country; there would be no import controls, duties, or tariffs on imported or exported goods and services.

The zone’s government would comprise an elected council, a police force, and a court (all paid for by assessments based on the last sale price of each parcel in the zone). The police force would be empowered to keep the peace among the residents of the zone, and to protect the residents from outsiders, who would be allowed to enter the zone only with the specific consent of resident homeowners or business owners. Breaches of the peace (including criminal acts) would be defined by the development of a common law through the court. The elected council (whose members would serve single, four-year terms) would oversee the police force and court, and would impose the assessments necessary to defray the costs of government. The council would have no other powers, and it would be able to exercise its limited powers only by agreement among three-fourths of the members of the council. The members, who would not be salaried, would annually submit a proposed budget to the electorate, which would have to approve the budget by a three-fourths majority. The electorate would consist of every resident who is an owner or joint owner of a residence or business (not undeveloped land), and who has attained the age of 30.

A zone of liberty would not be bound by the laws (statutory and otherwise) of the United States, the individual States, or any of political subdivision of a State. (The federal government could impose a per-capita tax on residents of the zone, in order to defray the zone’s per-capita share of the national budget for defense and foreign affairs.) The actions of the zone’s government would be reviewable only by the U.S. Supreme Court, and then only following the passage of a bill of particulars by two-thirds of each house of Congress, and with  the concurrence the president. (A zone could be abolished only with the approval of four-fifths of each house of Congress, and with the concurrence of the president.)

Absent such an experiment, I see only one hope for liberty — albeit a slim one — a Supreme Court that revives the Constitution. Politics as usual will only take us further down the road to serfdom.

Related posts:
Is Statism Inevitable?
The Interest-Group Paradox
Utilitarianism vs. Liberty
Greed, Cosmic Justice, and Social Welfare
Positive Rights and Cosmic Justice
Fascism and the Future of America
Negative Rights, Social Norms, and the Constitution
Rights, Liberty, the Golden Rule, and the Legitimate State
The Near-Victory of Communism
Tocqueville’s Prescience
State of the Union: 2010
The Shape of Things to Come
The Real Burden of Government

“Natural Rights” and Consequentialism

I have changed the name of the blogger whom I quote throughout this post because the issue at hand isn’t personal, and I don’t want to it to seem personal. I am merely drawing on an old exchange of views for the purpose of expounding on the concept of natural rights and its opposite in libertarian theory, which is consequentialism.

About six years ago, Rand (as I will call blogger X) wrote the following:

I don’t like consequentialism, because it’s usually an excuse for exchanging principles for popularity. Deducing one’s way from principles of human nature gives a grounding for any policy—that’s the great thing about natural rights theory. But drawing one’s policy conclusions from the opposite pole—from “consequentialism”—means looking to “social welfare” as one’s standard of value, rather than individual welfare. And “social welfare” is practically impossible to measure,… so that one’s consequentialism could easily be a license for any silly thing.

I have two problems with Rand’s dismissal of consequentialism. The first problem is his reliance on “principles of human nature” or “natural rights.” The second problem is his dismissal of consequentialism by invoking “social welfare.”

Before I address the two problems, I will say a bit about the underlying issues, which are captured in these questions:

  • Is liberty justified because it enables us to exercise our natural rights, or is it justified because it produces better outcomes (consequences)?
  • If liberty is justified by natural rights, what makes them natural (i.e., innate to humans), what rights are comprised in natural rights, and whose judgment delineates natural rights?
  • If liberty is justified by its consequences, what outcomes are made better, for whom, and in whose judgment?

What does it matter how liberty is justified? Liberty is liberty, right? Wrong. The natural-rights theory opens the door to abuses of liberty. Consider, for example, the following passages from Mortimer Adler’s “Natural Needs = Natural Rights“:

… What is not the product of legal or social conventions must be a creation of nature, or to state the matter more precisely, it must have its being in the nature of men. Moral rights are natural rights, rights inherent in man’s common or specific nature, just as his natural desires or needs are. Such rights, being antecedent to society and government, may be recognized and enforced by society or they may be transgressed and violated, but they are inalienable in the sense that, not being the gift of legal enactment, they cannot be taken away or annulled by acts of government.

The critical point to observe is that natural rights are correlative with natural needs….

For example, if I have a moral — or natural — right to a decent livelihood, that can be the case only because wealth, to a degree that includes amenities as well as bare necessities, is a real good … and thus indispensable to a good life. The fact that it is a real good, together with the fact that I am morally obliged to seek it as part of my moral obligation to make a good life for myself, is inseparable from the fact that I have a natural right to a decent livelihood….

Our basic natural right to the pursuit of happiness, and all the subsidiary rights that it encompasses, impose moral obligations on organized society and its institutions as well as upon other individuals. If another individual is unjust when he does not respect our rights, and so injures us by interfering with or impeding our pursuit of happiness, the institutions of organized society, its laws, and its government, are similarly unjust when they deprive individuals of their natural rights.

Just governments, it has been correctly declared, are instituted to secure these rights. I interpret that statement as going further than the negative injunction not to violate the natural rights of the individual, or deprive him of the things he needs to make a good life for himself. It imposes upon organized society and its government the positive obligation to secure the natural rights of its individuals by doing everything it can to aid and abet them in their efforts to make good lives for themselves — especially helping them to get things they need that are not within their power to get for themselves [emphasis added].

Thus Adler openly admits the fatal flaw of the natural-rights doctrine. It is open-ended. In the wrong hands, it becomes an excuse to take from the more-productive members of a society and give to the less-productive members of a society:

It imposes upon … government the positive obligation … to [help individuals] to get things they need that are not within their power to get for themselves.

This can be done (in a representative democracy) only by claiming that there is a natural right to a certain level of income — which must be determined arbitrarily, by those who claim that there is such a right. How convenient.

Do libertarian adherents of natural rights really believe that it makes no difference whether they live in a confiscatory and debauched society or in a society that eschews confiscation and debauchery? I doubt it.

We are all consequentialists, at heart. Some of us just like to play with the idea of natural rights, in the manner of children who play with matches.

Let us now consider this question:


According to Rand (blogger X), “A right is a moral claim based on the nature of human beings….” But the nature of human beings is complex; there are many “principles” of human nature, aggressiveness being among them. In order to have a conception of rights that is founded on human nature (i.e., natural rights), one must first decide which of the “principles” of human nature one is willing to countenance. It is one thing to assert that we have natural rights; it is another thing, entirely, to reach agreement about what those rights include. Some proponents of natural rights would, for example, have those rights include the right to steal from others, via the state (“for the general welfare,” “for the public good,” “to eradicate poverty,” etc.). Libertarian proponents of natural rights would deny that natural rights encompass legalized theft. In sum, there is nothing “natural” about natural rights.

Rand effectively concedes that point, when he writes:

Our natural rights and our liberty derive from nature, more specifically, from our nature as human beings.

The link leads to the Declaration of Independence, which contains one relevant passage:

We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness.

Rand is an ostentatious atheist, who proudly displays this link at the top of his sidebar. When he relies on a political document (like the Declaration of Independence) to back up his claim that rights (which ones?) are innate in human beings, and when he ignores the plain words of that document, which attribute those rights to a Creator, it is evident that the concept of natural rights is arbitrary (i.e., not natural).

If the concept of natural rights is not arbitrary, why must Rand spend so much time (as he has) explaining to others why such-and-such is or isn’t a natural right. This strikes me as priestly behavior. It certainly belies the naturalness of natural rights.

Breathing is natural, in that it is in our nature to breathe in order to live. But that does not rule out suicide, murder, death at the hands of someone acting in self-defense, death by “natural causes,” or anything else that causes the cessation of breathing and life. In sum, breathing is natural, but it is not a natural right. Given that, what can be an unqualified natural right?

The answer is “nothing,” as explained as Jonathan Wallace explains so well in “Natural Rights Don’t Exist.” This passage captures the essence of Wallace’s long argument (which you should read):

We believe there is a natural right to do anything which we think should be permitted (or mandated) under a human rulebook. Anything which should be forbidden under a human rulebook therefore cannot be a natural right, even if it is physically possible and can be justified by the same arguments used to support the idea of natural rights.


Something that is natural — in the sense that it can arise spontaneously from within us — but which is by no means universal, is the Golden Rule.

Stephan Kinsella of Mises Economics Blog, in a pugnacious and meandering post, finally gets around to naming the source of rights, as he sees it. That source is empathy, which is:

1. Identification with and understanding of another’s situation, feelings, and motives. See Synonyms at pity.

2. The attribution of one’s own feelings to an object.

Empathy has something to do with it. But there is also self-interest. Which brings us to the Golden Rule.

The Golden Rule implies empathy; that is, the validity of the Golden Rule hinges on the view that others have the same feelings as oneself. But the Golden Rule also encapsulates a lesson learned over the eons of human coexistence. That lesson? If I desist from harming others, they (for the most part) will desist from harming me. (There’s the self-interest.) The exceptions usually are dealt with by codifying particular applications of the Golden Rule (e.g., do not steal, do not kill) and then enforcing those applications through communal action (i.e., justice and defense).

The lesson here is three-fold:

  • Rights are “natural,” but not in the sense that they are somehow innate in humans. Rather, rights are natural in the sense that they arise from a nearly universal sense of empathy and an experiential belief in the value of mutual forbearance.
  • Those “natural rights” have no force or effect unless they are generally recognized and enforced through communal action.
  • Rights may therefore vary from place to place and time to time, according to the mores of the community in which they are recognized and enforced.

That is the natural explanation for rights. They are not universals floating in the air, waiting to be grasped by a priestly caste and handed down to the rest of us. Rights simply are the best bargains that we can make with each other about behavioral norms, to the extent that we have the political freedom to make such bargains. Those bargains will be honored by the unempathetic and predatory among us only as the rest of us are able to force them to do so.

The rights that arise from the Golden Rule are bound to have much in common across disparate groups because they arise from the human traits of empathy and self-interestedness. But they are not bound to be identical across disparate groups because of divergences in social evolution.

Rand would now (as he has) resort to a last-ditch defense of “natural rights” by asking this:

If a woman is raped in a forest and nobody hears, are her rights being violated?

Now, there’s a lawyerly question for you. It’s designed to elicit embarrassed agreement. The casual reader will see “woman is raped” and think “of course her rights are being violated” and “I wouldn’t want it to happen to me/my wife/my sister/my mother, etc.” What we have here is evidence of the prevalence of empathy and self-interestedness as human traits, not proof of the immanence of rights. The proper answer to Rand’s question isn’t “yes” or “no.” It is this: Almost everyone — but, unfortunately, not everyone — would condemn the rapist for having done something wrong.

To test the robustness of Rand’s technique for identifying “rights” — which is to posit a “right” in opposition to an instance of repulsive behavior — I pose this series of questions:

1. If A premeditatedly kills B, have B’s rights been violated?

2. If C kills D in self defense, have D’s rights been violated?

3. What about D’s rights if, in retrospect, an investigator concludes (by trying to put himself in C’s shoes) that C could have defended himself without killing D?

4. If the state electrocutes A for having premeditatedly killed B, has the state violated A’s “natural rights”?

5. If the state punishes C for having killed D unnecessarily, has the state violated C’s “natural rights” by relying on an investigator’s after-the-fact judgment instead of C’s contemporaneous judgment?

6. If E procures an abortion, have the rights of her fetus (F) been violated?

7. If E kills her infant (G) upon its birth, has she violated G’s rights? What if she waits until G is, say two years old?

8. If the answer to question 6 is “no,” and the answer to at least one part of question 7 is “yes,” when and how does a fetus/child acquire rights?

9. With respect to question 8, who makes the judgment as to when and how a fetus/child acquires rights?

10. Even if the answer to question 6 is “no,” doesn’t the legalization of abortion jeopardize the rights of others by fostering, say, involuntary euthanasia among the conscious, but infirm, elderly persons?

11. H, who lives in squalor and abject poverty, makes far less money than I. Does H have a right to steal from I in order to ameliorate his (H’s) lot?

12. If H doesn’t have a right to steal from I, does the state violate I’s “natural rights” by taxing I in order to ameliorate H’s lot?

Reasonable persons may disagree reasonably about the answers to many of those questions. Which leads me to another series of questions: Would Rand’s answers be superior to the answers of other reasonable persons? In other words, who decides when rights have been violated, and on what basis are such decisions made? Is Rand the sole judge of what constitutes a right, and whether it is a “natural right” or some other kind of right? Does he have, somewhere, a list of rights that we can consult and, having consulted it, make unanimous judgments about the answers to all twelve questions (and others like them)? How did Rand obtain his list? Did he inspect his “human nature” and find written on it a list of “natural rights” and a guide for determining what is or isn’t a right? Or did he make some (undoubtedly reasonable) judgments about what ought to be rights, just as others do (with differing results)? Or, if is he borrowing from others who have made such judgments, how did they arrive at their judgments?

Don’t get me wrong about the role of the state in all of this. I agree wholeheartedly with Rand when he says that “rights exist before the state enforces them.” As I have said before (here, for example),

rights do not necessarily depend on the existence of a state, but do arise from politics because politics “is the process and method of decision-making for groups of human beings…[which] is observed in all human group interactions….” And those “group interactions” began long before the creation of a state.

Therefore, I now return to Rand’s question and restate it in a way that is consistent with human nature and human behavior:

If a woman is raped in a forest and nobody hears her, does she feel harmed? Would other persons, upon learning of the rape, generally agree that she was harmed? Would enough such persons concert to (a) exact justice on the victim’s behalf and (b) ensure (to the extent possible) against the rape of any other person within the territory over which they can exert control?

In sum, rights — when properly understood as man-made bargains — are consequentialist to their core, arising as they do (in part) from empathy and (in part) from self-interestedness.


I turn now to Rand’s dismissal of consequentialism, a dismissal that is justified (in his view) because consequentialism depends on the concept of “social welfare.” That concept (in this context) is a red herring. Consequentialism does not depend on “social welfare” because it cannot do so; there is no such thing as “social welfare.” (See this, for example.) “Social welfare” is not “practically impossible to measure,” as Rand says in the first quotation above; as a nullity, it is impossible to measure.

I am perfectly willing to admit the arbitrariness of consequentialism; arbitrariness in the classification of rights is unavoidable. The best one can hope for is a systematic and generally accepted kind of arbitrariness that tends to limit the harm that predators and parasites do to the rest of us.

In its simplest form, such a system operates like this:

  • A, B, and C — knowing that each of them has different notions of acceptable behavior toward others — agree that murder (among other things) is a forbidden activity, and that one may not murder another except in self-defense. (They further agree as to the ways and means of enforcing their prohibition of murder, of course.)
  • That is liberty, for it enables each of them to “pursue happiness” within their respective means.


What if A and B agree, honorably, not to kill each other, whereas C “leaves his options open”? It then behooves A and B to reach a further agreement, which is that they will defend each other against C. (This is analogous to the decision of the original States to adopt the Constitution because it bound each of them to provide men, matériel, and money for the defense of all of them.) A and B therefore agree to live in liberty (the liberty of self-restraint and mutual defense), whereas C stands outside that agreement. He has forfeited the liberty of self-restraint and mutual self-defense. How so? A and B, knowing that C has “left his options open,” might honorably kill or imprison C when they have good reason to believe that C is planning to kill them or acquire the means to kill them.

In sum, there can be no system makes everyone happy (unless you believe, foolishly, that everyone is of good will). Try to imagine, for example, a metric by which C’s happiness (if he succeeds in his predatory scheme) would offset A and B’s unhappiness (were C successful).

The inescapable fact is that someone must define and enforce the norms that arise from the known or expected consequences of certain kinds of behavior. The big questions, as always, are these: Who defines and enforces the norms, and how (if at all) are the deciders and the enforcers constrained in what they do?

Jonathan Wallace says this in “Natural Rights Don’t Exist“:

I prefer this freedom, which seems to me simple and clear: we are all at a table together, deciding which rules to adopt, free from any vague constraints, half-remembered myths, anonymous patriarchal texts and murky concepts of nature. If I propose something you do not like, tell me why it is not practical, or harms somebody, or is counter to some other useful rule; but don’t tell me it offends the universe.

Were that life so simple.

There are, in fact, three systems for defining and enforcing social norms (or for ignoring them and imposing the preferences of rulers), which I delineate in “Parsing Political Philosophy“:

  • Anarchism is a fairly coherent (if implausible) philosophy of non-government, propounded by persons who usually call themselves anarcho-capitalists (probably because it seems a more respectable label than “anarchist”).
  • Minarchism is a somewhat more diffuse but still coherent philosophy of minimal government, propounded by persons who usually call themselves libertarians, over the objection of anarchists, who claim to be the only true libertarians….
  • Statism … comprises a broad set of attitudes about government’s role, propounded by “types” ranging from redneck yahoos to campus radicals, each type proclaiming itself benign. But each type would — in thought and word, if not deed — set loose the dogs of the state upon its political opponents and the vast, hapless majority….

Later in the same post, I say this with respect to statism, which can be (and is) both “left” and “right”:

Statism boils down to one thing: the use of government’s power to direct resources and people toward outcomes dictated by government. Statism is orthogonal to the libertarian worldview of anarchists and minarchists.

The particular set of outcomes toward which government should strive depends on the statist who happens to be expounding his views. But all of them are essentially alike in their desire to control the destiny of others.

None of these systems really incorporates “natural rights” or “social welfare,” regardless of any claims to the contrary. Each system simply offers a different way of defining and enforcing its preferred behavioral norms. In other words, each is consequential, in its own way. As always in politics, it is a matter of “what consequences for whom.”

Related post (07/29/10):
More about Consequentialism

The Higher Education Bubble

UPDATED 06/15/10

Katherine Mangu-Ward, pinch-hitting for Megan McArdle, observes that

the phrase “higher education bubble” is popping up everywhere in recent months. This is thanks (in small part) to President Obama, who announced in his first State of the Union address that “every American will need to get more than a high school diploma.” But Americans have been fetishizing college diplomas for a long time now–Obama just reinforced that message and brought even more cash to the table. College has become a minimum career requirement, a basic human right, and a minimum income guarantee in the eyes of the American public.

When I entered college, I was among the 28 percent of high-school graduates then attending college. It was evident to me that about half of my college classmates didn’t belong in an institution of higher learning. Despite that, the college-enrollment rate among high-school graduates has since doubled.

Mangu-Ward is exactly right when she says this:

If we’re going to push every 18-year-old in the country into some kind of higher education, most people will likely be better off in a programs that involves logistics and linoleum, rather than ivy and the Iliad.

More work, less talk. That’s the ticket.

UPDATE (06/15/10):

An L.A. Times story (carried by today’s Austin American-Statesman) underscores the over-education — more correctly, mis-educaton — of America’s young adults:

[G]overnment surveys indicate that the vast majority of job gains this year have gone to workers with only a high school education or less, casting some doubt on one of the nation’s most deeply held convictions: that a college education is the ticket to the American Dream.

The Bureau of Labor Statistics projects that seven of the 10 employment sectors that will see the largest gains during the next decade won’t require much more than some on-the-job training. These include home health care aides, customer service representatives, and food preparers and servers. Meanwhile, well-paying white-collar jobs, such as computer programming, have become vulnerable to outsourcing to foreign countries.

“People with bachelor’s degrees will increasingly get not very highly satisfactory jobs,” said W. Norton Grubb, a professor at the University of California at Berkeley’s School of Education. “In that sense, people are getting more schooling than jobs are available.”

He noted that in 1970, 77 percent of workers with bachelor’s degrees were employed in professional and managerial occupations. By 2000, that had fallen to 60 percent.

Of the nearly 1 million new jobs created since hiring turned up in January, about half have been temporary census jobs. Most of the rest are concentrated in industries such as retail, hospitality and temporary staffing, according to the Bureau of Labor Statistics.

“Society” doesn’t owe you a job — high-paying or otherwise — just because you have a degree, of any kind. It’s the job-seeker’s responsibility to offer useful skills to prospective employers. Would that that rule applied to tax-funded universities, which hire (at taxpayers’ expense) persons with advanced degrees in subjects that have no marketable value.

A Quotation to Ponder

Thanks to for this:

Full government control of all activities of the individual is virtually the goal of both national parties.

–Ludwig von Mises, Economic Freedom and Interventionism

My take: The parties differ in the kinds of activities they would control, and the degree to which they would control them. Democrats would control economic activity (including almost anything remotely related to it), speech, association, and religion (the press gets a pass because it is Democrat-controlled). Beside that ambitious (and almost-accomplished) agenda, the GOP’s agenda is relatively anarchistic.

That said, I favor the GOP, mainly because it isn’t the Democrat Party. And there is far more hope of the GOP returning to the limited-government ethic of the Harding-to-Taft era than there is of the Democrats returning to the limited-government ethic of Grover Cleveland.

Related posts:
Parsing Political Philosophy
Is Statism Inevitable?
Inventing “Liberalism”
A Bargain with the Devils of “Liberalism”
Utilitarianism vs. Liberty
Greed, Cosmic Justice, and Social Welfare
Positive Rights and Cosmic Justice
Fascism and the Future of America
Negative Rights, Social Norms, and the Constitution
Rights, Liberty, the Golden Rule, and the Legitimate State
The Near-Victory of Communism
Tocqueville’s Prescience
State of the Union: 2010
The Shape of Things to Come
The Real Burden of Government

How to Combat Beauty-ism

Now that the seekers of cosmic justice have taken care of health inequalities by ensuring that everyone enjoys equally poor health under Obamcare, they are turning their attention to inequalities in beauty. Here’s the lowdown:

In her provocative new book, The Beauty Bias: The Injustice of Appearance in Law and Life, Stanford law professor Deborah Rhode argues that workers deserve legal protection against appearance-based discrimination unless their looks are directly relevant to their job performance….

Rhode convingingly [sic] argues that beauty bias in the workplace is a widespread problem with serious consequences. Between 12 and 14 percent of workers say they’ve suffered some kind of appearance-based discrimination on the job.

It should go without saying that discrimination on the basis of appearance is unjust, especially when it comes to features individuals have little or no control over. Rhode does a good job of spelling out why such bias is offensive to human dignity and equal opportunity.

If discrimination on the basis of appearance is unjust, then discrimination on the basis of intelligence and ability must also be unjust. A very high percentage of workers have been discriminated against on the basis if their lack of intelligence, and yet individuals have little or no control over their level of intelligence. Nor do they have much control of their ability to do things that require intelligence or other genetically determined traits (e.g., exceptional eyesight, exceptional height, perfect pitch).

Therefore, following Deborah Rhode’s logic, public and private institutions should not be able to discriminate on the basis of intelligence or ability (where it is genetically dependent). Professors, most athletes, most musicians, brain surgeons, and others whose occupations demand high intelligence and/or unusual physical abilities should be chosen by lottery. Think of Debora Rhode as you go under the knife.

Seriously (not), here is how the government should deal with the problem of beauty-ism:

1. Establish national standards of beauty. This should be done by an independent commission of experts appointed by the president, subject to confirmation by the ugliest members of the Senate.

2. Assign every person over the age of 16 a beauty rating, on a scale of 1 to 8 (“10” is such a cliché). This can be done at the time of the decennial census. It would require the abolition of the mail-in form in favor of visits to every dwelling place in America by teams of beauty judges who are trained and certified by the beauty commission. Refusal to be judged would be a felony, punishable by compulsory viewing of American Idol or similar fare, as determined by the beauty commission.

3. Determine the national distribution of beauty ratings.  If the ratings are normally distributed, for example, they would occur with the following frequency per 1,000 persons: 1 = 1; 2 = 21; 3 = 136; 4 = 341; 5 = 341; 6 = 136; 7 = 21; 8 = 1 (distribution does not add to 1,000 because of rounding).

4. Require every employer (private and government) to maintain a workforce with a distribution of beauty ratings that matches the national distribution. Heads of private and government organizations (e.g., CEOs, the president, the speaker of the House) would be counted for purposes of determining compliance with the national average.

5. Give employers an opportunity to comply with the national distribution. In an arrangement similar to cap-and-trade for carbon emissions, employers could trade overly beautiful employees for underly beautiful ones. In a token bow to liberty, the terms of trade would be negotiated by the trading parties.

6. Punish employers who fail to bring their workforces into compliance with the national distribution by a date certain. Punishments would vary according to the degree of noncompliance. At a minimum, offenders would be forced to watch Dancing with the Stars. As for the most serious offenders, their personal beauty ratings would be lowered to 1, thus insulting 999 out of every 1,000 offenders and making it almost impossible for them to work anywhere. No exceptions would be made for high-ranking officials. (Note to Barack Obama, Harry Reid, and Nancy Pelosi: That means you.*)

Thus endeth today’s journey into the never-land of cosmic justice.

* On the evidence of these portraits and photos of the presidents of the U.S., I conclude that average beauty rating for a president in the post-hirsute era (Wilson through Obama) is a below-average 4.4.

The Psychologist Who Played God

UPDATED 02/12/14 (related reading and related posts added)

There’s a story at Slate titled “Jesus, Jesus, Jesus.” Here are some key passages:

In the late 1950s, psychologist Milton Rokeach was gripped by an eccentric plan. He gathered three psychiatric patients, each with the delusion that they were Jesus Christ, to live together for two years in Ypsilanti State Hospital to see if their beliefs would change….

…Rokeach wanted to probe the limits of identity. He had been intrigued by stories of Secret Service agents who felt they had lost contact with their original identities, and wondered if a man’s sense of self might be challenged in a controlled setting…. This … led Rokeach to orchestrate his meeting of the Messiahs and document their encounter in the extraordinary (and out-of-print) book from 1964, The Three Christs of Ypsilanti….

[T]he book makes for starkly uncomfortable reading as it recounts how the researchers blithely and unethically manipulated the lives of Leon, Joseph, and Clyde in the service of academic curiosity….

In hindsight, the Three Christs study looks less like a promising experiment than the absurd plan of a psychologist who suffered the triumph of passion over good sense. The men’s delusions barely shifted over the two years, and from an academic perspective, Rokeach did not make any grand discoveries concerning the psychology of identity and belief. Instead, his conclusions revolve around the personal lives of three particular (and particularly unfortunate) men. He falls back—rather meekly, perhaps—on the Freudian suggestion that their delusions were sparked by confusion over sexual identity, and attempts to end on a flourish by noting that we all “seek ways to live with one another in peace,” even in the face of the most fundamental disagreements. As for the ethics of the study, Rokeach eventually realized its manipulative nature and apologized in an afterword to the 1984 edition: “I really had no right, even in the name of science, to play God and interfere round the clock with their daily lives.”

Rokeach — the psychologist who played God — belonged to a coterie of left-wing psychologists who strove to portray conservatism as aberrant, and to equate it with authoritarianism. This thesis emerged in The Authoritarian Personality (1950). Here is how Alan Wolfe, who seems sympathetic to the thesis of The Authoritarian Personality, describes its principal author:

Theodor Adorno … was a member of the influential Frankfurt school of “critical theory,” a Marxist-inspired effort to diagnose the cultural deformities of late capitalism.

I was first exposed to Adorno’s conservatism-as-authoritarianism thesis in a psychology course taught by Rokeach around the time he was polishing a complementary tome, The Open and Closed Mind: Investigations into the Nature of Belief Systems and Personality Systems (related links). The bankruptcy of the Adorno-Rokeach thesis has been amply documented. (See this and this, for example.) The question is why academic leftists like Adorno and Rokeach would go to such pains to concoct an unflattering portrait of conservatives.

Keep in mind, always, that modern “liberals” are anything but liberal, in the classical sense. (See this and this, and be sure to consult Jonah Goldberg’s former blog, Liberal Fascism.) Modern “liberals” are authoritarian to the core, as is evident in the state to which they have brought us. They nevertheless persist in believing — and proclaiming — themselves to be friends of liberty, even as they seek to dictate how others should live their lives. They deny what they are because they know, deep down, that they are what they profess to abhor: authoritarians.

A classic way to resolve a deep psychological conflict of that kind is to project one’s own undesired traits onto others, especially onto one’s social and political enemies. That, I maintain, is precisely what Adorno, Rokeach, and their ilk have done in The Authoritarian Personality, The Open and Closed Mind, and similar tracts. And that, I maintain, is precisely what “liberals” do when they accuse conservatives of base motivations, such as racism and lack of empathy. Nothing is more racist than “liberal” condescension toward blacks; nothing is more lacking in empathy than “liberal” schemes that deprive blameless individuals of jobs (affirmative action) and prevent hard-working farmers and business-owners from passing their farms and businesses intact to their heirs (the estate tax). Nothing is more authoritarian than modern “liberalism.”

Milton Rokeach, rest his soul, acknowledged his penchant for authoritarianism, at least  in the case of the “Three Christs.” If only the “liberals” who govern us — and the “liberals” who cheer them on — would examine their souls, find the authoritarianism within, and root it out.

That will be a cold day in hell.

*     *     *

Related reading:
James Lindgren, “Who Fears Science?,” March 2012
John J. Ray, “A Counterblast to ‘Authoritarianism’,” Dissecting Leftism, December 20, 2013
James Lindgren, “Who Believes That Astrology Is Scientific?,” February 2014

Related posts:
Conservatism, Libertarianism, and the “Authoritarian Personality”
The F Scale, Revisited

Cuccinelli for President?

The more I learn about Ken Cuccinelli, the attorney general of Virginia, the more depressed I become by the fact that he — or someone like him — isn’t in the White House.

For example, Cuccinelli’s office is investigating Michael “Hockey Stick” Mann, who (while at the University of Virginia) accepted State funds for his research. Here is part of the AG’s statement about the matter:

The revelations of Climate-gate indicate that some climate data may have been deliberately manipulated to arrive at pre-set conclusions.  The use of manipulated data to apply for taxpayer-funded research grants in Virginia is potentially fraud.  Given this, the only prudent thing to do was to look into it.

This is a fraud investigation and the attorney general’s office is not investigating Dr. Mann’s scientific conclusions.  The legal standards for the misuse of taxpayer dollars apply the same at universities as they do at any other agency of state government.  This is about rooting out possible fraud and not about infringing upon academic freedom.

That bare statement cries out for amplification. Here are portions of an analysis posted at Watt’s Up With That?:

Mann is the former UVA professor, whose “hockey stick” temperature chart was used to promote claims that “sudden” and “unprecedented” manmade global warming “threatens” human civilization and Earth itself. The hockey stick was first broken by climatologists Willie Soon and Sallie Baliunas, who demonstrated that a Medieval Warm Period and Little Ice Age were clearly reflected in historic data across the globe, but redacted by Mann. Analysts Steve McIntyre and Ross McKitrick later showed that Mann’s computer program generated hockey-stick patterns regardless of what numbers were fed into it – even random telephone numbers; that explained why the global warming and cooling of the last millennium magically disappeared in Mann’s “temperature reconstruction.”

The Climategate emails revealed another deliberate “trick” that Mann used to generate a late twentieth-century temperature jump: he replaced tree ring data with thermometer measurements at the point in his timeline when the tree data no longer fit his climate disaster thesis.

Not surprisingly, he refused to share his data, computer codes and methodologies with skeptical scientists. Perhaps worse, Climategate emails indicate that Mann and others conspired to co-opt and corrupt the very scientific process that Carr asserts will ultimately condemn or vindicate them.

This behavior certainly gives Cuccinelli “probable cause” for launching an investigation. As the AG notes, “The same legal standards for fraud apply to the academic setting that apply elsewhere. The same rule of law, the same objective fact-finding process, will take place.” Some witch hunt.

There is simply no room in science, academia or public policy for manipulation, falsification or fraud. Academic freedom does not confer a right to engage in such practices, and both attorneys general and research institutions have a duty to root them out, especially in the case of climate change research.

Then there is Virginia’s suit for “declaratory and injunctive relief” from Obamacare. Cuccinelli’s office recently responded to the feds’ motion to quash the suit. Here is the AG’s statement:

Virginia has responded to the federal government’s attempt to dismiss the state’s lawsuit against the new federal health care law, Virginia Attorney General Ken Cuccinelli announced today.

In its motion to the court to dismiss Virginia’s lawsuit, the federal government argued that Virginia lacks the standing to bring a suit, that the suit is premature, and that the federal government has the power under the U.S. Constitution’s Commerce Clause to mandate that citizens must be covered by health insurance or pay a civil penalty.  The government also made alternative arguments based upon its taxing power and the Necessary and Proper Clause.

“If the government prevails and Congress may use the Commerce Clause to order Americans to buy private health insurance, then Congress will have been granted a virtually unlimited power to order you to buy anything.  That would amount to the end of federalism and our more than 220 years of constitutional government,” the attorney general said.

Here is a brief summary of some of the arguments:

Federal government’s arguments to dismiss the case

Virginia’s response

Virginia is not injured by the federal health care law

Because the federal health care law purports to invalidate a Virginia law (the Health Care Freedom Act) under the Constitution’s Supremacy Clause, Virginia’s sovereign interests have been injured.

Because the mandate doesn’t take effect until 2014, the case is not “ripe”

1)  Based on several previous Supreme Court decisions, if a dispute is certain to occur in the future, this does not prohibit the suit from being brought in the present

2)  Virginia has already been forced to make decisions regarding insurance exchanges under the act, as well as changes to Medicaid.  One of those decisions made the commonwealth forego more than $100 million in federal money.

Virginia’s suit is barred by the Anti-Injunction Act

The act does not apply to states under these circumstances, because Virginia’s action falls within an exception to the act that has been recognized by the Supreme Court

The government has the power under the Constitution’s Commerce Clause to mandate the purchase of individual health insurance

1)  The federal government’s argument is contrary to the text of the Constitution

2)  The federal government’s argument is contrary to the meaning of the words of the Commerce Clause as understood by the Founders

3)  The federal government’s argument is contrary to the historical context of the nation’s founding.  When Great Britain instituted a tax on tea, the colonists’ response was to boycott and to not buy tea.  Parliament had the power to regulate commerce, but even it did not attempt to force colonists to buy the taxed product.

4)  The federal government’s argument is contrary to the traditional uses of the Commerce Clause.  The clause has always been used to regulate economic activity; never inactivity.

5)  The federal government’s argument is contrary to the precedent of the U.S. Supreme Court.  The Court has set outer limits to the reaches of the Commerce Clause, including in cases such as Lopez and Morrison, saying that the clause must have principled limits, otherwise the federal government essentially would have unlimited power, rather than the limited powers enumerated in the Constitution.

Even if refusing to buy insurance is not commerce, the government can still force people to buy health insurance using the Constitution’s Necessary and Proper Clause.

1)  Since 1819, the Supreme Court has held that any use of the Necessary and Proper Clause must be consistent with both “the letter and spirit” of the Constitution.  Any interpretation that would destroy the federal form of government (where federal power is limited only to those powers enumerated in the Constitution, with remaining powers reserved to the states and the people) is not allowed under that standard.

2)  In May, the Supreme Court decided Comstock.

The Court adopted a historical approach to the use of the Necessary and Proper Clause. Because the mandate is utterly unprecedented, it is unlikely to be upheld under a historical approach.

Even if the government cannot win using the Commerce Clause and Necessary and Proper Clause arguments, the federal health insurance mandate can be justified under the government’s taxing authority.

1)  The penalty for not buying insurance is not a tax.  Congress called it a “penalty” and claimed authority to act only under the Commerce Clause.  To argue otherwise now ignores what Congress actually did.

2)  A penalty for inaction is not a tax of any kind known to the Constitution, when judged historically.

Finally, for today, there is Cuccinelli’s principled defense of the First Amendment in the case of Snyder v. Phelps. Here is the text of the press release that explains his refusal to join a case filed by the AGs of 48 other States:

Attorney General Ken Cuccinelli has decided not to join other states in an amicus brief on behalf of Albert Snyder in Snyder v. Phelps, which will soon be heard by the U.S. Supreme Court.  Mr. Snyder is the father of Matthew Snyder, a soldier killed in Iraq whose funeral was picketed by Fred Phelps and his followers at the infamous Westboro Baptist Church.

Here is our statement, given by Brian Gottstein, director of communication:

The attorney general’s office deplores the absolutely vile and despicable acts of Fred Phelps and his followers.  We also greatly sympathize with the Snyder family and all families who have experienced the hatefulness of these people.  The attorney general has always been a strong supporter of the military, both in his words and in his work as a Senator.  But the consequences of this case had to be looked at beyond what would happen just to Phelps and his followers.

This office has decided not to file a brief in Snyder v. Phelps, because the case could set a precedent that could severely curtail certain valid exercises of free speech.  If protestors – whether political, civil rights, pro-life, or environmental – said something that offended the object of the protest to the point where that person felt damaged, the protestors could be sued.  It then becomes a very subjective and difficult determination as to when the line is crossed from severely offensive speech to that which inflicts emotional distress.  Several First Amendment scholars agree.

Virginia already has a statute that we believe balances free speech rights while stopping and even jailing those who would be so contemptible as to disrupt funeral or memorial services.  That statute, 18.2-415(B), punishes as a class one misdemeanor (up to one year in jail and a fine of up to $2,500) someone who willfully disrupts a funeral or memorial service to the point of preventing or interfering with the orderly conduct of the event.

We do not think that regulation of speech through vague common law torts like intentional infliction of emotional distress strikes the proper balance between free speech and avoiding the unconscionable disruption of funerals.  We think our statute does.

So long as the protesters stay within the letter of the law, the Constitution protects their right to express their views.  In Virginia, if Phelps or others attempt this repugnant behavior, cross the line and violate the law, the attorney general’s office stands ready to provide any assistance to local prosecutors to vindicate the law.

A politician who stands on principle instead of bowing to popular outrage. How refreshing. How unusual.

Cuccinelli for President? Sounds good to me, but if you follow the first link in this post you will learn that Cuccinelli’s views on many issues would cause Democrats to unleash a latter-day anti-Goldwater scare campaign. Given the present mood of the country, however, Ken Cuccinelli could be just the right man for the times.

The Real Burden of Government

Drawing on estimates of GDP and its components, it is easy to quantify the share of economic output that is absorbed by government spending. (See, for example, “The Commandeered Economy.”) With a bit of interpretive license, it is even possible to assess the cumulative effects of government spending and regulation on economic output. (See, for example,  “The Price of Government.”)

But the real economy does not consist of a homogeneous output (GDP). The real burden of government therefore depends on the specific resources that government extracts from the private sector in the execution of particular government programs, and on the particular products and services that are affected by government regulations.

Each new or expanded government program raises the demand for and price of certain kinds of goods and services, and channels rewards (claims on goods and services) in the direction of the businesses and persons involved in providing goods and services to government; for example:

  • Social Security rewards individuals for not working. The service, in this case, is the “good feeling” that comes to politicians, etc., for having done something “compassionate.”  The effect is to raise the prices of the goods and services that prematurely retired individuals would otherwise produce, therefore reducing the well-being of the working public.
  • Medicare — another of many feel-good programs — rewards retirees by subsidizing their medical care and prescription drugs. The upshot of this feel-good program is to reduce the well-being of the working public, which must pay more for its medical services and prescription drugs (directly, through higher insurance premiums, or because of lower wages to offset the cost of employer-provided health insurance).
  • R&D conducted in government laboratories and under government grants absorbs the services of scientists and engineers, thus raising the compensation of many scientists and engineers who couldn’t do as well in the private sector (the reward) and reducing the numbers of scientists and engineers engaged in private-sector R&D (the cost). Remember the private-sector inventors, innovators, and entrepreneurs who brought you the telephone, automobiles, radio, television, any number of “wonder drugs,” computers, online shopping, etc., etc., etc.?
  • A goodly fraction of the teachers and professors at tax-funded schools and universities are rewarded with incomes that they could not earn if they worked in the private sector. (Tax-funded education also provides feel-good rewards to the usual suspects, who worship at the altar of statist inculcation.) Given that the “educators” and administrations of tax-funded educational institutions are essentially unaccountable to their “customers,” it should go without saying that tax-funded education delivers far less than the alternative: combination of private schools (including trade schools), apprenticeships, and penal institutions. Moreover, tax-funded education deprives private-sector companies of the services of (some) teachers and professors who have the skills and ability to help those companies to offer better products and services to consumers.

That’s as far as I care to take that list. You can add to it easily, just by selecting any federal, State, or local government program at random.

All of those programs, onerous as they are, have nothing on the insidious regulatory regime that has engulfed us in the past century. Regulation often are the means by which “bootleggers and Baptists” conspire to protect their interests, on the one hand (“bootleggers”), while slaking their thirst for do-goodism, on the other hand (“Baptists”). The classic case, of course, is Prohibition, which enriched bootleggers while making Baptists (and other temperance-types) feel good about saving our souls. You know how well that worked.

Obamacare is a leading example of “bootleggers and Baptists” at work. Insurance companies and the American Medical Association, anxious to protect themselves, lent their support to a program that promises to increase the demand for prescription drugs and doctors’ services. It’s a pact with the devil, of course, because (unless, by some miracle, it is repealed or declared unconstitutional) insurance companies and doctors will find that they are nothing more than government employees, in deed if not in name. And guess who will end up paying the bill? The working public, of course.

Obamacare is not a purely regulatory regime, however, because it revolves around a feel-good giveaway program. For examples of purely regulatory regimes, I turn to the myriad mundane regulations that are imposed upon us for “our own good” and at our own expense, from make-work schemes for electricians and plumbers building codes to death-inducing delays in drug approval the Pure Food and Drug Act.

More notorious (though perhaps not more damaging to the economy) are the federal government’s misadventures in “managing” the economy. A good place to begin is with the Federal Reserve’s actions from the late 1920s to the early 1930s, which helped to bring on the stock-market bubble that led to the stock-market crash that led to a recession that (with the Fed’s help) turned into the Great Depression. A good place to end is with the recent financial crisis and deep recession — a creature of Congress, the Fed, other federal suspects too numerous to mention, plus Freddie Mac and Fannie Mae — their pseudo-private-bur-really-government co-conspirators.

Have you had enough? I certainly have.

The growth of government and its incursions into our personal and business lives during the past century has done far more than rob us of wealth and income. It has ruined our character and our society, and deprived us of liberty. What has happened to self-reliance, social networks, private charity, and civil society in general? What has happened to plain old liberty, which is a value unto itself? That they are not gone with the wind is due only to the tenacity with which (some of us) hold onto them.

Government grows in power and reach because every government program and regulation — even the most benighted of them — creates a vested interest on the part of its political sponsors (in and out of government), bureaucratic managers, and dependent constituencies. New suckers are born every minute who believe that they can join the gravy train without paying the piper (to mangle a few metaphors). And when the problems created by government become too obvious to ignore, the conditioned response on the part of politicians, bureaucrats, their dependent constituencies, and most of the public is to find governmental solutions to those problems. It is the ultimate vicious circle.

Government is the problem. And it will be the problem for as long as it does more than merely protect its citizens from domestic and foreign predators, so that they can enjoy liberty and its fruits.

*     *     *

Related posts: Too numerous to mention. Begin with this list of posts at Liberty Corner, then start at the beginning of Politics & Prosperity, work your way to the present, and stay tuned.

Color Me Unsurprised…

…by this, from Daniel Klein:

Zogby researcher Zeljka Buturovic and I considered the 4,835 respondents’ (all American adults) answers to eight survey questions about basic economics. We also asked the respondents about their political leanings: progressive/very liberal; liberal; moderate; conservative; very conservative; and libertarian….

How did the six ideological groups do overall? Here they are, best to worst, with an average number of incorrect responses from 0 to 8: Very conservative, 1.30; Libertarian, 1.38; Conservative, 1.67; Moderate, 3.67; Liberal, 4.69; Progressive/very liberal, 5.26….

The survey also asked about party affiliation. Those responding Democratic averaged 4.59 incorrect answers. Republicans averaged 1.61 incorrect, and Libertarians 1.26 incorrect. (“Are You Smarter Than a Fifth-Grader?The Wall Street Journal, June 8, 2010)

Part of the explanation, of course, is that “liberals” and “progressives” derive their view of the world from their emotions: “It ought to be that way, so that’s the way it is.” Another part of the explanation is that “liberals” and “progressives” just aren’t as smart or rational as they like to think they are:

IQ and Personality
IQ and Politics
The Right Is Smarter Than the Left
The Psychology of Extremism

I wouldn’t mind it if the hubris of “liberals” and “progressives” led them to a nasty end, but they have acquired the power to take the rest of us with them.

Will the GOP Take the House?

UPDATED 07/27/2010

I showed, in the preceding post, the results of Rasmussen’s poll of likely voters who were asked whether they will vote for the Republican or Democrat candidate for their district’s seat in the House of Representatives. As of now, the edge goes to GOP candidates by 46 percent to 36 percent — a lead of 10 percentage points — with 18 percent noncommittal.

Were the GOP to hold onto that 10-percentage-point edge, the outcome would be even better (for the GOP) than that of the “Republican Revolution” of 1994, when Republicans re-took the House (winning 53 percent of the seats) while besting the Democrats at the ballot box by 6 percentage points.

Here are the statistics, in graphical form, for House contests from 1978 through 2008:

Source: Derived from congressional election results available through the links on this Wikipedia page.*

A 10-percentage-point win (55 GOP vs. 45 Democrat) would give the GOP about 57 percent of House seats (248), as against 43 percent for Democrats (187). That’s not a veto-proof majority,** nor is there any hope for a veto-proof GOP majority in the Senate. But, as long as Republicans hold the House, they can prevent the implementation of Obamacare (and other foolishness) simply by refusing to appropriate the necessary funds to implement it (and other things).

Pray for gridlock in D.C.
* The anomalous mid-term point at 46-46 represents the election of 2006, when (I suspect) a larger-than-usual fraction of GOP incumbents held onto their seats by slim margins. The anomalous general election point at 44-41 represents the election of 2008, when (I suspect, again) another larger-than-usual fraction of GOP incumbents held onto their seats by slim margins. In both elections, the tide was running against Republicans, so they did well to hold onto as many seats as they did.

** A similar analysis of the percentage change in seats vs. the percentage change in votes yields a GOP edge of 271-164, which is too much to hope for, and still not a veto-proof majority.

Obama, Obamacare, and the Polls

Obama, once again, is in trouble with the left (e.g., this piece by Frank Rich of The New York Times). Why is he in trouble this time? Because he lacks the superhuman powers it would require of him to personally stanch the flow of oil in the Gulf of Mexico. The best he can do is throw tantrums (after much prompting from the left). But you can be sure that when the leak is plugged Obama will find a way to take credit for a feat of engineering that owed nothing to his tantrums.

Some of Obama’s fickle, leftist flock will then return to the fold, giving him a bounce in the polls, like the bounces he enjoyed following his attack on the Supreme Court in January’s State of the Union Address and the signing in March of that obaminable piece of legislation known as Obamacare:

Net approval rating: percentage of likely voters strongly approving of BO, minus percentage of likely voters strongly disapproving of BO. Derived from Rasmussen Reports’ Daily Presidential Tracking Poll. I use Rasmussen’s polling results because Rasmussen has a good track record with respect to presidential-election polling.

Obama’s last venture into positive territory occurred way back on June 29, 2009. His ratings have been (mostly) downhill ever since. It seems that his baseline approval rating is around -10 — that’s about as high as it gets when his fickle fans give him  a bounce in the polls. (The modal value for 492 polling days is -10; the modal range is -7 to -15.)

Obamacare has followed a similar course:

Net disapproval before enactment of Obmacare: percentage of poll respondents strongly disapproving of Obmacare, minus percentage of poll respondents strongly approving it (source). Net disapproval after enactment: percentage of poll respondents strongly approving of repeal, minus percentage of poll respondents strongly opposing it (source).

Despite the left’s euphoria when Obama signed his obamanation into law, Obamacare remains broadly unpopular.

In polls there is hope:

Source: results of a Rasmussen poll in which likely voters are asked whether they intend to vote for their district’s Republican or Democrat candidate.

Afterthought: You can rest assured that around Labor Day the Democrats will launch some kind of sleaze attack on the GOP. Having observed Democrats in action for six decades, I have decided that their motto should be: “When all else fails, fight dirty.” Given Tricky Dick’s track record, I hereby award him posthumous membership in the Democrat Party.

Ricardian Equivalence Reconsidered

Ricardian equivalence is an old and fascinating theory of economics. One writer summarizes it this way:

In [David] Ricardo‘s view, it does not matter whether [government] choose[s] debt financing or tax financing, because the outcome will be the same in either case. Flip a coin if you like, because in terms of the final results, raising taxes by $1,000 is equivalent to the government borrowing $1,000. This concept, appropriately called “Ricardian equivalence,” may be unfamiliar and counterintuitive. The key to understanding it is recognizing that debt financing is essentially just future taxation. If a government issues a bond today to avoid raising taxes, it will need to raise taxes tomorrow to pay off the bond when it comes due. According to Ricardo’s argument, it makes no difference to the public whether those increased taxes will come sooner (tax financing) or later (debt financing).

… Assume [government] can either impose $1,000 in taxes now to pay for [a government program], or … issue $1,000 of government debt, payable in one year for, let’s say, 10% interest. If  [government chooses] taxes, [taxypayers] have $1,000 less to spend today. That’s straightforward enough.

If, on the other hand, [government chooses] debt, then [taxpayers], being a savvy bunch who’ve seen this debt financing in action before, realize that in one year, it will be time…to pay back the people who buy the government debt. [Taxpayers] will owe those people $1,000 plus $100 in interest, for a total of $1,100. [Taxpayers] know that money must come from somewhere, so they expect that in one year, their taxes will go up by $1,100. In order to be ready for that one year from now, they put $1,000 into saving today, earning 10% interest, so that they will have the $1,100 they will need. This is $1,000 dollars today that they cannot spend today or save for reasons other than paying future taxes, so the outcome is that [taxpayers] have $1,000 less to spend today, just like they do if you raise taxes today.

But there are some standard objections to Ricardian equivalence, which the writer summarizes:

1. [T]here must be complete access to perfect capital markets so that all of the required saving and borrowing can be accomplished without friction, and people must be able to borrow at the same interest rate at which the government borrows, or the equivalence breaks down.

2. Additionally, people must care about what happens in the future, when the government debt will be repaid. If the future taxes only will apply so far in the future that the person will be dead, why save now? But if people refuse to offer to save more now, then offered savings in the economy are reduced, so interest rates would have to be higher if the government tried to borrow than if it taxed people directly today. Thus, it is assumed that either all people live long enough to see the debt be repaid, or they have children (that the parents care about and to whom they leave sufficient bequests) who will live to see that day.

3. Even if these requirements are satisfied, people must also recognize the equivalence between tax finance and debt finance in order to act accordingly. This may be the most tenuous assumption required—regardless of how fine the … educational system is, it is unlikely that public debt theory and present value calculations are included in basic, compulsory schooling.

The first two objections do not negate Ricardian equivalence, they merely make it a tendency. That is, instead of perfect equivalence, there may be approximate equivalence. In the example of a $1,000 government expenditure, taxpayers (as a group)  might save less than $1,000 if the interest rate they pay is more than the interest rate government pays, or they might save less than $1,000 if not all of them have descendants or care about them as much as they care about themselves. But, some amount will be saved, and it may be as much as $1,000.

The third objection overlooks the sophistication of the institutions and persons who have the greatest interest in government’s actions: large corporations and persons in high-income brackets. They will react to government borrowing as if it would affect them and their heirs (corporate and individual). This objection, like the first two, simply makes Ricardian equivalence a tendency.

That is as far as I will defend Ricardian equivalence, for it is unnecessarily complex and counterintuitive. It may be true that taxation and borrowing have the same (first-order) effect on the private sector. But that effect arises simply because it is government spending — not the method of financing it — which extracts resources from the private sector.

If government happens to raise taxes by an amount equal to its additional spending, then the burden of that spending falls, to a first approximation, on the persons who happen to pay the additional taxes imposed by government. Their disposable income is reduced by as much as it would be if government had inflated the prices of  the goods and services they buy. Similarly, if additional government spending happens to coincide with additional government borrowing; the real value of private saving is reduced by the inflationary effect of the additional government spending. In fact, both phenomena occur at the same time, regardless of the mix of additional taxation and/or borrowing; that is, government spending inflates the prices of goods and services and thereby erodes the value private wealth.

Related posts:
The Commandeered Economy
The Price of Government
The Mega-Depression
Does the CPI Understate Inflation?

The Unreality of Objectivism

Charles Murray, in a review of two biographies of Ayn Rand, says that

Objectivism takes as its metaphysical foundation the existence of reality that is unchanged by anything that an observer might think about it—”A is A,” as Aristotle put it, and as Rand often repeated in her own work. Objectivism’s epistemology is based on the capacity of the human mind to perceive reality through reason, and the adamant assertion that reason is the only way to perceive reality.

Objectivism is just a refined form of bunkum, which can be shown by examining its four Randian tenets (in italics, followed by my commentary):

1. Reality exists as an objective absolute — facts are facts, independent of man’s feelings, wishes, hopes or fears.

It is true, and tautologous, to say that reality exists; that is, the real has “verifiable existence.” But there are many conceptions of reality, some of them based on identical observations of the physical world. (Read about physical cosmology and quantum mechanics, for example.) There may be an objective reality, but it is trivial to say so. The reality that we perceive depends on (a) the limitations of our perception (e.g., the degree to which telescopes have been improved), and (b) the prejudices that we bring to what we are able to perceive. (Yes, everyone has prejudices.) And it always will be thus, no matter how many facts we are able to ascertain; the universe is a bottomless mystery.

In my experience, Objectivists flaunt their dedication to reality in order to assert their prejudices as if they were facts. One of those prejudices is that “natural rights” exist independently of human thought or action. But the concept of “natural rights” is an abstraction, not a concrete, verifiable reality. Abstractions are “real” only in a world of Platonic ideals. And, then, they are “real” only to those who posit them. Objectivism is therefore akin to Platonism (Platonic mysticism), in which ideas exist independently of matter; that is, they simply “are.”

It would be fair to say that Objectivism is a kind of unreality.

2. Reason (the faculty which identifies and integrates the material provided by man’s senses) is man’s only means of perceiving reality, his only source of knowledge, his only guide to action, and his basic means of survival.

Reason operates on perceptions and prejudices. To the extent that there are “real” facts, we filter and interpret them according to our prejudices. When it comes to that, Objectivists are no less prejudiced than anyone else (see above).

Reason is an admirable and useful thing, but it does not ensure valid “knowledge,” right action, or survival. Some non-cognitive precepts — such as the “Golden Rule,” “praise the Lord and pass the ammunition,” and “talk softly but carry a big stick” — are indispensable guides to action which help to ensure the collective (joint) survival of those who observe them. Survival, in the real world (as opposed to the ideal world of Objectivism) depends very much on prejudice (see Theodore Dalrymple’s In Praise of Prejudice: The Necessity of Preconceived Ideas).

3. Man — every man — is an end in himself, not the means to the ends of others. He must exist for his own sake, neither sacrificing himself to others nor sacrificing others to himself. The pursuit of his own rational self-interest and of his own happiness is the highest moral purpose of his life.

This dictum is an attack on the straw-man concept of altruism, which has no basis in reality, as I explain here and here. All of us are individualists, at bottom, in that we seek our own happiness. It just happens that some of us correlate our happiness with the happiness of (selected) others. Rand’s third tenet is both a tautology and a (lame) justification for behavior that violates social norms. Objectivists (like anarcho-capitalists) seem unable to understand that the liberty which enables them to spout their nonsense is owed, in great measure, to the existence of social norms, and that those norms arise (in large part) from observance of the “Golden Rule.”

4. The ideal political-economic system is laissez-faire capitalism. It is a system where men deal with one another, not as victims and executioners, nor as masters and slaves, but as traders, by free, voluntary exchange to mutual benefit. It is a system where no man may obtain any values from others by resorting to physical force, and no man may initiate the use of physical force against others. The government acts only as a policeman that protects man’s rights; it uses physical force only in retaliation and only against those who initiate its use, such as criminals or foreign invaders. In a system of full capitalism, there should be (but, historically, has not yet been) a complete separation of state and economics, in the same way and for the same reasons as the separation of state and church.

Here, Rand shifts gears from preaching the bed-rock prejudices and tautologies of Objectivism (tenets 1, 2, and 3) to the “ought” of Objectivism. It is hard to distinguish Rand’s fourth tenet from the tenets of libertarianism, which makes me wonder why some Objectivists scorn libertarianism (e.g., go here and scroll down). It is not as if Objectivism is reality-based, as opposed to libertarianism. In fact, consequentialist libertarianism (anathema to anarchists and Objectivists, alike) has the advantage when it comes to defending laissez-faire capitalism. The facts of history and economics are on the side of laissez-faire capitalism because it yields better results than statism (see this and this, for example).

I will not bother, here, to dismantle the jejune rejection of preemptive self-defense: the so-called non-aggression principle, which I have addressed in this post (and in several of the links therein). Nor is the notion of complete separation of state and church worth more than a link this post (and the links therein) and this one.

In sum, Objectivism reminds me very much of a late-night, dorm-room bull session: equal parts of inconsequential posturing and uninformed “philosophizing.” Sophomoric, in a word.

Related post: This Is Objectivism?