Well-Founded Pessimism

I have never been more pessimistic than I am now about the future of the United States. Not even in the aftermath of 9/11, when the enemy was without and could be defeated, with persistence and resolve.

Patrick Buchanan observes that

Americans are already seceding from one another—ethnically, culturally, politically. Middle-class folks flee high-tax California, as Third World immigrants, legal and illegal, pour in to partake of the cornucopia of social welfare benefits the Golden Land dispenses.

High-tax states like New York now send tens of thousands of pension checks to Empire State retirees in tax-free Florida. Communities of seniors are rising that look like replicas of the suburbs of the 1950s. People gravitate toward their own kind. Call it divorce, American-style.

What author William Bishop called “The Big Sort”—the sorting out of people by political beliefs—proceeds. Eighteen states have gone Democratic in six straight presidential elections. A similar number have gone Republican.

“Can we all just get along?” asked Rodney King during the Los Angeles riot of 1992. Well, if we can’t, we can at least dwell apart.

After all, it’s a big country.

Buchanan has it right — until he counsels voluntary segregation as an antidote to statism. Liberty lovers cannot escape the dictatorial grip of the central government simply by living in a Red locale in a Red State. Big Brother is everywhere: carting off chunks of our income; dictating the manufacture of products that we use; dictating the wages and benefits that must be paid to the employees of companies that we patronize; driving up the cost of the health care that we need while driving providers and insurers out of the market for health care; subsidizing the follies of State and local governments through grants of “federal” (taxpayer) money; setting standards for education at local public schools; undermining the quality of the products and services we buy, locally and on the web, by dictating the racial and gender composition of workforces; driving the economy into stagnation (if not outright decline) through profligate spending on “entitlements”; and on an on.

The country is not big enough — not by a long shot — for voluntary segregation to work. Something has to give, and give soon, or those of us who prefer liberty to slavery will never escape the serfdom into which our “leaders” are marching us. What has to give, of course, is our attachment to the union that was preserved by the force of arms in 1865. As long as we cling to that union we remain subject to its now-irreversible statist commitments. At best, the election of conservative presidents and legislators will slow our descent into total statism, but it will not halt that descent.

Finally (for now), I am rightly pessimistic about the willingness of the left to allow a return to the true federalism that was supposed to have been ensured by the Constitution. The left’s mantra is control, control, control — and it will not relinquish its control of the machinery of government. The left’s idea of liberty is the “liberty” to follow its dictates. I will continue to point out the follies and fallacies of leftist policies, but I will not waste my time by dissecting the left’s specious arguments for its policies. Enough!

More to come.

A Contrarian View of Universal Suffrage

Timothy Sandefur, in the course of a commentary about Steven Spielberg’s Lincoln, quotes the man himself:

The doctrine of self government is right–absolutely and eternally right–but it has no just application, as here attempted. Or perhaps I should rather say that whether it has such just application depends upon whether a negro is not or is a man. If he is not a man, why in that case, he who is a man may, as a matter of self-government, do just as he pleases with him. But if the negro is a man, is it not to that extent, a total destruction of self-government, to say that he too shall not govern himself? When the white man governs himself that is self-government; but when he governs himself, and also governs another man, that is more than self-government–that is despotism. If the negro is a man, why then my ancient faith teaches me that ‘all men are created equal;’ and that there can be no moral right in connection with one man’s making a slave of another…. I say this is the leading principle–the sheet anchor of American republicanism. [Peoria, Illinois: October 16, 1854]

But there is a good case to be made that the votes of American blacks are responsible for the growth of oppressive government. Take the elections of 2008 and 2012, for example, which enabled the birth of Obamacare, and quite possibly its continued existence.

According to a report issued by the Census Bureau, about 16 million blacks voted in 2008. There is no similar report for 2012, but it is reasonable to assume that about the same number of blacks voted this year, with a somewhat lower voting rate being offset by somewhat larger numbers of voting-age blacks. Of the 16 million or so black votes in each election, 95 percent went to  Obama in 2008 and 93 percent went to Obama in 2012 (according to The New York Times exit polls).

Given the preceding information, and armed with a Census Bureau tally of the distribution of blacks by State, I estimated:

  • the number of votes in each State for the Democrat and Republican candidates in 2008 and 2012, had blacks not voted, and
  • the resulting distribution of electoral votes (EVs) in each election.

Obama might have edged out McCain in 2008, despite losing the popular vote by 54 million to 59 million. Nevertheless, McCain almost certainly would have gained the District of Columbia (yes!), with 3 EVs, Florida (27), Indiana (11), North Carolina (15), Ohio (20), and Virgina (13). Those wins would have brought McCain’s total to 266 — just 3 EVs short of a tie.

There is no doubt that Romney would have won in 2012 but for the black vote. With the addition of DC (3), Florida (29), Michigan (16), Nevada (6), Ohio (18), Pennsylvania (20), and Virginia (13), Romney would have taken a total of 311 EVs. Also, he would have won the popular vote by 59 million to 49 million.

So, I beg to differ with Sandefur and Lincoln. To paraphrase Lincoln, when the black man governs himself and also governs whites by voting almost exclusively for the Democrat-welfare state, that is despotism.

Much Ado about the Price-Earnings Ratio

Does the long-term trend of the price-earnings ratio have an upward tilt? You might think so, if you encounter Robert Shiller’s Cyclically Adjusted Price-Earnings (CAPE) ratio for the S&P Composite. It looks like this:


Derived from Robert Shiller’s data set at http://www.econ.yale.edu/~shiller/data/ie_data.xls.

The plot begins in January 1881 and extends through October 2012. As explained here, CAPE is supposed to more accurately reflect the value of stocks:

Legendary economist and value investor Benjamin Graham noticed the … bizarre P/E behavior during the Roaring Twenties and subsequent market crash. Graham collaborated with David Dodd to devise a more accurate way to calculate the market’s value, which they discussed in their 1934 classic book, Security Analysis. They attributed the illogical P/E ratios to temporary and sometimes extreme fluctuations in the business cycle. Their solution was to divide the price by a multi-year average of earnings and suggested 5, 7 or 10-years. In recent years, Yale professor Robert Shiller, the author of Irrational Exuberance, has reintroduced the concept to a wider audience of investors and has selected the 10-year average of “real” (inflation-adjusted) earnings as the denominator. As the accompanying chart illustrates, this ratio closely tracks the real (inflation-adjusted) price of the S&P Composite. The historic average is 16.4. Shiller refers to this ratio as the Cyclically Adjusted Price Earnings Ratio, abbreviated as CAPE….

CAPE can be quite misleading, however:

The problem with [the 10-year moving average of earnings] is that the typical or average business cycle has been significantly shorter than 10 years. According to data compiled by the National Bureau of Economic Research, economic contractions have become shorter and expansions longer in recent years. Furthermore, while the business cycle has lengthened in recent years, it is still considerably shorter than 10 years. Measured trough to trough, the average business cycle has been six years and one month for the most recent 11 cycles. Measured peak to peak, the average is five years and six months.

The problem with using a moving average that is longer than the business cycle is that it will overestimate “true” average earnings during a contraction and underestimate “true” average earnings during an expansion. According to the National Bureau of Economic Research, the last recession ended in June 2009 and the U.S. economy is now in an expansion phase. Thus, the average earnings estimate used by the July 2011 CAPE is too low and produces a bearishly biased estimate of value.

Using Shiller’s data, a July 2011 CAPE based on the average of six years of real earnings is 21.26 and the long-term average CAPE based on the average of six years of real earnings is 15.78. Comparison to this average indicates that stocks are overvalued by 34.7%. While still signaling that stocks are overvalued, the degree of overvaluation is much less than the 42.3% estimate provided by the July 2011 CAPE based on a 10-year average of real earnings.

When viewed correctly, then, the long-term P-E ratio for the S&P Composite (based on current earnings) looks like this:


Derived from Shiller’s data set. The vertical bars show variations of 1 standard error around the means for each of the three eras.

If I had fitted a long-term trend line through the entire series, it would tilt upward, as it does for CAPE. But that trend would be misleading because it would give undue weight to the stock-market bubble of the late 1990s and the artificially high P-E ratios resulting from the earnings crash during the Great Recession.

In fact, a trend line for the period 1871-1995 would be perfectly flat. Moreover, as shown in the graph immediately above, there is little difference between the first half of that period (1871-1933) and second half (1934-1995). The standard-error bars for both eras are almost the same height and vertically centered at almost the same value. The second era is just slightly (but insignificantly) more volatile than the first era.

As indicated by the standard-error bars, the P-E ratio for 1996-2012 is markedly higher than for the earlier eras. But, of late, the P-E ratio shows signs of returning to the normal range for 1871-1995.

In sum — and contrary to the story that is peddled by “bulls” — I doubt that the real long-term trend of the P-E ratio is upward. Rather, the apparent upward trend reflects bizarre happenings in the past 16 years: an unprecedented price bubble and a brief but steep earnings crash. I would therefore caution investors not to buy stocks in the belief that the P-E trend is upward. For reasons discussed here, the long-term trend of stock prices is more likely downward.

Related posts:
The Price of Government
The Price of Government Redux
The Mega-Depression
Ricardian Equivalence Reconsidered
The Real Burden of Government
The Rahn Curve at Work
The “Forthcoming Financial Collapse”
Estimating the Rahn Curve: Or, How Government Inhibits Economic Growth
The Deficit Commission’s Deficit of Understanding
The Bowles-Simpson Report
The Bowles-Simpson Band-Aid
The Stagnation Thesis
America’s Financial Crisis Is Now
Stocks for the Long Run?
Estimating the Rahn Curve: A Sequel
Bonds for the Long Run?
The Real Multiplier (II)
Lay My (Regulatory) Burden Down
Economic Growth Since World War II
More Evidence for the Rahn Curve
Progressive Taxation Is Alive and Well in the U.S. of A.
The Economy Slogs Along
The Obama Effect: Disguised Unemployment
The Stock Market as a Leading Indicator of GDP
Where We Are, Economically

Is Taxation Slavery?

Thomas Nagel writes:

Some would describe taxation as a form of theft and conscription as a form of slavery — in fact some would prefer to describe taxation as slavery too, or at least as forced labor. Much might be said against these descriptions, but that is beside the point. For within proper limits, such practices when engaged in by governments are acceptable, whatever they are called. If someone with an income of $2000 a year trains a gun on someone with an income of $100000 a year and makes him hand over his wallet, that is robbery. If the federal government withholds a portion of the second person’s salary (enforcing the laws against tax evasion with threats of imprisonment under armed guard) and gives some of it to the first person in the form of welfare payments, food stamps, or free health care, that is taxation. In the first case it is (in my opinion) an impermissible use of coercive means to achieve a worthwhile end. In the second case the means are legitimate, because they are impersonally imposed by an institution designed to promote certain results. Such general methods of distribution are preferable to theft as a form of private initiative and also to individual charity. This is true not only for reasons of fairness and efficiency, but also because both theft and charity are disturbances of the relations (or lack of them) between individuals and involve their individual wills in a way that an automatic, officially imposed system of taxation does not. [Mortal Questions, “Ruthlessness in Public Life,” pp. 87-88]

How many logical and epistemic errors can a supposedly brilliant philosopher make in one (long) paragraph? Too many:

  • “For within proper limits” means that Nagel is about to beg the question by shaping an answer that fits his idea of proper limits.
  • Nagel then asserts that the use by government of coercive means to achieve the same end as robbery is “legitimate, because [those means] are impersonally imposed by an institution designed to promote certain results.” Balderdash! Nagel’s vision of government as some kind of omniscient, benevolent arbiter is completely at odds with reality.  The “certain results” (redistribution of income) are achieved by functionaries, armed or backed with the force of arms, who themselves share in the spoils of coercive redistribution. Those functionaries act under the authority of bare majorities of elected representatives, who are chosen by bare majorities of voters. And those bare majorities are themselves coalitions of interested parties — hopeful beneficiaries of redistributionist policies, government employees, government contractors, and arrogant statists — who believe, without justification, that forced redistribution is a proper function of government.
  • On the last point, Nagel ignores the sordid history of the unconstitutional expansion of the powers of government. Without justification, he aligns himself with proponents of the “living Constitution.”
  • Nagel’s moral obtuseness is fully revealed when he equates coercive redistribution with “fairness and efficiency,” as if property rights and liberty were of no account.
  • The idea that coercive redistribution fosters efficiency is laughable. It does quite the opposite because it removes resources from productive uses — including job-creating investments. The poor are harmed by coercive redistribution because it drastically curtails economic growth, from which they would benefit as job-holders and (where necessary) recipients of private charity (the resources for which would be vastly greater in the absence of coercive redistribution).
  • Finally (though not exhaustively), Nagel’s characterization of private charity as a “disturbance of the relations … among individuals” is so wrong-headed that it leaves me dumbstruck. Private charity arises from real relations among individuals — from a sense of community and feelings of empathy. It is the “automatic, officially imposed system of taxation” that distorts and thwarts (“disturbs”) the social fabric.

In any event, the answer to the question posed in the title of this post is “yes”; taxation for the purpose of redistribution is slavery (see number 2 in the second set of definitions). It amounts to the subjection of one person (the taxpayer) to other persons: deadbeats, do-gooders, and  demagogues. If “slavery” is too strong a word, “theft” will do quite well.

The Value of Experience

UPDATED BELOW

Does experience count? You bet.

But experience is not an undifferentiated quality. Experience as a “community organizer” — which means “professional rabble rouser” — hardly qualifies someone for the responsibility of heading the executive branch of the U.S. government. As millions of Americans have learned (and other millions have not).

Relevant experience, on the other hand, counts for a lot. Consider the following graphs:


The New York Yankees have enjoyed three “dynastic” eras of dominance in the American League: 1921-1964, 1976-1981, and 1994-2012.

In the first era, which predates free agency, the Yankees relied mainly on the allure of the team’s initial successes  to attract talented young prospects. (Those initial successes were due in large part to the acquisition of Babe Ruth in a trade that Boston Red Sox fans have ever since rued.) The best of the young prospects were then tested in the Yankees’ farm system, advanced (selectively) as they proved worthy, and brought up to the “big time” when they were deemed ready.

The second and third eras of  the Yankees’ dominance followed and coincided with the dwindling of the minor leagues, the expansion of the major leagues, and the advent of free agency. Because of the first two developments, major-league teams have been providing on-the-job training to players who, in earlier decades, might never have made it to the big leagues. The Yankees adapted to this change by picking up proven players through trades and free-agent signings — after those players had acquired polish and displayed their skills while in the pay of other teams. Thus it is that the Yankees faded after 1981, as their teams became younger, and became successful again in the mid-1990s, as their teams became older (i.e., more experienced).

UPDATE 08/20/13:

I’ve taken a closer look at the relationships discussed above, and they hold up well.

The following equation applies to 1901-1976 (the years before free agency was in full force):

WL = 0.258 + 0.458xWLP + 0.010xBHO, where

WL = won-lost record in a season

WLP = won-lost record in the previous season

BHO = batting holdovers (the number of batters who appeared in 100 or more games in both the current and preceding seasons)

It makes sense for WL to be strongly correlated with WLP (continuity of players, playing conditions, opposition, etc.). The interesting wrinkle is the presence of BHO in the equation, at a high level of significance (0.07), given the strong cross-correlations between WL and WLP (0.61) and WLP and BHO (0.66).

Since, 1976, however, only WLP explains WL with any degree of significance. This is consistent with my hypothesis that after the advent of free agency the Yankees (unsurprisingly) became more dependent on free agents (i.e., veteran players).

In fact, there was a significant change in the correlation between WL and the relative age of players. For 1901-1976, the correlation is effectively zero (an insignificant -0.11). For 1977-2012, the correlation is a highly significant 0.50. Moreover, the correlation between WLP and BHO drops significantly after the advent of free agency, from 0.66 to 0.22.

To summarize: Before free agency, the Yankees’ depended largely on the retention of proved veterans, but the team remained relatively young (on average) because of the constant acquisition and cultivation of young players, some of whom became valuable veterans. Since free agency, the team has relied less on “growing its own” and more on veteran players who had proved themselves elsewhere.

In any event, experience is valuable. It’s just that it’s acquired in a different way than it was before free agency.

Related posts:
Moral Luck
The Residue of Choice
Can Money Buy Excellence in Baseball?
Inventing “Liberalism”
Randomness Is Over-Rated
Fooled by Non-Randomness
Accountants of the Soul
Rawls Meets Bentham
Social Justice
Positive Liberty vs. Liberty
More Social Justice
Luck-Egalitarianism and Moral Luck
Nature Is Unfair
Elizabeth Warren Is All Wet
Luck and Baseball, One More Time
The Candle Problem: Balderdash Masquerading as Science
More about Luck and Baseball
Barack Channels Princess SummerFall WinterSpring
Obama’s Big Lie
Pseudoscience, “Moneyball,” and Luck

A New Constitution for a New Republic

INTRODUCTION

Secession is much in the air. I have said much about it during the past four years. (See this post and the posts listed at the bottom of it.) I will have more to say about the separation of liberty-loving States from the United States. However, I will not counsel secession, which probably is fruitless even though it is legal, Justice Scalia’s dictum to the contrary notwithstanding.

Instead, a future post will propose a treaty of division. I will make the case that secession is legal, offer (in detail) a treaty of division as a beneficial alternative to secession, address practical and ideological objections to division, and discuss its advantages to all parties.

Left-wing opponents of division are likely to charge that the New Republic, as I like to think of it, would be inimical to the rights that Americans now enjoy under the Constitution, as amended and interpreted. I would answer that charge by offering the following new constitution, which would more than adequately safeguards the liberty rights of all who live under it. The most cynical (i.e., left-wing) opponents of division will not acknowledge the sincerity of a commitment to liberty, of course, but nothing will sway them, in any case. The new constitution, along with my proposal, will be aimed at persons of good will who are prepared to act in good faith for the good of all Americans.

The main problem with the Constitution of the United States is not its meaning; it is the fact that inappropriate meanings have been imputed to it because it is too often vague and ambiguous. The following Constitution for the New Republic of America is not only far more specific than the present Constitution of the United States — and more restrictive of the powers of government — but it also includes more checks on those powers. For example, there are these provisions in Article V:

Congress may, by a majority of three-fifths of the members of each House present, when there is a quorum consisting of three-fourths of the number of persons then holding office in each House…. provide for the collection of revenues in order to pay the debts and expenses of the New Republic…. [emphasis added]

*   *   *

A judgment of any court of the New Republic may be revised or revoked by an act of Congress, provided that such any revision or revocation is approved by two-thirds of the members of each house and leads to a result that conforms to this Constitution.

Then there are Articles VII and VIII, Keeper of the Constitution and Conventions of the States, which open thusly:

The responsibility for ensuring that the legislative, executive, and judicial branches adhere to this constitution in the exercise of their respective powers shall be vested in a Keeper of the Constitution. The Keeper may review acts of Congress, the executive branch, and judicial branch that have the effect of making law and appropriating monies.

*    *    *

Delegations of the States shall convene every four years for the purpose of considering revisions to and revocations of acts of the government that is established by this constitution. Such conventions (hereinafter “convention of the States”) may revise and/or revoke any act or acts and/or any holding or holdings, in the sole discretion of a majority of State delegations present and voting.

On top of that, there is Article IX, which authorizes petitions and subsequent elections for the revocation of a broad range of governmental acts and the expulsion of members of Congress, the President, Vice President and justices of the Supreme Court. Also, a constitutional convention may be called pursuant to a successful petition.

To the extent that Articles VII, VIII, and IX would inhibit presidential and congressional ventures into unconstitutional territory, so much the better.

This new Constitution also provides for secession, the threat of which might further help to preserve its original meaning.

The new Constitution is below the fold. Continue reading

How High Should Taxes Be?

Steven Landsburg correctly observes that taxes should be high enough

to cover expected outlays going forward — but no higher.

That’s because any additional revenue would be used to pay down the federal debt, which is a bad idea. It was almost surely a mistake to run up this much debt in the first place, but now that we’ve got it, the best thing to do is to keep it forever….

The right policy, then, is to estimate future outlays including interest on the existing debt but not including any principal payments on that debt, and to set tax rates so that revenues match those outlays in a typical year. Insofar as Mr. Obama asks for more than that, he’s either a) planning higher future spending than he’s admitting to or b) embarking on a reckless policy of debt reduction.

The following discussion is for the benefit of readers who may remain unenlightened by Landsburg’s explanation.

I begin with the parties to the spending-lending-taxing triangle:

A — beneficiaries of government programs who provide no products or services in return (i.e., recipients of “entitlement” spending, the largest and fastest growing aspect of U.S. government spending)

B — lenders who are willing to underwrite that spending in return for interest payments of 3 percent on the amounts lent (the principal)

C — taxpayers who are “responsible” for the payment of the interest on the loan and who would also bear the cost of repaying the principal if government decided to retire the debt.

Take it as given, for the purpose of this example, that there is little overlap between A, B, and C. A‘s tax payments are either zero or de minimis — because A (mainly) represents the non-taxpaying 47 percent invoked by Mitt Romney during the recent presidential race. B represents a mix of foreign lenders and a relatively small contingent of American entities. C stands for the millions of taxpayers who bear the burden of U.S. government spending — the other 53 percent — especially those in the upper reaches of the income distribution.

Now suppose that in year 1 the government gives A $100 and finances the expenditure by borrowing the sum from B. If the loan is for 10 years at 3 percent, the transaction could be structured in one of two ways:

  1. annual interest payments of 3 percent ($3), with a “balloon” of $100, which can be paid off by finding a new lender (a debt roll-over); or
  2. annual payments of $12.84, which would reduce the debt to zero after 10 years, while giving the lender a return of 3 percent on the unpaid balance.

Option 1 burdens C with annual payments of $3. Option 2 raises the annual burden by $9.84. That is a deadweight loss to C — a burden that is imposed on C without a compensating benefit.

But what about the benefit that C will reap in the future, when C becomes A and takes his turn at the public trough? Well, because the taxes imposed on C force him to forgo remunerative investments, C would be made whole only if his future benefits are somewhat larger than A‘s current benefits, and only then to the extent that his valuation of those benefits matches their nominal valuation. (A healthy C, for example, would place little value on Medicare.) Further, there is reasonable doubt that the A of the future will be as well-fed as the A of today.

No matter how you slice it, A‘s “free lunch” is a bad deal for C. A deadweight loss, to be sure.

The Economic Outlook in Brief

I have elsewhere quantified the connection between government spending and economic growth (e.g., here and here).* I have also shown that stock prices indicate the direction of economic growth. It should not surprise you if I say that

  • the re-election of Obama portends further growth of government spending — specifically, the uncontrolled growth of entitlement spending, as accelerated by Obamacare;
  • the rate of economic growth will continue to decline for as long as entitlements grow as a percentage of GDP; and
  • in anticipation of slower economic growth, stock prices will continue to decline, in real terms.

You can follow the links in the first paragraph if you wish to learn more. Here is a bit of additional evidence for my gloomy outlook. The real value of the S&P Composite Index has fluctuated in trough-to peak-to trough cycles, four of which have been completed since the 1870s:


Derived from Robert Shiller’s data set at http://www.econ.yale.edu/~shiller/data/ie_data.xls.

We are now on the downside of the fifth cycle, which began in July 1982 and peaked in August 2000. If the present cycle follows the pattern of the other two long cycles, it may not bottom out until sometime after 2020  (though it may never end if economic growth continues to decline). And if it does bottom out then, the real value of the S&P composite will have risen only about two-fold from where its value at the start of the cycle in July 1982. In nominal terms, the S&P Composite will have dropped to about half its current level by 2020.

But, as I say, the stock market merely anticipates underlying economic conditions. Those conditions seem destined to worsen because the entitlements mess will not be dealt with for as long as there is gridlock in Washington.

__________
* See also the second graph in this post by James Pethokoukis of the American Enterprise Institute. The graph highlights the inverse relationship between entitlement spending and growth-producing innovation. Entitlement spending diminishes investments in innovation by (a) diverting resources from productive to unproductive uses and (b) penalizing (taxing) productive activities that fund innovation and its implementation.

Related posts:
The Laffer Curve, “Fiscal Responsibility,” and Economic Growth
The Causes of Economic Growth
In the Long Run We Are All Poorer
A Short Course in Economics
Addendum to a Short Course in Economics
The Price of Government
The Price of Government Redux
The Mega-Depression
As Goes Greece
Ricardian Equivalence Reconsidered
The Real Burden of Government
The Illusion of Prosperity and Stability
Estimating the Rahn Curve: Or, How Government Inhibits Economic Growth
Taxing the Rich
More about Taxing the Rich
America’s Financial Crisis Is Now
A Keynesian Fantasy Land
The Keynesian Fallacy and Regime Uncertainty
Why the “Stimulus” Failed to Stimulate
The “Jobs Speech” That Obama Should Have Given
Say’s Law, Government, and Unemployment
Unemployment and Economic Growth
Regime Uncertainty and the Great Recession
Regulation as Wishful Thinking
The Real Multiplier
Vulgar Keynesianism and Capitalism
Why Are Interest Rates So Low?
The Commandeered Economy
Stocks for the Long Run?
We Owe It to Ourselves
Stocks for the Long Run? (Part II)
Estimating the Rahn Curve: A Sequel
In Defense of the 1%
Bonds for the Long Run?
The Real Multiplier (II)
Lay My (Regulatory) Burden Down
The Burden of Government
Economic Growth Since World War II
More Evidence for the Rahn Curve
The Economy Slogs Along
The Obama Effect: Disguised Unemployment
The Stock Market as a Leading Indicator of GDP
Government in Macroeconomic Perspective
Where We Are, Economically
Keynesianism: Upside-Down Economics in the Collectivist Cause

Secession for All Seasons

REVISED 11/07/12

I do not want my liberty (or yours) to depend on the preferences of voters in places like California, Massachusetts, New York, and Vermont. Nor should my liberty (or yours) be hostage to the outcome of a presidential election, to the vagaries of Supreme Court rulings, or to a filibuster-proof cabal of leftists in the U.S. Senate.

It is not supposed to be that way. (See the The Federalist Papers and the Constitution of the United States.) The last time that the presidency of the United States was in the hands of someone who gave a damn about liberty (Ronald Reagan), he did not have enough support in Congress to do more than chisel at the edges of federal power. Now, the GOP-controlled House of Representatives can only try to block Barack Obama’s statist initiatives — and he will go around the House, by issuing unconstitutional executive orders.

In “Secession, Anyone?” I suggested the formation of the Free States of America. The FSA could be built upon Red-Red States. A Red-Red State meets three criteria: (1) its electoral votes have gone to the Republican presidential candidate in the last four elections; (2) its governorship and its legislature will remain in the hands of Republicans for at least two more years (Nebraska’s “nonpartisan” legislature is here counted as Republican); and both of its U.S. Senate seats are held by Republicans (and will be for at least the next two years).  There are 13 Red-Red States:

(If the southeast quadrant of that map resembles an earlier union of disaffected States, so be it. Secession and slavery are separate and separable issues.)

With the fertile ground afforded by those 13 States, it should be possible to create a new republic — one that is bound by a restored Constitution.

When? Sooner rather than later. Sooner because with Democrats in control of the White House and the Senate, the egregious governmental acts of the past four years will not be reversed. Therefore, all who remain subjects of the United States will suffer the consequences of those egregious acts: economic stagnation and rationed health care being two of the more salient consequences.

How? By insisting on the constitutional right of every State to withdraw from the union known as the United States.

Getting out would not be a simple thing, by any means, and there would be a price to pay (e.g., less-free trade between the USA and the FSA; a more costly defense, per capita). But it seems to me that the left ought to be ecstatic about the prospect of controlling a nation — even a somewhat diminished one — while meeting less resistance. Not only would the Red-Red States be gone, but surely a lot of conservatives in Blue States would emigrate to the FSA. What could be more enticing to a leftist than the opportunity to issue edicts at will?

What I am suggesting, of course, is a negotiated secession — a treaty of division, if you will. Do not rule it out. The alternative is worse.

More to come.

Related posts:
How to Think about Secession
Secession
A New, New Constitution
Secession Redux
A New Cold War or Secession?
The Real Constitution and Civil Disobedience
A Declaration of Independence
Zones of Liberty
The Constitution: Original Meaning, Corruption, and Restoration
A Conversation with Uncle Sam
Re-Forming the United States
The Southern Secession Reconsidered
A Declaration of Civil Disobedience
Our Perfect, Perfect Constitution
Reclaiming Liberty throughout the Land
Secession, Anyone?

Economists and Voting

It is the time of year when economists like to remind the unwashed that voting is a waste of time. A classic of the genre appeared seven years ago, in the form of  “Why Vote?,” by Stephen J. Dubner and Steven D. Levitt (of Freakonomics fame). Here are some relevant passages:

The odds that your vote will actually affect the outcome of a given election are very, very, very slim. This was documented by the economists Casey Mulligan and Charles Hunter, who analyzed more than 56,000 Congressional and state-legislative elections since 1898. For all the attention paid in the media to close elections, it turns out that they are exceedingly rare. The median margin of victory in the Congressional elections was 22 percent; in the state-legislature elections, it was 25 percent. Even in the closest elections, it is almost never the case that a single vote is pivotal. Of the more than 40,000 elections for state legislator that Mulligan and Hunter analyzed, comprising nearly 1 billion votes, only 7 elections were decided by a single vote, with 2 others tied. Of the more than 16,000 Congressional elections, in which many more people vote, only one election in the past 100 years – a 1910 race in Buffalo – was decided by a single vote….

Still, people do continue to vote, in the millions. Why? Here are three possibilities:

1. Perhaps we are just not very bright and therefore wrongly believe that our votes will affect the outcome.

2. Perhaps we vote in the same spirit in which we buy lottery tickets. After all, your chances of winning a lottery and of affecting an election are pretty similar. From a financial perspective, playing the lottery is a bad investment. But it’s fun and relatively cheap: for the price of a ticket, you buy the right to fantasize how you’d spend the winnings – much as you get to fantasize that your vote will have some impact on policy.

3. Perhaps we have been socialized into the voting-as-civic-duty idea, believing that it’s a good thing for society if people vote, even if it’s not particularly good for the individual. And thus we feel guilty for not voting. [The New York Times Magazine, November 6, 2005]

In true economistic fashion, Dubner and Levitt omit a key reason for voting: It makes a person feel good. Even if one’s vote will not change the outcome of an election, one attains a degree of satisfaction from taking an official (even if secret) stand in favor of or in opposition to a certain candidate, bond issue, or other item on a ballot.

Dubner and Levitt (and their ilk) seem to inhabit a world in which a thing is not worth doing unless the payoff can be measured with some precision and compared with other, similarly quantifiable, uses of one’s time and money. I doubt they govern their own lives accordingly. If they do, they must be missing out on a lot of life’s pleasures: sex and ice cream, to name only two.

Their article continues on a different tack:

But wait a minute, you say. If everyone thought about voting the way economists do, we might have no elections at all. No voter goes to the polls actually believing that her single vote will affect the outcome, does she? And isn’t it cruel to even suggest that her vote is not worth casting?

This is indeed a slippery slope – the seemingly meaningless behavior of an individual, which, in aggregate, becomes quite meaningful. Here’s a similar example in reverse. Imagine that you and your 8-year-old daughter are taking a walk through a botanical garden when she suddenly pulls a bright blossom off a tree.

“You shouldn’t do that,” you find yourself saying.

“Why not?” she asks.

“Well,” you reason, “because if everyone picked one, there wouldn’t be any flowers left at all.”

“Yeah, but everybody isn’t picking them,” she says with a look. “Only me.”

Clever, what? Too clever by half. This argument overlooks the powerful effect of exemplary behavior — where “exemplary,” as used here, does not imply “laudable.” By Dubner and Levitt’s account, allowing a vandal to deface a public building would not encourage other vandals to do the same thing, and would not lead to the widespread defacement of buildings and other anti-social acts. (I refer, of course, to James Q. Wilson’s widely accepted Broken Windows Theory, which Levitt and Dubner tried to cast doubt on in Freakonomics. They wrongly suggested that the onset of legalized abortion was instrumental in the reduction of crime rates.)

Dubner and Levitt’s argument also overlooks the key fact that when economists preach against voting, they are not just preaching to themselves. Dubner and Levitt’s sermon appeared in the pages of one of the country’s most widely read and influential publications. It was not addressed to an individual, but to thousands and thousands of individuals. And I doubt that they would have objected if the article had appeared in every newspaper and magazine in the country. In effect, the Dubner-Levitt argument is not just an argument that the marginal vote makes little difference — it is advice to millions of Americans that they should abstain from voting.

In that respect, Levitt and Dubner are guilty of paternalism as well as economism. Thus the many links to posts about paternalism in the following list of related posts:
The Rationality Fallacy
Libertarian Paternalism
A Libertarian Paternalist’s Dream World
The Short Answer to Libertarian Paternalism
Second-Guessing, Paternalism, Parentalism, and Choice
Another Thought about Libertarian Paternalism
Back-Door Paternalism
Another Voice Against the New Paternalism
Slippery Paternalists
A Further Note about “Libertarian” Paternalism
Apropos Paternalism
Beware of Libertarian Paternalists
Externalities and Statism
Extreme Economism
Irrational Rationality
Not-So-Random Thoughts (III) (third item)
Obesity and Statism

Further Thoughts about Metaphysical Cosmology

I have stated my metaphysical cosmology:

1. There is necessarily a creator of the universe, which comprises all that exists in “nature.”

2. The creator is not part of nature; that is, he stands apart from his creation and is neither of its substance nor governed by its laws. (I use “he” as a term of convenience, not to suggest that the creator is some kind of human or animate being, as we know such beings.)

3. The creator designed the universe, if not in detail then in its parameters. The parameters are what we know as matter-energy (substance) and its various forms, motions, and combinations (the laws that govern the behavior of matter-energy).

4. The parameters determine everything that is possible in the universe. But they do not necessarily dictate precisely the unfolding of events in the universe. Randomness and free will are evidently part of the creator’s design.

5. The human mind and its ability to “do science” — to comprehend the laws of nature through observation and calculation — are artifacts of the creator’s design.

6. Two things probably cannot be known through science: the creator’s involvement in the unfolding of natural events; the essential character of the substance on which the laws of nature operate.

It follows that science can neither prove nor disprove the preceding statements. If that is so, why can I not say, with equal certainty, that the universe is made of pea soup and supported by undetectable green giants?

There are two answers to that question. The first answer is that my cosmology is based on logical necessity; there is nothing of logic or necessity in the claims about pea soup and undetectable green giants. The second and related answer is that claims about pea soup and green giants — and their ilk — are obviously outlandish. There is an essential difference between (a) positing a creator and making limited but reasonable claims about his role and (b) engaging in obviously outlandish speculation.

What about various mythologies (e.g., Norse and Greek) and creation legends, which nowadays seem outlandish even to persons who believe in a creator? Professional atheists (e.g., Richard Dawkins, Daniel Dennett, Christopher Hitchens, and Lawrence Krauss) point to the crudeness of those mythologies and legends as a reason to reject the idea of a creator who set the universe and its laws in motion. (See, for example, “Russell’s Teapot,” discussed here.) But logic is not on the side of the professional atheists. The crudeness of a myth or legend, when viewed through the lens of contemporary knowledge, cannot be taken as evidence against creation. The crudeness of a myth or legend merely reflects the crudeness of the state of knowledge when the myth or legend arose.

Related posts:
Atheism, Religion, and Science
The Limits of Science
Beware of Irrational Atheism
The Creation Model
The Thing about Science
Free Will: A Proof by Example?
A Theory of Everything, Occam’s Razor, and Baseball
Words of Caution for Scientific Dogmatists
Science, Evolution, Religion, and Liberty
Science, Logic, and God
Is “Nothing” Possible?
Debunking “Scientific Objectivity”
What Is Time?
Science’s Anti-Scientific Bent
The Tenth Dimension
The Big Bang and Atheism
Einstein, Science, and God
Atheism, Religion, and Science Redux
The Greatest Mystery
What Is Truth?
The Improbability of Us
A Digression about Probability and Existence
More about Probability and Existence
Existence and Creation
Probability, Existence, and Creation
The Atheism of the Gaps
Demystifying Science
Scientism, Evolution, and the Meaning of Life
Not-So-Random Thoughts (II) (first item)
Mysteries: Sacred and Profane
Something from Nothing?
Something or Nothing
My Metaphysical Cosmology