Positive Liberty

I suppose I could just walk over to his office and tell him this, but then… it’s been a while since I’ve posted, and this is a bit of a teachable moment, so… Will Wilkinson writes,

I hate [haggling]. I am terrible at it. As a consequence, I bought nothing in Turkey other than tickets to various things, room, food, and a poster of Ataturk. And I overpaid for all of these things, I’m sure, which has left me a bit bitter about the place. Surely this is inefficient overall, no? I understand the price discrimination argument for haggling, especially in a country with a lot of poverty and tourism. But probably hundreds of my dollars stayed in my pocket because I didn’t have good information about the quality of products and I knew the retailer is better at bargaining over the surplus than I am, so… there was no transaction and no surplus.

Inefficient? Of course it is, if all you consider are the utility of the goods purchased and the sums of money involved. But I suspect that these markets still exist because people — tourists — want to haggle. It’s recreation to many of us who would otherwise shop at Wal-Mart.

Maybe knowing a little economics takes the fun out of it, since those of us in the know will realize that to one degree or another we’re getting a less than efficient price (or are we simply valuing the entertainment less, in a quest — misguided? — for sophistication?). But I don’t imagine that we’re the majority. Hagglers find it fascinating to be able to manipulate prices themselves, when usually this activity is done for them in a market. Meanwhile, the markets back home work even when most people don’t realize how or even that they are doing so.

Mark Skousen described the new book, “Mobs, Messiahs, and Markets: Surviving the Public Spectacle in Finance and Politics,” as, “A cock-eyed, frolicking hell of a read.”

Anyone familiar with William (Bill) Bonner’s work at The Daily Reckoning would expect no less. He and his co-author, Lila Rajiva, used poignant rhetoric, colorful analogies, and often surprising humor, to drive home the point that following the crowd or trusting modern day prophets is a recipe for human disaster.

Decades ago, Hayek taught us about the Knowledge Problem in dry prose. Bonner and Rajiva expound upon and apply the Knowledge Problem to current events, and the result is an instructive laugh-fest.

But Bonner and Rajiva aren’t contrarians for the sake of ideology or humor. They want to establish that the world we’re in and the events we’re witnessing are NOT rational. Therefore, they canNOT be scientifically managed or anticipated. Their primary concern is the investor looking to increase the value of his portfolio: Following the crowd or taking the guru too seriously, that same poor investor might lose it all.

Bonner and Rajiva warn people of the dangers of world improvers and self-professed experts. Once again, they use shocking questions and humorous tales to illustrate their points.

1. They openly question insanity — Continue Reading »

“I think our main problem is our unclear definition of value.”

I’d like to make a top-level reply to one of the most interesting comments we’ve gotten in weeks. Before we begin, readers should know that I’ve already laid my cards on the table in the global warming game: Several months ago I wrote that 1) global warming is apparently both real and manmade and 2) even so, the best option may still be to do nothing about it.

I argued that many people seem to become convinced on this issue — one way or the other — because they find a particular narrative appealing, even while discounting various possibilities that don’t line up neatly with the narrative they happen to like. “Scientists find a danger, stop it, and save the world” is a tremendously appealing story, even to me. “Scientists find a danger, try to stop it, spend enormous amounts of money, and we’re screwed anyway” — while not appealing — is also a possibility, and one that we should not dismiss. There’s even “Scientists find a danger, overcorrect it, and polar bears now rule the world,” which is a remote possibility, but then, the remote possibility of something horrible shouldn’t be discounted either.

The problem with seizing on a narrative is that it focuses our attention on one set of dangers and on one outcome only. This is unwise in the extreme, particularly when dealing with a system in which “we’ve warmed things up, but we don’t know how much” is the cutting edge of our knowledge. It might in fact be wisest to wait and see what new technologies — like cheap solar energy — may do to the question in the coming years.

Anyway, let’s get to Casey’s comment. I’ve interleaved my replies, so if you’d like to get the full effect of the comment before you see them, please do so now.

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I am always interested in how other people do their jobs. Sometimes you can steal a good idea from another industry and use it to promote your own career or venture.

Chris Sligh was one of the American Idol, Top 10 contestants from last season. At his blog he weighed out-loud the pros and cons of signing with a major record label, or holding out and going “indie.” (I think he ultimately chose to go independent in Christian Contemporary Music).

At the beginning of Sligh’s post is a link to a short MTV News video on the Future of the Music Business, with more on the subject.

The Internet services many new, deeper niches. Yet how many industries are getting flattened by the Net? In the MTV news vid, one record promoter explains that they can now make a profit with 1% of the sales major labels need to break-even.

It seems to me that,for the new age we’re in, opportunity abounds (in a variety of industries) for many more people to get in on the lower rungs and do what it is that they enjoy doing as a part-time or full-time career (if it weren’t for the Internet, I wouldn’t have my current jobs). But making it “big” may be harder than ever.

This context-plucked snippet of a phrase is from the ‘pen’ of David Mamet, surely one of the finest playwrights / screenwriters of our age. It is not, however, from any of his dialog overlapping, cynical 1.5 dimensional character cluttered literary efforts but from a longish essay in, of all places, the Village Voice. Herewith, Mamet the formerly “brain-dead liberal” (his phrase, folks, not mine) and still master wordsmith:

The Constitution, written by men with some experience of actual government, assumes that the chief executive will work to be king, the Parliament will scheme to sell off the silverware, and the judiciary will consider itself Olympian and do everything it can to much improve (destroy) the work of the other two branches. So the Constitution pits them against each other, in the attempt not to achieve stasis, but rather to allow for the constant corrections necessary to prevent one branch from getting too much power for too long.

Rather brilliant. For, in the abstract, we may envision an Olympian perfection of perfect beings in Washington doing the business of their employers, the people, but any of us who has ever been at a zoning meeting with our property at stake is aware of the urge to cut through all the pernicious bullshit and go straight to firearms.

Good stuff (though not, by the way, all that much different from the slant one gets from P.J. O’Rourke’s brilliant Parliament Of Whores). Perhaps one shouldn’t be all that surprised to hear such comments from someone whose political sensibilities were sufficiently well honed to have written Oleanna back in 1992. Alas, there doesn’t appear to be a role here for Mamet perennial favorite, Ricky Jay. Even so, well worth a read.

From the comments, Matt writes,

Completely off topic but yesterday I caught part of a radio programme that made me think of you guys. The part that fascinated me was Professor Frank Trentmann’s claim that advocating free trade was in the 19th century a *working class* movement. This certainly challenged my previous impression that avowedly working class political movements tend to be some variant of socialism. Anyway just thought I’d throw it in and see if anyone can make something of it. The programme website is [here].

Matt is absolutely right. The working-class appeal of free trade in the 19th century is maybe the biggest untold story in the history of free trade. It’s particularly ironic that today free trade is seen as benefiting chiefly the upper classes, because a thorough and principled free trade would I think not benefit the rich very much, while in the long term, it would raise living standards for the poor more than any other group. The great liberalization of the 19th century is instructive here.

In Britain, the Corn Laws set high tariffs on imported grains, making bread artificially expensive. The poor were particularly hard-hit, since a greater proportion of their overall income went to bread — and thus to the tax collectors. Similar duties existed on many staple products, and they were widely disliked by the liberals of the day.

The Anti-Corn Law League’s successful campaign to repeal the Corn Laws is therefore a textbook classical liberal success story. Wikipedia’s page on the ACLL is pretty poor, but this one at the city of Manchester is very good.

Yet the ACLL’s work was too little and too late to save Ireland from the famine of the 1840s. The Irish lived and died by the potato harvest in part because bread was not an economical substitute; added to this, restrictions on land ownership by ethnic Irish meant that English landowners had the final say in where the remaining food products went, and these often ended up in England. The result was the first modern famine, that is, the first famine produced not by natural dependence on weather and growing conditions, but by misplaced economic incentives. Or, to be frank, by the laws. Yes, there was a blight on potatoes in Ireland during the 1840s. But there was a blight on potatoes everywhere in Europe at the same time. Only Ireland starved.

In our day, tariffs and other measures restricting free trade still hurt the poor more than any other group, because the poor still have smaller savings and less ability to reduce luxury consumption in response to rising prices on necessities. With regard to consumer goods like clothing, housewares, and electronics, tariffs will result in less consumption by the working class. These goods tend to be imported, and threats to raise tariffs against China, for instance, are really threats to make everyday products more expensive for everyone — a step that the poor will notice more than any other group.

The difference is that today, working-class people don’t face starvation as the marginal method by which they reduce their consumption, and they are therefore much more willing to, in effect, “purchase” protectionism — at the cost of fewer or more expensive shoes, televisions, and the like. (Even if there were a tariff on imported foods, the result would not be a drop in food consumption, at least not to the point of starvation; these other goods would be purchased less often as food budgets rose and took up a higher share of income.)

Protectionism, ultimately based on an economic fallacy, is still intuitively appealing, and if it can be purchased so cheaply, well, the case for free trade is that much harder to make.

“Big” can be a real problem here in the United States. Big Labor. Conglomerate Corporations. Military-Industrial Complex. Institutional Media. These are all part of that amorphous blob populists fear called, “Big Business.”

And the populists, particularly of the more progressive stripe, have a point: Big Business uses our Monopoly Government to spy on, suppress, and even, occasionally, destroy competition. Sometimes, Big Business even gets new laws passed that impose new inconveniences, restrictions, or taxes on all of us. The coming “Real ID” is a boon for companies who make various “security products.”

But Big Business has a specific tool that makes some of their bigness (and resulting treachery) possible. It’s Big Government. That is to say, if we reduced the size of government, Big Business would, by necessity, become leaner and more customer oriented. Big Business would be largely de-fanged if we Downsized DC.

Americans understand that OPEC provides a method for artificially increasing the revenues of Middle Eastern oil producing nations. It’s a cartel.

Cartels are the inevitable step-children of government bureaucracies. These boards Continue Reading »

Have I got your attention? Zeke M. Vanderhoek hopes he has. He’s making that offer to attract teachers for a start-up New York City charter school the New York Times today describes as follows:

The school will open with seven teachers and 120 students, most of them from low-income Hispanic families. At full capacity, it will have 28 teachers and 480 students. It will have no assistant principals, and only one or two social workers. Its classes will have 30 students. In an inversion of the traditional school hierarchy that is raising eyebrows among school administrators, the principal will start off earning just $90,000. In place of a menu of electives to round out the core curriculum, all students will take music and Latin. Period.

Vanderhoek isn’t, by the way, cherry picking students. The school’s “students will be selected through a lottery weighted toward underperforming children and those who live nearby.”

Before Stand And Deliver there was To Sir, With Love and, before that, Goodbye, Mr. Chips and who knows how many other movies and novels about remarkable, inspiring teachers. For that matter, most of us whose education took place somewhere less glamorously awful than an inner city high school or an elite prep school can recall an excellent teacher or two along the way. Few of us, however — maybe some of those of you who did go to St. Grottlesex – remember an entire school filled with great teachers. Is all it takes more money?

Probably not. And there are, of course, ‘educational professionals’ who are already critical of the experiment. But however many prospective great teachers there may be for whom salary is not all that important, there are almost certainly many more for whom it is.

Once upon a time nearly eighty years ago something happened that, for as long as it lasted, was perhaps the greatest single boon to public education since the Morrill Land Grant Act. I speak, of course, of the Great Depression. Say what you will about an economy so bad that one in four job seekers can’t find employment, but it was great for a pre-professionalized public school system that could hire engineers and other bright college graduates who couldn’t find work elsewhere. (This is, by the way, the back story in To Sir, With Love and Stand And Deliver, too.)

But both before and after the Great Depression America’s public schools benefited greatly from yet another socioeconomic disaster; namely, the de facto exclusion of women from other career fields. The simple fact is that a gender neutral, robust economy will attract many, many women who in earlier generations would have been attracted to teaching as one of the few learned professions viably open to them.

Market conditions being what they currently are, I therefore expect Vanderhoek’s experiment to succeed. That said, it doesn’t follow that even if it is a success it will prove much of a viable pattern for school systems elsewhere. What I fear, in fact, is that all the wrong lessons, e.g., that merely paying bad teachers more money will improve performance, will be argued to support even more bloated public school budgets.

Still, between those two extremes there is the potential for real gain here, especially for those students who are fortunate enough to benefit from the experiment before it is ruthlessly destroyed by the powerful, vested and utterly self-serving interests of public education.

Besides, mandatory “music and Latin. Period”? You gotta love it.

First, the serious bit: Matt comments (on “Corporatism“),

Something like this is, I think behind the opposition to markets by the European left. Consider a typical privatisation in an EU country.

Corporation makes a donation to ruling political party.

Corporation is invited to tender for a government asset.

Corporation gains control of that asset for far less than it would fetch in an open market.

Government provides a subsidy that more than repays whatever the corporation paid for the asset.

Any profits are taken by the corporation, any losses are met by the taxpayer.

And this we are told is the marvel of the free market and private enterprise!

It’s certainly a terrible abuse, and I could see how someone might end up hating the “free market” if this were what he usually found under that name. Without a doubt, there are better and worse ways to privatize a state-owned enterprise. Perhaps a useful constitutional rule would be to outlaw asset sale privatization, while allowing for other forms of privatization.

Cracked features the Nine Most Baffling Theme Parks From Around the World. Weird food tie-in: Bon-Bon Land, which is just really scary. Now With Devastation: Grutas Park, also known as “Stalin’s World.”

The Onion’s A.V. Club has started hosting food reviews. I’m delighted. The first item on the menu is that twitchingly horrid canned cheeseburger we all read about a few weeks back. With video. My god, with video.

Cliopatria isn’t one to be left out, I guess. I can’t decide if this is the funniest or the most tasteless thing ever linked at the heart of the history blogosphere. But it’s a new record either way, with weird food and devastation in every single frame.

The last scene redeems it all, in a macabre sort of way.

And last, never count out Wikipedia. From the entry on “Shock and Awe,” we read,

Following the United States’ invasion of Iraq in 2003, the term “Shock and Awe” has been used for commercial purposes. The United States Patent and Trademark Office received at least 29 trademark applications in 2003 for exclusive use of the term. The first came from a fireworks company on the day the United States started bombing Baghdad. Sony registered the trademark the day after the beginning of the operation for use in a video game title, but later withdrew the application and described it as “an exercise of regrettable bad judgment.” Miscellaneous other uses of the term include golf equipment, an insecticide, a set of bowling balls, a racehorse, a shampoo, and condoms.

Anthony Gregory, writing for the Future of Freedom Foundation, provides a good summation of the problem of Corporatism (an ill that has plagued both the Republican and the Democratic parties in America)…

Principled advocacy of the free market requires an understanding of the differences between genuine free enterprise and “state capitalism”… which is in fact a common adversary of the free marketer and the anti-corporate leftist…

Indeed, corporatism, implemented by the state — whether through direct handouts, corporate bailouts, eminent domain, licensing laws, antitrust regulations, or environmental edicts — inflicts great harm on the modern American economy. Although [progressives] often misunderstand the fundamental problem plaguing the economy, they at least recognize its symptoms.

Conservatives and many libertarians, on the other hand, frequently dismiss many ills such as poverty as fabricated by the left-liberal imagination, when in fact it does a disservice to the cause of liberty and free markets to defend the current system and ignore very real and serious problems, which are often caused by government intervention in the economy. We should recognize that state corporatism is a [variant] of socialism, and it is nearly inevitable in a mixed economy that the introduction of more socialism [or corporatism] will cartelize industry and consolidate wealth in the hands of the few.

[Progressives] usually understand how wartime provides politically connected corporations with high profits and cushy contracts. What is more often neglected is Continue Reading »

OK HEAR WE GO UP FOR AUCTION IS THIS EMPTY BOX YOU ARE BIDDING ON THE BOX ONLY!ANYTHING ELSE IN THE BOX IS A GIFT FROM ME TO YOU.THE REAL MYSTERY IS WHAT MIGHT BE IN THE BOX.WELL THE ONLY WAY TO FIND OUT IS TO WATCH THIS AUCTION AND FOLLOW THE CLUES THAT WILL BE POSTED LATER.FOR AS THE BIDING GOES UP SO DOES THE VALUE OF THIS BOX. TRUST ME THE VALUE OF THIS BOX WILL ALWAYS EXCEED THE AUCTION PRICE BUY FAR. View My Feedback YOU WILL SEE IM AN HONEST EBAYER.

One of those longish, shaggy-dog posts of the type that I’d write back when I got a dozen or so readers a day. At your own risk.

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Aside from being the oldest and second oldest universities in the United States, there are vast differences between Harvard University and the College of William & Mary. One is among the richest and most powerful institutions of higher education in the nation, the other typically gets the dubious honor of being among the least affluent of America’s elite universities. One has remained a private institution, never mind how many billions of dollars it manages to secure from public sources. The other, having fallen on hard times following the Civil War, became a “state supported” institution approximately one century ago, never mind that some 80% of its current funding does not derive from the Commonwealth of Virginia. One has some of the most prestigious graduate schools anywhere, the other remains primarily an elite undergraduate institution. One is the alma mater of some of the best Presidents of the United States and the other one is Harvard.

One of the few things they do share in recent years, however, is that both have seen their presidents resign from office after losing the support of the political interests necessary for their continued tenure. In the case of William & Mary’s recently resigned president, Gene R. Nichol, those political interests include a significant number of alumni, some Virginia legislators and, ultimately, the College’s governing Board of Visitors. In the case of Lawrence Summers’ tenure as president at Harvard, while he apparently continued to enjoy support from the de jure controlling Harvard Corporation, Harvard’s Faculty of Arts and Sciences’ 2005 “lack of confidence” vote is generally assumed to have marked the beginning of the end.

Both men were embroiled in various controversies during their presidencies. The most notorious in Summers case were probably his confrontation with Cornel West and his remarks regarding possibly innate differences accounting for the far smaller number of women excelling in science and engineering. In Nichol’s case, his decision to remove a cross from the chapel in the historic Wren Building and his most recent refusal to ban a student funded performance of the Sex Workers’ Art Show received the most media attention. In the case of both men, however, there were other, less publicized controversies.

Be that as it may, it would be easy to account for Summers’ downfall as the result of his having fallen victim to Northern political correctness and to Nichol’s defeat as the result of entrenched Southern conservativism. Perhaps there is some truth to that on a superficial level. I have no direct relationship with Harvard and I have expressed my personal views on the Nichol affair elsewhere; but the merits of their respective cases aside, what I find interesting here is the role of both ideology and, insofar as they are different, politics in both cases.

His intellectual integrity aside, Summers is, after all, a liberal Democrat. (And, yes, I’d make the same snide remark about any conservative Republican with intellectual integrity.) That he was insufficiently liberal or ‘progressive’ to satisfy the Harvard faculty shouts volumes about the extent to which there is any real room for intellectual disagreement inside contemporary academia.

But liberals and, even more so, progressives are supposed to love public, i.e., state funded and state controlled education. So it is especially ironic to hear Nichol’s supporters now decry the fact that his contract was not renewed “for political reasons.” That, ladies and gentlemen, is how public institutions and politics work. People with differing views make their respective cases and rally support from others as best they can, especially including the support of elected and other public officials, and whoever has the most political power wins regardless of who is right or wrong.

This is majoritarianism in action. (And no silly comments, please, about constitutional protections for minorities as the solution to the threat of majoritarianism – a sufficiently large majority can eliminate those protections any time it sees fit.) At Harvard, at the very least one can sit back and say, “Well, it’s their own private affair.” At William & Mary and at any other public institution, by contrast, the will of the many will always threaten the reasoning of the few. It’s not about right or wrong, after all; it’s about power. And that is why education, like religion, is too important to be left to the corruptible whims of the state.

I have just returned from a family vacation. Now, I’m in that post-vacation recovery phase. We went to Walt Disney World and hit the four main theme parks. It was great to be with my family.

But that’s not why I write this post. What do you care? I went on vacation — so what?

This wasn’t our first time at Disney. But there was something different about this trip. And I think it’s notable and important to all of us.

Let me set the stage…

If you’ve been to Disney (or even if you haven’t), you know that it’s probably the number one tourist stop in the world. And the locals are grateful for the commerce it generates. We even saw a taxi driver, pulled over at the side of the freeway with an unrolled carpet, genuflecting in the direction of the Disney campus (well, perhaps it was coincidence that Disney was in the East).

Florida has been a point of outreach by both political parties. And I think I’ve discovered the George Bush plan to win Florida. Bring tourists from all over the world!

The plan is simple, really: Gut the value of the dollar.

It’s fun and it works on several levels for the political class.

If you are this President, then . . . Continue Reading »

Those of us who are entirely indifferent this morning to which Democrat Caroline Kennedy thinks is most like her daddy might consider instead this opening paragraph from the (UK) Daily Telegraph:

Smokers, heavy drinkers, the obese and the elderly should be barred from receiving some operations, according to doctors, with most saying the health service cannot afford to provide free care to everyone.

First things first, a bit of Borscht Belt humor: “You’re charging $10 a pound for lamb chops?!? Across the street at Stein’s I can buy them for $8 a pound!” “So go buy them at Stein’s.” “I can’t, he’s out of lamb chops.” “So when I’m out they’ll be $8 a pound here, too!”

It isn’t that the British national health service cannot afford to provide free care to everyone but that it cannot provide free care to anyone. Hidden costs are real costs nonetheless and the fact that the typical British citizen (or journalist) is unaware of the real cost he personally bears for his health care is irrelevant to the fact that it exists.

What the surveyed doctors are thus saying is that while it is not only proper but necessary for smokers, heavy drinkers the obese and the elderly to continue to contribute toward a socialized medical system, they should nonetheless be deprived of the very benefits they are most likely to need. That sounds fair, doesn’t it? I do hope you think so because it is, sadly, only a matter of a decade or so and maybe sooner before Americans find themselves the, um, beneficiaries of a similar health care system.

Be that as it may, let’s get one other point straight. One thing else the doctors are noting, a point which happens to be entirely correct, is that health care, like every other good in the world, is scarce in the technical economic sense that its supply potential demand exceeds its potential demand supply. [See comments.] Otherwise, we could have all the MRIs and liver transplants and stomach staples and cosmetic surgery and quadruple bypasses and whatnot our bloated, cholesterol clogged hearts desired.

Alas, we can’t. Oh sure, we can take some measures right now to increase, for example, the supply of livers for transplant, and according to my thanaphobic friend Ron Bailey we will someday live in a golden age of genetic medicine when cloning yourself a new liver or simply repairing your old one to its pristine condition will be as simple as microwave popcorn, but we’re not there yet. One way or another, medical treatment is going to be rationed and the only question left is whether that rationing is going to be conducted by the market or by the state.

Admittedly, deciding who gets a new liver on the basis of who can best pay for it or, worse yet, who can pay the most for it, strikes most of us as unfair. Health care, we feel, shouldn’t be like Ferraris or Picassos, available only to the wealthy, but like movies and Coca-Cola – plentifully available and affordable to all. Bill Gates and Warren Buffet can both drink their Cokes out of solid gold goblets while they watch Walk Hard in the comfort of their private home theaters but the Coke won’t taste any different and the movie will still suck. And that, we feel, is how health care should work.

Well, it doesn’t. For one thing, unlike many other modern services, it remains highly labor intensive, requiring skills ranging from neurosurgery to the folks who have to mop up all your messy bodily fluids after the operation. For another, the economics of medical technology (the machines, not the medicines) is such that all the emphasis is on performance, not on greater cost savings. That is to say that if we were willing to live (and die) with 1960s level medical technology, we could save a great deal of money. But we’re not. We want those MRIs and whatever the next generation of cutting edge technology might be and damn the cost.

A post or two ago, I mentioned a Weekly Standard column claiming that “[t]he moral vacuity of dogmatic libertarianism is poisonous to public life.” As absurd as that column was, I would agree with that statement but for the critical fact that what dogmatic libertarianism I have encountered over the years has had absolutely zero effect on public life. It’s around, though, if you want to seek it out at, say, any Libertarian Party social function. Be that as it may, the authors made yet another claim worth quoting here: “[E]conomic libertarianism, elevated to the status of inviolable first principle, leads to moral libertarianism.”

To which I can only add, damn, I sure hope so! Moral libertarianism, if it means anything at all, must mean something like the claim that I can’t know in advance how important that medical treatment is to you, your family and friends and you can’t know in advance how important it would be to me. Not, at least, in any absolute, “let’s-make-a-rule-for-everyone” sense. And that’s exactly what the rationing of socialized medicine perforce does; makes one-size-fits-all rules.

Markets are morally imperfect because people are morally imperfect. Letting people themselves decide what medical services they want or need and making them recognize that, one way or another, they must pay for those services entails a certain sort of unfairness. The problem with socialized medicine, however, is that its solution to that problem is far, far worse.

* “… wait until you see what it costs when it’s free.” — P.J. O’Rourke