The other day at dinner, I told a group of folks with more, uh, conventional political views than my own that this election was great. When pressed on my seeming madness, I said that I was tired of people fetishizing politicians, starting with the cult of the Presidency. History is written as if these losers drove most of history, when in fact the vast vast majority of our wealth and well-being today results from the actions of private individuals, private individuals who typically had to fight politicians to make our lives better. Anything we can do to cause people to think twice about giving more power to these knuckleheads, the better. And thus, this election is great -- like Dorothy stumbling on the wizard behind the curtain, perhaps going forward people will be a little less willing to blindly accept politicians as their betters.
Archive for the ‘Capitalism & Libertarian Philospohy’ Category.
New Pacific Legal Foundation attorney Jeremy Talcott generously gives me some credit for his interest in defending liberty. At about the 5:50 mark. While blogging, one is so disconnected from the readers it sometimes feels like lecturing in a pitch black auditorium and wondering if anyone is in the audience. PLF is one of the half dozen top organizations in the country using litigation to protect liberty (along with others like the IJ, Goldwater, Mackinac, etc.)
Quick background: my company privately operates public parks, making our money solely from the entry fees voluntarily paid by visitors and campers. We don't get paid a single dollar of tax money.
A major partner of ours is the US Forest Service (USFS), which actually operates more recreation sites than any other agency in the world (the National Park Service has a higher profile and the Corps of Engineers has more visitors, but the USFS is the most ubiquitous). Despite the USFS being an early pioneer of using private companies to reduce the operating costs of parks and campgrounds, the USFS still has a large number of employees opposed to what we do. The most typical statement I hear from USFS employees that summarizes this opposition -- and it is quite common to hear it -- is that "It is wrong to make a profit on public lands."
It would be hard to understate the passion with which certain USFS employees hold to this belief. I discovered, entirely accidentally through a FOIA request my trade group had submitted to the USFS, that a Forest Supervisor in California (a fairly senior person in the USFS management structure) whom I have never met or even had a conversation with circulated emails through the agency about how evil he thought I was.
This general distaste for profit, which is seen as "dirty" in contrast to wages which are relatively "clean" (at least up to some number beyond which they are dirty again), is not limited to the USFS or even to government agencies in general, but permeates much of the public. As a result, I thought I would describe a conversation I had with a USFS manager (actually this is the merger of two conversations). The conversation below had been going on for a while discussing technical topics, and we will pick it up when the District Ranger makes the statement highlighted above (a District Ranger is the lowest level line officer in the USFS, responsible in some cases for the land management functions of an area the size of a county. I have cleaned up the text (I am sure the sentences would not be as well-formed if I had a transcript) but I think this captures the gist of it:
Ranger: I think it's wrong that you make a profit on public lands
Me: So you work for free?
Me: If you think it's wrong to make money on public lands, I assume you must volunteer, else you too would be making money on public lands
Ranger: No, of course I get paid.
Me: Well, I know what I make for profit in your District, and I have a good guess what your salary probably is, and I can assure you that you make at least twice as much as me on these public lands.
Ranger: But that is totally different.
At this point I need to help the Ranger out. He struggled to put his thoughts on this into words. I will summarize it in the nicest possible way by saying he thought that while his wage was honorable, my profit was dishonorable, or perhaps more accurately, that his wage paid by the government was consistent with the spirit of the public lands whereas my profit was not consistent
Me: I'm not sure why. My profit is similar to your wage in that it is the way I get paid for my effort on this land -- efforts that are generally entirely in harmony with yours as we are both trying to serve visitors and protect the natural resources here. But unlike your wage, my profit is also a return on the investment I have made. Every truck, uniform, and tool we use comes out of my profit, whereas you get all the tools you need paid for by your employer above and beyond your salary. Further, your salary is virtually guaranteed to you, short of some staggering malfeasance. Even if you do a bad job you likely would just get shunted to a less interesting staff position at the same salary, rather than fired. On the other hand if I do a bad job, or if one of my employees slips up, or even if some absolutely random occurrence entirely outside my control occurs (like, say, a flood that closes our operations) my profit can completely evaporate, or even turn into a loss. So like you, I get paid for my efforts here on public lands, but I have to take risk and make investments that aren't required of you. So what about that makes my profit less honorable than your wage?
Ranger: Working on public lands should be a public service, not for profit
Me: Well, I think you are starting to make the argument again that you should be volunteering and not taking a salary. But leaving that aside, why is profit inconsistent with service to the public? My company serves over 2 million visitors a year, and 99.9% give us the highest marks for our service. And for the few that don't, and complain about a bad experience, every one of those complaints comes to my desk and I personally investigate them. Do you do the same?
Why do I make such an effort? Part of it is pride, but part is because I understand that my margins are so narrow, if even 5% of those visitors don't come back next year -- because they had a bad time or they saw a bad review online -- I will make no money. Those 2 million people vote with their feet every year on whether they think I am adequately serving the public, and their votes directly affect how much money I make. Do you have that sort of accountability for your public service?
Postscript: Interestingly, though perhaps not surprisingly, the government ranger did not bring up what I would consider the most hard-hitting challenge: How do we know your profits are not just the rents from a corrupt, cronyist government contracting process. Two things let me sleep well at night on this question. The first is that I know what lobbying I do and political connections I have (zero on both) so I am fully confident I can't be benefiting from cronyism in the competitive bid process for these concession contracts. Of course, you don't know that and if our positions were reversed, I am pretty sure I would be skeptical of you.
So the other fact I have in my favor, which is provable to all, is that the recreation areas we operate are run with far lower costs and a demonstrably higher level of service than the vast majority of recreation areas run by the government itself. So while I can't prove I didn't pull some insider connections to get the work, I can prove the public is far better off with the operation of these parks in private hands.
I am exhausted with folks, particularly on the Progressive Left, judging themselves and each other based on their intentions. Your intentions mean virtually nothing. I suppose it is better to have good intentions than bad, but beyond that results, particularly in the public policy arena, are what should matter. And the results of most Progressive well-intentioned legislation are generally terrible. For example, as I wrote earlier today, poverty in this country is mainly caused by lack of work rather than low wage hours, but Progressives preen over their good intentions in introducing higher and higher minimum wages that will only serve to reduce the work hours of low-skilled poor people.
Begin with a libertarian goal that should be agreeable to most Progressives -- people should be able to live the way they wish. Add a classic Progressive goal -- we need more low income housing. Throw in a favored Progressive lifestyle -- we want to live in high density urban settings without owning a car.
From this is born the great idea of micro-housing, or one room apartments averaging less than 150 square feet. For young folks, they are nicer versions of the dorms they just left at college, with their own bathroom and kitchenette.
Ahh, but then throw in a number of other concerns of the Progressive Left, as administered by a city government in Seattle dominated by the Progressive Left. We don't want these poor people exploited! So we need to set minimum standards for the size and amenities of apartments. We need to make sure they are safe! So they must go through extensive design reviews. We need to respect the community! So existing residents are given the ability to comment or even veto projects. We can't trust these evil corporations building these things on their own! So all new construction is subject to planning and zoning. But we still need to keep rents low! So maximum rents are set at a number below what can be obtained, particularly given all these other new rules.
As a result, new micro-housing development has come to a halt. A Progressive lifestyle achieving Progressive goals is killed by Progressive regulatory concerns and fears of exploitation. How about those good intentions, where did they get you?
The moral of this story comes back to the very first item I listed, that people should be able to live the way they wish. Progressives feel like they believe this, but in practice they don't. They don't trust individuals to make decisions for themselves, because their core philosophy is dominated by the concept of exploitation of the powerless by the powerful, which in a free society means that they view individuals as idiotic, weak-willed suckers who are easily led to their own doom by the first clever corporation that comes along.
Postscript: Here is a general lesson for on housing affordability: If you give existing homeowners and residents the right (through the political process, through zoning, through community standards) to control how other people use their property, they are always, always, always going to oppose those other people doing anything new with that property. If you destroy property rights in favor of some sort of quasi-communal ownership, as is in the case in San Francisco, you don't get some beautiful utopia -- you get stasis. You don't get progressive experimentation, you get absolute conservatism (little c). You get the world frozen in stone, except for prices that continue to rise as no new housing is built. Which interestingly, is a theme of one of my first posts over a decade ago when I wrote that Progressives Don't Like Capitalism Because They Are Too Conservative.
Postscript #2: So, following the logic above, one can think of building restrictions and zoning as a form of cronyism. Classic cronyism is providing subsidies to politically favored companies and restricting the ability of new competitors to arise to compete with them, granting them an effective monopoly and the ability to jack up their prices. So what do we do with housing? We give massive subsidies to home-owners and restrict competition from new housing that might reduce their home value, thus granting current homeowners an effective monopoly and the ability to jack up their prices. I challenge anyone to tell me that rising home prices in Palo Alto are not driven by the exact same government actions for favored constituents as are rising prices for Epipens.
Postscript #3: I will ask a question using Progressive terminology -- you were worried about these young renters and their power imbalance vs. development companies and landlords. So how much more powerful are they now with a thousand fewer rental units on the market? Consumers have power when supply is plentiful. Anything done to reduce supply is going to reduce consumer power.
Kevin Drum, in commenting on a Binyamin Appelbaum article in the NY Times, writes that the Presidential candidates should be talking more about poverty in part because the US is way behind Europe. Specifically, Appelbaum quotes a Harvard Sociology (!) Professor as the source for the poverty claim:
“We don’t have a full-voiced condemnation of the level or extent of poverty in America today,” said Matthew Desmond, a Harvard professor of sociology. “We aren’t having in our presidential debate right now a
serious conversation about the fact that we are the richest democracy in the world, with the most poverty. It should be at the very top of the agenda.”
Drum argues that Desmond is right, because of this chart from the OECD:
One of the dirty secrets about poverty measurement is that the actual measurement seldom has anything to do with absolute well-being. And this is the case with the OECD numbers. The OECD's poverty measurement is based on the country's median income, and is the percentage of people who are below a certain percentage (generally 50%) of the country's own median income. As such, this is more rightly thought of as a graph of income inequality rather than absolute poverty.
Here is an example. Image country A with a median income of $50,000 and an income of the 20th percentile at $20,000. Now imagine country B where the median income is $30,000 and the 20th percentile income is $15,000. In this example, the poorest 20th percentile in country A are better off on an absolute basis, but the OECD (and most other poverty numbers) will show country B doing better because the poor are closer to the (much lower) median income. In an extreme example, if everyone in a country were equally impoverished, the OECD would show that country as doing the best on poverty -- Yes, you read that right. By this metric, the OECD would show a country where every person made just $10,000 a year as having 0% poverty.
Obviously, what one would really like to do is compare across nations the absolute well-being of the lowest 10th or 20th percentile. On a purchasing power parity basis, which country's poor has, after transfers and taxes, more money? Unfortunately, you likely have never ever seen this. Yes, the data comparison is hard, but it is possible, so one has to wonder if there is some ulterior political motive for never showing this quite obvious analysis.
I tried to do this analysis myself for years (I describe some false starts here) but was unsuccessful until I actually identified a data source that would work, ironically from two folks on the Left (Kevin Drum and John Cassidy) who were using data from the LIS Cross-National Data Center to make comparisons of income inequality. It turned out the data they were using could do what I wanted.
So now we get to the chart I call the poverty Rorschach test. It is a comparison of the absolute income, by income percentile and including transfers and taxes, of the US vs. Denmark (the country by Drum's chart that should be the "best" on poverty)
(The date is old, alas, because this kind of cross-country data is only gathered every so often)
This chart shows, on a purchasing power parity basis, that for every single income percentile, all the way to the bottom, an equivalent person in the US has more income than that a similarly situated person in Denmark. In short, the poor in the US are wealthier than the poor in Denmark. The only reason Denmark does better than the US in the way the OECD and others measure poverty is that the middle class in the US are a LOT wealthier than the middle class in Denmark.
I call it the Rorschach test because one either sees the US doing a good job, because everyone is better off, or the Danish doing a better job, because everyone is more even. Proponents of the latter view tend to believe that the size of the economic pie is an exogenous variable, unrelated to the method one chooses to slice it.
I picked the Danish because they were the obvious comparison from Drum's chart, but here is the US vs. all the European countries for which there was data in the survey. The US is better than all but 3 at the 10th percentile and better than all but one country at the 20th percentile. And better -- by a huge margin-- for the middle class than any of the countries in Europe.
Update: One more note on Drum's chart. As I said above, the exact definition of the OECD numbers is percentage of people with income less than 50% of the country's own median income. The US has a median household income, per the OECD, 41% higher than Denmark's. So the US has 9% more people under a number that is 41% higher. That is hardly a fair or meaningful comparison.
For reasons that are beyond my understanding, I am banned at Mother Jones so I cannot post the comments directly to his article. If someone wanted to cut and paste this under his or her own name, I wouldn't complain.
I have written before that the best way to read Ayn Rand's Atlas Shrugged is not as a character-based novel, but as an extended exposition taking socialism to its logical conclusion. That ultimate conclusion in the novel is directive 10-289, whose first two points are these:
Point One. All workers, wage earners and employees of any kind whatsoever shall henceforth be attached to their jobs and shall not leave nor be dismissed nor change employment, under penalty of a term in jail. The penalty shall be determined by the Unification Board, such Board to be appointed by the Bureau of Economic Planning and National Resources. All persons reaching the age of twenty-one shall report to the Unification Board, which shall assign them to where, in its opinion, their services will best serve the interests of the nation.
Point Two. All industrial, commercial, manufacturing and business establishments of any nature whatsoever shall henceforth remain in operation, and the owners of such establishments shall not quit nor leave nor retire, nor close, sell or transfer their business, under penalty of the nationalization of their establishment and of any and all of their property.
When I first read this at age 18, I thought this was a bit over the top. But I have seen similar things in my lifetime, even in the US. I remember years ago a law in Oregon where companies could not go out of business without the state's permission.
More recently, Atlas Shrugged has started to become redundant -- we don't need it to see the logical conclusion of socialism, we can just watch Venezuela. Here is a brief dispatch from that country via Glen Reynold's, showing that Venezuela has gone full 10-289
This is not a joke nor even an exaggeration. I just found out that my sister in law’s other brother-in-law was arrested in Venezuela at the airport while trying to leave the country. His crime, he was an employee for a company that went out of business. Waiting for more? There isn’t any. Maduro has decreed that any business that goes out of business has committed economic treason and its employees are subject to arrest. They had already arrested numerous owners and managers but this is the first time they went after rank and file worker bees.
Feel the Bern, suckers.
Apparently new Communist Party archives are becoming available to scholars in China, and the true story of the Great Leap Forward appears to be even worse than we imagined.
A catastrophe of gargantuan proportions ensued. Extrapolating from published population statistics, historians have speculated that tens of millions of people died of starvation. But the true dimensions of what happened are only now coming to light thanks to the meticulous reports the party itself compiled during the famine. My study, Mao’s Great Famine: The History of China’s Most Devastating Catastrophe (2010), relies on hundreds of hitherto unseen party archives, including: secret reports from the Public Security Bureau; detailed minutes of top party meetings; unexpunged versions of leadership speeches; surveys of working conditions in the countryside; investigations into cases of mass murder; confessions of leaders responsible for the deaths of millions of people; inquiries compiled by special teams sent in to discover the extent of the catastrophe in the last stages of the Great Leap Forward; general reports on peasant resistance during the collectivisation campaign; secret police opinion surveys; letters of complaint written by ordinary people; and much more.
What comes out of this massive and detailed dossier is a tale of horror in which Mao emerges as one of the greatest mass murderers in history, responsible for the deaths of at least 45 million people between 1958 and 1962. It is not merely the extent of the catastrophe that dwarfs earlier estimates, but also the manner in which many people died: between two and three million victims were tortured to death or summarily killed, often for the slightest infraction. When a boy stole a handful of grain in a Hunan village, local boss Xiong Dechang forced his father to bury him alive. The father died of grief a few days later. The case of Wang Ziyou was reported to the central leadership: one of his ears was chopped off, his legs were tied with iron wire, a ten kilogram stone was dropped on his back and then he was branded with a sizzling tool – punishment for digging up a potato.
There is more like this in the article. When I read this, I can't help thinking about Hannah Arendt and her classic "Origins of Totalitarianism." During the 60's and 70's, this fabulous work was targeted for marginalization by the academic Left because many in academia were admirers of Stalin and the Soviet Union and deeply resented the parallels Arendt raised between European fascism and Soviet communism. Arendt's partial rehabilitation came after 1989, when Eastern European scholars and historians coming out from under communism looked around for a framework to describe their experiences under communism, and found Hannah Arendt to be most compelling. This new wave of scholarship on communist China likely will vindicate Arendt as well.
American university campuses, in their current orgy of admiration for socialism, will have to work extra hard to whitewash this, but I am sure they are up to the task.
Here is the trick: You want a tax increase for X. The public is never going to approve of raising taxes for X. So you bundle 95% X with 5% Y, Y being something the public is really excited about. As much as possible, you never mention X in any discussion of the tax increase, despite most of the funds being dedicated to X, and instead focus solely on Y. If history is any guide, you will get your tax increase.
What a specific example? You want a tax increase to fund a huge public transit boondoggle. The public is not buying it. So you rebrand the public transit project as a "transportation bill", you throw in a few highway improvements, you talk mainly about the highway improvements, and you get your public transit bill.
Another example is general revenue increases. Most of these tax increases go to increasing the salary and pensions of bureaucrats and senior administrators that aren't really doing anything the public wants done in the first place. So you say the tax increase is to improve the pay of three (and only these three) categories of workers: police, firefighters, and teachers. The public likes what these folks do, and could mostly care less about what anyone else in local government does. So even if the taxes help about just 3 teachers among 3000 other bureaucrats, you sell it as a teacher salary increase.
It is because I understand this one weird trick that this sort of story does not surprise me in the least:
'Yikes!': Some Arizona teachers see little from Prop. 123
For months leading up to the vote on Proposition 123, supporters of the public education funding measure pleaded for its passage, saying it represented money for teachers.
But as the first installment of cash has gone out, many teachers may find Prop. 123 is a smaller windfall than they hoped. And voters may be surprised to learn where some of the money is going.
In some cases, teachers will collect less than 20 percent of their district's Prop. 123 funds. Some districts will use most of their money for other purposes, ranging from textbooks to computers to school buses, according to an Arizona Republicsurvey of district spending plans.
The measure was sold as a way to direct money — significant money — to teachers and classrooms....
With no rules on how the money can be used, each school district has tried to address its own priorities. While many supporters of the measure invoked teachers as the main reason to vote for Prop. 123, others in the public school systems have staked a claim to the money, especially after many went years without raises beginning in the recession.
Those seeing raises include relatively low-paid secretaries, custodians and bus drivers. But it also includes superintendents, principals and mid-level administrators who don’t work in classrooms.
That may not sit well with voters who opposed the measure or with supporters who thought they were doing something more substantive for teachers.
The Problem Is That We Should Not Care About "Democracy", We Should Care About Protection of Individual Rights
Perhaps this is yet another negative legacy of Woodrow Wilson and his "Making the world safe for democracy" meme. We talk all the time about allying with and siding with and protecting democracies, but all "democracy" really means in practice (at least today) is that the country has some sort of nominal election process. Elections are fine, they are less bad than most other ways of selecting government officials, but what we really should care about is that a country protects individuals rights, has free markets, and a rule of law. If a county has those things, I am not sure I care particularly if they vote or pick leaders by randomly selecting folks from the phone book.
You can see this problem at work here, in an essay by Ilya Somin:
Most democratic governments – including the United States – condemned the attempted recent military coup against Turkish President Recep Tayyip Erdogan, and welcomed its failure, citing the need to respect Turkey’s “democratic” institutions. But in the aftermath, Erdogan took the opportunity to persecute his political opponents on a large scale, including firing thousands of judges who might constrain his authoritarian tendencies. Erdogan’s government was also severely undermining civil liberties long before the coup, even going so far as to pass a law criminalizing “insults” to the president, under which hundreds of people have been prosecuted. Erdogan’s own commitment own commitment to democracy is questionable, at best. He famously once called democracy a tram that “[y]ou ride it until you arrive at your destination, then you step off.”
This raises the question of whether the coup attempt against Erdogan might have been justified. More generally, is it ever justified to forcibly overthrow a democratic government? In this 2013 post, written after the successful military coup against Egypt’s radical Islamist government, I argued that the answer is sometimes “yes.” There should be a strong presumption against forcibly removing a democratic regime. But that presumption might be overcome if the government in question poses a grave threat to human rights, or is likely to destroy democracy itself by shutting down future political competition.
While we can argue if Erdogan is "committed" to democracy, I think it is pretty clear that he is not committed to the protection of individual rights.
What we need is a new alliance not to protect the world for democracy -- that word may originally have meant what I want it to mean but now it seems possible to just check the democracy box merely by having some kind of voting. We need a new (much smaller than the UN) alliance to make the world safe for, what? We need a name. What do we call a country with strong protections of individual rights, free markets, and the rule of law?
Postscript: yes, there are snarky answers to the last question, such as "increasingly rare" and "net here anymore".
This sounds so much like the latter stages of Atlas Shrugged, when one by one Colorado businesses shut down, worsening shortages across he country. The government tries to come in and restart each factory, but there is no confidence that the government can actually do the job and within months the whole thing has imploded forever.
Over the weekend, Kimberly-Clark said that the South American nation’s deteriorating economic situation had made “it impossible to continue our business at this time." The company had made a number of hard-to-find staples in Venezuela such as diapers and face tissues.
As Bloomberg adds, the decision will likely to add to shortages that have gripped Venezuela for the past few years after the ruling socialists capped the price on many consumer basics below production costs." As we have documented repeatedly, desperate shoppers now routinely spend long hours in front of stores to purchase essential products ranging from toilet paper to rice. At the same time, companies face hefty losses on price-controlled goods, while the products are often flipped on the black market for many times their sticker price.
So in retaliation, Venezuela's government announced it had seized the factory. Labor Minister Owaldo Vera said Monday that the socialist government took the action at the request of the 971 workers at the factory that the company decided to shutter. The seizure follows a similar takeover from 2014 when Clorox announced it was closing its doors.
"Kimberly-Clark will continue producing for all of the Venezuelans," Vera said in a televised statement from the factory surrounded by workers chanting pro-government slogans. That statement was not exactly true: former workers of the company would continue producing under the observation of government management. We doubt this "forced restructring" will survive more than a few months.
I have written this before, but I interpret Atlas Shrugged a bit differently than most. There is much criticism of the one-dimensional characters and limited character development in the book. But I have always thought this beside the point. The main character in Atlas Shrugged is the world itself, and the main story arc is the decline and fall of the world under the increasing influence of socialism. All the human characters are just props to this main drama.
In this interpretation, the climax of the book is when the hobo Jeff Allen tells the story of 20th Century Motors to Dagny on the train. This story shows the final death throws of a group of people attempting to pursue socialism in its purest form. It's a statement of the end towards which everything else is quickly heading. After this point in the book, we immediately are in Galt's Gulch and end up with Rand's Utopian vision, which from a literary standpoint is awkward and boring. That's because utopian novels are always dull as dirt. Rand's triumph in that book was that she was absolutely prescient about how socialism plays out, which we are seeing today in Venezuela.
Update: Food lines in socialist Venezuela
Progressives are going to try to memory-hole their support for Chavez and Venezuela, but don't you forget that most prominent progressives were enthusiastic supporters of the imposition of socialism by Chavez in Venezuela. It is only now, when its predictable failures are becoming too obvious even for the American media to ignore, that progressives have gone silent on Venezuela. Give them a few years and they will likely develop a meme that this was some sort of failure of free markets.
I am not sure that many politicians are good on this score, but Hillary Clinton and Donald Trump are likely as bad as it gets on crony capitalism. Forget their policy positions, which are steeped in government interventionism in the economy, but just look at their personal careers. Each have a long history of taking advantage of political power to enrich themselves and their business associates. I am not sure what Cruz meant when he said "New York values", but both Trump and Clinton are steeped in the New York political economy, where one builds a fortune through political connections rather than entrepreneurial vigor. Want to build a new parking lot next to your casino or start up a new energy firm -- you don't bother with private investors or arms length transactions, you go to the government.
With that in mind, I particularly liked Don Buudreaux's quote of the day:
First, we labor under a ubiquitous threat of being shackled by crony capitalists. [Adam] Smith wondered how internally stable a free market could be in the face of a tendency for its political infrastructure to decay into crony capitalism. (The phrase “crony capitalism” is not Smith’s. I use it to refer to various of Smith’s targets: mercantilists who lobby for tariffs and other trade barriers, monopolists who pay kings for a license to be free from competition altogether, and so on.) Partnerships between big business and big government lead to big subsidies, monopolistic licensing practices, and tariffs. These ways of compromising freedom have been and always will be touted as protecting the middle class, but their true purpose is (and almost always will be) to transfer wealth and power from ordinary citizens to well-connected elites
As much as Bernie would like to blame the money laundering and money-hiding in the Panama papers on capitalism, in fact the vast majority of clients in those papers appear to be from socialist and strongly interventionist, populist governments.
Socialist countries tend still have winners and losers just like capitalist countries. However, those winners and losers are not determined by success in making products and services in the marketplace, but in success in reaching a leadership position in the government or cozying up to those in government. Soviet government elite had special privileges and special stores not accessible by ordinary Russians. The Castro brothers and Hugo Chavez's daughter are among the richest people in the western hemisphere.
However, these wealthy leaders now have two problems. First, they likely spend most of their time spouting egalitarian claptrap, so that they would like to hide their wealth in order to mask the obvious consistency problem. Perhaps more importantly, their socialist policies have likely destroyed the country's economy -- there is, for example, no place any sane person would want to invest a billion dollars in Venezuela. They need to get their money out of the country but because everyone else in a socialist country is also trying to get their money out, the self-same leader has likely instituted capital controls. So the leader needs to put his or her money in a different country where it can actually be invested productively, and in doing so must evade their own capital controls.
Nicholas Kristof urges us not to exaggerate or overreact to the risk of terrorism based on a few high-profile but isolated and nearly-impossible-to-control events, particularly since there is no upward trend in terrorism deaths.
He urges us instead to exaggerate and overreact to the risk of catastrophic man-made climate change based on a few high-profile but isolated and nearly-impossible-to-control weather events for which data show there is no actual upward trend (e.g. hurricanes, tornadoes, droughts, heat waves, etc).
Everyone today seems to be trying to stampede everyone else into some kind of fear based on overblown risks, whether it be to terrorism or climate change or immigrant-related crime or vaccine-caused autism or, uh, whatever is supposed to be bad that is caused by GMO's. It is all a quest for power. They hope that fear will cause you to write them a blank check for exercising power over you. Don't give it to them.
Don Boudreaux has a great post about why you are richer and better off than John D Rockefeller. I would have thought this to be almost axiomatic, but apparently he is getting push back on this. Please go to the link and read it.
I posted a similar article in 2007, though in that case I was doing a comparison with California Big 4 magnate Mark Hopkins. I will reprint the article in full since it has been so long:
One of the really bad ideas that drive some of the worst government actions is the notion that wealth is somehow fixed, and that by implication all wealth is acquired at someone else's expense. I am working on my annual tax-day post on the zero sum fallacy, but in the mean time here is a brief quiz.
The quiz consists of matching a description to the owners of these two houses:
One house has hot and cold running water, central air conditioning, electricity and flush toilets. The other does not. One owner has a a computer, a high speed connection to the Internet, a DVD player with a movie collection, and several television sets. The other has none of these things. One owner has a refrigerator, a vacuum cleaner, a toaster oven, an iPod, an alarm clock that plays music in the morning, a coffee maker, and a decent car. The other has none of these. One owner has ice cubes for his lemonade, while the other has to drink his warm in the summer time. One owner can pick up the telephone and do business with anyone in the world, while the other had to travel by train and ship for days (or weeks) to conduct business in real time.
I think most of you have guessed by now that the homeowner with all the wonderful products of wealth, from cars to stereo systems, lives on the right (the former home of a friend of mine in the Seattle area). The home on the left was owned by Mark Hopkins, railroad millionaire and one of the most powerful men of his age in California. Hopkins had a mansion with zillions of rooms and servants to cook and clean for him, but he never saw a movie, never listened to music except when it was live, never crossed the country in less than a week. And while he could afford numerous servants around the house, Hopkins (like his business associates) tended to work 6 and 7 day weeks of 70 hours or more, in part due to the total lack of business productivity tools (telephone, computer, air travel, etc.) we take for granted. Hopkins likely never read after dark by any light other than a flame.
If Mark Hopkins or any of his family contracted cancer, TB, polio, heart disease, or even appendicitis, they would probably die. All the rage today is to moan about people's access to health care, but Hopkins had less access to health care than the poorest resident of East St. Louis. Hopkins died at 64, an old man in an era where the average life span was in the early forties. He saw at least one of his children die young, as most others of his age did. In fact, Stanford University owes its founding to the early death (at 15) of the son of Leland Stanford, Hopkin's business partner and neighbor. The richest men of his age had more than a ten times greater chance of seeing at least one of their kids die young than the poorest person in the US does today.
Hopkin's mansion pictured above was eventually consumed in the fires of 1906, in large part because San Francisco's infrastructure and emergency services were more backwards than those of many third world nations today.
Here is a man, Mark Hopkins, who was one of the richest and most envied men of his day. He owned a mansion that would dwarf many hotels I have stayed in. He had servants at his beck and call. And I would not even consider trading lives or houses with him. What we sometimes forget is that we are all infinitely more wealthy than even the richest of the "robber barons" of the 19th century. We have longer lives, more leisure time, and more stuff to do in that time. Not only is the sum of wealth not static, but it is expanding so fast that we can't even measure it. Charts like those here measure the explosion of income, but still fall short in measuring things like leisure, life expectancy, and the explosion of possibilities we are all able to comprehend and grasp.
I could write a book on Progressive reform efforts which begin as sensible liberalization efforts and then overshoot into authoritarianism. Gay marriage is a great example. Liberalizing stage 1: Let's give gay folks equal access to the benefits of protections of legal marriage. Authoritarian state 2: Let's punish any small business who refuses to serve a gay wedding.
I ran into another example the other day. Hillary tweeted out, "Every survivor of sexual assault deserves to be heard, believed, and supported" which is a common refrain among women's groups (we will leave aside the irony of Hillary making this statement after she has crushed a number of women who have made sexual assault claims against her husband).
In what I believe to be the initial meaning of this phrase, it was quite reasonable. In the past (and presumably on occasion today) women have gone to police or some other authority and claimed to have been raped or assaulted, and have been essentially ignored. A pat on the head and the little lady is sent home. Women, reasonably, wanted their charges to be taken seriously and investigated seriously. This is my memory of where this phrase, then, originally came from. It meant that when women claim to have been assaulted, authorities need to take these charges seriously and investigate them seriously.
But, as with most other things, Progressive reform which began as liberalizing and empowering has transitioned to being Stalinist. The meaning today of this phrase when used by most women's groups is that any such claims by women should not immediately trigger an investigation but should trigger an immediate conviction. The accused male should be immediately treated as guilty and punished, and any exercise of due process represents an assault on women -- never mind that the same SJW's taking this stance would take exactly the opposite stance on due process if the accused were, say, a black male in Ferguson accused of theft.
I would rather have second-rate politicians who know they are duffers than ones who believe they are brilliant.
I am sympathetic with this statement but for a reason that Dillow does not mention. No one is smart enough to try to manage certain complex systems, like the economy. They don't have the information or the ability to set prices, fix (or even correctly identify) "market failures, assess the preferences of 300 million individuals, or any of the other things politicians try to do -- no matter how freaking brilliant they are. Really smart people in politics (or people who think they are really smart) also have a tendency to want to substitute, by force, their judgement and decision-making for my own.
From Ryan McMaken of the Mises Institute, is your state richer than Bernie Sander's dream country Sweden? The author has used state-level purchasing price parity adjustments, rather than a single US adjustment, due to large variations in state price levels discussed previously here (click to enlarge)
I find it telling the progressives have chosen the most vocal and one of the most eloquent opponents of cronyism and corporate welfare as their particular bogeyman.
The West Has A Continuous History of Becoming more Liberal Only Because We Have Changed the Definition of "Liberal"
Kevin Drum writes, "the entire Western world has been moving inexorably in a liberal direction for a couple of centuries."
If this is true, it is only because the definition of "liberal" has changed. After becoming increasingly less authoritarian and intrusive and controlling for hundreds of years, government is again becoming far more authoritarian and intrusive. Only with a change in the definition of "liberal" over time can one consider attempting to ban, for example, the eating of certain types of foods as "liberal"
Until a few years ago, I would have said that Drum was right that there is a continuity of liberalization in the social realm. I celebrate the increasing acceptance of differences, from race to sexuality. But even here people who call themselves "liberal" are demanding authoritarian limitations on speech and expression, try to enforce a dictatorship of hurt feelings.
The whole post of his is a really interesting insight into the Progressive mind. Apparently, the (purported) lack of compromise in government is the fault of just one of the two sides. I am not sure how that is possible, but that seems to be the Progressive position (you will find an equal number of folks on the Right who believe the same thing, though they blame the opposite group).
Essentially, you can see in this post the strong Progressive belief that the default mode of government is to constantly generate new prohibitions, rules, strictures, taxes, regulations, and penalties. And that anyone who stands in the way of this volume production of new legal entanglements must be overcome, even if one has to break the law to do it.
A few days ago Matt Yglesisas wrote a #Slatepitch piece arguing that Hillary Clinton "is clearly more comfortable than the average person with violating norms and operating in legal gray areas"—and that's a good thing. In a nutshell, Democrats can't get anything done through Congress, so they need someone willing to do whatever it takes to get things done some other way. And that's Hillary. "More than almost anyone else around, she knows where the levers of power lie, and she is comfortable pulling them, procedural niceties be damned."
Unsurprisingly, conservatives were shocked. Shocked! Liberals are fine with tyranny! Today Matt responded in one of his periodic newsletters:
A system of government based on the idea of compromises between two independently elected bodies will only work if the leaders of both bodies want to compromise. Congressional Republicans have rejected any form of compromise, so an effective Democratic president is going to try to govern through executive unilateralism. I don't think this is a positive development, but it's the only possible development.
So Democrats are within their rights to lie, cheat and steal -- to do whatever it takes -- to break through the gridlock. I wonder: The worst gridlock this country has ever had was in the 1850's, when no compromise could be found on slavery. If Democrats are empowered today to lie, cheat, steal to break the gridlock, should they have been similarly empowered in 1850?
Of course, no one would want that. But it raises an important point. If you define the game as one with nietzsche-ist / Machiavellian rules, no one ever seems to consider that it is just as likely the other side will win as yours will. In fact, if you truly represent liberality, I am not sure this kind of anything-goes game is stacked in favor of the truly liberal players.
For folks who think that the end justifies the means here, and that we need to break the rule of law in order to save it, I would offer this paraphrase to an old saying: you can't sell your soul and have it too.
99% of the examples you will ever hear of resources being "raped" result from lack of property rights on those resources or insufficient legal protections for those rights. This video says it all (starting at 1:00 but the whole thing is funny). Money line: "There might be a few more polar bears left if people wanted one for breakfast"
I was thinking about the crazy populist nuttiness of Donald Trump and the misguided focus of Black Lives Matter and the musty socialism of Bernie Sanders. As I drive around Europe and see ruins of castles and palaces, it occurred to me that we had almost always been saddled with an aristocracy exercising power over us. Sometimes they won that position through violence and military action, and sometimes by birth.
But it struck me that we have a new sort of aristocracy today: the Aristocracy of Hucksterism. These new aristocrats are just as wealthy and powerful as the old sort, but they have found a new way to gain power -- By suckering millions of people to simply hand it to them. And when they inevitably fail, and make things worse for everyone, they additionally manage to convince people that they root cause of the failure is that they had not been given enough power.
Vox shares what is perhaps the greatest achievement in human history, the continuing disappearance of absolute poverty:
Readers of this blog will likely have seen this before (though it may well be new to Vox readers). Here is the amazing thing about the Vox article: It never once mentions capitalism, trade, economic freedom, or any synonym. Here is a sampling of the tone of the accompanying article:
There's still much work to be done: 14.4 percent of the world amounts to 1 billion people who still need to be lifted out of extreme poverty. And making sure everyone's making at least $1.25 a day isn't the end of the fight either. The world's median income is still only $3 to $4 a day. By comparison, the poverty line in the US for a family of four is $16.61 per person per day. Once under-$1.25-a-day poverty is eradicated, the world needs to set about eradicating under-$15-a-day poverty, which will be a substantially harder task.
Vox is treating this like it is the result of some top-down effort, using the same language one might use to describe the eradication of Yellow Fever in Panama. As if this resulted (and as if future progress depended on) some all-hands-on-deck technocratic government program.
No one "set about" eradicating poverty. It happened because governments, at least to some extent, got out of the way and didn't stop it. China is a great example. Mao "set about" trying to eliminate poverty using many of the approaches likely favored by the Vox staff, and killed a few tens of millions of people in the process.
Here is my theory of the world's accelerating wealth formation that I have written on a number of times before. This chart largely results from:
- There was a philosophical and intellectual change where questioning established beliefs and social patterns wentfrom being heresy and unthinkable to being acceptable, and even in vogue. In other words, men, at first just the elite but soon everyone, were urged to use their mind rather than just relying on established beliefs and appeals to authority.
- There were social and political changes that greatly increased the number of people capable of entrepreneurship. Before this time, the vast vast majority of people were locked into social positions that allowed them no flexibility to act on a good idea, even if they had one. By starting to create a large and free middle class, first in the Netherlands and England and then in the US, more people had the ability to use their mind to create new wealth. Whereas before, perhaps 1% or
less of any population really had the freedom to truly act on their ideas, after 1700 many more people began to have this freedom.
So today's wealth, and everything that goes with it (from shorter work hours to longer life spans) is the result of more people using their minds more freely.