Posted by Georg Thomas on 08/31/2014 at 05:29 PM in American Culture, Barack Obama, Books & Media, Congress, Constitution, Economics, Electoral Prospects, Film, Georg Thomas, Health Care, History Lessons, Liberty Laid Bare, Media/Media Bias, Presidency, U.S., Pure Politics, Social Philosophy, Socialism Gone Wild, Supreme Court, Taxes and Spending | Permalink | Comments (0)
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I would like to see libertarians of all stripes slow down their denunciation of public authorities, without whom we cannot enjoy the ordered liberty that we all prize.
Read more at Lessons from Ferguson.
I am notorious for being a friend of the police.
I venture the hypothesis that many libertarians who engage in the "denunciation of public authorities" are stuck in a doctrinal trap that colours their perception.
Unlike Richard Epstein, from whom the above quote stems, they are not usually in the habit of figuring out the often difficult questions of how to fit public authorities into the framework of a free society, let alone appreciating their fundamental role in creating freedom.
Instead they work on a strong presumption against the state.
From that point on, negative perceptions become a foregone conclusion.
Mainstream libertarianism suffers from the lack of a serious theory of the role of politics and the state in an open society, betraying a derivative paucity of interest in the vital minutiae of intermediary conditions between principles and outcomes, i.e. libertarians are not prone to look carefully into the ways in which state agencies work in detail and on a day-to-day basis to buttress the freedoms we enjoy. This attitude encourages simple stereotyping that builds up pent-up demand for events that seem to prove the grim presumption against the state.
We urgently need more libertarians in positions of political responsibility. Ours is a theory in desperate need of sobering practice.
The cow on the old wall: Since there was lots of excellent grass on the old wall, some of the citizens of Schilda proposed to let a cow graze on it. A rope was put around the cow's neck and a group of strong men hauled her up. In the process, the cow got strangulated. When the citizens of Schilda saw that the cow was sticking her tongue out, they would jubilate: "Look she's grazing!
Following up on Australia Repeals Carbon Tax, let me share with you some words of wisdom concerning investment:
The federal government is moving towards abolishing the Renewable Energy Target rather than scaling it back in a move that will cost almost $11 billion in proposed investment and which is at odds with the views of its own Environment Minister.
Let’s parse this sentence bit by bit.
Scaling back the RET is described as “a move that will cost almost $11 billion in proposed investment”. “Investment” is one of those hurrah words so that anything that can be described as investment is automatically given a warm reception. What cutting the RET will actually do is cut almost $11 billion dollars of waste. Eleven bil on more windmills and solar panels would not get you back ten cents in the dollar. Stopping such expenditure dead in its tracks will only promote future economic growth, or at least it will if the government doesn’t decide to spend the money itself in some other totally useless way.
Here is the message: DO NOT SPEND MONEY ON ANY SINGLE INVESTMENT THAT WILL NOT OF ITSELF AND ON ITS OWN PROVIDE A POSITIVE RETURN ON FUNDS EMPLOYED IN A REASONABLE PERIOD OF TIME (LET US SAY THE NEXT THREE YEARS). If you can’t see a return, and prove it in a published cost-benefit study, don’t do it.
I don’t say you shouldn’t provide welfare. By all means provide welfare. Let us look after the sick, the aged and the disabled. But here, since the demands are near infinite, judicious allocations of funds will be required. But while welfare expenditures may be important for those who are unable to work or are too old to work, none of these expenditures will promote economic growth and future prosperity.
We do not have an infinite pool of productive resources. We must prioritise. Removing renewable energy targets is pure profit for the economy, a 100% benefit. So would getting rid of paid parental leave. Get rid of them both at once. I wish the NBN was also up for grabs since getting rid of it would also be a net positive.
And I should finally mention since I am throwing it all into the pot, do not raise taxes on anything in any part of the economy. If the kinds of revenues you are in receipt of are insufficient to pay for everything in the basket, then take some things out of the basket.
Wilfred Owen wrote Futility in May 1918, just a few months before death on the battlefield on 4 November during the crossing of the Sambre–Oise Canal. Futility documents an event where a group of soldiers discover one of their comrades. He has died and their attempts to revive him by moving him in to the sun fail.
The two major problems with modern liberalism (European meaning) are a lack of
(1) theoretical fortitude to generally deal with the vast fields of contingency and indeterminacy opened up by greater freedom, and more specifically, a lack of
(2) doctrinal maturity to guide it in political participation.
Both deficiencies have a common source. The model of social order underlying modern liberalism is the market. But the market is only a subset within the broader social order.
Hume or Smith were never in danger of reducing the system of liberty to a mechanism that describes free markets. But when Hayek speaks of spontaneous order, he is already propagating the narrower vision.
I do not know when and why it occurred, at any rate, the tragic turn of liberalism looms when sight is increasingly lost of the spontaneous order of society at large.
Why would liberalism suffer such constriction? Maybe because its roots lie in a precapitalist world, and more importantly in a world where government could not possibly be anything but very small by later standards. Maybe because its heyday coincided with the breakthrough of commercial society. Small government and commerce looked like the essence of liberalism. They appeared to offer liberalism's ultimate formula for success.
Now, let me explain what I mean by "the vast fields of contingency and indeterminacy opened up by greater freedom."
(1) Freedom brought about capitalism. (2) Capitalism brought about wealth. (3) Wealth required and enabled mass political participation, and wealth made possible government endowed with unprecedented resources. (4) Mass political participation brought about unheard of demands on the state. (5) Unheard of demands on the state brought about big government.
Freedom brought about big government.
It is useful to think outside the usual box, for a moment, and admit that there are not only silly and objectionable grounds for a larger state to happen. At least from stage (3) on, the delta of implications deriving from mass political participation and unprecedented publicly available wealth becomes much too broad and complicated, too contingent and indeterminate to simply wipe away any consideration of larger government as an expression of base doctrinal dazzlement.
However, this is exactly the error committed by the liberal movement. By its very structure, the liberal doctrine was conditioned, or at least predisposed to heavily underweight political processes and the dynamics of state institutions and government. Liberalism yields to this propensity at a time when these are becoming the most powerful forces in society, next to free markets and civil society, by which latter I mean the growing independence of humans and organisations from the tutelage of the powers-that-be.
The irony, nay, the tragedy is that liberalism becomes a creed of political abstention, just at the time when liberty is taking off in the biggest possible way. This is the dawn of the era of the paradox of freedom. Liberty proliferates and grows all over the world, but liberals hardly participate in shaping her fate. Those among them ready to accompany liberty in the political realm quickly amalgamate with other political schools uninhibited to regard politics as a welcome tool to bring mankind advances that the smaller governments of yesteryear were utterly incapable of. This is the reason why, for instance, the German liberal party has become yet another branch of social democracy a long time ago. A liberal party, a strong liberal force in politics is simply not conceivable under the core paradigm. A liberal must cheat or desert in order to become politically effective.
I must use the word for the third time: it is a tragedy that the audacious vision of perhaps the greatest liberals ever, and the unparalleled success of their political activism have not become the guiding light of modern liberalism. Instead, liberals live estranged from and often embittered by a time characterised by more freedom than has been experienced in any period before ours.
It has been frequently remarked that it seems to have been reserved to the people of this country, by their conduct and example, to decide the important question, whether societies of men are really capable or not of establishing good government from reflection and choice, or whether they are for ever destined to depend for their political constitutions on accident and force.
(Federalist 1, par. 1)
The answer to this puzzle is not a foregone conclusion - it is an ongoing process of political activity producing partial answers.
Posted by Georg Thomas on 08/09/2014 at 06:24 PM in American Culture, Congress, Constitution, Electoral Prospects, Georg Thomas, History Lessons, Liberty Laid Bare, National/International Affairs, Pure Politics, Republicans, Social Philosophy, State/Nebraska Politics, Supreme Court | Permalink | Comments (0)
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Today marks the 100th anniversary of the outbreak of the "Great War" – World War I. This is how the catastrophe unfolded:
So then, we have the following remarkable sequence of events that led inexorably to the 'Great War' - a name that had been touted even before the coming of the conflict.
Image credit and more on another green blob.
Again, let me emphasise that participation in political competition, political engagement, and hence the work of politicians are of the essence in defending the system of liberty that underlies our civilization.
Just ponder these words of a politician:
…However, I leave the post with great misgivings about the power and irresponsibility of - to coin a phrase - the Green Blob. By this I mean the mutually supportive network of environmental pressure groups, renewable energy companies and some public officials who keep each other well supplied with lavish funds, scare stories and green tape. This tangled triangle of unelected busybodies claims to have the interests of the planet and the countryside at heart, but it is increasingly clear that it is focusing on the wrong issues and doing real harm while profiting handsomely. Local conservationists on the ground do wonderful work to protect and improve wild landscapes, as do farmers, rural businesses and ordinary people. They are a world away from the highly paid globe-trotters of the Green Blob who besieged me with their self-serving demands, many of which would have harmed the natural environment. I soon realised that the greens and their industrial and bureaucratic allies are used to getting things their own way. I received more death threats in a few months at Defra than I ever did as secretary of state for Northern Ireland…
Posted by Georg Thomas on 07/23/2014 at 11:44 AM in "Goin' Green", A Climate of Changes, Barack Obama, Books & Media, Current Affairs, Electoral Prospects, Georg Thomas, Goin' Green, Media/Media Bias, National/International Affairs, Pure Politics, Socialism Gone Wild, Taxes and Spending | Permalink | Comments (0)
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Chris Berg of Australia's Institute of Public Affairs discusses "Too Big To Fail", and comes to a different conclusion than I do. He argues that the problem cannot be solved because it is an inherent concern of politicians to protect certain companies or institutions from terminal collapse.
I would argue, that only politics can change the present state of affairs. However, if libertarians are unwilling to participate in politics, eschewing the competition for political dominance of the state, matters are indeed bound to linger on in their unsatisfactory condition.
"Too big to fail" describes financial institutions, mostly banks, which have become so large and so deeply integrated into the financial system that if we let them collapse they would take everything else with them.
If a corporation is too big to fail, then, it follows, taxpayers have to bail them out.
It's quite a problem. A market economy is supposed to be dynamic, full of entries and exits. Firms that add economic value thrive. Those that do not go broke.
So bailing out failed companies makes the economy less efficient. More gallingly, it redistributes money from the poor to the rich. And it creates "moral hazard" - a belief by management that ultimately they won't have to pay for their mistakes.
Moral hazard is a particularly severe problem for banks. Banks trade on risk. A bank's basic job is to transform short-term highly liquid deposits into long-term extremely illiquid loans. Too much of the latter will prevent redemption of the former.
Too big to fail encourages banks to make riskier loans. Why wouldn't they? They're not the ones bearing the cost of failure. Taxpayers are.
So it would be great to get rid of too-big-to-fail. Or at least limit it somehow. The Murray Inquiry has a few ideas: higher capital requirements for bigger institutions, for instance, or new procedures for when banks do fail.
But the question isn't what should we do about too-big-to-fail but what can we do about it.
And the answer to that question is almost certainly nothing.
Make sure to read the entire article.
Hat tip to Sinclair Davidson.
Posted by Georg Thomas on 07/22/2014 at 03:29 PM in Barack Obama, Books & Media, Congress, Current Affairs, Economics, Electoral Prospects, Georg Thomas, Media/Media Bias, National/International Affairs, Presidency, U.S., Presidential Race--Then and Later, Pure Politics, Social Philosophy, Socialism Gone Wild, Taxes and Spending | Permalink | Comments (0)
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I haven’t written anything here for quite some time. Lots of reasons for that, not the least of which is my ongoing campaign effort. I thought I might jot down a few quick thoughts/reactions from the campaign trail.
The next 110 days will be busy, I’m sure. I hope to pop in here and chronicle things once in a while.
Thanks to Georg and (occasionally) Angela for manning the wheel around here. November will be here soon enough, and then maybe (regardless of the election outcome) I can post with a little more frequency.
Apparently, understanding free market economics is hard to accomplish, as seems to be amply demonstrated both by those underestimating and those (especially zealous anarcho-capitalists and radical libertarians) overpromoting the merits of capitalism.
As for the majority perspective on market-induced prosperity nowadays, the credo is based on a fundamentally erroneous premise and an appallingly immoral conclusion. Premise: those with wealth have come by it by robbery and exploitation or some other anti-social, zero-sum game whereby what one person gains another must have been deprived of. Conclusion: those with less wealth are entitled to expropriate those with more.
This is generally assumed in more or less disguised form, where the biggest problem is that people argue and act on that basis, while often denying or retracting any such conviction when driven into a corner - so, it appears that no one really believes such nonsense, when almost everyone feels strongly about it and acts on it.
Conceited ignorance of this kind explains the tremendous success and popularity of third-rate theories of capitalism - such as Picketty's scientifically dressed up political hunches concerning capital and inequality.
In a perceptive review George L. Priest explains:
The heart of Piketty’s book, however, similar to Marx, is the claim that the owners of capital are gaining returns greater than workers, returns that will continue into the future, generating huge inequality. What is the consequence? The book is quite vague on this. It is not the Communist Manifesto. But laced throughout the book are references to the “powerful and destabilizing effects on the structure and dynamics of social inequality” and the like.
This is a political, not an economic, analysis. And it is not quite political science. Piketty shows that there have been periods of greater inequality of ownership than today or than he projects for the future that have not resulted in revolutions. Piketty’s predictions about the destabilizing effects of inequality in the future — revolution? — are a hunch.
Almost 70% of young Germans regard employment by the state as the most desirable option for their future; this presupposes an inequality within the population of ownership of growth-producing capital. Anyone who prefers dependent employment to self-employment casts a vote, as it were, for unequal distribution of capital in society. Put differently, if more equality of capital ownership is sought after, then more people must become entrepreneurs/capitalists. This, however, is not achieved by soaking the rich, Piketty's preferred strategy.
Wealth creation by entrepreneurs is conditional upon adding value. By contrast, wealth enhancement by expropriation severs the vital tie of a person's acquirements to the production of real wealth.
At any rate, what is so surprising about the fact that those earning a living by adding exceptional value to their offerings end up with a higher return than people happy to be told what to do?
More importantly, Piketty does not explain, except for his subtle references to social discontent, why we should care about the growing — if it is — concentration of ownership of capital. In a competitive economy, why should we care about capital ownership?
[...] If owners of capital aspire to maintain their rate of return, they have to provide products or services of value to the consuming population. Why should the consuming population care about inequality in ownership of the capital used to provide the product?
Personally, I am absoluteley in favour of monopoly, that is: meritocratic monopoly - ein Leistungsmonopol, in German, a monopolistic position attained by providing a product of unrivalled desirability. I want my baker to be a meritocratic monopolist, the only guy in town where people buy bread, because it is so much better than anybody else's profferings. If someone managed to produce a top echelon Mercedes and sell it profitably for € 100, she would surely and deservedly become a monopolist and an earner of excpetionally high returns. For monopoly to be a boon for everyone, all we need is open market entry, no political favours, and incredibly capable entrepreneurs. The improvement to my life that a super product makes does not diminish by so much as a tittle when the provider earns a substantial return on his service to mankind.
When a patient goes to a hospital, there is a huge inequality of capital ownership. The hospital’s possession of MRI and CT scanning machinery, not to mention the accumulation of machines checking vital signs, is vastly unequal to the capital possessed by the patient. Is this inequality a problem? No, in fact the patient would prefer more inequality of capital if that would enable the hospital to more successfully diagnose the health problem.
Similarly, when a consumer buys a car, does it matter whether the car manufacturer is owned or controlled by a dynastic family as opposed to a set of employee pension plans (again, most workers are idle capitalists by Piketty’s definition)? It doesn’t matter. What’s important is the quality of the car.
Maintaining a competitive economy trumps all of Piketty’s concerns about inequality of wealth.
An economist used to be a person who was able to explain why the economy works well without interference by the state, and, indeed, better than if such meddling were to be effected. Nowadays, an economist is a person who affirms that the economy can only work properly thanks to interventions by the state.
The economist – versed in knowledge about the invisible hand – has metamorphosed into a staunch proponent of economic policy, the politician’s advisor ambitious to steer the visible hand.
I have watched the reception of Piketty's book for a while, and in the process have accumulated a large bunch of reviews of his rickety economics - so, anyone interested help yourselves:
Piketty's Rickety Economics, The Piketty Fallacy, Capital in the Twenty First Century ..., Capital Punishment, Something to Celebrate, Piketty Should Focus ..., Wealth Inequality: Signal or Noise? , The Inequality Puzzle, The Inequality Illusion, The Inequaliity Illusion (II), The x% Puzzle, Two Piketty Links, The Piketty Code, Piketty Problems ..., Piketty's Numbers Don't Add Up, What Thomas Piketty Gets Wromg About Capitalism, Piketty Fudged His Wealth Data ..., Why Didn't Piketty's Harvard Publisher ..., The Piketty Controversy, Piketty and scientific fraud, The Piketty Kerfuffle, Piketty: Bad Theory, Bad Data, Deirdre McCloskey ..., Is Thomas Peiketty a Fraud?, Fraudulent Use of Dada, Monsieur Piketty Goes to Latin America, Piketty is an economic illiterate, Piketty: A Wealth of Misconceptions, A Global Wealth Tax Is a Lousy Idea, Is Piketty's 'Second Law of Capitalism' Fundamental?, Piketty's Envy Problem, Smith, Marx, and Picketty, On Piketty and Capital, Picketty's Popular Nonsense, Everything That Counts, More Matt Rognlie ..., Picketty and Emerging Markets, Cronyism in the 21st Century.