Mortgages

In reference to the recent storm of sup-prime mortgage issues, comes this quote from Marginal Revolution:

"Old definition:

A loan shark is a scumbag who charges the poor obscenely high rates of interest.

New definition:

A loan shark is a scumbag who charges the poor obscenely low rates of interest."

It's funny because it's true.

The New Definition of "Free Trade"

The Heritage Foundation has a good article on Free Trade. Here's a quote:

"Free trade is dead, living on in policymaking as a euphemism for conditional trade deals. "Yes, Peru, Americans will trade ‘freely' with your citizens on the condition that you do X, Y, and Z." This is not the American way; conditional interstate commerce among the United States was made unconstitutional in 1789 precisely because the Founding Fathers recognized the pettiness and gross inefficiency of protectionism."

Mangling Crime Statistics

Fox News has a good article about recent claims that violent crime/violent crime rates have surged recently. Even if you are not interested in such things as crime and crime rates, read the article. It is a good example of how you have to be careful with statistics - both when using them yourself and when accepting or rejecting arguments made by others based on statistics.

It vaguely reminds me of one of my first posts here, "How Bad is the Federal Deficit Really?", in which I went to great lengths to explain how "it's a matter of accounting."

The Pain of Parting with Cash

The Motley Fool has an interesting article on neuroeconomics research that examines the "pain" one feels when spending money and the difference between paying with different methods. Not terribly enlightening, but a quick, interesting read.

Follow-up: Grocery Bags

As I posted about earlier, San Francisco has been considering a ban on plastic grocery bags. As of yesterday, city leaders approved the ban. If you take the time to read the article, which is quite short, let me know if I am just overreacting or if the attitude that it would be a shame if grocers didn't use the more expensive corn-based biodegradable plastic bags because environmentalists find them the best option infuriating:

"Craig Noble, a spokesman for the Natural Resources Defense Council, said it would be disappointing if grocers rejected the biodegradable plastic bag option, since more trees would have to be cut down if paper bag use increases.

"The new breed of bags 'offers consumers a way out of a false choice, a way out of the paper or plastic dilemma,' Noble said."

"The paper or plastic dilemma"!? Since when did grocery stores not allow consumers to bring their own canvas bags to use if they saw fit? I've seen many people do it at many different stores. If anything, grocery stores encourage it because it is that much less money they have to spend on buying bags. The supposed "false choice" is not caused by a lack of other options - it's caused by people who "care" about the environment enough to complain about things but not enough to get over their laziness or cheapness and obtain an alternative solution. These people seem to be saying either "it's too difficult for a consumer to do this on their own" or "it's too expensive for a consumer to do this on their own, so let's make the grocery stores foot the bill."

Opegasur

More on the possibility of an OPEC-style natural gas cartel, about which I've posted previously.

The Golden Scepter

Arnold Kling has an excellent article over on TCS today about his theory of government. He calls it "The Golden Scepter." If you care about government theory, do yourself a favor and read the whole thing.

Disputes happen all the time. If we did not have disputes, we would not need umpires in baseball -- players could just call the balls and strikes themselves. . . .

We do not give guns to baseball umpires, and still we accept their decisions as final. However, I would argue that baseball games are peaceful in the context of a society in which we expect government to enforce the peace. Thus, although umpires are not employed by the state, their authority to resolve baseball disputes is indirectly backed by the state, in the sense that if you engage in violence to try to overturn an umpire's call, you can be punished by the state.

In contrast, if you are a heroin dealer involved in a dispute with another heroin dealer, it is much harder to commit to peaceful resolution of a dispute. Because you are involved in a business that is not sanctioned by the government, you cannot submit your dispute to an Arbiter who has ultimate backing from the state. Thus, it becomes difficult to develop peaceful mechanisms for resolving disputes among heroin dealers.

A Great Leap Forward

As a (small) part of my undergraduate thesis on egalitarianism, I examined China's Great Leap Forward (a period when villages developed the practice of swapping children with neighboring villages so that no one would have to eat their own children), so I find this comparison of Gore's plan for our energy future with the Chairman's plan for steel production very interesting. Let's all hope it has a more positive impact than its predecessor.

Wal-Mart and Harvard

Harvard receives ten applications for every opening they have. New Wal-Marts receive between 25 to 75 per opening, which means Harvard's acceptance rate is 9.3%, and Wal-Mart's acceptance rate is only 1-3%.

Priceless

The Motley Fool has an article about a cafe/deli, Terra Bite Lounge, the business model of which is not to charge a set price for anything but rather to encourage patrons to voluntarily pay what they would reasonably elsewhere. As the author points out, this is not totally unheard of - after all that's what tipping is.

As the author also points out, this type of business model/experiment is more suited for certain industries than others. Off the top of my head, I can think of a number of industries where this might do well, e.g., certain types of service industries. Anyone have any other ideas?

The Deadly Risks of Unlicensed Interior Decorators

From George Will:

In Las Vegas, where almost nothing is illegal, it is illegal -- unless you are licensed, or employed by someone licensed -- to move, in the role of an interior designer, any piece of furniture, such as an armoire, more than 69 inches tall. A Nevada bureaucrat says that "placement of furniture" is an aspect of "space planning" and therefore is regulated -- restricted to a "registered interior designer."

Aren't we all glad the government is there to protect us from unlicensed movement of an armoire? Of course the reason our elected representatives (and appointed bureaucrats) enact laws to protect us from the dangers of amateur color coordinators and furniture movers is the same reason they protect us from unlicensed doctors, lawyers, and taxi drivers. To keep us from being duped by fly by night charlatans and unscrupulous operators? Nope, to raise the barriers to entry of a market and protect the profits of those who are already established. Thank God we have the Regulators to protect us. Who knows what might happen otherwise.

It reminds me of the story of the woman from Mauritania who wanted to sell camel cheese to Germany. There were no regulations about camel cheese. The law was silent on the matter (as you can imagine). She was therefore banned from selling the cheese (which would have supported a poor community in her country) because there was no paperwork for her to fill out. Everything must be regulated.

The Right of the People Shall Not be Infringed

I wanted to say something intelligent and biting after reading this article from Cato, but it pretty much says it all.

Prof. Erwin Chemerinsky claims [“A Well-Regulated Right to Bear Arms,” March 14] that the federal court of appeals for the D.C. Circuit “interpreted the Second Amendment as bestowing on individuals a right to have guns,” and as “creating a right for individuals to have firearms.” Yet the court took great pains to explain that the amendment neither creates nor bestows the right to keep and bear arms. According to the court, “The wording of the [amendment] indicates that the right to keep and bear arms was not created by government, but rather preserved by it,” and that it is “a right that pre-existed the Constitution like ‘the freedom of speech’” [emphasis in original].

Read the whole thing.

Should DC Get a Vote in the House?

The issue of Washington DC not having a vote in the House of Representatives is once again being debated on Capital Hill. The twist this time is that, if passed, the bill giving the District a vote would also create a new seat in the House that would temporarily be given to Utah (until 2010). The logic is that a DC seat would vote Democrat and a Utah seat would vote Republican, thereby not altering the balance of power between the two parties.

Other People's Money

Someone has posted the transcript of DeVito's speech from the 1991 movie Other People's Money. A fantastic read, and so very true.
HT Club for Growth

Political Correctness vs. Freedom

European Commission President José Manuel Barroso indicated in an interview that Europeans are in danger of losing their freedoms as a result of political correctness.

I can't say that I disagree with the idea that the more society imposes political correctness on people through various means, whether they be legislative or simply social pressures, that freedoms suffer.

Spending ≠ Success

Just a quick response to Ken's post about DC literacy rates.

1. DC spends more per pupil than any state in the Union (as of 2005 roughly $11,300)
2. DC public schools perform worse than any state in the Union

While I would hesitate to claim this as evidence that more spending hurts children, I would point to it as evidence that more spending is not the panacea for all education woes.

EDIT: There was a comment that I needed to adjust for regional cost differences. If you click the link in point 1, they claim the numbers are already adjusted.

Oil and Cars

From 4-Block World, HT Carpe Diem

DC Illiteracy

According to this Breitbart article, the illiteracy rate in Washington DC is 36% compared with the national average of 21%.

Forever Stamps

In a previous post, I mentioned that the USPS was considering issuing a "Forever Stamp" that would be good for First Class postage regardless of rate increasing the occur after the stamp was purchased. According to this article, the Forever Stamps will go on sale May 14, 2007, the same day on which the First Class postage rate will increase from $.39 to $.41.

Tax Links

With tax season in full swing, here are some links that might prove handy:

Little Tax Tips -- The Motley Fool
Audit-Proof Your Tax Return -- The Motley Fool
Nine Tax Tips for Happier Returns -- MSNBC

U-Haul Indicators

From Carpe Diem:

From Flint, Michigan to Austin, Texas: $3,201

From Austin, Texas to Flint, Michigan: $540

Guess the demand is about 6X higher for one-way truck rentals TO Texas vs. TO Michigan?

Texas gained about 244,000 jobs over the last year, and Michigan lost about 67,000 jobs.

Also, the Carpe Diem Quote of the Day:
"Socialism is an ideology. Capitalism is a natural phenomenon.
Socialism collapsed because it is a policy of unrestrained intervention. It tries to fix what is 'wrong' with the spontaneous, self-organizing phenomenon called capitalism. But, of course, a natural process cannot be 'fixed.' ..."
~Michael Rothschild

"Right of The People"

The recent court ruling overturning the handgun ban in DC was 2-1, meaning one judge dissented. In her opinion (starting on p59 of this PDF) Judge Karen LeCraft Henderson argues that while the People may have a right to keep and bare arms, by the people the authors meant people of the States. Since DC is not a State, its people don't get rights. Apparently we can quarter troops in homes in DC with impunity.
More at Cato-at-Liberty.

Emergency Spending

Included in the new “emergency” supplemental spending bill (HT Cato-at-Liberty)

* $1.8 billion in crop subsidies:

* $283 million in price supports for milk producers

* $74 million for “peanut storage” subsidies

* $25 million in aid to spinach growers who lost money during the 2006 contamination scare

French Productivity

Cafe Hayek's Donald J. Boudreaux has an excellent article in the Cristian Science Monitor on statistics and French productivity. He notes that the French are frequently more productive than their American counterparts, despite working less hours and generally being French.

France's labor regulations are much more burdensome than those in the US. By artificially raising the cost of hiring workers in France, these regulations make it unprofitable to hire the lowest-skilled workers. One result is that only higher-skilled workers get jobs in France. But because US labor regulations are less restrictive, a higher proportion of low-skilled workers find jobs in America.

With a larger proportion of highly skilled workers, France's average productivity is bound to be higher.

An excellent piece, I recommend reading it all. It offers a number of observations on the use of statistics in economics.

Public Lobbying Loophole

From USA Today article:

"When Democrats took control of Congress in January, they passed a sweeping set of ethics rules, including a ban on gifts that prohibits lobbyists from buying a lawmaker as much as a hamburger.

But the gift ban left in place a little-noticed loophole: It doesn't apply to government agencies and public institutions. That exemption, which dates back more than a decade, leads to a stark disparity when it comes to public and private universities, which compete fiercely for federal money.

While private universities are banned from giving gifts, public universities can offer members of Congress free tickets to some of the country's most sought-after sporting events. That includes the upcoming NCAA men's basketball tournament, in which 43 of the 65 teams represent public schools.

Nor do those gifts have to be disclosed, according to the rules."

Grocery Bags

NPR has an article about how San Francisco may become the first city in the country to ban the use of plastic grocery bags due to concerns about their environmental impact. I find this interesting because, as I was growing up, I distinctly remember the use of paper bags being phased out and the use of plastic bags phased in for the exact same reason. The article cites the fact that paper bags are recyclable - aren't plastic bags? I wonder if it is the case that plastic is less efficient than paper to recycle - that might explain it.

I'm very tempted to think that the shift in thinking has no real rational or scientific basis but is rather fueled by the shift from the fad of caring about trees to that of caring about global warming and, by extension, petroleum products.

Since groceries presumably have to be carried out in something, other than plastic and paper bags (both of which are disposable) another option would seem to me to be durable bags made out of fabric or some other material. My instincts would normally say that this would be a great alternative since it would cut down on waste and energy consumption. I am uncertain, though, because I recently heard a fascinating statistic that I have been heretofore unable to verify: when I was in college, the cafeteria was stocked with styrofoam cups and we would go through many cases per meal. Many people advocated bringing a personal mug to meals so as to cut down on the amount of styrofoam we went through. This seemed, like the durable bags idea, to be a great solution. The aforementioned statistic, however, has thrown that instinctual judgment into doubt for me. Supposedly, it takes just as much energy to produce a mug as it would to produce 18,000 styrofoam cups. Faced with that reality, one wonders if the best thing to do wouldn't be to continue using 3 styrofoam cups per person per day since it is quite likely that a single mug wouldn't last as long (6,000 days) due to breaking, getting lost, etc.

If anyone is able to confirm or refute that statistic, I would love to hear about it. Also, if there are other data concerning similar resource consumption ratios between durable and disposable alternatives for the same product, I would love to hear about them.

Gold as a Value Haven

MarketWatch has an interesting article regarding the recent volatility in the gold market and how gold may be a victim of its own success when it comes to being a haven of stability in times of stock market volatility.

Wasting Food

The BBC has an interesting article reporting that Britain wastes 3.3 million tons of food per year. Many of the things stated in the article make a lot of sense, for instance, that much of the cause of wasted food is that people are gravitating for towards fresh foods, which have a shorter life. Also, half of the wasted food is actually inedible - things like tea bags (it's England; imagine how many tea bags they go through ;-)) and bones.

Now, as those who know me are well aware, I hate waste of any kind - wasting food, wasting energy, wasting money, etc. - in and of itself. Thus, I don't like the idea of wasting 1.65 million tons of edible food per year. This got me to thinking, though, about why I hate waste. Why is waste a bad thing (or, better, why do I consider waste a bad thing (so as not to beg the question)).

Without spending too much time on it, I think that the main reason I hate waste is that I perceive that whatever is being wasted could be put to good (or better in the case of money) use/towards a good end, which will now suffer a lack of an important resource. I also dislike waste because of the side effects it has - for instance, in the case of energy, not only is one spending money on unnecessary energy, but one is contributing to the consumption of resources without any good reason.

Regarding wasting food, I dislike it for multiple reasons. One is that it is a waste of money which could otherwise be put to good use. Another is that, like most children, I was often told in childhood that we should appreciate the fact that we have so much food while so many others elsewhere do not. While this may sound very trite and childish, there is a lot of truth to it. Thus, I am usually well disposed towards the attitude that we should not waste food in the interest of preserving/affecting the food supply in such a way as to benefit those who are hungry elsewhere (I know I'm glossing over the fact that a substantial portion of the hunger in the world is caused not by economic pressures, etc., but by government corruption and the like).

In the case of this article, however, the thrust of the piece is that wasting food is bad because it will contribute to . . . . wait for it: global warming.

I'm just going to leave it at that.

More Tax Cuts for the Rich

A while ago I had a post on how the top half of earners in the US pay 97% of the taxes. Well, Carpe Diem did a little more dinging, and produced this chart.

The top 1% of taxpayers paid almost 37% of all federal income taxes in 2004, an increase from 34.27% in 2003. The top 5% paid more than 57% of all taxes in 2004, up from 54.36% in 2003; and the top 10% paid 68.19% in 2004 compared to 65.84% in 2003

So the top 5% pay almost 60% of the taxes in this country, and the share payed by the top few percent continues to rise.

Apparently, The North Pole Is Colder Than They Thought

This is more Ken's pet project, but since he is busy for the rest of his life, I thought I would post it. It seems that two women who were walking to the North Pole to raise awareness for global warming were forced to turn back after one of them got frostbite.

Bancroft, 51, became the first woman to cross the North Pole on a 1986 expedition. She and Arnesen, 53, of Oslo, Norway, were the first women to ski across Antarctica in 2001.
But the latest trek got off to a bad start. The day they set off from Ward Hunt Island, a plane landing near the women hit their gear, punching a hole in Bancroft's sled and damaging one of Arnesen's snowshoes.
They repaired the snowshoe with binding from a ski, but Atwood said the patch job created pressure on Arnesen's left foot, which led to blisters that then turned into frostbite.
Then there was the cold — quite a bit colder, Atwood said, then Bancroft and Arnesen had expected. One night they measured the temperature inside their tent at 58 degrees below zero, and outside temperatures were exceeding 100 below zero at times, Atwood said.
"My first reaction when they called to say there were calling it off was that they just sounded really, really cold," Atwood said.

As Cafe Hayek points out, they still manage to blame the cold on global warming.

"They were experiencing temperatures that weren't expected with global warming," Atwood said. "But one of the things we see with global warming is unpredictability."

We're From the Government

Great Quote from Frederic Bastiat, via Club For Growth:

The claims of these organizers of humanity raise another question which I have often asked them and which, so far as I know, they have never answered: If the natural tendencies of mankind are so bad that it is not safe to permit people to be free, how is it that the tendencies of these organizers are always good? Do not the legislators and their appointed agents also belong to the human race? Or do they believe that they themselves are made of a finer clay than the rest of mankind? The organizers maintain that society, when left undirected, rushes headlong to its inevitable destruction because the instincts of the people are so perverse. The legislators claim to stop this suicidal course and to give it a saner direction. Apparently, then, the legislators and the organizers have received from Heaven an intelligence and virtue that place them beyond and above mankind; if so, let them show their titles to this superiority.

They would be the shepherds over us, their sheep. Certainly such an arrangement presupposes that they are naturally superior to the rest of us. And certainly we are fully justified in demanding from the legislators and organizers proof of this natural superiority.

We're Here to Help

Another great find from Carpe Diem (which makes me want a subscription to WSJOnline). This one is about IPLs, Item Pricing Laws, which say that each item on a shelf must have an individual price sticker rather than just a price on the shelf. Of course, this well-intentioned law has nasty repercussions on consumers.

Walmart in Mexico

Carpe Diem has an excellent post on Wal-Mart. He argues that they are the single most powerful force in the world for raising people out of poverty.

"In Mexico, Wal-Mart has been a counterweight to the powers that control commerce. One of the most closed economies in the world until the late 1980s, Mexico was dominated for decades by a handful of big grocers and retailers. All were members of a national retailing association called ANTAD, and cutthroat competition was taboo."
Translation: Wal-Mart broke Mexico's former grocery and retail cartels, and replaced high prices, limited selection and restricted competition with competitive low prices and lots of choice.

There is a lot of great stuff in the piece, and I recommend you read the whole thing.

Free to Shoot the Bastards

Well, not exactly, but the DC Court of Appeals has ruled that DC's handgun ban is unconstitutional. As someone who enjoys freedom and will take whatever freedoms he can get, I think this is a good thing. Maybe some day the residents of DC will no longer need to carry whistles to ward off crime. The really interesting thing about this ruling is that it rests on interpreting the Second Amendment as applying to individuals. Basically, the court ruled that the right of the people to keep and bear arms was being infringed. DC was always the prototypical example of a city that instituted very strict gun laws and still suffered very high violent crime rates. It will be fascinating to see if the change in the law will change the crime rate, once it is allowed to go into effect (after a Supreme Court hearing).

Here are some details about the ban, or as Eleanor Holmes Norton has called them, “Gun Safety Laws,” from Cato-at-Liberty:

First, you can’t own an unregistered gun.

Second, you can’t register a handgun that you didn’t register prior to September 24, 1976, which is a nice Catch-22.

Maybe you’ve somehow managed to leap these two hurdles. Maybe you thought ahead and registered a handgun back when disco was king. If so, you’ve got a gun you can keep in your home. But it must be quote “unloaded and disassembled or bound by a trigger lock” endquote, thus rendering it utterly useless if someone breaks into your home. What you’ve got there is an expensive paperweight.

And as hard as it is to believe, even if you own a lawfully registered pre-1976 handgun, you cannot legally carry it from room to room within your own home without a license. The penalty for carrying a pistol in your own home without a license is imprisonment for up to one year, and a fine of up to $1,000. And you can’t get a license.

That seems a little ridiculous, even for a city where ninety some percent vote Democrat, but the attacks on the ruling have already begun. The Washington Post has a typically shrill example.

In overturing the District of Columbia's long-standing ban on handguns yesterday, a federal appeals court turned its back on nearly 70 years of Supreme Court precedent to give a new and dangerous meaning to the Second Amendment. If allowed to stand, this radical ruling will inevitably mean more people killed and wounded as keeping guns out of the city becomes harder. Moreover, if the legal principles used in the decision are applied nationally, every gun control law on the books would be imperiled.

My favorite part of the article is the line "The NRA predictably welcomed yesterday's ruling. According to its myth, only criminals have had guns in the city and now law-abiding citizens will be able to arm themselves." Aside from the fact that the NRA has fought this lawsuit at every step, as the Agitator says, "isn't this "myth" true on its face? If guns are banned in the city,a everyone in the city who owns a gun is a criminal. And if this ruling stands, law-abiding citizens would now be able to arm themselves for protection."

I would like to take this opportunity to put my cards on the table. This post is far to small a venue to lay out my reasoning, but I can give my conclusions. I don't particularly care if handguns cause crime or prevent it (although I think the evidence points to prevention). The the Constitution gives us the right to bear arms so that we can defend ourselves, not against robbery or muggings, but against tyrants. When the document was written, the authors had just fought a war to cast out a king, and they wanted to ensure that they or their descendants would have that ability in the future. Our right to have weapons is not to allow hunting, or sport shooting, or target shooting, but give us the ability rise up against a government become tyrant. If the ability to drive where we wish is worth the deaths of hundreds of thousands motorists, and our right to swim is worth thousands of drownings, I hold that if the ability to resist a tyrant causes a few thousand deaths a year, that is a price worth paying.

New Member of Society

The Society and Money editors would like to announce to (both of) our vast readership (hi Mom) that Ken and his wife, Mrs Ken, welcomed Ken Jr into the world last night at about 10:00 pm. Mother and child are doing fine. The father can't stop giggling.

The Freakonomics of Carbon Offsets

Regarding my post Supply & Demand in Carbon Offsets, Peter made the observation that it is quite like the experiment documented in Freakonomics of the day care center charging a late fee for parents - rather than discouraging the activity, it actually encourages it because it gives people an artificially clear conscious.

Foreign Government Holdings of American Debt

Don Boudreaux over at Cafe Hayek has an excellent post responding to Hillary's accusation that free trade is to blame for foreign powers buying American debt. He rather sensibly points out that if our politicians were legitimately concerned about the leverage our debt offered, they should bring spending in below income.

Uncle Sam is behaving like a drunkard who blames his alcoholism on Jack Daniels. . . .
Uncle Sam behaves irresponsibly, begins to worry about some of the consequences of this irresponsibility, and then insists that these ill-consequences are best avoided by making it harder for American consumers to seek out and take advantage of good deals offered by foreign sellers.

Tax Cuts for the Rich

The Bush tax cuts are widely and accurately accused of only cutting taxes for the wealthy (since the wealthy pay the vast majority of taxes, when there is a tax cut they benefit). Before the cuts, the top half of American tax payers contributed 95% of the tax revenue to the public coffers. After the tax cuts, they only contribute 97%.

Club for Growth

Tax Take

How much have the Bush Tax cuts cost the government? We had a balanced budget, then we got a tax cut, now we have debt. So how much are the cuts costing us? Don Boudreaux, GMU economist, gives us this little gem over at Cafe Hayek.

Uncle Sam today takes from Americans' pockets more than $2.5 trillion per year. In real dollar terms, this sum is 50 percent higher than what Bill Clinton's government took during its first year in office and 25 percent higher than what George W. Bush's government took during its first year.

We had a balanced budget at the end of the Clinton years. We now bring in 25% more money after inflation. We now have a huge debt. My guess? Spending went up.

Property Taxes

For a number of reasons, I don't like property taxes. I like them even less now that I have read a paper entitled "Constitutionality of Real Property Taxation and Location Incentives, and Some Associated Economic Effects" by Michael Nwogugu, which can be downloaded in PDF format.

The paper is short and well worth the read. Take aways: property taxes violate the Constitution in a number of different ways.

Abstract:

"This article shows that the present regime of real property taxation and location incentives are inherently unconstitutional. The analysis in this article pertains to US state/local laws/regulations governing tax assessment, tax collection, tax foreclosures and incentives offered to firms to relocate to states (although much of it is applicable in most common law jurisdictions."

HT: TaxProf Blog

Wage and Salary Information Services

Yesterday's New York Times had an interesting article about the various free and fee-based online services that will provide you with information regarding wages and salaries for people in positions and with skills such as yourself. Worth the read especially if you are expecting to be negotiating compensation (whether for a new job or a raise) any time soon.

Ponderings Regarding Choice and Economic Systems

While pondering further some of the issues about which I have recently posted (e.g., Banning McDonald's, Choices and Wealth, Thoughts Regarding Wal-Mart in India, etc.), I began thinking about an interesting difference in the way that various socio-economic systems and schools of thought consider and treat free choice.

For instance, I am a staunch believer in the idea that free markets are the best socio-economic structure for the purpose of rewarding what I consider to be good choices on the parts of individuals. By "good choice", I mean here a choice that was beneficial not only to the individual but also to society or at least not detrimental to society in general or any other portion of it (and I would probably have to admit that this would need to be restricted to the material realm in order to hold water). I also consider it to be a very effective form of punishing bad choice (by which I mean the inverse of "good choice") insofar as, not only does a bad choice generate bad effects, but it deters similar bad choices in the future.

Inversely, I also consider various socialistic institutions, e.g., welfare, as mostly (if not completely) detrimental to society because, despite the best intentions in the world, they tend to have the opposite effect of what they intended - they create incentives for people to make bad economic choices, or, at the very least, remove the deterrents to making bad choices, including, but not limited to, not striving to lift oneself above one's current socio-economic condition. They also remove most (if not all) of the incentives for making good choices.

It struck me, then, that, as I define good and bad choices, there is a very interesting inverse proportion going on in certain economic systems: (free market) capitalism seems to be, to the extent to which it is free, a system that tends the vast majority of the time to reward good choices and punish bad ones. On the other hand, socialism (and it's various flavors), to the extent to which they are not free, tends the vast majority of the time to reward bad choices and punish good ones.

One wonders, then, about the underlying philosophical tenets of the various systems, whether consciously held or not. It would seem that capitalism, in principle, holds individuals in much higher esteem - it is their responsibility to make choices and the system trusts them to do so both because they are capable of making good choices and because the system will correct them if/when they make bad choices. Capitalism relies heavily on the decisions (choices) made by individuals (or, at least, private parties) to keep the whole system working - it's analogous to a mechanical system where each part is responsible for its own upkeep and performance, rather than a centralized mechanism handling all maintenance and performance monitoring for the system. It would also be analogous to distributed computing where each unit contributes what is best for itself to give at any one moment, thus optimizing the balance between its native tasks and its portion of the general task.

Furthermore, capitalism seems to assume the same general ideas of what constitute "good" and "bad" decisions/effects, namely beneficial not only to the individual but also to society (at least, materially speaking).

Less free systems, though, seem to hold individuals (and other private parties) in much lower esteem. They are predicated on the idea that society and individuals will benefit more from varying degrees of centralized planning and a lack of individual freedom in matters of personal property (assuming there is personal property) and the like than they will from making decisions on their own.

What I consider to be an obvious flaw in this idea is this: what is good for one person/private party or family is not necessarily what is good for another. In fact, due to circumstances, personal tastes, etc., what is good for one might be harmful for another. Furthermore, even with a very small number of people, a centralized planning official/agency/mechanism would have a very hard time easily and quickly knowing one from the other without being directly told by the parties involved. When the number of people in a society reaches any meaningful level, the task would become so enormous that the planning mechanism would have to devour so many resources simply to operate well that any benefit it might actually have to society would be more than offset by the amount of resources it requires. The other alternative, which is what seems to be the case in all historical examples of which I am aware, is that the centralized planning mechanism, because it cannot requisition the necessary resources to operate well, operates badly. People not only lack what they want, they usually lack what they need (one need think only of the bread lines in Soviet Russia or the current food shortages in Venezuela for an example of this).

More socialistic socio-economic systems also seem to presuppose that my definitions of good and bad are reversed. A choice that is good insofar as it profits the one making it is bad, according to these systems. I mean this is both a philosophical and substantive sense. Philosophically, the system holds this premise because it is predicated on the idea of a zero-sum game where transactions between individuals will always result in one party "losing." The apparent solution to this problem is simply to do away with inter-party transactions and let the central planning mechanism do it instead (although, this really doesn't change anything; to borrow a phrase from one of my favorite undergrad professors, "that just moves the problem over one," i.e., it just means that the private parties aren't the ones executing the transaction even though they is still a transaction going on and they are the ones involved).

Substantively, socialistic systems tend to punish what I would consider good economic choices because (a) those choices result (or would) in a material benefit for the party doing the choosing and (b) the systems are heavily imbibed with the idea that, when a party benefits materially, they must be exploiting other portions of society in someway. (I'll save the discussion of egalitarianism for another day).

Thus, there seem to be two things going on in my supposed inverse proportion between more and less free socio-economic systems:

1. A fundamental disagreement on what are "good" choices and what are "bad" choices. I believe this stems from a disagreement regarding whether the "game" of socio-economics in the real world is a zero-sum game (win-lose) or a positive sum game (win-win).


2. A fundamental disagreement over who/what is best equipped to make choices for individuals. I believe that this is more of a pragmatic difference: capitalistic systems tend to experience "spontaneous order" on account of all of the pieces of the machine aligning into the most efficient form possible due precisely to the fact that what is good for the part is good for the whole and vice versa. This spontaneous order has been extremely effective and one doesn't fix what isn't broken.
   
   On the other hand, socialistic systems seem to require centralized planning and administration in order to stop people from making choices since the system considers the choices private parties make to be inherently contradictory to the common good (because it is a zero-sum game, the party can be counted on to act in its own best interests, and the party can be counted on (at least enough of the time) to act effectively towards its own interests). Even if this weren't the case, socialistic economies would seem to require centralized planning and administration because they do not trust individuals to make good choices. Even if the system did trust private parties to make good decisions, it would still have to disallow it since all decisions would have to be made at the very highest level in order to ensure that it benefited as much of the society as possible - which would require vast amounts of data and resources unavailable to private parties.

You Mean Some People Like Caffeine?

The Wall Street Journal reports:

The big drinks makers now plan to disclose the caffeine content on the product label.

The new information will allow consumers to compare the caffeine content of various soft drinks and comes as beverage companies are introducing new supercharged drinks….

While health groups laud the move toward more labeling, some worry the caffeine disclosure might be used to encourage more caffeine consumption. “It’s conceivable that some people will choose higher caffeine soft drinks,” says Michael F. Jacobson, executive director of the Center for Science in the Public Interest, who has lobbied for caffeine labeling by soda companies.

It must come as a shock to some health nannies that caffeine is not yet as reviled as nicotine. In fact, some people like it. Apparently, when people are given more information, they use it to make choices.

"Whoooouuuuaaa!" as in surprise and alarm.

HT Cato-at-liberty

Neutral Hostilities

• Switzerland invaded Liechtenstein early on the morning of March 1, 2007, capturing more than a mile of territory - without being noticed, much less opposed.
• Swiss government promptly issues an "Our bad," the troops having returned to Swiss territory and the Liechtenstein territory having been liberated by default by the absence of enemy occupation forces.
• Liechtenstein replies "It's cool."

Banning Legos and Property

A private school in Washington temporarily banned Legos after it was discovered that the children were incorporating "their assumptions about ownership and the social power it conveys." These assumptions "mirrored those of a class-based, capitalist society -- a society that we teachers believe to be unjust and oppressive." After some much-needed brainwashing, the Legos returned to an environment of equality.

Freedom and Order

One of the principles of modern free market thinking is that people make better decisions for themselves than others do for them. Basically, it means that, in the main, on average, letting people make their own choices leads to the best results. The best known example is a centrally planned economy, which is far less efficient than the spontaneous order that results from free trade. But it also applies to other areas of society. One which I have been following for awhile is the theory that removing street signs would improve traffic safety. The theory goes that if there are too many signs and regulations drivers worry only about not breaking a rule, or not being caught breaking a rule, but if there are no rules, drivers must watch their surroundings and make constant choices about the best way to drive. Most people think that the idea is an example of the worst excesses of academia, theory fully divorced from the constraints of reality.
The Dutch city of Makkinga has put that theory into practice, eliminating all traffic signs.

The many rules strip us of the most important thing: the ability to be considerate. We're losing our capacity for socially responsible behavior," says Dutch traffic guru Hans Monderman, one of the project's co-founders. "The greater the number of prescriptions, the more people's sense of personal responsibility dwindles."

Apparently, traffic accidents are down dramatically, much to the chagrin of those who would tell us they know what is best.

HT: Cafe Hayek

Economics of Non-Scarce Goods

Techdirt has another in a long line of articles on non-scarce goods and the economics that govern their markets. The latest one deals with why DRM (Digital Rights Management) cannot add value. An interesting read for anyone who follows the struggles of media conglomerates to limit what their customers can do with the content they have purchased.

Choices and Wealth

TCS Daily has a great article entitled "Two Americas, Indeed" in which the author discusses the point that becoming wealthy is largely a function of a basic choice, namely, to live below one's means, and not simply a function of how much money one earns (which, itself is also partially a function of previous choices). Citing the book "The Millionaire Next Door", which I've never found the time to read, the author points out such facts as, among millionaires, most have not inherited their wealth and fewer than 20% have inherited 10% of their wealth.

A number of thoughts either contained in the article or evoked by it are 1) trying to "fight" income inequality via government intervention or any other measure won't necessarily have a big impact on wealth inequality since, again, wealth is not entirely a function of income, but rather of lifestyle choices; 2) I consider the purpose of saving, investing, growing wealth etc. not an end unto itself, but rather spending that wealth later, whether on myself or giving it away as I see fit. Thus, growing wealth is an exercise is delayed gratification. Thus, to a great extent, trying to close the wealth gap by taxing or otherwise punishing people who manage to accumulate a certain amount of wealth is, to a great extent, simply punishing the choice to enjoy the fruits of one's labor later rather than immediately, which seems an awfully arbitrary thing to do.

I encourage you to read the entire article.

Ban McDonald's

Prince Charles recently remarked that the key to people eating healthily was to ban McDonald's. Now, it is quite possible that this was some sort of joke - it could have been hyperbole, for instance (after all, I can see myself saying in jest that the best way to protect National Parks is to forbid people to use them; of course, I wouldn't really mean it because, while it may actually solve some of the problem, it would contradict my other principles of, for example, that part of the purpose of National Parks is to be enjoyed by the public). On the other hand, if he actually meant it, it betrays a fundamental misunderstanding of reality: people aren't unhealthy because McDonald's made them so - it's because they chose to eat food that they knew was unhealthy. There weren't any McDonald's employees on the sidewalks with guns forcing people into the store to eat their trans-fats - people walked in willingly.

This (the whole fast food chains made me fat things) is perhaps the most egregious example of people blaming others (usually those evils American corporations) for things that are patently their own fault, as if they are three years olds with no free will who were forced to engage in whatever action they now consider harmful.

To wax philosophical for a moment, it's as if people recognize the fact that they have appetites, but fail to recognize that the responsibility for controlling those appetites is their own - not the government's, not the corporations', not anyone else's. Thus, when they feel that some thing that they did or consumed as a result of those appetites (or just plain bad judgment) has harmed them in some way, they sue because obviously it wasn't their fault that they did that - it was the person who made it possible. I acknowledge the fact that the person who made it possible may have some responsibility if, for example, they misrepresented their product, their product is harmful even when consumed in moderation, etc. I really don't think that many fast food chains fall into this category, though - fast food isn't any more unhealthy than a great number of meals people prepare in their own homes every day especially when consumed in moderation. In addition, I don't ever hear about anyone suing because it turned out that McDonald's was claiming their Big Mac only contained 15 calories.

OK. I think I'm done ranting again.

The Term "Illegal Alien"

A Florida state legislator, Sen. Frederica Wilson, D-Miami, wants to ban the use of the term "illegal alien" from official state documents because "An alien to me is someone from out of space." She goes on to say "There are students in our schools whose parents are trying to become citizens and we shouldn't label them," she said. "They are immigrants, through no fault of their own, not aliens."

Apparently, she feels that the word "alien" has some sort of denotative derogatory meaning that "immigrant" doesn't (beyond the fact that her language skills are apparently so rudimentary that she thinks the word "alien" necessarily refers to a person not originating from the planet we know as Earth). Oddly, she feels that in the term "illegal alien", the word 'alien' is worse than the word 'illegal' even though her statement seems to focus on the fact that children are labeled as "aliens" "through no fault of their own." Apparently, it's alright is a child is illegal through no fault of their own, but it is not alright if they are "not from here" through no fault of their own.

This is obviously not a big issue except insofar as it is another example of political correctness run amok (with bad command of language for icing) - I wonder if some day we will not be able to refer to people as "tall" since it's not their fault. Sometimes I really think that political correctness is nothing more than the attempt to pretend that everyone on the planet is exactly the same in every respect to the point where the use of adjectives in conjunction with words that denote a certain person are irrelevant (notice that I don't say "or groups of people" since the only way to group people would be to introduce adjective denoting how they are different).

OK. I'm done now.