Enivornmentalism Turns Against Itself *UPDATED*

After Dr. Foldvary's article (Ethanol subsidies starve poor kids) and seeing a report on Comcast News about the rising cost of "organic" and "environmentally friendly" food -- and headlines like "Era of cheap food ends as prices surge" (h/t Drudge) -- I'm beginning to wonder whether the environmentalist movement doesn't need to be a lot more centralized and coordinated.

If environmentalist causes drive up the cost of food, and that keeps people from buying "environmentally friendly" foods, then . . . . What was that about "a house divided against itself"?

Speaking of the unexpected results of environmentalism, did you see this from NPR last Fall?:

Rice fields are a major source of methane — one of the so-called greenhouse gases linked to global warming. But switching to other crops is unthinkable in Asia, where rice is the primary source of calories for many people. So scientists in Thailand are trying to find rice cultivation techniques that produce less methane.

And speaking of government subsidies (in the name of environmentalism) getting in the way of "environmentally friendly" causes, see Peter Robinson's interview with T.J. Rodgers (in five parts: One, Two, Three, Four, Five).

The centralized power of the US government evidently isn't enough to coordinate the environmentalist movement. And it would be no use appealing th the UN.

(But why use a government body at all?)

-MT

UPDATE:
Looks like it's a busy week on the ethanol/food/environmentalism front. See the following four pieces on NRO today:

Hungry Like the Ethanol Wolf [Editorial]
A New Environmentalism -Victor Davis Hanson
Global Food Riots -Deroy Murdock
Saving the world is cheaper than free -David Freddoso

And see the following recent headlines on Drudge:
Americans hoard food as industry seeks regs -Patrice Hill, Washington Times
Load Up the Pantry -Brett Arends, Wall Street Journal
Two major US retailers ration rice amid global food crisis -AFP
Run on rice makes its way to U.S. -Jerry Hirsch and Tiffany Hsu, Los Angeles Times

Milton Friedman: Singlehandedly responsible for libertarianism

Or so Peter Goodman's NYTimes article ("Reconsidering Milton Friedman") might lead you to believe.

Furthermore, it seems that the experts cited in Goodman's article believe libertarianism has been refuted by the current financial crisis. That despite Jason Lewis's convincing (to me, at least) argument this past Thursday that government involvement was a cause of said crisis (or would at least make it worse, in the long run).

But what do I know? I'm neither an historian nor an economist.

Wal Mart Katrina Response Illustrates Government's Failure

"A lot of you are going to have to make decisions above your level," was Scott's message to his people. "Make the best decision that you can with the information that's available to you at the time, and above all, do the right thing." This quote from Lee Scott, the chief executive officer of Wal-Mart, was made to his employees shortly before Hurricane Katrina made landfall illustrates the mind set the company took prior to the greatest natural disaster in American history which allowed the company to succeed where the Federal Emergency Management Agency failed.

According to a new study by Steven Horwitz, an Austrian-school economist at St. Lawrence University in New York, the entrepreneurial mentality of Wal Mart's employees allowed them to excel while indecision paralyzed their highly-paid, "expert" colleagues in the federal government. A few of the specific acts of "heroism" or at least tremendous individual initiative on the part of certain Wal Mart employees:

In Kenner, La., an employee crashed a forklift through a warehouse door to get water for a nursing home. A Marrero, La., store served as a barracks for cops whose homes had been submerged. In Waveland, Miss., an assistant manager who could not reach her superiors had a bulldozer driven through the store to retrieve disaster necessities for community use, and broke into a locked pharmacy closet to obtain medicine for the local hospital.

Among the recommendations of Horwitz's study designed to improve the response to future natural disasters:

1. Give the private sector as much freedom as possible to provide resources for relief and recovery efforts and ensure that its role is officially recognized as part of disaster protocols.

2. Decentralize government relief to local governments and non-governmental organizations and provide that relief in the form of cash or broadly defined vouchers.

3. Move the Coast Guard and Federal Emergency Management Agency (FEMA) out of the Department of Homeland Security (DHS).

4. Reform "Good Samaritan" laws so that private-sector actors are clearly protected when they make good faith efforts to help.

Vote for Freedom

in the Economist's online debate on whether the government is responsible for the housing crises. Paul Moore, senior Lecturer at the University of Ulser, attempts to defend government intervention in the economy while John Berlau, Director of the Center for Entrepreneurship at the Competitive Enterprise Institute, defends sound economics and freedom.

Also, be sure to check out John's piece on Eliot Spitzer's real crimes and how DC is giving even more power to the next generation of Spitzers.

Warmongering vs. Socialism

Paul Gessing is very worried that a John McCain presidency would increase injustice and violence through continued (expanded?) war on the world. I am concerned about this, but I wonder if bad economic policy isn't worse, especially given the socialist leanings of the current Congress.

The Financial Times had this to say about the Democratic candidates on economics:

Barack Obama, now the favourite to secure both the nomination and the White House, once had intelligent things to say about trade. He has lately positioned himself as a hardliner among the hardliners...Mr Obama and the Democrats have been seized with a kind of intellectual and political cowardice. The implications of this lack of spine are grave – and extend beyond economics. The next Democratic administration promises to repair US alliances and standing in the world. A worthy aim. Yet its first act, the party says, will be to tell its closest neighbours that the rules they are all agreed to are defunct – and if they do not like it, tough luck.

/KDR

Fed to Blame?

Could the Fed have done better, or is it hopelessly flawed (and should be abolished)?

A list of criticisms here.

Thoughts?

/KDR

Undo the Obstacles to the Manifestation of Comparative Advantage

TFL’s newfound friend and commenter ACC appears to be quite knowledgeable about the intricacies of the Ex-Im Bank. I am in this sense at a disadvantage. ACC does, however, give us an opportunity to go back to square one on important concepts.

Today, let’s go back to “comparative advantage.” ACC says:

This cuts to the issue of whether or not one believes that promoting exports at all is a "good" thing. If you believe at all in the theory of comparative advantage, you probably would think that it is.

My take: the notion of comparative advantage is an observation, not a call to arms. When markets, goods and services flow freely and peacefully, it liberates people to do what they do best. It also tends to aggregate in nation states. The US, for example, does technology more effectively than Switzerland. The Swiss do chocolate and watches effectively.

These advantages can and, most of the time, do evolve and arise without government intervention. The theory of comparative advantage says absolutely nothing about “promoting” anything. Some promotion does happen, to be sure. Whether such promotion works to increase the prosperity of the citizenry – who can say? What is clear is that nations that do less promotion and less intervention are generally substantially more prosperous than those nations that do more, over time.

ACC also asserts:

Nor are resources just magically being shifted out of production of other goods a la Soviet arms factories eschewing consumer durables – especially in a case like Boeing -- its natural market is going to be made up of international actors by default.

This depends on what you mean by “magic.” People and corporations react to subsidies and penalties, do they not? Subsidize X, and we almost always get more X. Penalize (tax or regulate) Y, and we almost always get less Y. Call it “reinsurance” if you must, but the Ex-Im Bank is in the subsidy business. While I’m pleased to see that the Ex-Im Bank is not a drain on taxpayers, I’d remind you that there are other “facilitating” government and quasi-government entities in the mortgage and pension liability areas that appear to be ticking time bombs for taxpayers.

That’s why I advocate undoing the obstacles to the manifestation of comparative advantage. It’s a neutral, peaceful approach, not the government-as-mad-scientist, testing and tinkering with a market of people that just wants to do its thing. While he was no saint, Ronald Reagan put this point well: “Get the government off our backs.” Not just off Boeing’s back. Not just off industry’s back. Off your back and my back.

Look at it this way: If government doesn't promote exports (or production of any kind), do you honestly believe that there would be no exports or production? If yes, I humbly, respectfully, but strongly disagee.

-RC

The Mercantilist Impulse

You may also note that virtually every other major economy has their own export credit agency.

-ACC, TFL Commenter

But, Mom, everyone else is doing it.

Everyone might want to go jump off a bridge, that doesn’t mean you should, too.

A spirited, unexpected discussion here on TFL about the Ex-Im Bank. Highly recommended. I hadn’t realized that the Ex-Im Bank has been self-financing in recent years, so thank you for that fact. It has fallen on my list of most absurd government programs, but I still find it absurd.

We’ve established that industry is sometimes inefficient, and probably that government is more inefficient. The big difference, of course, is that government imposes its will on citizens, while industry must compete to attract customers. That’s a built-in advantage for industry in my book. Over time, I have a lot more confidence that Boeing can and will find customers for its products. Government intervention may seem on the surface to help make the markets – that is, the people – more efficient, but that all depends on which fact set one looks at. For example, the US corporate tax rate is intolerably high. It’s high relative to the rest of the industrialized world, even. If we want to “help” Boeing, we should start by lowering their tax rate. That’s an undue burden that certainly is putting US industry at a competitive disadvantage.

Let's see. They finance US exports that commercial banks can't finance to help US exporters compete and keep Americans working... their default rate is around 2%, AND they've returned $4 billion to the Treasury during the past decade or so. That's $4 billion MORE than the taxpayer paid to operate Eximbank.

-Tom Jeff, TFL commenter

I’d suggest reading up on F.A. Hayek’s concept of malinvestment here, Tom. In isolation, again, your case is strong. But consider the secondary and tertiary effects of government intervention, which is part of Hayek’s point. Favoring exports by policy means that industry shifts resources away from what the market wants. It’s impossible to quantify, as there are 300 million data points on any given day, signaling the market what their demands are. Suppliers react to those demands, unless government steps in. It may look good for the Treasury, but it doesn’t look good for the national economy, which expresses its preferences privately and peacefully every second of every day.

-RC

Bottoms Up

Highly recommend this short blog over at Cato@Liberty.

It shows that the lowest fifth of US citizens pay an average effective tax rate of 4.3% and tht the top fifth pay 25.5%. This includes virtually ALL federal taxes, not just income taxes. I'd like to see this data including state and local taxes, too, but this seems to be a nice snapshot of tax distribution.

Right wingers might say: See, the "rich" pay more than their fair share. Left wingers might say: Nope, they reap the greatest benefit from the society, they should be paying A LOT more.

This Free Liberal says: Why are we taxing the poorest at all? Can't we all agree that that's the place to start?

-RC

Boudreaux on the Falling Dollar

GMU econ dept chairman Don Boudreaux has a wonderful piece explaining the causes and effects of the weakened dollar:

http://www.csmonitor.com/2007/1128/p09s01-coop.html?page=1

What I think is especially interesting about this kind of matter is that the policy-makers don't seem to recognize how their anticipated regulatory action is likely one of the causes of the very problem they will attempt to solve.

Boudreaux writes:

By 2009, Democrats may well control the White House, too. Investors generally believe "that government is best which governs least." From that perspective, partisan gridlock is desirable because it keeps excessive political interference in the economy at bay. But with Democrats in control, the antitrade, pro-tax, "don't just stand there, regulate" forces will be unleashed. Such a prospect is already weighing down the dollar.[emphasis added by KDR]

The future can govern the past! Perhaps policy-makers should re-watch "Back to the Future II" for a remedial lesson. :-)

/KDR

Liberty Dollars: What's the Big Deal?

Well, the feds finally raided the Liberty Dollar folks. Frankly, I am surprised it took them so long to get around to it.

This is not to say I agree with the federal government action; I don't. I simply figured that the purpose of the Liberty Dollar was to trigger federal action in order to have a public lawsuit. That's how civil disobedience works. The feds finally fell into the trap.

Unlike many in the freedom movement, I consider the Liberty Dollar to be something of a joke. Why spend $20 for a coin with only $14 worth of silver. That's instant 30% inflation! Federal Reserve notes are a better deal, and they fit in my wallet. At least Liberty Dollars are refused by most merchants – a powerful money-saving factor.

(OK, as collectibles, Liberty Dollars may prove to be a good investment, especially after the federal raid. But as currency, no thanks.)

Some would argue that Liberty Dollars are inflation proof in the long run, that the initial 30% hit will be small compared to fed note inflation over time. However, the U.S. Treasury offers inflation-proof currency for a much lower premium: it's called T-Bills.

Yes, you pay a few percent a year to hold fed notes, but who does so in large quantity anyway? Bank CDs and other instruments usually keep up with inflation. And if you really want to short the dollar, don't buy gold, buy land! Compare land prices since 1980 with gold prices since 1980. And you get to use the land while you wait for it to appreciate.

Liberty dollars are a joke. Both the gold bugs and the feds take them way too seriously. And the reason they take them too seriously is that they don't understand fed notes.

Federal Reserve notes are not backed up by faith or by legal tender laws. The feds have nothing to fear from Liberty Dollars, and U.S. citizens need not worry about fed notes losing their value overnight due to loss of faith. Fort Knox could vanish and the fed could issue new bills with pictures of Bozo the Clown, David Duke and Hillary Clinton and people would still accept them as currency.

The reason? Federal Reserve notes have intrinsic value. They are backed up the same way the corporate bonds and stock certificates are backed up. Crack open a textbook on banking. Close to 90% of money creation is by privates banks, and the practice precedes the existence of the Fed. Federal Reserve notes are backed up by trillions of dollars of real estate, factories, and consumer durables.

If you have a mortgage, you need fed notes to keep your house. If you have a car loan you need fed notes to keep your car. If you lease office space with a contract measured in dollars, you need dollars to keep your office. No faith needed. Federal Reserve notes are backed up by debt.

Yes, there are problems with fed notes. The fed can dilute their value through open market operations. (The same holds for stocks and bonds. Corporations can dilute their values with new issues.) And debt based money has inherent instabilities. I'd like to see an equity based currency myself, though it should be backed up by more than gold.

But let us not overestimate the problems with fed notes. The result is misplaced efforts, loss of credibility – and run-ins with the FBI.

Colorado Residents Missing Rebates

In 2005, a narrow majority of Colorado residents voted to allow their state government to keep all tax revenues it took in for the next 5 years. In most states, politicians are always allowed to spend whatever they can convince taxpayers to give them, but something called the Taxpayers' Bill of Rights made Colorado different and its citizens wealthier. As Michael New points out here, in giving the state more of their hard-earned money, the average Colorado taxpayer has missed out on 910 dollars in tax rebates during the past two fiscal years.

Other states, including my home of New Mexico, should emulate Colorado's economic success by adopting Taxpayer Bill of Rights-style spending limits. Unfortunately, as Paul Jacob experienced in Oklahoma, the establishment (conservative or liberal) doesn't like limited government.

Club for Growth Assessment of Ron Paul: Fair or Hatchet Job?

The Club for Growth is a fiscally-conservative organization that attempts to elect people to Congress and the Presidency who believe in limited government and fiscal responsibility. They have been publishing analyses of each of the presidential candidates over the last few months and just recently published their analysis of Ron Paul's fiscal record.

I believe that the Club is fair to Ron as far as they go. Dr. Paul has a stellar track record on nearly all tax and budget issues. Under a Paul Administration there is no doubt that the federal government would be a fraction of its current size.

That said, as the report points out, Dr. Paul does indeed sometimes let perfect be the enemy of good. Some trade issues fall under this category although I don't share the Club's optimism about federal tort reform or the line item veto.

Not every trade agreement that comes down the pike is a good one, but I think it is hard to argue that NAFTA has not been a boon to both the US and Mexican economies. Also, NAFTA and other trade agreements are nothing but international treaties over which Congress has the final say. They would seem to pass Constitutional muster.

But the Club's major shortfall (and the shortfall of most DC-based free market groups) is the inability and unwillingness to take an honest look at the impact foreign policy has on the size of government. With the Iraq War having cost US taxpayers nearly $500 billion (just a down-payment on that war), not to mention the unnecessary creation of the Department of Homeland Security (gee...maybe the DEFENSE Department should be defending the "homeland," and dozens of other very expensive projects (Iraq embassy anyone) linked directly to our belligerent foreign policy, Ron Paul stands head and shoulders above the rest of the field. I understand why the Club and other fiscally-conservative groups don't take stands on foreign policy, but "War is the Health of the State" and anyone fighting for limited government must account for that fact.

What is Libertarian Paternalism?

Paul Gessing discusses Jacob Hornberger's position on "libertarian paternalism" in the previous post. While they both offer valuable remarks on the matter, Gessing and Hornberger are having a debate over whether incremental libertarianism is libertarianism at all. But, I don't think that is what "libertarian paternalism" -- as an idea -- is really about. I chalk this up to the incorrect usage of the term by David Leonhardt of the New York Times, whom Hornberger references.

Libertarian paternalism is about whether there is merit in government helping out by setting a default choice for the option most beneficial to the citizen.

Cass Sunstein describes libertarian paternalism as such:

The basic idea is that private and public institutions might nudge people in directions that will make their lives go better, without eliminating freedom of choice. The paternalism consists in the nudge; the libertarianism consists in the insistence on freedom, and on imposing little or no cost on those who seek to go their own way.

In an interview with EconTalk, Richard Thaler compares the government's role to a cafeteria manager who benevolently makes fruit easier to access, while making candy bars harder to reach. He does not deny them the choice of the candy bar, but he helps them make a better choice.

In Econ Journal Watch, Dan Klein dismisses this approach:

But it seems odd to drag the terms “libertarian” and “paternalism” into matters like dessert placement. What they speak of could be more accurately, if less provocatively, addressed using such terms as benevolence, discipline, delegation, propriety, help, cooperation, and so on. The terms “libertarian” and “paternalism” reside naturally in discussions of political affairs and particularly in issues involving coercive government policy. The paternalism entry of The Blackwell Encyclopaedia of Political Thought begins: “In modern use the term usually refers to those laws and public policies which restrict the freedom of persons in order that their interests may be better served”

Klein suggests that libertarian paternalism is an odd coupling and he suggests other absurd pairings:

It seems to me that Thaler and Sunstein pull “libertarian” and “paternalism” out of their normal context just to create an oxymoronic gimmick. If Thaler and Sunstein were to proceed with this kind of gimmick, we could anticipate the following papers:

“Libertarian Socialism”: A paper pointing out that sometimes patrons at a Chinese restaurant may decide to order a number of dishes and share them in common.

“Libertarian Communism”: A paper pointing out that sometimes adults such as the Jesuits at Santa Clara University live and eat and work together within a nexus of private property and voluntary association.

“Libertarian Dirigisme”: A paper pointing out that executives centrally plan the basic skeleton of activities at the worksite.

“Libertarian Interventionism”: A paper pointing out that condominium associations involve restrictions on members’ activities.

“Libertarian Repression”: A paper pointing out that, as described in Schelling (1984), individuals control their own behavior by repressing, subduing, or annihilating certain subordinate selves.

Cass Sunstein says it is not just a gimmick:

But it is not idiosyncratic to distinguish between approaches that respect freedom of choice and those that do not. Klein suspects "that the authors simply wish to reject the distinction between voluntary and coercive action upon which the very idea of libertarianism is based" (Klein 2004, 267). But that very distinction is pivotal to our argument, which opposes libertarian paternalism to nonlibertarian varieties, and which endorses the former over the latter.

Klein replies:

By adding “libertarian” to “paternalism,” Thaler and Sunstein make it seem like they affirm the libertarian distinction between voluntary and coercive. They use “libertarian”—a political call to depoliticize—to counteract the political meaning of “paternalism.” But “libertarian paternalism” is like “voluntary coercion.” Sunstein and Thaler concoct new meanings—of “voluntary” and “coercion” as much as of “libertarian” and “paternalism.”

The bastardization “libertarian paternalism” upsets people’s understanding of those terms in their critical function: highlighting the coercive nature of government intervention. In espousing government intervention, Sunstein would advance honest discourse by admitting that it is coercive and defending it as such.

The debate over libertarian paternalism is not whether incremental libertarianism is libertarianism, but whether "libertarian paternalism" offers a meaningful class of policy maneuvers and whether the very terminology undermines freedom.

/KDR

Huckabee's Smoking Ban

Presidential candidate Mike Huckabee wants a national smoking ban. He says it is a workplace safety issue and compares subjecting restaurant workers to cigarette smoke is like exposing them to radon. He asks us not to think of it as a consumer issue.

I suppose, he doesn't want us to think of consumers, because that might lead us to think of the market, specifically, the free market. (Hint: I'm in favor of it!)

We can assume most bar patrons and employees are aware of this hazard and can choose accordingly to subject themselves to the smoke or to avoid the smoke. Bar owners can choose the amount of smoking allowed which maximizes the profits enjoyed. Smoking is not an externality, as pointed out by economist David Henderson in the latest issue of Econ Journal Watch.

So Governor Huckabee, do you want to be a health nanny, or do you just find the free market unpalatable?

/KDR

Wall Street's Nanny

One of the main reasons CounterPunch continues to be my favorite left-of-center web site is they are one of the few (only?) non-Austrian/libertarian sites to recognize how the Federal Reserve benefits the elites and harms working people.

For example, see Jackie Coor's essay on how the Federal Reserve's recent actions represent a form of nanny statism designed to protect the big banks and other major financial interests from ever having to face the consequences of their reckless behavior. So those at the top of the financial system profit from Federal Reserve created booms and then are protected by the Fed from the consequences of their "irrational exuberance." Nice work if you can get it.

Instead of using the current crises to began restoring honest money, Congress is scheming to using the current problems in the market as an excuse for yet more regulations. I am sure these new proposals will be as beneficial as Sarbanes-Oxley.

Ron Paul and Bernanke

Next Wednesday, July 18, at 10:00 a.m. Federal Reserve Chairman Ben Bernanke will testify before the House Committee on Financial Services on "Monetary Policy and the State of the Economy," and take questions from Committee members, including Ron Paul.

You can watch Dr. Paul discuss economics with Chairman Bernanke at the Committee's web site.

Private Dollars Lead New Orleans Recovery

This story is really not a surprise. Private charity has always been more effective at improving peoples' lives than government handouts and examples of this in reaction to Hurricane Katrina have already been widely reported.

What is surprising is that people are so easily fooled, so often, by government officials who say "we're going to help." Things weren't always this way. In fact, after every disaster, natural or otherwise, we should mandate the reading of "Not Yours to Give," an excellent Illustration of the way government has usurped and corrupted private charity.

No Magic Wand

The Angry Economist says something I want to scream at certain radical libertoids:

Some problems are simply hard to solve. There is no magic wand. A free market can't solve them. Neither can a market constrained by the violence of the state -- although it will arrive at a different solution.

/KDR

Whole Foods, Monopolist?

Whole Foods recently struck a deal to purchase rival organic grocery Wild Oats. No big deal, right? It is a very big deal actually if you work for the Federal Trade Commission and you believe that consumers must be protected from a "monopoly" in organic grocery stores.

Leaving aside the debate over whether federal intervention to ensure competition in the organic food grocery sector is really a pressing national interest, I find the argument that the merger of these two companies is somehow "anticompetitive" quite unreasonable. If anything, the fact that Wild Oats has been losing money and yet was still able to find an interested purchaser implies that Whole Foods management sees ample room to grow the organics market and for new players to enter and expand their selections of organics.

In fact, prospects for growth and the obvious optimism expressed by Whole Foods might even spur other grocery chains like Kroger and Safeway to start doing even more in the organics sector...and where does Trader Joe's fit in to the discussion? Aren't they a competitor of Whole Foods?

The fact is that the grocery industry is highly competitive and (even after the purchase of Wild Oats) Whole Foods is a relatively small player, not a monopolist.

Hopefully the FTC will get a grip on reality before this gets tied up in court. Seems like another case of a bureaucracy looking for new dragons to slay when it might be better just to put down the sword.

The Inflation Tax

While I'm not terribly concerned about inflation and the Federal Reserve in the short run, those who are may find this amusing:

http://www.theuniverseas.com/inflate2.html

-Robert Capozzi

Politically Incorrect and proud of it

Looking for a good introduction to Austrian Economics that applies fundamental economic principles to some of today's hottest topics and is written for the intelligent layman? Look no further than Bob Murphy's Politically Incorrect Guide to Capitalism. The latest in Regnery's "Politically Incorrect" series, this could very well be to this generation of Austrians and libertarians what Henry Hazlitt's "Economics in One Lesson" was to previous generations.

The great inflation cover-up

Counterpunch is not only one of the few left-wing websites to expose the truth about the Democrats' phony opposition to the war they are also one of the few sites to talk about how the Federal Reserve benefits the elites while harming middle-and-working class Americans.

For example, Jane Stillwater details how inflation continues to erode our standard of living, even though the Federal Reserve and its' media groupies keep telling us that the Fed has slain the inflation dragon. Stillwater also exposes how the Federal Government distorts its economic figures to hide the true rate of inflation.

The biggest lies told by the state

may be found in the federal budget. Steven Rattner, managing principal of a New York investment firm, examines the budgetary facts our rulers are tying to hide from us. His findings? Even if Bush's predictions that the government accountants will be able to claim that the budget is balanced in five years, the US Government will still face trillions in long-term debt.

This is because the official budget figures are determined by using accounting tetchiness that would land any CEO in jail. For example, the official budget counts the Social Security "surplus" as a current asset in order to reduce the size of the deficit, instead of as representing money needed to help pay off a future long-term liability.

The official budget also does not properly account for the $200 billion in federal pension obligations or the $39 trillion Social Security/Medicare debt facing the nation. Rattner does not mention how the official budget understates the long-term costs of the war, which will add a couple more billions (or trillions) to the debt.

While this at first glance seems fairly depressing, there is an upside for libertarians in that these figures confirm Ron Paul's observation that we will eventually win because the welfare-warfare state will run out of money.

Hat tip Jacob Sullum.

Beckham: Not About the Money

“I don’t want to go out to America at 34 with people saying he is only going for the money.

“I am going out to hopefully build a team which has a lot of potential, that’s what excites me.”

-- David Beckham, quoted in an article about his $250 million, 5 year contract to play for the L.A. Galaxy.

It’s never about the money. Money is merely an intermediary, the transmission of which indicates the creation of a (hopefully) mutually beneficial trade. The money represents David Beckham’s expectation that he could not do better for himself otherwise, or else he would have asked for even more. The money represents all the choices he will possess in exchange for the choices he is giving up. The money represents that his presence in L.A. is worth greater than $50 million a year to the team, and a greater amount still to the fans (customers) of the team.

Wow, imagine creating $50 million a year in value! Beckham’s comments, rather than being seen as clever weasel words to avoid being branded a greedy capitalist, should be seen for the truth they hold. His presence in America could generate huge returns for professional soccer as a whole and great pleasure for the burgeoning mass of young people who play the sport and dream of becoming stars.

-- KDR

The Matter of $1

I got to experience some free-market inefficiency at the local Safeway today, where a lady, whose club card failed to work, held up the line for nearly 20 minutes to claim the $1 she would have saved with the club card.

The gentleman in front of me and I discussed how time is money and that with the price of time in the DC-area, it was tremendously wasteful for all of us in line to stand there while the woman reclaimed her money.

I even offered to give the lady a dollar to get her out of the way, a suggestion which neither she nor the cashier seemed to understand, as neither replied.

Perhaps looking at the situation holistically would reveal that in fact the situation was efficient. Perhaps the money I save from Safeway’s corporate policies – including the policy which deprives their employees of independent judgment – reduce my overall costs.

However, I’ve seen a lot of lines held up by one person’s payment dispute. Food stamps, coupons, and price inconsistencies have all been culprits. I would hope that the executives at these companies consider that they are increasing the price of their goods when people are required to stand in line. If they want to compete on price, they need to compete on time, too.

~KDR

Tyler Cowen Calls for Carbon Tax

In a recent article in U.S. News & World Report, George Mason University economics professor Tyler Cowen advocates the implementation of a carbon tax:

" Phase out all forms of capital income taxation, including the corporate income tax, and replace them with a carbon tax, including a gasoline tax. "Savings and investment boost economic growth, but when it comes to energy, global warming threatens as a major problem and our dependence on Middle Eastern oil damages our foreign policy."

Cowen is known as somewhat of a contrarian in the overwhelming libertarian econ department at Mason where even I got called a "socialist" by radical free-marketeers from time to time. I'm glad to see another sharp libertarian offering up such free liberal proposals.

Readers of this site will recall Carl Milsted's similar proposals on instituting a carbon tax.

~KDR

Trans-Texas Corridor and Sovreignty

I love Ron Paul, and while I understand that a great many Texans have concerns about the proposed Trans-Texas Corridor, I believe Dr. Paul's concerns over the sovreignty implications of this particular project are overblown.

Yes, there will be the use of eminent domain to construct this project, but this particular taking would be for public use and as Dr. Paul is well-aware, falls within the Constitution. Whether it is a desirable project or not is to be determined, but the idea that by constructing a road that is designed to transport goods from the Mexican border to other locations within the United States we are abdicating our sovreignty is confusing to me.

Trade -- even if NAFTA is more of a managed trade deal than real free trade -- is a good thing and so is the investment of private dollars (as opposed to tax dollars) in infrastructure projects. I'm not even sure why Congress has a role to play in prohibiting a road project involving Texas and some private investors.

There is still a long way to go before the Trans-Texas-Corridor comes to fruition, but I think Dr. Paul is jumping the gun in stridently opposing the road at this point.

A Desire Named Streetcar

City Council in my recently-adopted home of Albuquerque, New Mexico, will be voting soon on a project called a "modern streetcar." This costly government project, despite costing upwards of $200 million just for construction, will more likely hurt overall transit ridership than help it, yet the Mayor seems hellbent on building this thing.

Considering that it costs only $35 million to run Albuquerque's entire bus system, it seems foolish to build a streetcar that costs $28 million a mile. Light rail and so-called "modern streetcars" would never make it were it not for government subsidies and the misguided support of many environmentalists. Instead of wasting money on rail, though, the environmental community should focus on something called bus rapid transit, which is much cheaper and quicker than rail.

Pre-K in the Womb?

A recent Albuquerque Journal story discusses a study by the national Foundation for Child Development in which full-day pre-kindergarten is recommended for all 3 and 4 year olds. New Mexico's new and controversial half-day pre-K program was deemed "inadequate" by the Foundation.

I'm not sure if this foundation is funded by the teacher unions or not, but I can't think of a more effective way to create jobs for public school teachers than allowing the state to get its hands on your kids even earlier. Of course, other studies have found that starting kids even earlier in school to be costly and ineffective boondoggles.

Clearly, the so-called experts are moving quickly towards mandatory in-the-womb schooling at some point. This will clearly create a conundrum for the National Education Association which is adamantly pro-choice.

Does the Dear Leader Understand Incentives?

In last week's issue of The Economist(Apr 29-May 5) there is an obituary for a South Korean film director, Shin Sang-Ok, who was once kidnapped by Kim Jong Il and forced to make propaganda films for the totalitarian North Korean government. Especially amusing was the following:

Mr. Kim was worried that films produced in decadent, capitalist South Korea were better than those produced in the North. Perceptively, he explained to Mr. Shin that this was because North Korean film workers knew the state would feed them regardless of the quality of their output. In the South, by contrast, actors and directors had to sweat to make films the public would pay to see.

It would be hard to believe that Mr. Kim could not extend the analogy to other aspects of his command-and-control economy. It is not always a lack of knowledge of the problems of socialism that cause tyranny to continue. Those who run the beast sometimes know the evils they delivering, but choose to continue them anyways, as long as they themselves are not harmed by the system.

-- Kevin D. Rollins

Too High? Why so Low?

Bob Capozzi correctly warns us against being too ready to condemn the "gamblers" of the market from charging us prices which are "too high."

Why is it that we think one price is "too high" while another is appropriate? Certainly, $3 a gallon for gasoline is more than we were paying a few months ago, but on what grounds is it "too high?" Who determines what is a good price and what is a bad price?

To those of us who appreciate the beauty of the market -- that prices are determined by the buyers' demand curves and the sellers' supply curves -- not by some omnipotent ruler, we recognize that "too high" is a purely subjective determination. It can only be "too high" on the individual level, if an individual would rather not buy an extra unit of gas at a given price, but rather use the money for some other purpose.

Perhaps, we should be asking why prices are "so low." Afterall, can we say why prices aren't higher? Why not $10 a gallon? The same market in which plenty abounds, where most every American family has a TV, two cars, and a trip to Applebee's every Friday night, also contains the possibility for fluctuating prices. It is this dynamic system which gives us prices which are "too high." But, the only reason we think they are "too high" is that they are typically "so low."

-- Kevin D. Rollins

Uncle Sam: worse than Enron

Thanks to David Broder for exposing how the federal government is running up billions in future obligations but not reporting them on its official financial statements. Instead, one has to look at the government's obscure "Financial Report" in order to learn that the true deficit for Fiscal Year 2005 is not the widely reported figure of $319 billion but $760 billion.

The Feds get away with this by using cash, instead of accrual accounting, in the most widely-distributed financial statements. As Broder explains,"If you go to Target and buy an item for cash, it's felt in your wallet immediately. If you buy the same item on a credit card, unless you are using accrual accounting, it is disguised until the bill arrives."

Failure to use accrual accounting is a violation of the infamous Sarbanes-Oxley Act, fortunately, the federal government does not have to obey the standards it imposes on the rest of us.

Cross-posted at lewrockwell.com

Taxaphobia?

Every year my fear and loathing of the IRS and the whole tax system results in a massive panic attack right before I do my taxes. Otherwise, my life is panic free. This is why I am one of those who waits until a week or two before the dreaded day to even think about looking at a 10-40. I am wondering if any other libertarians also suffer from "Taxaphobia" and if, so, if anyone wants to join me in a class-action lawsuit against the IRS since forcing taxaphobes to pay taxes clearly violates the Americans with Disabilities Act?

Cross-posted at lewrockwell.com.

10 Worst Government Programs

Human Events is by no means a "Free Liberal" publication, but recently they convened a panel that was assigned with the task of naming the 10 worst government programs. Panelists included such luminaries as Larry Kudlow of Kudlow and Cramer fame, Walter Williams, one of the best-known economists in the country, and former House Majority Leader Dick Armey (among others). The votes are now tallied and here is what we came up with. This was a weighted vote that included some 50 federal programs. I don't necessarily agree with all of the panel's choices, but it is a good listing and should provoke discussion.

-- Paul J. Gessing

Problems with geoanarchism?

P.M. Lawrence sends along these thoughts regarding Fred Foldvary's piece on geoanarchism::

"One problem area, the biggest, is the idea that people could effectively secede as individuals if they didn't like what was on offer in a geoanarchist community. This wouldn't be true if - like landlords - all communities were pretty much the same and had taken up all resources. It would be a hollow mockery like pointing unhappy bank customers to the availability of other banks; in a country like Australia they are all much of a muchness. The problem of states would re-emerge in a different form, with the communities working like ground cover plants to make a network externality preventing any shift in the system of uniform geoanarchist communities. The only way there could be true choice is if there were other communities around that were anarchist without the "geo-".

The second problem area is that it is false that using different revenue bases than land tax would make people pay twice, once for the revenue base and once for increased rent arising from the associated services. For one thing, any such rise would of itself indicate that the group had acted to thrust costs onto individuals indirectly; they would not have individually wanted those services if they disagreed with the cost, so it reflects a failure to connect - a creation of something that governs.

But we can see more than this. The assertion would only be true if by some chance the community were a meaningless cover, allowing absentee landlords to laugh all the way to the bank. Most likely, even with a landlord and tenant split, at least the landlords would be part of the community that was not caught in this bind. But before denouncing even that as a mockery, consider that - done properly, say with a distributist approach - there would not be that split. People would not be paying rent but rather owning their own homes and resources. Geoanarchism, or even anything with that much of a Georgist base, presumes an enduring problem with landlordism and gives up on it, preferring palliative care.

Yet clearly the most that would be needed is a decent way for the younger generation to become owners in their turn, without building any concentrations of land resources. The only practicality of a Georgist solution is to deal with a transition, but it risks seducing people into abandoning a principle of non-intervention. The most I would concede against principle is to work within existing tax bases to reduce them, rather than ever raising any part or introducing a new one. At least that way, like Orpheus, we would be leaving without ever looking back.

That of course begs the question of what should be done instead, to provide a revenue base. One, it is no criticism of a critic to ask him to fix a problem before he has the right to point it out (although, as it happens, I can fix it - read on). Two, it presumes too much in a collectivist direction, rather than letting the atomist/individualist approaches have a go first; it makes a presumption in favour of collectivism. Maybe nothing should be done instead, for most things. Three, there is no reason why a community should not, itself, have a pool of revenue generating resources - apart from the very issue of whether there should be ground covering collectivities putting us all at risk anyway. This, after all, is how mediaeval religious foundations used to work, even the commanderies of military orders working at the edges of Christendom. But even they could be oppressive.

I could go into detail on this approach, but it would be going into a new although related topic, and as it happens it would amount to reinventing checks and balances for something quasi-governmental. Far better to adapt Henry Ford's advice for car components and not put it in in the first first place because 'that way it can't break and it can'tn fall off'."

But we can see more than this. The assertion would only be true if by some chance the community were a meaningless cover, allowing absentee landlords to laugh all the way to the bank. Most likely, even with a landlord and tenant split, at least the landlords would be part of the community that was not caught in this bind. But before denouncing even that as a mockery, consider that - done properly, say with a distributist approach - there would not be that split. People would not be paying rent but rather owning their own homes and resources. Geoanarchism, or even anything with that much of a Georgist base, presumes an enduring problem with landlordism and gives up on it, preferring palliative care.

Yet clearly the most that would be needed is a decent way for the younger generation to become owners in their turn, without building any concentrations of land resources. The only practicality of a Georgist solution is to deal with a transition, but it risks seducing people into abandoning a principle of non-intervention. The most I would concede against principle is to work within existing tax bases to reduce them, rather than ever raising any part or introducing a new one. At least that way, like Orpheus, we would be leaving without ever looking back.

That of course begs the question of what should be done instead, to provide a revenue base. One, it is no criticism of a critic to ask him to fix a problem before he has the right to point it out (although, as it happens, I can fix it - read on). Two, it presumes too much in a collectivist direction, rather than letting the atomist/individualist approaches have a go first; it makes a presumption in favour of collectivism. Maybe nothing should be done instead, for most things. Three, there is no reason why a community should not, itself, have a pool of revenue generating resources - apart from the very issue of whether there should be ground covering collectivities putting us all at risk anyway. This, after all, is how mediaeval religious foundations used to work, even the commanderies of military orders working at the edges of Christendom. But even they could be oppressive.

I could go into detail on this approach, but it would be going into a new although related topic, and as it happens it would amount to reinventing checks and balances for something quasi-governmental. Far better to adapt Henry Ford's advice for car components and not put it in in the first first place because 'that way it can't break and it can'tn fall off'."

Assume We Do

Scott Adams has a very funny Dilbert today about making assumptions based on assumptions to make business decisions. It isn't just economists who are prone to make an "ass out of you and me."

Like the old joke (courtesy of Alan Xian Yang's website):

"Q: How many mainstream economists does it take to change a light bulb?

A: Two. One to assume the existence of ladder and one to change the bulb."

Or perhaps even worse:

"Q: How many Chicago School economists does it take to change a light bulb?

A: None. If the light bulb needed changing the market would have already done it."

Of course, there are plenty of things that need doing but haven't been done for one reason or another. Creativity and individual initiative are still needed to make the free-market a nice place for us to live. If everyone sat around assuming that someone else would do everything, not much would get done.

-- Kevin D. Rollins