£s for Brexit

With my perfect betting record hanging in the balance, I follow Brexit news to the point of obsession.  Out of the many hundreds of stories I’ve read, though, I have yet to hear anyone point to the simplest path to Brexit: Let Britain buy its way out! In Theresa May’s failed deal, the UK was supposed to pay the EU about £38 billion for the “divorce.”  Yet there is nothing magical about this price tag.  It could just as easily be £40 billion, or £140 billion.  Why, then, can’t the UK just tell the EU, “The backstop is a deal-breaker.  How much money will it take to make this issue go away”?

If this were any normal business deal, this straightforward path would be on the tip of every Brexiteer’s tongue.  It’s the logic of any familiar real estate transaction:

“We won’t buy unless you fix the roof.”

“OK, that will cost me $25,000, so let’s add that to the price.  Ready to sign now?”

As far as I can tell, however, there isn’t a single prominent British or European politician who even mentions the possibility of letting the UK pay more to get more, much less advocates it.  Instead, we see British politicians demanding better terms for free, and Europeans saying that the current deal is Take-It-Or-Leave-It.

But politics isn’t like business, you say?  I know!  I’ve been saying so for decades!  The very fact that elementary monetary bargaining on Brexit is so unthinkable is yet another symptom of the psychological chasm between the relatively rational, instrumental world of business and the irrational, expressive world of government.

Brexit now hogs the global stage, but politics is packed with look-alike impasses.  Why can’t Israelis just pay Palestinians for the land settlers have taken?  Why can’t the EU just pay Russian to withdraw from Ukraine?  Why can’t the U.S. just pay Maduro to resign – and Russia to welcome the regime change?  Indeed, why can’t Bay Area developers just pay local governments to approve a hundred more skyscrapers?  In each case, the answer is a multilateral mix of foolish pride and wishful thinking.

Since I think that Brexit is a bad idea, why am I telling its advocates how to proceed?  Because I know Brexiteers won’t listen – and even if they did, the EU wouldn’t budge.  While I can understand the failures of politics, I have near-zero ability to solve them.  Not coincidentally, this is precisely what my view predicts.

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One Cheer for Trump on Iran

On June 21, President Donald Trump informed the world (via tweet) that after getting US forces “cocked and loaded” to carry out strikes on Iranian targets the night before, he had canceled those strikes at the last minute rather than prospectively kill 150 people. “Not proportionate,” he wrote, “to [Iranian forces] shooting down an unmanned drone” earlier that week.

Anti-interventionists (including me) cheered the move. US hawks moaned that Trump had suddenly and inexplicably gone soft by avoiding the war they want so badly. Pretty much everyone thinks the “proportionality” claim isn’t the true explanation, given Trump’s over the top predisposition on most things.

But hey, I’ll take it, and I’ll thank Trump for it. Every time he avoids escalation toward outright war with the Iranians or anyone else, he’s doing the right thing and should get credit for it.

As to the bigger picture, the question now is whether Trump will undo his earlier errors on US policy toward Iran instead of compounding them.

He doesn’t seem inclined to. On June 24, he signed an executive order imposing new sanctions on Iran’s Supreme Leader, Ayatollah Ali Khameini, and Foreign Minister Javad Zarif, also in retaliation for the downing of a US drone — possibly over Iranian airspace, certainly  more than 5,000 miles from airspace it had any business in.

Unfortunately, Trump considers his warlike attitude toward Iran a campaign promise and seems to have every intention of keeping that promise. He was elected president on, among other things, his stated intention of undoing former President Barack Obama’s most significant foreign policy accomplishment, the Joint Comprehensive Plan of Action, (the “Iran nuclear deal”).

That JCPOA began winding down four decades of mutual belligerence  that began when Iranians had the gall and temerity to overthrow a dictator installed by the US , replacing him with a government more to their own liking. In exchange for partial lifting of sanctions and return of some money stolen by the US government after their revolution, the Iranians gave up a nuclear weapons program they don’t appear to have actually had, going above and beyond their already existing (and apparently kept) obligations under the Non-Proliferation Treaty.

Trump violated the deal, pretending that he was “withdrawing” the US from it (the deal is codified as a UN Security resolution; the only way to withdraw from it is to withdraw from the UN itself). He’s reimposed US sanctions and pressured US allies to do likewise.

In violating the agreement and returning to a belligerent footing, he confirmed something the Iranians, like the Sioux, have long had good reason to believe:  That the US government can’t be trusted to keep its word.

That’s a lot of toothpaste to get back in the tube, and it’s not clear that Trump intends to even try.  Canceling the strike may have just been a message to Iran and to recalcitrant US allies: “We could have gone to war but CHOSE not to.”

We should be glad he chose not to, and hope he keeps choosing not to.

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Bowling Alone: How Washington Has Helped Destroy American Civil Society and Family Life

Church attendance in the United States is at an all-time low, according to a Gallup poll released in April 2019. This decline has not been a steady one. Indeed, over the last 20 years, church attendance has fallen by 20 percent. This might not sound like cause for concern off the bat. And if you’re not a person of faith, you might rightly wonder why you would care about such a thing.

Church attendance is simply a measure of something deeper: social cohesion. It’s worth noting that the religions with the highest rate of attendance according to Pew Forum have almost notoriously high levels of social cohesion: Latter-Day Saints, Jehovah’s Witnesses, Evangelical Protestants, and historically black churches top the list.

There’s also the question of religious donations. Religious giving has declined by 50 percent since 1990, according to a 2016 article in the New York Times. This means people who previously used religious services to make ends meet now either have to go without or receive funding from the government. This, in turn, strengthens the central power of the state.

It is our position that civil society – those elements of society which exist independently of big government and big business – are essential to a functioning and free society. What’s more, these institutions are in rapid decline in the United States, and have been for over 50 years.

Such a breakdown is a prelude to tyranny, and has been facilitated in part (either wittingly or unwittingly) by government policies favoring deindustrialization, financialization and centralization of the economy as well as the welfare state. The historical roots of this breakdown are explored below, along with what concerned citizens can do to mitigate its impact on their loved ones.

Continue reading Bowling Alone: How Washington Has Helped Destroy American Civil Society and Family Life at Ammo.com.

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Find Community, Give, Receive, Repeat

Last night at a beer garden here in Atlanta, I got to see what a healthy modern tribe could look like.

I was meeting with dozens of new and old participants, alumni, and team members from Praxis, the startup apprenticeship program that helped launch my career. If it sounds like a staid old business conference, it wasn’t.

The atmosphere most closely resembled a family reunion more than anything. People were snapping photos and perching on picnic tables, and everyone felt free to talk to everyone else. Shared values and mission brought together people of different genders, ethnic backgrounds, places, ages, religions, and more.

Because of all the differences we brought to the gathering, there was this beautiful cycle of exchange at play – particularly between veterans and beginners. I received affirmation and welcome from mentors and role models. They received thanks and praise from me. I gave affirmation and welcome to younger, newer members of the community. They in turn honored me for my experience.

Everyone had a role to play in the cycle of exchange that comes with a healthy community – and everyone walked away with something. Communities like last night’s little ephemeral gathering provide opportunities to work, explore, play, support others, and receive support and encouragement ourselves. For me (and I suppose for many people), it felt good to play our roles well within that.

The giving and receiving of a healthy community (reciprocal respect and affirmation) is just *right*, and last night’s event was a small glimpse of what life can be like inside that flow.

What if that giving and receiving wasn’t an exception?

What if we engaged ourselves meaningfully as members of as many communities as possible? Or as meaningfully as possible in single communities?

Obviously adding value and receiving value from community isn’t something that can be done haphazardly. But given that stable, geographically-fixed tribes aren’t a thing anymore, we are going to have to work harder to replicate the feelings of closeness and reciprocal respect and love that we need.

Fortunately, I’m lucky enough to get community (and especially that reciprocal respect-affirmation cycle) in jiu jitsu classes, at church, at work, in my small group, and with my accountability partners. But even these small pockets of integrated community aren’t enough. I want to go deeper into relationship there, and I want to cultivate more areas where I can find reciprocal respect and affirmation.

I’m not one to harp on how we *need* other people (we do to some extent, just like we need independence). But community – and giving and receiving inside community – is not so hard to find and not so hard to recognize as one of life’s great gifts. Let’s make it the rule, not the exception.

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See What You Can Build on Your Own

There’s a sense of personal accomplishment, of self-worth, when you make something with your own hands through your own efforts. Even if you seek guidance from someone with experience, you’ve learned more than you knew before. You’ll probably value the results more than if you had no part in making it.

If, after you do the work yourself, you decide you’d rather pay someone to do it for you next time, at least you now know what’s involved. You will probably have a better sense of whether someone is doing a good job or not. You might be able to tell if they are trying to scam you or overcharge for their services.

To prevent someone from making things on their own is bad in two ways. You show you don’t trust them to be competent, and you keep them from becoming competent; from learning how to do things they’ll value. If you never allow someone to succeed or fail on their own, always doing everything for them, they’ll never really grow up. They’ll never learn responsibility.

Self-government is the same way. Until you try to govern yourself, without any laws or representatives to fall back on, you’re not a fully competent human being. You may even surprise yourself when you discover you don’t need those things, nor do you want them imposed on others. I have more respect for myself than to look for someone to govern others — even my enemies — on my behalf.

To me, insisting that others must be governed for my benefit is a sign of weakness and immaturity.

People tend to live up or down to your expectations.

So how do you govern yourself with your own two hands? Be responsible. Don’t pawn your responsibilities onto others. Don’t expect others to take care of you, or to protect you from threats you should be dealing with on your own. Mind your own business and expect others to mind theirs. If someone violates you, deal with it yourself. Only seek help if absolutely unavoidable, and then only from truly voluntary sources. You aren’t entitled to other people’s time or money, so don’t act as though you are. Governing yourself isn’t achieved through voting or expecting representatives to fix anything. If you want to do that anyway, don’t stop there and think you’ve accomplished something.

See what you can build with the effort of your own mind and hands. I think you’ll be pleasantly surprised.

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In Sync: How Business Responds to Gratis Government

Whenever people criticize government provision of a product, clever analysts often demur that private suppliers who compete with government have exactly the same problems.  Part of Helland and Tabarrok‘s case for the Baumol effect in education, for example, is that prices have risen at the same rate in both the public and private sectors:

Prices are much lower at public than at private institutions. The vertical scale is a ratio scale, so equal slopes mean equal rates of growth. Thus, although prices are lower at public institutions, the rate of growth in prices has been similar at private and public institutions. Between 1980 and 2015, real prices more than doubled.

OK, let’s step back.  Picture a typical government service.  The price: gratis.  The quality: mediocre.  Private competition, however, remains legal.  Should we expect the private part of the market to look just as it would under laissez-faire?

No way.  Unless the government rations the free mediocre product, consumers have virtually no reason to ever pay for products of mediocre or lower quality out of their own pockets.   At minimum, then, government’s gratis products kill private production of all products of equal or lower quality – a textbook case of predatory pricing.

That’s not all.  Gratis production also effectively kills private provision of products of moderately higher-than-mediocre quality.  After all, if you can get a C+ product for free, who wants to pay full price for a B- alternative?  With gratis public provision, private providers must convince consumers that the marginal quality improvement is worth the total price of the product.  A tall order.

What does this mean?  Well, if public schools add more low-value services, private schools must keep pace in order to compete.  If public schools add more sports, more specialized teachers, or more courses, private schools that fail to keep up will lose their customers.  The first rule of private competition against gratis government is: Always keep your product quality well above the government’s.  This remains true even if the government adds services that consumers value well below cost.  If you can get them for free from the government, why pay extra for a private school that refuses to offer them?

The lesson: When government supplies free (or highly subsidized) products, we should expect private suppliers to supply gold-plated versions of the standard government-issue.  As a result, their prices and costs will be closely synced.

There are admittedly some exceptions: If government is spending money for no gain at all, private competitors needn’t bother.  If government supplies numerous expensive low-value services, private competitors might decide to just outshine the government on other dimensions.  Most realistically, if government refuses to provide some cheap, highly-valued options (such as religious education), then private competitors can win customers by filling the gap.

Yet overall, when there is a dominant public sector with a private fringe, we should expect the Helland-Tabarrok pattern – without or without a Baumol effect.  Given the pathologies of the public sector, it’s nice to have a private option, but don’t get too excited.  The private options will generally be extravagant, because gratis government strangles budget-friendly alternatives.  Tragically, this in turn sustains the illusion that in the absence of government, only the rich would be able to afford whatever the government now provides.

P.S. Another reason to expect public and private education to closely resemble each other is that both are almost always non-profit.  Morally, yes, there is a major difference between public and private non-profits.  Economically, however, they’re very much alike, because both give managers flimsy incentives to raise value or cut costs.

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