If the Only Way You Can Get Your Great Idea Implemented…

Economics textbooks are full of clever-and-appealing policy proposals.  Proposals like: “Let’s redistribute money to the desperately poor” and “Let’s tax goods with negative externalities.”  They’re so clever and so appealing that it’s hard to understand how any smart, well-meaning person could demur.  When critics appeal to “public choice problems,” it’s tempting to tell the critics that they’re the problem.  The political system isn’t that dysfunctional, is it?  In any case, reflexively whining, “The political system will muck up your clever, appealing policy proposal,” hardly makes that system work better.  The naysayers should become part of the solution: Endorse the clever-and-appealing policy proposals – and strive to bring them to life.

When you look at the real world, though, you see something strange: Almost no one actually pushes for the textbooks’ clever-and-appealing policy proposals.  Instead, the people inspired by the textbooks routinely attach themselves to trendy-but-awful policy proposals.  If you point out the discrepancy, they’re often too annoyed to respond.  When they do, reformers shrug and say: “The clever-and-appealing policy never has – and probably never will – have much political support.  So we have to do this instead.”

Examples?  You start off by advocating high-impact redistribution to help poor children and the severely disabled… and end defending the ludicrously expensive and wasteful Social Security program.  “Unfortunately, the only politically viable way to help the poor is to help everyone.”  Or you start off advocating Pigovian taxes to clean the air, and end up defending phone books of picayune environmental regulations.  “Unfortunately, this is the way pollution policy actual works.”

Don’t believe me?  Here’s a brand-new example courtesy of Paul Krugman:

But if a nation in flames isn’t enough to produce a consensus for action — if it isn’t even enough to produce some moderation in the anti-environmentalist position — what will? The Australia experience suggests that climate denial will persist come hell or high water — that is, through devastating heat waves and catastrophic storm surges alike…

[…]

But if climate denial and opposition to action are immovable even in the face of obvious catastrophe, what hope is there for avoiding the apocalypse? Let’s be honest with ourselves: Things are looking pretty grim. However, giving up is not an option. What’s the path forward?

The answer, pretty clearly, is that scientific persuasion is running into sharply diminishing returns. Very few of the people still denying the reality of climate change or at least opposing doing anything about it will be moved by further accumulation of evidence, or even by a proliferation of new disasters. Any action that does take place will have to do so in the face of intractable right-wing opposition.

This means, in turn, that climate action will have to offer immediate benefits to large numbers of voters, because policies that seem to require widespread sacrifice — such as policies that rely mainly on carbon taxes — would be viable only with the kind of political consensus we clearly aren’t going to get.

What might an effective political strategy look like? … [O]ne way to get past the political impasse on climate might be via “an emphasis on huge infrastructural projects that created jobs” — in other words, a Green New Deal. Such a strategy could give birth to a “large climate-industrial complex,” which would actually be a good thing in terms of political sustainability.

Notice the pattern.

Step 1: Economics textbooks offer a clever-and-appealing policy proposal: Let’s tax carbon emissions to curtail the serious negative externalities of fossil fuels.  It’s cheap, it’s effective, it provides great static and dynamic incentives.  Public choice problems?  Don’t listen to those naysayers.

Step 2: Argh, Pigovian taxes are going nowhere.

Step 3: Let’s have a trendy-but-awful populist infrastructure program to get the masses on board.

So what?  For starters, any smart activist who reaches Step 3 tacitly concedes that public choice problems are dire.  You offer the public a clever-and-appealing remedy for a serious social ill, and democracy yawns.  To get action, you have to forget about cost or cost-effectiveness – and just try to drug the public with demagoguery.

Note: I’m not attacking Krugman for having little faith in democracy.  His underlying lack of faith in democracy is fully justified.  I only wish that Krugman would loudly embrace the public choice framework that intellectually justifies his lack of faith.  (Or better yet, Krugman could loudly embraced my psychologically-enriched public choice expansion pack).

Once you pay proper respect to public choice theory, however, you cannot simply continue on your merry way.  You have to ponder its central normative lesson: Don’t advocate government action merely because a clever-and-appealing policy proposal passes a cost-benefit test.  Instead, look at the trendy-but-awful policies that will actually be adopted – and see if they pass a cost-benefit test.  If they don’t, you should advocate laissez-faire despite all those shiny ideas in the textbook.

Krugman could naturally reply, “I’ve done the math.  Global warming is so terrible that trendy-but-awful policies are our least-bad bet.”  To the best of my knowledge, though, this contradicts mainstream estimates of the costs of warming.  That aside, why back a Green New Deal instead of deregulation of nuclear power or geoengineering?  If recalcitrant public opinion thwarts your clever-and-appealing remedy, maybe you started out on the wrong path in the first place.

Unfair?  Well, this is hardly the first time that Krugman has rationalized destructive populism when he really should have reconsidered.  Krugman knows that immigration is the world’s fastest way to escape absolute poverty.  He knows that standard complaints about immigration are, at best, exaggerated.  But he’s still an immigration skeptic, because:

The New Deal made America a vastly better place, yet it probably wouldn’t have been possible without the immigration restrictions that went into effect after World War I. For one thing, absent those restrictions, there would have been many claims, justified or not, about people flocking to America to take advantage of welfare programs.

Notice the pattern.

Step 1: You start with the textbook case for a welfare state to alleviate domestic poverty.  Public choice problems?  Bah.

Step 2: Next, you decide that you can’t get that welfare state without horrible collateral damage.

Step 3: So you casually embrace the status quo, without seriously engaging obvious questions, like: “Given political constraints, perhaps its actually better not to have the New Deal?” or even “How close can we get to the New Deal without limiting immigration?”

The moral: If the only way you can get your great idea implemented is to mutilate it and/or package it with a pile of expensive junk, you really should wonder, “Is it still worth it?”

Well, is it?

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Democracy: Holy Mob Rule

Holy Pole Quilt isn’t the only vulgar thing considered holy by “American” government supremacists.

Many have joined the international cult of democracy worshippers.

They worship Holy Mob Aggression.

The Holy Hive Mind or the Holy Mindless Mob. However you want to describe it.

Some try to hide this uncomfortable truth by claiming America is a “constitutional representative republic”, not a democracy. This is evidence that many worship the Holy Slave Documents as well.

It’s also a denial of the fact that all republics will devolve into democracies– given time and politics.

But in practice— Right boot, left boot, crushing the throat… what difference is there?

I don’t need to be ruled, nor do I need you to be ruled on “my behalf”. Not by a dictator nor by a dictating mob.

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Real Democracy Requires a Separation of Money and State

As we enter a new year, the running battle between the world’s governments and the world-changing technology known as “cryptocurrency” continues. As 2019 drew to an end, Swiss president Ueli Maurer asserted that Facebook’s digital currency (not a real cryptocurrency), Libra, has failed “because central banks will not accept the basket of currencies underpinning it.”

Politicians want to regulate — or, if possible, kill — cryptocurrency.

Large firms like Facebook want to capture cryptocurrency’s potential without rocking those governments’ boats.

Cryptocurrency advocates want democracy. Yes, democracy.

Of all the important words in the English language, “democracy” (from the Greek demokratia, “rule by the people”) may be the most fuzzily defined. Some people define it in terms of raw majoritarianism, others as one of various forms of representative government.

I define “democracy” in words used by Thomas Jefferson in the Declaration of Independence. “Democracy,” to my mind, is government that enjoys the “consent of the governed.”

Not just the consent of 50% plus one of the governed, and certainly not just the consent of a few big players who can afford lobbyists and bribes to get their way, but the consent of ALL the governed.

One major hinge on which the door of democracy as I define it swings is control of money — who may create it, how it may be used, and what portion of it must be handed over to government for “public” uses those paying the bills may or may not approve of.

Involuntary taxation is the opposite of the consent of the governed. It’s the opposite of democracy. We can have financial regulators and central banks, or we can have democracy. We can’t have both.

Cryptocurrency threatens the reign of government over money. It bodes a future in which, as an old antiwar slogan puts it, the Air Force will have to hold a bake sale if it wants to buy a new bomber.

That’s the future I want. It’s also the future that politicians, regulators and central bankers fear.

They don’t want to have to ASK you to fund their schemes.  They’re not interested in requesting your consent. They prefer to simply demand your compliance.

The ability to anonymously handle our finances without reporting them to government or involuntarily giving it a cut is a revolutionary development. And it’s here, now. More and more of us are using cryptocurrency, and the politicians are panicking.

While cryptocurrency won’t entirely kill involuntary taxation — land can’t be easily hidden, so we can expect property taxes to persist — it will make the global economy harder for governments to manipulate and milk.

The inevitable future of cryptocurrency, absent a new Dark Age in which we all go back to plowing with mules and reading rotting old books by candlelight, is a future without income and sales taxes (to name two of the biggest and most pernicious).

The ruling class will do everything it can to prevent the coming separation of money and state.

They’ll fail. And democracy will flourish. See you at the bake sale.

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Afghanistan: Oh, When Will We Ever Learn?

“U.S. officials failed to tell the truth about the war in Afghanistan throughout the 18-year campaign,” the Washington Post‘s Craig Whitlock reports, “making rosy pronouncements they knew to be false and hiding unmistakable evidence the war had become unwinnable.”

Whitlock bases that claim on a collection of candid, confidential interviews with more than 400 military and political “insiders” conducted by Congress’s Office of the Special Inspector General for Afghanistan Reconstruction.

Not that we really needed “The Afghanistan Papers” to tell us the war was unwinnable.  That was clear from the beginning.  Any mission beyond quick strikes on al Qaeda’s facilities and operators in Afghanistan was doomed to failure.

The idea of taking over the country and making it into a “western democracy” was transparent foolishness. More than one empire has foundered on the rock that is Afghanistan, and the American military adventure there was never going to be the exception.

Nor do “The Afghanistan Papers” tell us anything else we shouldn’t have already known. They merely confirm a lesson we should have learned nearly 50 ago.

In 1971, the New York Times published  the Report of the Office of the Secretary of Defense Vietnam Task Force, better known as “The Pentagon Papers.”

That report, leaked to the press by American hero Daniel Ellsberg, revealed (in the words of the Times‘s R.W. Apple) “that the Johnson Administration had systematically lied, not only to the public but also to Congress,” about the progress and prospects of the US war in Vietnam.

Sound familiar?

War is always ugly. Optional and prolonged wars with nebulous objectives are always built on lies — lies stacked sky-high atop one another for no other purpose than to keep the ugliness going for as long as possible.

Why?

The prettiest answer, and it’s not pretty, is that generals and politicians hate to admit defeat. They can always be relied upon to convince themselves — and try to convince us — that “a corner has been turned” and that “there’s light at the end of the tunnel,” at least until they’ve managed to bequeath the losses to, and blame the losses on, their successors.

The uglier answer is that war is profitable all around for politicians who want to be re-elected, officers who want to be promoted, and “defense” contractors who want to sell more guns, more bombs, more planes, more everything.

It’s not so good for the rest of us, though.

At a conservative estimate, the US government has burned through more than a trillion dollars dragging out the fiasco in Afghanistan. You’re on the hook for that bar tab.

And you’re getting off easy. More than 3,500 “coalition” troops, most of them Americans, and somewhere between 100,000 and half a million Afghans (depending on whose figures you believe) have paid with their lives.

Next time the politicians want to drum up or continue an optional war, they’ll tell us the same lies they told us this time, and last time, and the time before that.

We’ve got to stop believing those lies.

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Non-Intervention: An Imperfect Solution to a Terrible Problem

On November 27, US president Donald Trump signed the Hong Kong Human Rights and Democracy Act.

The bill, passed by veto-proof majorities in Congress amid large protests in the “special administrative region,”  allows the president to impose sanctions on officials who violate human rights there, and requires various US government departments to annually review Hong Kong’s political status with a view toward changing trade relations if the US doesn’t like what it sees.

In response to the bill’s passage and Trump’s signature, the Chinese government in Beijing denounced US “meddling” in China’s “internal affairs” and threatened “countermeasures.”

Some non-interventionists agree with Beijing’s line on the matter, claiming that Hong Kong is intrinsically part of a thing called “China” and that the US simply has no business poking its nose into the conflict between pro-democracy (and increasingly pro-independence) protesters and mainland China’s Communist Party regime.

I happen to disagree with Beijing’s line, but that doesn’t mean I think the bill is a good idea. Non-interventionism is sound foreign policy not because the situation in Hong Kong is simple, but because it’s complex.

In 1842, the British Empire forced China’s Qing dynasty to cede areas including Hong Kong to it as a colony. In 1898, that same dynastic regime granted Britain a 99-year lease on Hong Kong.

When Britain’s lease ran out in 1997, Hong Kong wasn’t returned to the Qing dynasty. That dynasty no longer existed. It had been replaced in rebellion and civil war,  first by a notional republic under Sun Yat-sen’s Nationalist Party, then in 1949 by Mao’s Communist Party.

But Britain still returned Hong Kong to “China,” albeit with some negotiations for “special administrative status,” meaning more personal, political, and economic freedom than the people of mainland China enjoyed. Now the Beijing regime is acting to erode the prerogatives of that “special” status, and the people of Hong Kong are unhappy about it.

The problem is that the Westphalian nation-state model that has prevailed for the last 400 years treats given areas as “sovereign” even if the governments  within those areas change. “China” is the territory enclosed by a set of lines on the ground (“borders”) agreed to by politicians once upon a time, and nothing that happens within those borders is anyone else’s business, forever and ever amen.

Yes, Hong Kong was “returned” to a “China” completely different from the “China” it was torn from, but nobody gets to tell the new “China” what to do within the agreed borders. At least, it seems, not for more than 20 years or so.

I don’t like that, but I don’t have to like it. That’s how it is whether I like it or not.  Beijing doesn’t get to decide how Washington treats us. Washington doesn’t get to decide how Beijing treats the people of Hong Kong.

That being the case, the choice is non-intervention or some form of conflict, up to and including war. I prefer the former — and I hope we evolve out of the nation-state political model before the latter destroys us.

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Doug French: Why Democracy Doesn’t Work (58m)

This episode features a talk by economics professor Doug French from 2013. The true believers always tell us we are just one election away from liberty. It never happens. French blends Hoppe, Hayek, and Maslow to explain why, despite voters best intentions, sociopaths are elected and freedom is lost. Purchase books by Doug French on Amazon here.

Listen To This Episode (58m, mp3, 64kbps)

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