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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Martin Luther King, Jr.

Nobody asked but …

I am late for MLK’s birthday’s anniversary.  It happened a week ago according to a record source I have seen.  MLK’s real birthdate occurred on January 15, 1929.  Every year we are reminded of the contributions that Martin Luther King, Jr. made to our society.

What I fear now is that we are doing it wrong.  We gather in public places to observe this holiday, but we treat it as though this man was principally a patriot and his campaign was to elevate a noble characteristic among the citizens of the USA.  His real hope was to correct a grievous set of errors made by the original founders and their hand-picked constituents.  Let us never forget, that MLK wanted society reorganized to fit the formulation that the USA had been officially lying about for 200 years or more.

I suppose that the thing that galls me most is that politicians hi-jacked civil rights, and made the story about politicians, not the Golden Rule.

A few years ago someone said to me that Martin Luther King, Jr. was not a libertarian because he chose the state as his main tool for setting things right.  Malarkey!  There was likely no way that MLK could have achieved what he did while keeping the politicos at bay.

Reverend King never once asked for the state’s intervention.  Ironically until the old white boys club saw the handwriting on the wall, “political glory,” they stonewalled MLK and his constituents at every turn.  Then the worms turned.  The politicos were responsible for the bandwagon, and the self-congratulations.  Martin Luther King, Jr. was responsible for the conscience of America.

— Kilgore Forelle

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Two-and-a-Half Cheers for Elizabeth Warren’s Student Debt Plan

On January 14, Elizabeth Warren released a “Plan to Cancel Student Debt on Day One of My Presidency.”  Warren would use the US Department of Education’s “broad legal authority” to cancel up to $50,000 of debt on behalf of up to 42 million borrowers.

Warren’s plan makes a lot of sense politically.  She’s struggling for traction in the Democratic Party’s presidential nomination race. Big promises to  millions of borrowers and their families could make a big difference in the Iowa caucuses and New Hampshire primary.

As for the larger problem of college costs, Warren’s overall approach is a mix of some bad things ($150 billion in taxpayer money for Pell Grants and “minority serving institutions,” plus the costs of “universal tuition free public college”) and one and a half good things above and beyond her debt forgiveness plan.

The one good thing: She proposes to eliminate the “undue hardship” standard for discharging student debt in bankruptcy.

The half a good thing: She wants to ban federal funding for for-profit colleges.

That second thing would be a full good thing, instead of just half a good thing, if Warren removed the word “for-profit.”

There’s a strong historical correlation between easy availability of student loans and soaring costs of a college or university education.  It’s basic economics. By artificially lowering loan risk to direct money at a good or service, government increases debt and drives up the price of that good or service.

Under the present system, naive 18-year-olds are swindled into borrowing  more and more insane amounts of money to spend on less and less valuable college degrees. Then when they find themselves barely scraping by under the burden of repaying those loans, they can’t resort to bankruptcy.

Think about that for a minute.

I’m 53. If I go out tomorrow and take out a sub-prime mortgage on a home and a loan for a $40,000 car, then max out a bunch of credit cards, I can substantially get out from under that debt in bankruptcy court.

The 18-year-old who trusted others when they said “you need to go to college and here’s how” doesn’t have the same recourse as spendthrift Tom, who was old enough to know better and then some, but partied hearty anyway. That’s not right.

No, everyone does not need to “go to college.” That’s becoming more true than ever as inexpensive distance learning options and non-school certifications in various fields prepare Americans for many jobs better than seeking a degree does. We need to stop lying to America’s kids about both the costs and the benefits of a college education.

I’m all for Warren’s idea of “forgiving” a bunch of the existing debt. But any kind of lasting solution calls for less, not more, government involvement in general.

The Libertarian Party’s platform offers a better direction: “We support ending federal student loan guarantees and special treatment of student loan debt in bankruptcy proceedings. … Education is best provided by the free market, achieving greater quality, accountability, and efficiency with more diversity of choice.”

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Trump versus Iran: Power Doesn’t Just Corrupt, it Deludes

On January 8, US president Donald Trump addressed the American public concerning a casualty-free Iranian missile attack on US bases in Iraq, where just last week Iranian general Qasem Soleimani was killed in a US drone strike.

If the speech was remarkable in any way, it was for the comparative restraint Trump displayed: Rather than pledging another round of tit-for-tat, he announced new sanctions on Iran, vowed that “as long as I’m president of the United States, Iran will never be allowed to have a nuclear weapon,” called on NATO to “become much more involved in the Middle East process,” and rambled aimlessly about the “Iran nuclear deal” that his administration abrogated in 2018.

What was unremarkable — and unfortunate — in the speech was the obvious assumption underlying it: That the United States enjoys, and SHOULD enjoy, absolute power in international relations.

Trump is hardly unique in publicly stating, or in operating on, that assumption. The claim of such absolute power has been the tacit US doctrine of foreign relations since at least as far back as the end of World War Two.

America emerged from that war as the world’s sole nuclear power and, unlike other combatant countries, with its wealth virtually unscathed and its industrial capacity increased rather than demolished. Its rulers saw themselves as able, and entitled, to dictate terms to almost everyone, on almost everything.

“Power tends to corrupt,” wrote Lord Acton, “and absolute power corrupts absolutely.”

Acton was referring to individuals (“great men are almost always bad men”), but his observation is just as true of institutions. And above and beyond corruption, absolute power creates delusion.

The post-war “consensus” on American power around the world began to fray almost immediately.

The Soviet Union acquired “the bomb” and settled in for half a century of dominating eastern Europe.

The US found itself fought to a draw in Korea and defeated in Vietnam when it tried to throw its newfound weight around.

Even after the collapse of the Soviet bloc, the US learned that Michael Ledeen’s re-formulation of the doctrine — “every ten years or so, the United States needs to pick up some small crappy little country and throw it against the wall, just to show the world we mean business” — tends toward big price tags and negative returns.

Yet the delusion persists. It substitutes hubris for humility, sacrificing the blood and treasure of Americans and foreigners alike on the altar of a false god and in pursuit of an imaginary paradise.

The foreign policy recommended by Thomas Jefferson in his first inaugural address —  “peace, commerce, and honest friendship with all nations, entangling alliances with none” — was, and remains, the common-sense alternative to the nonsensical assumption of absolute American power.

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In Praise of Home Delivery Culture

Writing at Reason magazine, Liz Wolfe lauds home delivery culture — the increasing tendency of Americans to Netflix and chill while relying on Amazon Prime, Instacart, Grubhub, and other services to drop the goods we consume off on our front porches.

Wolfe nails some of the individual benefits, and beneficiaries, of this “late-stage capitalism” phenomenon. It allows working people to spend more of their limited “free” time with their families instead of trudging up and down store aisles. It eases the shopping problems and increases the options of the elderly and disabled.

But Wolfe doesn’t mention a couple of the biggest SOCIAL benefits: Delivery culture is also a huge potential boon for the environment and in terms of reduced infrastructure costs.

Fewer individual shoppers means fewer cars clogging the roads and filling store parking lots (in fact, given Wolfe’s inclusion of ride-sharing services like Uber, it may mean fewer cars, period).

Fewer individual shoppers also means less retail space to heat, cool, and light.

And those two things translate into three other things: Fewer greenhouse emissions, less money spent building and maintaining roads, and more land potentially left as “green space.”

One Amazon or Instacart delivery van bringing groceries to 20 households reduces the number of vehicles out on the road for that purpose, during that time frame, by 95%, and the number of total miles driven for those shopping needs by some smaller factor.

One Uber vehicle transporting ten individuals or parties per day means at least five fewer cars taking up parking spaces for hours at a time at the non-home ends of round trips.

And because those services are operated with an eye toward maximizing profit, the vehicles used are likely to be more fuel-efficient and better maintained than your jalopy, and the drivers are likely to choose the most efficient routes, reducing miles driven, wear and tear on roads, and overall emissions.

Much of the focus on home delivery culture, both positive and negative, is on lots and lots of stuff becoming more and more accessible. That’s true, and relevant, whether you’re a fan of consumer culture or bemoan it.

But home delivery culture also incentivizes businesses to do things that are good for all of us. And it does so through market mechanisms rather than through political haggling.

The iron laws of profit and loss are more reliable motivators of business behavior than public scolding or government regulation.

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Computers Do Not Understand Lying

Nobody asked but …

The computer is incredibly fast, accurate, and stupid. Man is unbelievably slow, inaccurate, and brilliant. The marriage of the two is a force beyond calculation.

Leo Cherne

The problem is that computers cannot avoid a lie.  They process facts and factoids, without distinction, in an incredibly fast, accurate, and stupid manner.  Are they speedy?  Oh yeah.  Are they accurate?  They are accurate with 100% fidelity to the original content (whether true or false).  Are they stupid?  They only do one thing — set single switches to “on” or “off,” as instructed, never asking “why?”

Computers have no capability of filtering good from bad, in an ethical sense.  Content creators, on the other hand, can lie copiously, knowingly or not.  Content creators are the complete set of all human beings, and some human beings will lie.

“A lie can travel halfway around the world while the truth is putting on its shoes.” said Mark Twain.  Furthermore, there are an infinite number of lies for every truth.  It makes no difference, however, because the computer is totally incapable of telling or conveying the truth.

— Kilgore Forelle

 

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