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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Libertarianism is The Balance

One objection I frequently see against libertarianism is that it’s “too extreme”. “There needs to be a balance between the extremes of libertarianism and fascism” (as illustrated by “border enforcement” and so forth).

This misses the reality.

(Of course, the act of governing others won’t be referred to as fascism. Statists aren’t that self-aware or honest. They’ll call it “rule of law” or will conflate political government with society. You can use whatever substitute terms you wish, as long as you keep this in mind.)

The extreme ends of the spectrum are not libertarianism and fascism– the extremes are nihilism and fascism. Libertarianism is the healthy balance which avoids both of the toxic extremes. It’s the only way to avoid ruin.

Libertarianism is not “extreme” unless your wish is to watch the world burn; unless you want to kill off everyone with your chosen politics. If you choose something other than libertarianism you are choosing one of the deadly extremes. You are choosing to be extreme in defense of something indefensible.

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Facebook’s Libra Isn’t a “Cryptocurrency”

In mid-June, Facebook — in cahoots with 28 partners in the financial and tech sectors — announced plans to introduce Libra, a blockchain-based virtual currency.

The world’s governments and central banks reacted quickly with calls for investigation and regulation.  Their concerns are quite understandable, but unfortunately already addressed in Libra’s planned structure.

The problem for governments and central banks:

A new currency with no built-in respect for political borders, and with a preexisting global user base of 2.4 billion Facebook users in nearly every country on Earth, could seriously disrupt the control those institutions exercise over our finances and our lives.

The accommodation Facebook is already making to those concerns:

Libra is envisaged as a “stablecoin,” backed by the currencies and debt instruments of those governments and central banks themselves and administered through a “permissioned” blockchain ledger by equally centralized institutions (Facebook itself, Visa, Mastercard, et al.).

To put it a different way, Libra will not be a true cryptocurrency like Bitcoin or Ether. Neither its creation nor its transactions will be decentralized and distributed, let alone easily made anonymous. A “blockchain” is just a particular kind of ledger for keeping track of transactions. It does not, in and of itself, a cryptocurrency make.

In simple terms, Libra is just a new brand for old products: Digital gift cards and pre-paid debit cards.

The only real difference between Libra and  existing Visa or Mastercard products is that Libra’s value will fluctuate with the “basket” of currencies and bonds it’s backed by, instead of being denominated in one particular (also fluctuating — you experience the fluctuations as changes in the prices of goods) currency like the dollar or the euro.

When it comes to the goal envisaged by cryptocurrency’s creator, the pseudonymous Satoshi Nakamoto — to free money from control and manipulation by  governments and central banks — Libra is a dead end. Instead of being manipulated by one government or central bank, Libra will be manipulated by all of them.

Cryptocurrency is, to get biblical, new wine in old wine skins — it bursts those skins, by design. Libra isn’t new wine. It isn’t even a new wine skin. It’s a blend of the same old wines, in the same old skins, with a fancy new label. And there’s nothing to suggest that the old wine is getting better with age.

Fortunately, these structural defects also mean that Libra isn’t a threat to real cryptocurrency. Accept no substitutes.

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Martial Negligence in Game of Thrones and Beyond

I’ve previously argued that George R.R. Martin’s Song of Ice and Fire is implicitly a great pacifist work.   While rewatching season 2 with my younger son, I re-discovered a scene worthy of a pacifist ovation.  While Talisa, the crucial pacifist character, appears only in the show, the following exchange sheds great light on the role of martial negligence in Martin’s fictional universe.  For context, Robb Stark is the King in the North, Talisa is a battlefield medic, and they’re surrounded by the bodies of maimed and dead soldiers.

Talisa: That boy lost his foot on your orders.

Robb: They killed my father.

Talisa: That boy did?

Robb: The family he fights for.

Talisa: Do you think he’s friends with King Joffrey? He’s a fisherman’s son that grew up near Lannisport. He probably never held a spear before they shoved one in his hands a few months ago.

Robb: I have no hatred for the lad.

Talisa: That should help his foot grow back.

Robb: You’d have us surrender, end all this bloodshed. I understand. The country would be at peace and life would be just under the righteous hand of good King Joffrey.

Talisa: You’re going to kill Joffrey?

Robb: If the gods give me strength.

Talisa: And then what?

Robb: I don’t know. We’ll go back to Winterfell. I have no desire to sit on the Iron Throne.

Talisa: So who will?

Robb: I don’t know.

Talisa: You’re fighting to overthrow a king, and yet you have no plan for what comes after?

Robb: First we have to win the war.

Notice: Rather than argue that war can never be justified, Talisa shows that Robb is unleashing the horrors of war casually.  He has no master plan to bring great good from great evil.  Instead, he has a master plan to do great evil, motivated by vague wishes to do great good.  Proverbially, however, if you fail to plan, you plan to fail.

Is this scene an unfair caricature of the practice of moralized warfare?  Hardly.  U.S. leaders of both parties barely thought about what would happen after the fall of Saddam Hussein in Iraq or Muammar Qaddafi in Libya.  Roosevelt’s view of Stalin was mind-bogglingly naive.  Wilson, a former Princeton professor, wrote his sophomoric 14 Points, then dumped most of them in a failed effort to build a sophomoric “League of Nations.”  This is what a morally serious case for just war sounds like, but don’t expect to hear anything like it for as long as you live.

Why do even well-intentioned leaders so carefully plan for war, and so negligently plan for peace?  Simple: Despite their self-righteousness, they’re drunk with power.  Well-intentioned?  Don’t make me laugh.  Yes, with great power comes great responsibility… which politicians routinely fail to exercise in reality and Westeros alike.

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Pork is Not the Problem

It’s that time of year: Citizens Against Government Waste just released its annual “Pig Book,” a compendium and analysis of pork barrel spending, aka earmarks, by the US Congress in 2019.

Summary: Congressional appropriations for 2019 include 282 earmarks, up from 232 last year. The cost comes to $15.3 billion, up from $14.7 billion.

That sounds like a lot of money, and it is. But not nearly as much as one might think, in the scheme of things.

The federal government plans to spend more than $4.5 trillion in 2019. Those earmarks constitute a whopping one third of one percent of that total.

Critics of earmarks point out, correctly, that they’re used by members of Congress to direct federal spending to their own districts, not always with much “public good” justification (cue complaints about $500,000 for the Sparta Teapot Museum, $7.5 million for golf education, etc.)

True, all of it — but it’s baked into any political process. Whether formal earmarks exist or not, politicians will support bills that spend money in their districts, oppose bills that don’t, shill for their favored projects, and make deals to bring home the bacon.

And, it should be mentioned, earmarks do not directly increase total spending. They simply require that if Congress appropriates $10 billion for Purpose X, $1 million of that $10 billion be spent on Project Y.

The problem in that hypothetical isn’t the $1 million earmark, it’s the $10 billion appropriation.

The problem with the real numbers isn’t $15 billion in earmarks, it’s $4.5 trillion in federal spending.

If Congress has $9 million to spend on a fruit fly quarantine program and $3 million to blow on bad loans to ship buyers (among 2019 earmarks), Congress has too much money to spend on, respectively, Agriculture and THUD (Transportation, Housing, and Urban Development).

Congress DOES have too much money — money it takes from all of us via various tax schemes, and money it borrows in our names on the promise to bond-holders that it will beat us out of it, with interest, later.

Earmarks could be part of the answer to that problem.

If Congress specified in greater detail where and how EVERY dollar of EVERY appropriation must be spent, instead of just handing the dough over the executive branch under broad categories, we’d have a much better idea of where it was going — and be better prepared to protest, and bring pressure to bear against, wasteful spending.

It would also clarify “separation of powers” violations, such as President Donald Trump’s illegal and unconstitutional “emergency” misappropriation of  Treasury and Defense Department funds for his pet “border wall” project, making it easier to rein in presidential misbehavior.

Silly earmarks are fun to point out, but concern over them comes at the expense of addressing the bigger problem: The spending is too damn high.

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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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