March 31, 2004

This Land Is Mine

Roderick Long in favour of unencumbered private property rights in land:

Your right to control your own body surely includes the right to control the particles currently composing your body. (You didn’t create them, but then you didn’t create yourself either.) Now most of the particles in your body are not particles you were born with (since if you’re like most of us, your body was much smaller at birth than it is now); instead you gradually incorporated pre-existing particles into your body by eating, drinking, and inhaling. In effect, what you are is mainly a series of improvements you have introduced into this shifting mass of raw material.

But no libertarian would conclude that your exclusive claim to control those particles, once they are in your body, must be limited on the grounds that you did not create the particles. We are embodied beings, and self-ownership is meaningless unless it extends to the materials of which the self is composed.

Now the process by which we acquire external property is simply an extension of the process by which we incorporate material into our bodies. As Wolowski and Levasseur point out, "it is by labor that man impresses his personality upon matter," thus giving rise to property, which is a "prolongation of the faculties of man acting upon external nature" and "participates in the rights of the person whose emanation it is." Our relation to the products of our labour is simply an extension of our relation to our bodies; indeed, our bodies themselves are to a large extent the product of our labour (though the particles composing them are not), just as cultivated land is the product of our labour (though again the particles composing it are not). Not for nothing does Molinari speak of the "production of land."

Thus one cannot consistently affirm self-ownership and yet cite the fact that we have not created land ex nihilo as a reason for denying or moderating property rights in land.

March 28, 2004

A Welfare State for Aggrieved Market Losers

Robert Levy on the European Union's antitrust ruling against Microsoft:

Triple jeopardy. That is the net effect of the European Union's order imposing additional antitrust sanctions on the world's leading software maker. Microsoft must pay about Euros 500m (Pounds 335m) in fines, disclose more of its programming code so that rivals' server computers can more easily interact with Windows, and offer dual versions of Windows to personal computer makers in Europe - one version with Microsoft's Media Player and one without.

(...)

Microsoft tried to placate RealNetworks with a promise to have most PC makers worldwide install three competing media players. Even that was not enough. Mario Monti, the EU competition commissioner, wanted to make history, not settle the case. Although he conceded that there had been "substantial progress towards resolving the problems which have arisen in the past", he wondered about Microsoft's "future conduct" and concluded that "consumers in Europe will be better served with a decision that creates a strong precedent". By contrast, Brad Smith, Microsoft's general counsel, placed the emphasis where it properly belongs: "We have to be sure that the law is not just about competitors' complaints. Consumers must be part of the equation."

Far from promoting consumer interests, the latest EU order transforms antitrust regulation into a corporate welfare programme for market losers. The implications will not be confined to the Microsoft case. Without some semblance of regulatory consistency, companies competing globally will not be able to satisfy the dictates of divergent legal regimes. That means special interests pursuing their favourite antitrust forum in an effort to exercise the most political clout. The real costs: fewer jobs, less innovation, inferior products and higher prices.

March 24, 2004

A Billion Reasons to Raise Your Taxes

Thomas E. Nugent on the reasons why some very wealthy people favor raising taxes:

Did you ever wonder why George Soros (the billionaire who is doing all he can to defeat George Bush), Warren Buffett (the billionaire from Omaha who continues to argue for the repeal of tax cuts), John Kerry (the candidate for president who married into the billion-dollar Heinz fortune), and innumerable wealthy Hollywood celebrities all support the Democratic party - hook, line, and sinker? It doesn't seem to make sense. Why would these patricians favor the party that wants to increase tax rates (as Kerry would do by repealing the Bush tax cuts)? Here's one explanation.

They may act like philanthropists, but in actuality these Democrats are fat cats who can either avoid taxes entirely or pay just a minimal amount. They surely don't pay their fair share relative to their wealth. These megabuck corporate elites take minimal salaries and then benefit from tax-sheltered windfalls when their company stock prices go up. In addition they create huge foundations that provide tax deductions which can offset much of their taxable income. Ongoing contributions to these foundations can materially reduce income taxes for an indefinite period of time. So the guys at the top - whether they are billionaires by inheritance, luck, or hard work - have amassed enormous fortunes that grow, and at the same time they use their assets to keep their income taxes low. Legions of tax accountants and lawyers make sure they take advantage of every tax loophole.

March 22, 2004

Reactionary Prophet

Christopher Hitchens on Burke's Reflections On The Revolution In France:

Three questions will occur to anybody reconsidering the Reflections today. Was it a grand and prophetic indictment of revolutionary excess? Was it the disdainful shudder of a man who despised or feared what at one stage he described as the "swinish multitude"? And did it contain what we would now term a "hidden agenda"? The answer to all three questions, it seems to me, is a firm yes.

(...)

However often one awards the winning of the longer-term argument to Paine, the fact remains that he and Jefferson and Lafayette never even dreamed of the advent of Bonapartism. They all believed, at the time that the argument was actually taking place, that France would become a constitutional monarchy, or had actually become one already. It was Burke who took this romantic delusion - a delusion shared by Charles James Fox and the leaders of Burke's own Whig party, and even for a time by William Pitt and the more pragmatic Tories - and mercilessly exploded it. He also showed that the outcome of the French Revolution would be war on a continental scale. The tremendous power of the Reflections lies in this, the first serious argument that revolutions devour their own children and turn into their own opposites.

(...)

If modern conservatism can be held to derive from Burke, it is not just because he appealed to property owners in behalf of stability but also because he appealed to an everyday interest in the preservation of the ancestral and the immemorial. And the abolition of memory, as we have come to know in our own time, is an aspect of the totalitarian that spares neither right nor left. In the cult of "now," just as in the making of Reason into an idol, the writhings of nihilism are to be detected.

March 17, 2004

Gibson breaks Hollywood's 10 Commands

Martin A. Grove explains:

Because "Passion" will be timely to re-issue theatrically at Easter for years to come, it has the potential to wind up as the biggest grossing film in movie history -- at least if you calculate that record on the basis of the cumulative gross from multiple releases of the same film. To do so, it will have to overtake "Titanic's" roughly $1.8 billion worldwide total, which seems possible in the future, but isn't likely on the basis of "Passion's" initial release. If "Passion" winds up with somewhere between $1 billion and $1.2 billion worldwide this time around, it's possible that well planned reissues down the road could send it sailing past "Titanic."

In breaking or bending so many of Hollywood's basic rules -- studio development executives would probably give them the punchier name Ten Commands rather than Ten Commandments -- Gibson showed considerable courage that's paid off big-time for him. It's doubtful that he envisioned the level of monetary success the film has enjoyed or even that money was a driving force for him. His personal passion for the project seems very genuine whether one agrees or disagrees with the specific nature of his religious point of view. Moreover, given reports of how distributors around town turned down the chance to release "Passion," it's clear that nobody saw this as being the moneymaker it's become.

March 16, 2004

The Explanatory Power of Economic Logic

Robert P. Murphy on Thomas Sowell’s latest book Applied Economics: Thinking Beyond Stage One:

Sowell’s overall message is that "thinking beyond stage one" is necessary to understand the true causes (and cures) of social ills. Whether the issue is housing, health care, or Third World development, Sowell shows that the traditional government "solutions" are always counterproductive. In many respects, Sowell’s book is an updated Economics in One Lesson.

(...)

As mentioned earlier, one of the best features of Sowell’s book is his use of interesting and relevant examples to illustrate general principles. To explain a particular point about decisions in the face of uncertainty, he cites the case of Japanese fighter pilots who didn’t wear parachutes, because the constraint on their flexibility in dogfights would make them more likely to get shot down in the first place (p. 154).

When discussing the very real risks faced by check-cashing businesses, Sowell cites the case of Banco Popular, which lost $66,000 when a fly-by-night employer skipped town after emptying the account on which the paychecks had been written. Because well-paid employees are likely to have more reliable employers, they often get free check cashing services, while the "working poor" must pay a premium for the added risk. Notwithstanding the apparent unfairness, Sowell’s example explains the phenomenon (pp. 133-34).

March 15, 2004

Enough Talking about Fiscal Responsibility -- Let's Cut Spending

Article by Veronique de Rugy, fiscal policy analyst at the Cato Institute:

End corporate welfare. As former Budget Director Mitch Daniels noted: "It was not the federal government's role to subsidize, sometime deeply subsidize, private interests." He's right. Unfortunately, there is at least $90 billion of corporate welfare in this year's budget. Farmers get a large share of subsidies, with over $30 billion in 2004 in the form of crop subsidies and loans. With the federal government in deficit, corporate welfare is the perfect place to curtail spending.

All levels of government contain pork. According to Citizens Against Government Waste, in FY 2003, the GOP-controlled Congress porked-out a record $22.5 billion. Two examples: $100,000 renovation of the historic Coca-Cola building in Macon, Georgia, and $350,000 for construction of a folk cultural center in Pinellas County in Florida.

Finally, the feds should privatize businesses such as NASA, air traffic controllers, the U.S. Postal Service, Amtrak and other agencies. These operations should not be publicly run, especially given their poor performances. Even welfare states in Europe have learned this lesson. For instance, Germany's postal service is private. Canada's private air traffic control operates well. And private space exploration is on its way in Russia. Those industries ought to be private in America too.

Government is too big and it spends too much. Equally important, it spends money foolishly. It subsidizes the wrong things and penalizes the right things. Politicians create programs to solve problems, which invariably make things worse and lead to more spending. America need not creep into stagnant, bureaucratic wasteland. Yet we will become like France if Congress continues to spend like French politicians.
Red Spanish Ayes

Samizdata's David Carr has an interesting viewpoint on the possible significance of the Spanish election results for Al-Qaeda:

But in one sense, it may not matter why Aznar and his centre-right government lost. If Al-Qaeda did orchestrate the Madrid attack (and it appears increasingly likely that they did) then they will chalk this up as a major success. In their own minds, they have successfully terrorised the Spanish electorate into installing a government that was more to Islamicist liking.

That may not actually be true, but the danger lies in these maniacs believing it to be true.

March 10, 2004

Prejudice Against Business

Tibor Machan on the bias against business and commerce:

Everyone knows that there will be bad apples in any profession. And where the press is concerned, everyone accepts that such bad apples must be reprimanded from within and the government is required to stay out of whatever mess happens to occur there. (Where were all the calls for Congressional oversight of magazines when The New Republic unleashed more than two dozen phony news articles on its readership? How about when The New York Times published a bunch of rubbish recently from one of its star reporters?)

What this shows is that when folks come down on business, it has far less to do with actual misconduct than with rank prejudice: Making money itself is the target, striving for prosperity, unabashedly as people do in commerce, is what is being attacked. Never mind the particulars-­they only serve to make the prejudice somewhat palatable.

Of course, this is nothing new-­commerce and business has been demeaned in most of human history, by philosophers, theologians, politicians, psychologists, sociologists and, of course, artists. Since these folks dominate the forums of ideas, while those in the business community are attending to, well, business, there is little chance that there will ever be fairness about the merits of commerce in human communities. But perhaps some of us can make the effort to point out that the mere dominance of such prejudice doesn’t render it the right stuff.

March 08, 2004

Venezuela: The Next Cuba

Paul Crespo on Hugo Chavez and socialism in Venezuela:

There is no doubt that Chavez - with Fidel Castro's help -- is creating a Cuban-style socialist state in Venezuela. Scholar Maxwell Cameron calls it the world's first "slow-motion constitutional coup." In the process, Chavez also is breathing new life into Fidel Castro's dying and decrepit dictatorship. But what's even more worrisome is the fact that the mercurial Chavez is turning the large, oil rich country into a base for international terrorism.

(...)

Most prominent in Venezuela's list of friendly terror groups are the communist FARC guerillas (Colombian Revolutionary Armed Forces) who have terrorized Colombia for over 30 years and have killed thousands of people. Gen. Gary Speer, former acting chief of America's Southern Command, said during a Senate Armed Services committee hearing in March 2002 that "we are very concerned about President Chavez ... the FARC operates at will across the border into Venezuela."

"There are arms shipments originating in Venezuela that get to the FARC and the ELN [National Liberation Army]," he added. "We have been unable to firmly establish a link to the Chavez government, but it certainly causes us suspicions. The company that Chavez keeps around the world, although under the guise of OPEC, certainly causes additional concerns as well." The US News piece details the exact location of FARC camps inside Venezuela where Venezuelan military advisors reportedly train FARC guerillas.

Sadly, Democratic presidential hopeful John Kerry stated in a February speech in Boston that the murderous FARC guerillas had "legitimate complaints" despite the fact that they have the support of less than three percent of Colombia's citizenry.

March 03, 2004

Health Care in Prison

William L. Anderson on socialialized medicine:

To justify his claims that government medicine would be a social panacea, Krugman cites "a recent study" which claims "that private insurance companies spend 11.7 cents of every health care dollar on administrative costs, mainly advertising and underwriting, compared with 3.6 cents for Medicare and 1.3 cents for Canada's government-run system." (Of course, Krugman does not tell us who authored the study, or the criteria used to arrive at such conclusions, but we can be assured that whoever wrote it is not an advocate of private medical care.)

From there, Krugman's reasoning is quite simple. If we were to go to socialist medicine, it would be cheaper than what exists right now and nothing else would change. All of us would receive the same care we do now - or perhaps even superior care.

In economics, we call this the ceteris paribus assumption, that is, "everything else being equal." Unfortunately, Krugman's assertion that the only thing that would change if government took over the entire medical apparatus here would be lower costs is more reminiscent of the many economists' jokes that appear on Internet sites. (An economist and two others were stranded on a deserted island when a case of canned goods washed up on shore. While the others fretted about how to open the cans, the economist declared, "That's easy. Just assume that we have a can opener.")

(...)

The reason is that for all his rhetoric, Krugman's ceteris paribus standard cannot hold in this case. If Krugman were correct, then it would make sense for government to supply all scarce goods, since it would be able to deliver them at lower costs (using Krugman's calculus) and, thus, save consumers money. Product quality would not change and everyone would be better off.

However, no one but the most diehard socialist would make the argument I have made. Not even Krugman will advocate something akin to what we see in North Korea of the former Soviet Union or China before it began to cast off its Maoist "heritage." Yet, we are now left with a perplexing question: If socialism does not deliver the goods like bread and automobiles in large numbers and in high quality, why does anyone believe that the practice of medicine is an exception?

One thing to remember is that when government becomes the monopoly provider of services, then people who receive those services are going to be subservient to the state. (After all, Krugman, for all his protestations that he is against monopolies - calling them "market failures" - is advocating a government monopoly over medicine.) People who have no choice must be satisfied with what they receive - or else receive nothing at all. This is a prescription for abuse, and those who have been on the receiving end of government abuse know clearly of what I write.
Israel Frenzy

William F. Buckley on neocon policies and Israel:

It is being claimed, ever more widely, that neocon policies are determined by the advantages they bring, manifest or putative, to the State of Israel. Patrick Buchanan, in the current American Conservative, believes this ardently, while the most quoted advocates of neocon militancy, Richard Perle and David Frum, go further than merely to deny that neoconservatism is an Israel First world view. They insist that criticism of neocon policies is, at heart, anti-Semitic.

(...)

Nobody who knows his way around questions the political leverage of the Jewish vote in critical states or denies the importance of Jewish patronage of favored candidates and office holders.

But the transposition of this into the position that U.S. policies are formulated because they bear directly on Israeli interests is invention. The proposal to go to war against Iraq was, concertedly, advocated in one form or another by Richard Perle. But that policy proceeded from the loins of Donald Rumsfeld and George Bush after the 9/11 attacks on New York and Washington, and was animated by the reiterated U.S. interest in the stability of the Near East. The Bush administration arrived at the conviction that the sepsis of which the 9/11 attack was a single, lethal thrust was a variant of the Islamic fundamentalism that had taken over the country of Afghanistan and almost certainly was festering in Iraq. Which was governed by a totalist dictator who had already used weapons of mass destruction and was accumulating an inventory for strikes against his neighbors and nations of the west.

(...)

The neocon movement, it is being suggested, is motivated by concern for Israel but, more, by its affinity for the Likud Party of General Sharon, which represents militant and, many believe, shortsighted policies, contrasting with policies advocated by many Israelis, including past Israeli leaders, Ehud Barak prominent among them.

It's an unreasonable polarization of opinion: 1) everything a neocon advocates is animated by a concern for Israel, and, 2) every criticism of neocon policy is animated by anti-Semitism. That is straitened thought, and should be resisted.

March 01, 2004

Tax Cuts Do What?
Why it's important for economists to combat public ignorance.


Thomas Sowell on the importance of educating the general public on basic economics:

Some years ago, the distinguished international-trade economist Jagdish Bhagwati was visiting Cornell University, giving a lecture to graduate students during the day and debating Ralph Nader on free trade that evening. During his lecture, Prof. Bhagwati asked how many of the graduate students would be attending that evening's debate. Not one hand went up.

Amazed, he asked why. The answer was that the economics students considered it to be a waste of time. The kind of silly stuff that Ralph Nader was saying had been refuted by economists ages ago. The net result was that the audience for the debate consisted of people largely illiterate in economics and they cheered for Mr. Nader.

Prof. Bhagwati was exceptional among leading economists in understanding the need to confront gross misconceptions of economics in the general public, including the so-called educated public. Nobel Laureates Milton Friedman and Gary Becker are other such exceptions in addressing a wider general audience, rather than confining what they say to technical analysis addressed to fellow economists and their students. By and large, the economics profession fails to educate the public on the basics, while devoting much time and effort to narrower and even esoteric research.

(...)

Sometimes the fallacies are based on something as simple as a failure to define terms accurately. Everyone has heard the claim that a high-wage country like the U.S. loses jobs to low-wage countries when there is free trade. When the North American Free Trade Agreement went into effect a decade ago, there were dire predictions of "a giant sucking sound" as American jobs were drawn away, to Mexico especially.
In reality, the number of jobs in the U.S. increased by millions after Nafta went into effect, and the unemployment rate fell to low levels not seen in years. Behind the radically wrong predictions was a simple confusion between wage rates and labor costs.

Wage rates per unit of time are not the same as labor costs per unit of output. When workers are paid twice as much per hour and produce three times as much per hour, the labor costs per unit of output are lower. That is why high-wage countries have been exporting to low-wage countries for centuries. An international study found the average productivity of workers in the modern sector of the Indian economy to be 15% of that of American workers. In other words, if you paid the average Indian worker one-fifth of what you paid the average American worker, it would cost you more to get the job done in India.

(...)

International trade has no monopoly on economic illiteracy. One of the apparently invincible fallacies of our times is the belief that President Reagan's tax cuts caused the federal budget deficits of the 1980s. In reality, the federal government collected more tax revenue in every year of the Reagan administration than had ever been collected in any year of any previous administration. But there is no amount of money that Congress cannot outspend. Here again, the confusion is due to a simple failure to define terms.
What Mr. Reagan's "tax cuts for the rich" actually cut were the tax rates per dollar of income. Out of rising incomes, the country as a whole--including the rich--paid more total taxes than ever before.