The Mothering Effect of Government Regulation

The Case for Regulation

On the surface, government regulation provides a much needed service to our uncertain world and protects us from rampant subjugation to the whims of our neighbors.  It is such a compelling and simple concept that I have a great deal of empathy for those who believe it to be true.  Many of my fellow travelers in the quest for greater individual freedom hold the position that, of course, we need some minimal level of regulation from government.  Who could be so extreme, callous and ignorant to propose that we should have none?

Me for one.

When I was growing up, my mother made us do chores.  I'm glad she did because when I struck out on my own I knew how to cook, sweep the floors, do the laundry and clean the toilet.  I had the skills and the compulsion to keep a clean kitchen and an orderly bedroom.  But when I pause to think about the quality of the work I did as a child and contrast it to that which I do in my own house, I am embarrassed.  Now I was a well-behaved child, but I did the bare minimum I could get by with less I disappoint dear mother.  My style of cleaning in those days could well be described as "hitting the high spots."  I never moved chairs to sweep beneath them.  I rarely took the items off of the bathroom sink to wipe it down.  I mastered the art of pushing them back, wiping and pulling them forward, thus creating an illusion akin to sweeping dust under a rug, which I was also not above.

Comparatively, I am a cleaning Nazi when it comes to my own house - think rigid discipline and rampant germicide. 

Why the disparity?  What drives us to literally and figuratively sweep things under the rug in certain conditions and not others?

Ownership and Responsibility  

The difference now is that I own the house I live in and thus have an internal drive to keep it neat and orderly.  Even when I rented an apartment, the effect of being the sole person responsible for housekeeping created an immediate shift in my behavior.  I knew that if I did not keep my place in order it would directly effect how I felt about myself, and perhaps just as important, how visitors felt about me. 

Granted, in the case of industry in the market there is still the effect of ownership and responsibility to one's customers.   But consider for a moment the effects of a paternalistic regulatory apparatus on the goals of an organization.  The confines of regulation are inherently slow to change and rarely focused entirely on the safety and satisfaction of the consumer or the public at large.  They are necessarily driven in large part by political forces and are usually subject to the powerful influence of relatively small interest groups.  Besides these effects they shift the focus of industry in part away from satisfying customers, which includes an interest in their safety, on to the particular guidelines provided by regulatory bodies.  This provides industry with the perverse objective to dot the i's and cross the t's provided by regulation and then, if they run afoul of public safety, to blame the shortsightedness of the regulatory body which has claimed ownership and responsibility for an orderly society. 

In the Long Run We're All Ill-defined

Admittedly I'm no expert in details of modern macroeconomic theory, but one thing that has bothered me since the beginning of that course in college is the concept of the long and the short run.  They seem so varyingly and broadly defined to me as to be relatively useless.  To me this is exemplified in the oft-quoted evasion by the famous John Maynard Keynes, "In the long run, we are all dead."

The one important point I do recall about the subject is the admonition that correlation X and law Y apply only in the short run.  As well as I recall, this stipulation applied to every quantitative concept that we learned.

If one were to take the pragmatic position for central planning based on macroeconomic models, wouldn't one need to answer to a high degree of certainty this glaring issue?  Isn't the long-term the period we should be interested in for our future and that of our posterity?  Do we know the effects of today's policies on prosperity 5, 10 or 15 years down the line?  Is it mere coincidence that politicians, who are in office for a relatively short period in comparison to the length of a human life, seem serially uninterested in the long-term effects of their "scientifically" guided, short-term machinations?  If pharmaceutical companies relied only on science investigating the immediate effects and side effects of their drugs, would we not cry foul?  Would we not accuse them of confirmation bias?


It is fine by me if someone wishes to invest their wealth based on macroeconomic models.  It may be quite beneficial for them, and I wish them the best.   But, I will not consent to having mine taken to support such lofty and ill-defined goals.  Unfortunately, as a lowly citizen of these states I have no choice in the matter.  

A View Into Krugman

Paul Krugman recently provided some insight into the influence Isaac Asimov had on him at a young age over at the guardian (yea, they don't capitalize it either).  I will provide only a few snippets.  He begins:

There are certain novels that can shape a teenage boy's life. For some, it's Ayn Rand's Atlas Shrugged; for others it's Tolkien's The Lord of the Rings. As a widely quoted internet meme says, the unrealistic fantasy world portrayed in one of those books can warp a young man's character forever; the other book is about orcs.

Ok, that's a little bit funny, but in reality Atlas Shrugged, one of the most popular and highly acclaimed books in human history, is a tale of a struggle to be free.  Yes, those people who are struggling have made alot of money for themselves, but nonetheless, 16 year-olds the world over are able to see the heroism inherent in a free mind in spite of the class warfare they have been marinated in since kindergarten.  An economist who cannot say a kind word about this novel should raise a few red flags.  Interestingly he links to another guardian page with a single review of the book.  Surprise, surprise, they didn't like it.    

The Foundation itself seems to recapitulate a fair bit of American history, passing through Boss Tweed politics and Robber Baron-style plutocracy

The emphasis here is mine. What serious economist uses the term "Robber Baron"? 

 Yet if the Foundation books are a tale of prophecy fulfilled, it's a very bourgeois version of prophecy.

And "bourgeois"?  Seriously, it appeared twice.  

economics is, after all, largely about greed, while other social sciences have to deal with more complex emotions.

And here we come to the essence of the man who has been very influential in guiding the policies - enforced at gunpoint - which are intended to scientifically and magnanimously guide us to the promised land of wealth, health and prosperity for all.  He sees your quest to maximize your subjective self interest as nothing more honorable or complex than greed, and he doesn't even know you.  What you choose to buy, eat, wear, drive, watch and read - and at what price - are simple matters for the economic scientist of tomorrow. 

Admittedly, I have made nothing here but ad hominem attacks, but in the realm of economics, a field far from the certainty and consensus of the physical sciences, it pays to understand the ideology of the shaman offering you the cure. 

Ben Swann - Reality Check: Is This The End of the Petro-dollar?

It's refreshing to see someone in the media discussing real issues like the petro-dollar.  Hats off to Ben Swann and bonus points for not mentioning Big Bird.  I am far from an expert in the history and economics of the petro-dollar concept, so please provide any viewpoints in the comments section.

Stossel: NASA Brought us CAT Scans?

Anyone who knows me could guess that my DVR is full of Stossel episodes.  I think the man and his crew are doing an excellent job distributing the ideas of individual liberty and freedom into the mainstream.  I was surprised this weekend, however, to hear him attribute the invention of the CAT scan to NASA.  This is not in line with the origin story I have heard, so I did a little bit of research.  Now this should not be taken as an attempt to scoop Stossel, as it is one of my favorite shows.  Rather, I am chasing down what I see as a theme of attributing to NASA the full-scale development of any project with which it was associated.

I did a little bit of very superficial research which confirmed what I had heard about the origin of the CAT scanner.  The first commercial machine was developed by Sir Godfrey Hounsfield in the UK, at EMI Central Research Laboratories, the very same company which held the record label for The Beatles.  The popular tale says that it was the success of The Beatles that helped fund the research lab which led to the development of the CT, but of course, this is difficult to confirm.  The invention of the scanner was preceded by a series of advancements and discoveries in x-ray technology, imaging and mathematics dating back to the early 1900's.  In my brief research, I found very little specific attribution to NASA except a few statements on NASA-related websites indicating that image processing technology developed for the Apollo program is used in modern CT imaging.  No doubt the program deserves credit for advancements made under its many programs.  Clearly there have been several that have had considerable, positive impact on human life.  However it is not fair to, as is commonly done, attribute recognition in toto for the development of a technology in which the program played only a bit part.  This only serves the fuel the drumbeat for greater government funding of research and development, a task better left to the market as I have discussed in detail previously.

And so, every time we object to a thing being done by Government, it concludes that we object to its being done at all. We disapprove of education by the State—then we are against education altogether. We object to a State religion—then we would have no religion at all. We object to an equality which is brought about by the State then we are against equality, etc., etc. They might as well accuse us of wishing men not to eat, because we object to the cultivation of corn by the State. -- Frederic Bastiat

Heinlein Foreshadowed Cash for Clunkers

In a brilliant scene from Heinlein's classic The Door into Summer, written in 1957, the main character seems to channel Bastiat himself when confronted in a futuristic world with a government program essentially the same as Cash for Clunkers.  The main character goes on a long sleep in 1970 and awakes in 2000.  His first steady job upon waking is crushing new, unsold cars.  This is the conversation he has with a coworker upon his first day of work:

“It’s a simple matter of economics, son. These are surplus cars the government has accepted as security against price-support loans. They’re two years old now and they can never be sold...so the government junks them and sells them back to the steel industry. You can’t run a blast furnace just on ore; you have to have scrap iron as well. You ought to know that even if you are a Sleeper. Matter of fact, with high-grade ore so scarce, there’s more and more demand for scrap. The steel industry needs these cars.”  

“But why build them in the first place if they can’t be sold? It seems wasteful." 

“It just seems wasteful.  You want to throw people out of work? You want to run down the standard of living?” 

“Well, why not ship them abroad? It seems to me they could get more for them on the open market abroad than they are worth as scrap.”  

“What!—and ruin the export market? Besides, if we started dumping cars abroad we’d get everybody sore at us—Japan, France, Germany, Great Asia, everybody. What are you aiming to do? Start a war?” He sighed and went on in a fatherly tone. “You go down to the public library and draw out some books. You don’t have any right to opinions on these things until you know something about them.”

Sound at all like the familiar parable of the broken window?  There truly is nothing new under the sun.

Mandatory Blood Donation

I gave blood yesterday...no, no, thank you, please hold your applause...Anyway I gave blood yesterday and got to thinking, perhaps due to lack of blood flow to my brain, how grand it would be if everyone who was able donate blood on a regular basis or even just gave it a shot.  It's really not difficult or unpleasant.  I mean I am a particularly weak individual, and I have never had any trouble during or after donation.  Maybe the government should require all able-bodied citizens above a certain age to regularly be screened for blood donation eligibility, and if they pass the criteria, be compelled to "donate" a pint under penalty of law.  Maybe a simple tax on anyone who didn't show up for screening and a stiffer one for anyone who passed screening and didn't submit to the needle.  You would probably want to impose a stiffer penalty (tax, I meant tax, sorry) on anyone who willfully made themselves ineligible through international travel, living in the UK for a period exceeding 5 years, having sex for money, sharing an apartment with someone who has hepatitis etc.  Based on recent precedent, this should all be quite constitutional in the US.

Just think of the potential savings, not just in lives, but more importantly, in the federal budget.  I'm no medical expert, but it should be fairly straight forward to come up with a figure spelling out the cost savings for Mr. John Q. Taxpayer due to the ready access to compatible blood in the ER, since he is paying for so many of those visits for the uninsured and the insurance for the insured (Author's Note:  remind me to draft a plan on an O negative blood type breeding program).  Further, think of all the money it will save the blood banks.  If everyone is forced (sorry, incentivized) to give blood, they can stop calling me three times a day and asking me to donate.

More thoughts on the subject - More on Mandatory Blood Donation

"You Didn't Build That" - A response in favor of peace

For those of you living under a rock, there has been a recent uproar over something our gentle public servant Obama said the other day.  If you search for "you didn't build that", you will doubtless find a great number of  news items describing, quoting, misquoting, spinning and backpedaling on the statements of the president.  I will not sully my site with the banal news cycle.  I simply wish to provide my thoughts on the subject.

There are various arguments of the type, "You couldn't have accomplished (or you wouldn't have possession of) X, Y or Z without the government.  The government invested in the internet, microchips, space exploration, your education, and roads.  They provided laws and boots for your protection including such things as patents, police, armies, navies and courts.  Governments paid Columbus to "discover" the new world and Lewis and Clark to explore and document it.  Therefore, you have no cause to complain about taxation or other government interventions which have provided for your general welfare."

These arguments are generally given by the left, though the right is only conditionally allergic to them.  They are given in opposition to the simplistic, dare I say Randian, portrayal of the rugged individualist entrepreneur standing alone against the world to profit in a capitalist paradise.  They so often end with some variant of, "You didn't accomplish this alone."  Well of course is it overly simplistic to think that anyone succeeds in business (or in life for that matter) purely on the merits of their own efforts, but does it follow that we should back off any opposition to government based on this fact?

Of course we all rely on the kindness, savings, investments, intelligence, innovation and business of others in extraordinary and unpredictable ways.  You must receive your business inputs, you must obtain the capital and skills to produce your output and your customers must find you and decide to purchase your product at the price you have set.  You stand on the shoulders of inventors and discoverers who have come before you and presume that somehow a population will have the wealth and the desire to purchase your wares.  You didn't plan all of this; you would have had to start before you were born.  So if you succeed in business through loss of your own blood, sweat and tears, whom do owe and how much?

Certainly you can account for the prices paid for your raw materials, your capital equipment, your employees and your education.  You will pay interest or give up a portion of future profits to investors.  Your parents are unlikely to insist repayment for your upbringing, so you're off the hook there.  You either pay rent for your property or you purchased it outright.  Last but not least, your customers pay you, which ultimately allows you to pay for all of your inputs.  So maybe you owe your customer the most; you clearly couldn't have done it without them.  But wait a minute, they received something in this transaction - your product.  Did they pay too much?  Should you give something back, if not to them then to society?  Unless you defrauded them, forced them or sold a defective product, you should not feel the need to repay anyone.  The price paid for any good is a reflection of the subjective valuation of that good to the purchaser at the given place and time.  You give a man a hamburger, he gives you $5 and you owe each other nothing but mutual thanks.  This relationship recurses back through every transaction in the chain of production and we end up with this beautiful, spontaneous, chaotic order in which we can peacefully make progress and profits off the backs of our neighbors and owe them nothing but our thanks.    

Now enter a gang of thieves who disrupt this harmonious relationship with force or subterfuge.  Their guns represent an attempt to get something from the beautiful order of man without giving anything in return.  The gang may in special circumstances provide money in exchange for their takings, but this "price" is meaningless on account of their weapons and their "right" to use them.  Imagine a gang large enough to repel all other gangs between the sea and the nearest mountain range.  The pragmatic gang will not disrupt the order enough to destroy it as it provides for the welfare of all.  They will protect their borders with troops and the order on their streets with police.  They will take their cut of commerce flowing in, out and within their realm.  The population will become so accustomed to these takings that the guns will be rarely taken out of their holsters for the robbery, which then will be called a tax.  If possible they will monopolize the currency used by the populace to aid in extracting the resources required to "maintain" the order, which preceded their existence.  Finally, the populace will thank them and sing their praises for false promises written on paper to constrain the power they have already usurped for themselves.  They will put roads and build bridges where it pleases them and pay prices that mean nothing for materials and labor.  With funds taken from the people, they will pay meaningless fees to scientists to discover things they think people are interested in knowing and engineers to build things they think people will want.  In the same way they will enforce a curriculum upon the youth.  They will mistake progress with comfort and destroy both by paying men to dig ditches and fill them in.  For all of this they will claim a right to thanks from the citizenry.  They will shout down objections to their power with claims that the order would not exist without them and that their theft was necessary and beneficial.  And at this point, their resemblance to the state is complete.          

Penny4NASA Follow-Up

This thought came to me in the shower, as most good thoughts do, and I thought it was a shame I didn't include it in my previous post:

Consider for a moment the capital expended to mass produce the first automobiles.  Now think of how quickly they were adopted, how drastically they changed human activity and productivity and how unbelievably quickly they improved with respect to speed, mobility, style, reliability and efficiency.  All of that was produced with hard-earned capital, voluntarily given in expectation of profit, and a healthy dose of enterprising individuals employed for the same cause.  Now compare this with NASA's history.  The expenditure has been enormous, not to mention it was all taken by force, and the payoff relatively small.  The so-called "spin-off" technologies and secondary externalities created by the agency seem paltry compared to the advances in technology Ford alone developed.  I encourage anyone to look them up.  While you're at it, read Garet Garett's The Wild Wheel.

Freedom, Peace and Liberty - 1
Tyranny, Force and Plunder - 0


Related Posts:


Pennies for Flying Cars - Another Tale of the Unseen
Pennies for NASA - Ignoring Cost at all Cost

Pennies for Flying Cars - Another Tale of the Unseen

Wouldn't it be great if I drove a flying Mercedes-Benz?  I certainly think so!  Wouldn't it be great if everyone else did too?  No doubt.  Of course we would need to nationalize a major car company, but I don't anticipate any obstacles there.

How much would you pay for the universe (of flying cars)?  How do we examine the costs and benefits?

Besides the mere fact that everyone would be flying in style with little concern for congestion, just think of all the stimulative effects it would have on society.  We would probably all save a bunch of time going to and from work.  The ability to fly would eliminate many of the complexities associated with driving and would probably facilitate automating the process.  This would free us from the drudgery of the daily commute and essentially make the world smaller, expanding our zone of employment and improving our earning power.  Besides all that, I certainly would feel better about myself and my status, being a hot-rod pilot and all.  I would probably start dressing better, and maybe I would have the esteem to go for that big promotion at work.  Multiply that by millions of people so effected and imagine the economy purring along like a spoiled kitten.  Children everywhere would be inspired by the wonder of daily flight, as well as the precise engineering, the smooth handling and the attractive contouring that go along with the now ubiquitous, flying Mercedes-Benz.  Just imagine the young crop of overachieving engineers, scientists, designers and artists growing up and really getting after it in an ever expanding world of opportunity!  Beyond all of that, we're bound to happen upon a great many wealth-producing discoveries and labor-saving inventions in our quest to mass produce flying cars.  We can't afford to let go of this dream!  People probably won't go for it voluntarily, so we'll probably need the government to foot the bill.

Foolish, childish ideas and hyperbolic extrapolations?  Absolutely.  No one would ever seriously propose such an expensive, narrow-minded, centrally-planned "national greatness" program simply on the grounds that it would be inspirational or generally stimulative.  First of all, to attribute the life decisions and successes of any individual in an advanced society (let alone that of a group of such individuals) to a single program, stimulus or event is utter foolishness.  Further, to claim that directing that desire toward a particular field in lieu of all others is an improvement on the situation of men is a fatal conceit indeed.  Inspiring a young Sam Walton to design thrusters for the new F-Class would have deprived us of Walmart, which would have been an injustice nearly beyond this author's will to consider.

The rationalization of the program based on the stimulative effects of inventions made in the process is a particularly special pleading based on ignoring the costs of the program itself.  Of course the monetary price we would pay for the program is obvious, but the activities forgone in order to support it will forever be hidden to us.  I am not speaking here of what other great national work must be given up, like the Federal Jetpack Program, though that is a viable concern.  I am considering what activities in the private (or peaceful) market place must be displaced in order to make the flying car dream a reality.  It takes real saved wealth to pull off a project like this, and since the government has none, they'll have to take it away from someone (more likely a whole bunch of someones).  Your guess is as bad as mine as to what that saved wealth would have been used for.  Some of it no doubt would have been saved for consumption at a later date, while some of it would have been consumed right away on things like candy, shirts, smart phones and regular, old-fashioned rolling cars.  So that's simple enough; we're just asking for little Johnny to go without his chocolate for the week, or little Susan to cut back on the texts or 16 year-old Franklin's parents to go for the fixer upper instead of certified pre-owned.  That's not so much to ask of the patriotic citizen for the common dream of flying cars.  If you buy that argument, I guess this is where we go our separate ways, but there is one last thing I would like you to consider - investment.  Some of that wealth would have been invested in a broad array of forward-looking ventures, most of which probably would have had a better chance of turning a profit than the lofty dream of flying luxury cars.  Some, no doubt, would have been massive failures that were either poorly managed or not well thought out or both, but if history is any guide, a great many of them would have been successful, some of them fantastically so.  There would have been some AOL-TimeWarner's and some Betamax's, but there would also be the Amazon's and the Apple's.  Maybe we would be missing out on the next Iphone, Ipad, or hell, the Icar (not flying til generation 4.f).  Maybe Bayer would have cancelled a line or research on some young drug that would have turned out to cure cancer, or AIDS, or diabetes.  Maybe Pfizer pulled back on the next great erection enhancer.  Maybe Kenmore's new dishwasher would have saved us more time at less expense than the flying 'Benz.  The fact is, we'll never know the costs of the great flying machine project because they are simply immeasurable.  So you tell me if you can justify taking your neighbor's wealth by force to support this or any other technological fantasy.

In my previous post on the subject of Penny4NASA, I focused on the fiscal irresponsibility of clamoring for increased NASA funding.  Now I hope I have demonstrated the fallacious nature of the arguments used to present the supposed benefits of increased funding for the program as expounded on said website:

NASA contributes to society in massively huge ways in terms of technological, economical, and inspirational progress. The progress that we have seen in the last 40 years comes largely from the world's extremely talented scientists and engineers. Now, talk to most any scientist and/or engineer of the last 40 years, and we are willing to bet that they were drawn into their chosen field by something NASA related. And more often then not, they refer to the Apollo, Gemini and/or Space Shuttle program where humans were physically advancing a frontier. It's the human spirit of exploration that drives the world's greatest technologists to invent the future, today. We want to see to it that the US annual budget allocation for NASA reflects that hugely important role technology, economy, and inspiration bringer.

I hope my work can be a massively huge inspiration bringer to young thinkers everywhere so that they can root out the legal plunder of the future, today.


Related Posts:
Pennies for NASA - Ignoring Cost at all Cost

Pennies for NASA - Ignoring the Cost at All Cost

I consider myself a skeptic.  I try to live my life by reason, guide my choices by science and defend my positions without faith.  However, my political philosophy, which I think is rationally derived and is deeply rooted in individual liberty, often clashes with the leftist/statist strain within skeptical society.  This was so exposed on my drive to work this morning as I listened to one of my regular podcasts.   

I think it is relatively clear that the federal government of the united States is in a dire fiscal situation, along with much of the developed world. In spite of this fact, there is a segment of the population clamoring for an approximate doubling of the budget for NASA under the cleverly misleading moniker "Penny4NASA". The gist of their platform is described at the head of their homepage:

NASA’s budget currently represents 0.5% of the US budget, and has been relatively unchanged for 25 years. We are calling for their budget to be increased to 1% of the US budget.

The site contains some links and videos intended to educate the public and gin up support for one of the most universally beloved government programs in history. One of the videos contains the following quote from Neil degrasse Tyson, a widely respected, highly adored and well spoken astrophysicist:

...I’m tired of saying this, but I’m gonna have to say it again, the NASA budget is four-tenths of one penny on a tax dollar. If I held up the tax dollar, and I cut horizontally into it, four-tenths of one percent on a tax dollar does not even get you into the ink! So I will not accept a statement that says, “We can’t afford it!”’

I hate to be the bearer of bad news to Dr. Tyson, but "we" can not even afford to keep NASA's budget the same in our current condition, let alone increase it by any fraction of a penny on the dollar.  "We" are massively in debt beyond what the rosiest predictions indicate "we" will be able to pay back, and the government's ability to paper (literally) over this fact will come to an end sooner or later.  If your definition of "afford" is, "having access to credit without any demonstrable means of sufficient repayment of this or any other debt", then you may think that I am crazy for saying this.  

Granted, the NASA budget is small potatoes compared to the entitlement/warfare/never-ending-stimulus spending nightmare we are in, but that does not mean it can be ignored.  

Ignoring the cost of the program is explicit in the Penny4NASA platform.  At first blush one might think that they are advocating for everyone to give (or rather have taken from them) a penny to support NASA.  That might sound ok, but wait a minute!  They are talking about a penny of every "tax dollar"!  That's a little bit different, especially since most people don't even know how much they pay in federal taxes.  Go ahead and calculate it if you would like; I'll wait here and hold my breath.  Just don't forget to include paycheck withholdings along with the lump sum you might send the IRS in April (ignore any interest you might have earned on the  withholdings just to safe).  While you're at it include payroll taxes that your employer pays that he or she might otherwise have paid you, tariffs and customs duties on all the goods you purchased that were imported or contained components that were imported, estate and gift taxes etc.  It's a little bit more than a penny now isn't it?  It gets better.  The call to action is to raise the funding of NASA from 0.46% of the federal annual BUDGET to 1% of the federal annual BUDGET.  If you just calculated your annual federal taxes based on Dr. Tyson's allegory to the "tax dollar", you calculated your contribution to federal REVENUE.  Do you want to make any guesses as to how that stacks up against the federal  BUDGET?  Not well!  According to The Hill, "CBO has predicted that in 2012, the U.S. will have its fourth consecutive year with a budget deficit over $1 trillion."  I cannot begin to tell you how to calculate your projected increase in "contributions" required to meet an increased budgetary obligation made by an entity that is serially delinquent with its bills, but my guess is, it's more than a penny.   

To further the case for increasing NASA's funding, the group provides this chart of the NASA budget history:

http://penny4nasa.org/?q=how

Which may be a little bit misleading if you don't understand that total federal spending during the approximate time frame did this:

When you look at NASA budget history in terms of absolute 1996 dollars as in the following graph (orange trace), which I plucked from Wikipedia, the situation for NASA is a little bit less dire.

http://upload.wikimedia.org/wikipedia/en/1/1a/NASA_budget_linegraph_BH.PNG

There are way more problems with this movement to forcibly take your money for great works of national pride, but I have a day job.  So, I will be back for more later.


Related Post:

Pennies for Flying Cars - Another Tale of the Unseen



An elephant: A mouse built to government specifications. -- Robert Heinlein, Time Enough for Love

Economy: Impossible

Chef Robert Irvine hosts a fantastically entertaining show on the food network, Restaurant: Impossible in which he attempts to turn around failing restaurants with a combination of customer-centric business savvy, a tremendous work-ethic, psychological counseling and a healthy dose of yelling.  To be sure much of the show is geared toward the theatrical, and the businesses are helped by an infusion of cash and at least a temporary bump from appearing on TV.  But the show illustrates a very important aspect of business - it's not all about the cash. Often the proprietors have poured copious quantities of their own money and time into the business only to fail due to their poor decisions, management techniques and food preparation.  Chef Robert provides something more valuable than capital or marketing; he provides entrepreneurism.  He roots out the structural problems in the business plan, or lack thereof, and attempts to fundamentally improve the way the restaurant treats the customer so that they may become profitable in the long term.

I would love to see the show's producers add another layer to the show by providing a subsection of the applicants with cash and free advertising by appearing on the show but with no advice from Chef Robert.  This "control arm" would provide a valuable insight into the application of "stimulus" without any intelligent market direction.  I have little doubt that the control group businesses would continue to struggle more often than not.

You may have guessed that I see this show as an allegory to our current economic struggles and the government's attempt to literally paper them over.  But let me stop you before you think that I am suggesting a layer of guidance bureaucracy atop the stimulus.  Besides the fact that any such bureaucrats are unlikely to have the skills or proper incentives to succeed in such an endeavor, there is already a much better structure in place to provide this market guidance - profit and loss.  When a business fails, the Chef Roberts of the world can take the capital that has been producing things people don't want to buy and apply their knowledge and skills to employ the capital in making things people do want to buy.  They will not always succeed, but they will certainly produce more wealth on the whole than we will by throwing money at bad ideas.

Most people can’t think, most of the remainder won’t think, the small fraction who do think mostly can’t do it very well. The extremely tiny fraction who think regularly, accurately, creatively, and without self-delusion—in the long run these are the only people who count . . -- Robert Heinlein 

In Defense of Moonshiners

You might say that I come from a long line of men who enjoy the drink, so if anyone were to be helped by the paternalistic ban on booze, it would be me.  Unfortunately, it is incongruent with human nature to think that anyone can be protected from themselves.

It's been rumored that my grandfather made moonshine.  He was coal miner in southern West Virginia, so as far as I can tell, the story checks out.  Regardless, let's take a moment to think about who might be hurt from his alleged business.

First, let's consider the case in which he makes a good and safe product.  The most obvious victim is the consumer who cannot control his actions under the influence of alcohol let alone curtail his own consumption of it.  Everyone is familiar with the story of the drunk who, during the brief period during which he keeps his job, goes home and beats his family after a long day at the mill.  Doubtless he and his family would be better off without access to alcohol.  So fine, let's make a law banning the production, distribution and consumption of alcoholic beverages.  Wait a minute, didn't we try that?  What happened?  People kept drinking spirits, which were purchased on a black market.  Black market purchases, as always, were accompanied by violence and products of inferior and practically unverifiable quality.  So the drunk either, in the best case, went blind from drinking methanol, got caught up in gang violence and was killed or, in the worst case, continued to beat his wife and kids.  An organized and ruthless system of crime developed around this black market, leading to a loss of safety and security for the masses, the dissolution of the seemingly well-intended law, and providing fodder for the greatest films of the 20th century.  So much for protecting the first class of victim of this otherwise safe and reputable product.  It turns out there were a great number of unforeseen victims ignored by the well-meaning legislators, as is usually the case.

Second, you may say, "There is no guarantee that his product is safe and reliable.  He could really hurt some people by selling wood alcohol or blowing up his home and still."  Fine, let's regulate the production and distribution of alcoholic beverages.  This should sound perfectly reasonable and familiar to everyone.  But to whom do we grant these licenses and for what cost?  How do we separate ourselves from the organized crime bosses, who after all merely sought to bring order to the unruly anarchy before them and who employ the same tactic that we propose - physical force?   You may say that we elect officials to conduct our raids and protect our made men at our chosen distilleries, but this is merely different in magnitude, not in kind.  Had Capone's business been more popular in the eye's of the public, would any among us have considered them just?  Those of us who wish to govern must understand that proclaiming the power to license inexorably weakens our armor to corruption as those who have purchased our favor will certainly pay to keep their neighbors out.  So, by assuming rights we do not have, we will have disrupted what integrity remains of our government all in the name of an alleged good which can never be measured at cost which can never be known.

Let the moonshiner's reputation govern the safety and quality of his product.  Let him engage in peaceful transaction with his benefactors in the sanitizing light of day.  Let freedom ring; and let's have another drink!

A whore should be judged by the same criteria as other professionals offering services for pay—such as dentists, lawyers, hairdressers, physicians, plumbers, etc. Is she professionally competent? Does she give good measure? Is she honest with her clients? It is possible that the percentage of honest and competent whores is higher than that of plumbers and much higher than that of lawyers. And enormously higher than that of professors.  -- Robert Heinlein, Time Enough for Love

 

Incandescent Bulbs - The Seen and the Unseen

During a large portion of the year, in a large portion of the world, I would argue that the incandescent bulb is 100% efficient.  Provocative enough?  Well it shouldn't be.  If you're thinking that incandescent bulbs are generally reported to be 10-20% efficient, you are correct.  But the energy that is wasted is simply heat put off by the bulb.  Here in Pittsburgh there are only 4-5 months out of the year that I am not running the heat, at least intermittently.  This means the heat put off by the bulb, even though it is quite small in magnitude, is helping me heat my house.  So from my perspective, the bulb is 100% efficient during such time.  I doubt this consideration has been included in the justification of the laws attempting to ban incandescent bulbs in favor of the "more efficient" compact florescents.  This thinking is in line with the overly constrained and simplified engineering perspective that our great leaders so often take when attempting to run out lives.  They will always fail to take into consideration all potential use cases - in this case they missed a pretty big one.  It is relatively easy to come up with models and estimates for how much product X is going to save the average consumer Y.  The difficulty comes in extrapolating those savings to the entire population.  It is quite easy to imagine scenarios in which a CFL does not save John Q. Citizen any money or is more trouble than it is worth.  But it doesn't matter.  Our choice will be forcibly constrained so that model citizen Y may save a few bucks using his light bulbs in a particular way.   

The Need for Government - A Fallacy?

Is it just me, or does pretty much every argument for the necessity of government boil down to the argument from personal incredulity, "I can't think of how X can be true, therefore X is false."  These arguments come from Left, Right, Center and even radical Libertarian minarchists.  The story is always the same:

We have to have government because...

• ... I can't conceive of how we would have roads without them.  
• ... I can't imagine who would take out the trash.
• ... it's impossible for people to pay for their own healthcare. 
• ... no one would be able to keep law and order.  
• ... I can't imagine parents educating their own kids. 
• ... I don't see how businesses will regulate themselves such that they will produce high quality, safe products.  
• ... I can't come up with a way to make basic science research profitable without subsidies.  
• ... it would just be utter chaos without it.  

Perhaps I am missing something.  I'm sure you'll let me know.  

I Am Officially Getting in the Way

It's easy to miss the point of an article, blog or oral argument, especially when you are more interesting in grinding your ax than really understanding the other point of view.  It turns out this is even the case for highly skilled philosophy experts.

Every struggling upstart blogger is thrilled to see notifications of comments on one of their posts.  I am no different; I relish each of the 10 comments my site has received.  A few weeks ago I was delighted to see a new comment but was surprised to find that it was a tag from another blog.  I pasted the address into my browser and was delighted to find a rather lengthy article devoted to missing the point of my original commentary which was essentially a very simplified, sound-bite-style summary of the socialist calculation problem.  I never intended for the piece to be a thorough dissertation on the topic, but rather, a rant the blow off steam and preach to for four-person choir that is my following.  But I posted it nonetheless, so it is fair grounds for debate.  It is a curious strategy to pick on a blog nobody reads, but I am flattered still.
 
The argument, which was about 5 times the length of my original post, went something like this (parenthetical statements are to be taken from my perspective):

1. Talented individuals do not always perform up to their expectations.
2. Sometimes less talented individuals outperform more talented ones by better honing their skills and being more well rounded.
3. Therefore skill is the relevant metric for predicting success as opposed to talent.  
4. The quoted statement (from my post) implies that no one will ever be talented enough to effectively centrally plan an economy (a gross misunderstanding).  We already know how irrelevant talent is, therefore this statement is false.  
5. Our institutions have it all wrong because they tend to look at talent instead of skill. 
6. Parents who tell their children to follow their talents and do what they love are "almost criminal" because alot of people don't like their jobs.  
7. Therefore, we can't give up on central planning because we haven't been appropriately looking for or demonstrating the skills required to be successful at it.  We have to keep our optimism and keep plugging away (in spite of a total lack of evidence to the efficacy of central planning).

I especially enjoyed the conclusion:

"This is just one more reason why I find libertarian bomb-throwing to be wearying: we already know that something is going wrong, and we already know how to make it better. What we need is for fewer people to pounce on the opportunity to be bitterly pessimistic and instead look around them at the ways in which we can, have, and do make things work - or, in the case of people who can't manage that, to at least have the courtesy to stay the fuck out of the way."

Really, "we" know how to make it better?!  Then why didn't "we" stop it from happening in the first place.  The author must suffer from the delusion that there was no central planning going on prior to the crash and that only the government can swoop in and save us from the dastardly deeds of "the market".  The original point he is missing, and I take part of the blame for being so terse to begin with, is not that no one is smart enough, talented enough or even skilled enough to manage an economy.  The point is that no one will ever acquire the knowledge needed to do such a thing at the time they will have needed to do it.  To think otherwise is pure hubris, and frankly, quite dangerous.  This is not pessimism per se; I simply disagree with the position. that "we" can and must do something.  I am quite optimistic that free individuals left to their own devices and allowed to live, innovate, and trade freely will prosper.

Besides all of the practical considerations, which I leave to Mises, Hayek and Rothbard for further detail, there is no moral justification for central planning.  No amount of skill gives anyone the right to force me to use a particular type of money or to spend it on a particular type of good.  No level of crisis gives anyone the right to take something from one individual by force and give it to another.  It seems pretty clear to me, that the man who proposes we give up on peace and start imposing the will of the state on formerly free people should bear an enormous burden of proof well beyond torturing a distinction between "talent" and "skill".  Further, it is clear that he is the one standing between us an prosperity.  

The author, after missing the finer points, has hit square upon the central purpose of this blog - to get the fuck in the way...




...of legal plunder*.








*If you didn't get this, you haven't been reading enough Bastiat.
 

Cold, Soft Cash

You will occasionally hear old-timers use the phrase "Cold, Hard Cash".  This is clearly an expression of a bygone era as our cash no longer can be misconstrued as "hard" in any way.  The fiat bugs (they call us gold bugs) have managed to destroy the currencies of the world by pegging them to the ever fluctuating index of bureaucratic whim.
"How can you say the dollar is weak?" people often ask me me, "After all, it is thumping the Euro (or the Peso or the Canadian dollar) this week."  This would be like concluding that my nephew is getting shorter because my niece is going through a growth spurt.  In order to draw meaningful conclusions about the value of cash or the heights of youngsters, we need a stable, standard reference.

Today's James Taggart

While reading Peter Schiff's excellent article on gold investment, I realized that the real James Taggart is alive and well.  The following is an excerpt from that article focusing on the Oracle of Omaha's less than honest, politically charged rhetoric of which we should all now be familiar.

[Warren Buffet] has been in the press since last August claiming that he pays less taxes than his secretary – and urging Congress to pass a "Buffett Rule" mandating a 30% minimum tax on millionaires. The natural reaction is to say, "If you want to pay more, go ahead." But Buffett has gone on record saying that it's not enough for him to lead by example, and demanding that all of America's well-off bear the burden of Washington's reckless spending binge.

The problem is that Buffett's entire argument is constructed on deception. Buffett is rated as the third richest man in the world for managing the nearly $393 billion in assets, and he highlights that he pays only pays 17.4% of his income in taxes. But this is because he earns less than 1% of his annual wealth from his salary, while over 99% is earned as the largest shareholder of Berkshire Hathaway. Buffett claims that he discounts his Berkshire holdings because he plans to give it all to charity when he dies. So, it's not that the tax rates are so low, it's that Buffett plans to give away 99% of his wealth.

But even accounting for this clever accounting trick, Buffett is still grossly understating his personal tax burden. He owns roughly 1/3 of Berkshire's outstanding shares, the profits from which are subject to a 29% corporate tax rate. Last year, Berkshire paid $5.6 billion in taxes – and the IRS says they owe $1 billion more! In addition to corporate taxes, Buffett is also subject to an additional 15% capital gains tax on his stock when he cashes out, not to mention any future estate tax, leaving many to conclude that his share of taxes is certainly higher than his secretary's.

Ayn warned us that we would have to save Capitalism from the capitalists.  She is turning out to be more prescient than we could have imagined.

The Core Fallacy of Central Planning

The fundamental fallacious assumption that all central planners make in the course of their divine intervention into our personal affairs is not that they are smarter than the average person or even that they are the smartest person alive.  Rather it is that they are smarter than all of us put together.  

Was bailing out GM a good idea?  Well maybe, maybe not, but "we" had ample opportunity to make investments in the company on our own through the stock market.  Perhaps investors chose not to do so for a reason - it wasn't a sound investment.  Instead, the geniuses in the federal government decided that they were smarter than the whole of the people and that they would force us to "invest" in GM's future.  

Should we invest in new forms of energy?  On an individual level investing in particular energy concerns may pay off handsomely and help the future of mankind immensely.  Unfortunately when the central planners decide where to spend our money, they do so based on  much less information and insight than our pooled individual efforts, and they base their decisions in whole or in part on political merits.  They may occasionally back into a good idea that pays off, but their historical record is pretty awful - think Soviet Union.  The fact is "we" shouldn't be investing in anything.  The government has no right or authority to plunder our savings to fund their pet projects.  What's worse they will never have the information or the skills to succeed at it, regardless of who is in office.  


A committee is the only known form of life with a hundred bellies and no brain. -- Robert Heinlein

Append "By Force"

I am usually more for breaking laws than making them, but I just had one of those there-ought-to-be-a-law moments that I imagine liberals and conservative have daily.  My law would be that every time someone who is either running for or executing some government office speaks to the public and gives a plan for how they are going to "help" us, they must append the words "by force" to their statement.

Example:  We're going to invest in Green Energy - by force.  We're going to provide health insurance to every American citizen - by force.

This may seem cumbersome, but in my opinion it is the best way to ensure that the motives and methods of the government remain in clear view of the general populous.  Just imagine how poorly FDR's Second Bill of Rights would have been received if this law was in place.  Hell, the State of the Union Address might even be bearable were this law in effect.

I think most people apply the old adage about sausage to government - it's best not to think about how it is made.  But, if we are to be consistent moral agents, we must not ignore the dirty side of governance lest we give our sanction to the imposition of force on others.  What made the Solyndra scandal so egregious was not that the president and his cronies picked a loser, it was the fact that they took money from the taxpayers - by force - and propped up a pet company in a politically sexy business.

Call your congressmen; let's make it happen!