Year: 2014

Precios inflacionarios en la industria farmacéutica global

Guillermo Pineda Economics , , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,

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En Guatemala se impuso la insignificante multa de US$.20,000 a la industria multimillonaria de farmacias que venden medicamentos con altos porcentajes de descuentos. Este caso es uno más de cientos que tienen lugar en los países en vías de desarrollo.  Estudios que explican las razones por las cuales se paga más por medicamentos en países en vías de desarrollo han sido publicados y luego, ignorados por el Establishment.  Al centro de la discusión deberían de estar los criterios utilizados por la industria farmacéutica para establecer los precios de sus productos.  Empezando por acá se podría corregir errores elementales como los que pueden leer en la imagen de esta noticia publicada el día de hoy en el diario Prensa Libre titulado “Descuentos en medicinas no son reales“.

Los burócratas en esta nota aducen que “los descuentos no son reales” y por lo tanto piden al gobierno que legislé sobre los precios a los medicamentos con el establecimiento de controles.

Desafortunadamente, una legislación de control de precios no funcionará. Los descuentos son reales, existen, se aplican sobre un precio establecido según las reglas del mercado estipuladas por lo que existe en el mercado (oferta controlada por la industria farmacéutica global + oferta regulada por una grupos de lobby locales) y por lo que están dispuestos a pagar los consumidores (demanda) por estos productos que de “precios de libre mercado” tienen solamente el nombre.

Se puede hacer algo acaso para (rescatar) esta industria de las garras de las grandes corporaciones y permitir que los precios sean establecidos según las reglas del libre mercado?

Sí, la solución es sencilla pero relativamente imposible. El establecimiento de precios inflacionarios sobre industrias controladas por una pequeña elite capitalista en el pseudo “libre mercado global” es el resultado de que estas industrias estén protegidas por privilegios en los países desarrollados. Es allá, en el norte global donde los primeros pasos de nuestra solución se hayan. Destruye la raíz de los problemas y es muy difícil que la mala hierba vuelva a crecer.  Para esto es necesario comprender las razones por las cuales la postura neoclasica de considerar este tipo de problemas desde el punto de vista de “fluctuaciones en las reglas de la oferta y la demanda” es incompleto y no integra la complejidad de las sociedades de economías corporativistas y patrimonialistas en ausencia del de estado de derecho y/o en la existencia de economías mixtas que favorecen a grupos de interés.

Lo que la nota de este periódico muestra es lamentablemente el final de la cadena de malas decisiones económicas que existen en todas las industrias de nuestros estados naciones hoy en día.  Lo que hacen las empresas de venta minorista es una copia en pequeño de lo que acostumbran hacer las industrias farmacéuticas globales.

La estrategia de imponer precios artificiales a través de acuerdos corporativos globales que fueron inspirados en los precios de monopolio a la antigua usanza del estado-nación continúan y solamente se transforman en nuevas estrategias comerciales conforme la economía se ha ido integrando cada vez más.  Se ha incrementado controlando monopólicamente el mercado global y  distorsionando ‘efectivamente’ los precios para inducir precios inflacionarios.

La crítica y solución debe dirigirse a cuestionar el actual modelo de  economía política que rige y en cuestionar las condiciones del actual dominio del capital financiero corporativista, la  crisis estructural del capitalismo corporativista y la crisis ‘artificial con los controles de oferta y aumento de precios que continúan imponiendo las industrias globales de la provisión de energía y alimentos.

Ya ven como la única solución de este problema es sencilla pero casi imposible? O quizás se pueda solucionar más fácil de lo que pensábamos?

The Problem with Modern Monetary Theory

Fred Foldvary Economics, History, Liberty , , , , ,

“Modern Monetary Theory,” a doctrine about fiat money, has captured the attention of some reformers and progressives. This doctrine – a set of propositions contrary to logic and evidence – purports to explain why the US and other economies are ailing, but is beset by contradictions with the historic facts and within the doctrine.

For example, The New Inquiry on 11 April 2014 featured an article by Rebecca Rojer on “The World According to Modern Monetary Theory.” The author regards it as a revelation of MMT that the “rules of money are not immutable laws of nature.” Since the science of economics explains the effects of incentives and decisions, evidently these money “rules” are the outcomes of private and governmental decisions, and since the effects are not immutable laws, people can arbitrarily create whatever outcomes they wish. That would indeed be wonderful, to just print money are thereby eliminate unemployment, depressions, and poverty, all without creating price inflation, because the rules of money creation are not immutable, so we can have whatever outcome we wish!

Science is based on logic and evidence rather than “revelations.” It is possible that there have been revelations, but these create religion rather than science, since if an experience or experiment cannot be duplicated, the revelations are not sufficient for scientific warrants. Various religions have had different revelations, and the members do not believe the revelations of the others.

The author provides an example of the MMT doctrine. Suppose there is an island that has minerals. The owner of the mines hires workers and pays them with fiat money, like the paper and bank-account money we have today, i.e. money created out of nothing. But the owner also imposes a tax on the wages of the miners. So evidently this mine owner is a government, and we are not dealing with private enterprise, but a coercive socialist state. The miners work enough to both pay the wage tax and be able to survive.

But a premise of this MMT island example is that prior to the mining, the people were able to hunt and farm without working too hard. So why would anyone work in the mines? The historical explanation is the “enclosures” movement, in which land that was held by small-scale farmers or by villages was forcibly taken by the aristocracy or by the state or by foreign invaders. This is not a money story, but a land-grab story. Another way to get forced labor, other than chattel slavery, is to require the payment of taxes in money, which forces subsistence farmers to work on plantations at least long enough to pay the taxes. That is more a tax story than a money story, since if the government insists on being paid in coconuts, and a farmer does not grow coconuts, he must work on the coconut plantation, get paid in coconuts, and then pay the tax. Therefore the forced labor is based on the government’s restrictions on alternative employment opportunities.

MMT is correct in stating that one way that the government gets people to accept its fiat money is what economists call the “fiscal theory of money,” that the government reinforces its money as a medium of exchange by requiring the use of that money for paying taxes. However, if the government currency is being hyper-inflated, taxpayers would keep their savings in, say, gold, or a stable foreign currency, and then convert it to the fiat money only when a tax payment is due. The fiscal effect only works if the government is not creating too much inflation.

Therefore MMT is incorrect as stating, as a “core building block,” that forcing people to pay taxes with fiat money “gives it its value.” That was not the case, for example, in Zimbabwe, which suffered hyperinflation. One “immutable” economic law of money is that the creation of money, beyond what is needed for transactions, results in price inflation, and the payment of taxes becomes tied to that inflation, via the nominal rise of prices and wages, rather than preventing inflation.

A related fallacy of MMT is that “sovereigns” in general create money by “spending it into existence.” That can indeed happen, as for example in the Zimbabwe hyperinflation, but in the US and most countries today, government spending comes from taxes and borrowing, not money creation. The central bank, such as the Federal Reserve, does not create money by spending it for goods, but rather by buying bonds and then increasing the banks’ reserves or funds to pay for the bonds.

Since the “core” proposition of MMT, that price inflation can be controlled by government’s taxing and spending, is incorrect, the whole superstructure of the MMT doctrine built on it collapses. Actually, MMT does accept the proposition that monetary inflation creates price inflation, but that true proposition contradicts the core MMT premise that tax-paying gives money its value.

A worse MMT fallacy is that the taxes paid to the government destroys money. MMT tells us that governments create money when they spend, and then the money disappears when taxes are paid. But a tax no more destroys money than the dollars used to buy bread. The seller of bread now has the money, and the government now has the dollars paid in taxes, and they then spend that money.

There have been various theories and doctrines on money and banking in the history of economic thought, and in my judgment, the explanations that best fit the facts are a combination of the monetarist and the Austrian schools of thought. The monetarist core is the equation MV=PT, which explains that the quantity of money (M) multiplied by its annual velocity or turnover (V) equals the price level (P) multiplied by the amount of transactions (T) measured in money. Thus high price inflation, a rise in P, is usually caused by monetary inflation, an on-going increase in M.

The Austrian school explains how excessive monetary inflation not only cause price inflation, but distorts relative prices, such as when house purchase prices rise faster than rentals. Austrian theory shows how governmental central planning fails because the knowledge to do so well is always lacking, and that applies to money as well. Hence the Austrians propose free-market money and banking, so that the market sets interest rates and the money supply.

Indeed the Fed failed to prevent the Great Depression of the 1930s and the Great Recession of 2008, and its policies generated high inflation during the 1970s and the cheap credit that has fueled land-value bubbles. MMT cannot do any better, because, as the Austrian theory explains, the optimal money supply is not only not known, but not knowable. The pure free market provides the optimal money supply just as it provides the optimal amount of bread and the optimal amount of shoes.

Useful neoconservative insights

Edwin van de Haar Liberty , , , , , , ,

It is not common for liberals to praise neoconservative thinkers. Regardless if this concerns domestic politics or international affairs.  While this normally makes a lot of sense, sometimes the liberals are clearly at fault. I recently re-read two of Robert Kagan’s most famous books: Paradise and Power: America and Europe in the New World Order (2003) and The Return of History and the End of Dreams (2008). The power of Kagan’s analysis struck me again in these two concise books, predominantly his balanced treatment of the enduring and dominant role of power in world politics. This is something not many liberals are keen to accept, the classical liberals excepted, most notably Hume, Smith and the certainly the hawkish Hayek.

In the light of the topical situation in Eastern Europe, let me quote a few lines from The Return of History.

  • ‘One of the geopolitical fault lines runs along the western frontier of Russia, [Ukraine included] with Russia on one side, and the European Union and the United States on the other. Instead of an anticipated zone of peace, western Eurasia has once again become a zone of competition.’
  • ‘If Russia was where history most dramatically ended two decades ago, today it is where history has most dramatically returned. Russia’s turn toward liberalism at home stalled and then reversed, and so has its foreign policy […….] Great power nationalism has returned to Russia and with it traditional great power calculations and ambitions.’
  • ‘Contrary to the dismissive views of many in the West, Russia is a great power, and it takes pride in being a force to be reckoned with on the world stage.’
  • ‘its oil and gas wealth has allowed Moscow to increase defense spending by more than 20 percent annually over the past three years’.
  • ‘This new sense of power today fuels Russian nationalism. It also stirs up deep resentment and feelings of humiliation […] such as acceptance of NATO enlargement, the withdrawal of troops from former Soviet republics and the ceding of independence to Ukraine, Georgia and the Baltic states.’

Recall this was in 2008 and it just a very brief selection. There was not much the liberals (of all persuasions) could have added to this. Liberals generally lack realistic let alone original views on world politics. That is simply not good enough, if they have intentions to widens the appeal of liberal thought. An embrace of neoconservative insights such as Kagan’s would be a good start.

Choques reais e choques monetários…juntos – observações aleatória sobre bitcoin, Lucas, Marschak e, claro, política monetária

claudio Liberty , , , , , , ,

One source of difficulty in formal empirical studies of monetary policy effects on real variables has been the common practice of focusing attention on real responses to policy innovations—i.e., unexpected components —in vector autoregression (VAR) studies. [McCallum, B.T., here]

O que dizer da distinção entre choques reais e monetários quando o governo norte-americano, de forma inteligente, aceita a inovação do bitcoin?

Pois é. A criação do bitcoin e similares é um choque tecnológico, mas é também um choque monetário. Digo, você injetou mais moeda de forma descentralizada e temporalmente aleatória na economia. A princípio, isto tornaria a oferta de moeda mais instável do que a demanda, penso.

Bem, como seria de se esperar, políticos, que são tão racionais quanto nós, facilitaram o fluxo de bitcoins…para eles.Seria legal agora que pudéssemos investigar uma galera da Papuda. Será que eles têm bitcoins também?

Old bottles…

Suspeitas à parte, a questão sobre como medir o choque monetário do bitcoin é algo a ser pensado, não? McCallum já chamava a atenção para a dificuldade, em termos do debate acerca da demanda de moeda (a equação (4) do texto, reproduzida a seguir) e dos choques tecnológicos já em 2002.

mt −pt = γ0 +γ1γt +γ2Rt +εt

Agora que você se lembrou da famosa equação, eis o trecho interessante:

Indeed, it would seem almost to suggest the opposite—for the theoretical rationale for (4) is built upon the transaction-facilitating function of money, but the technology for effecting transactions is constantly evolving. And since technical progress cannot be directly measured by available variables, the effects of technical change (not captured by a deterministic trend) show up in the disturbance term, εt. But the nature of technological progress is such that changes (shocks) are typically not reversed. Thus one would expect a priori there to be an important permanent component to the εt process, making it one of the integrated type— and thereby making mt −pt not cointegrated with yt and Rt.

Podemos ver que McCallum, ao discutir a questão do progresso tecnológico, deu-nos uma pista para como poderíamos começar a entender o problema. Temos que estudar mais séries de tempo, cointegração e pensar melhor no sistema de equações que usamos. Ok, não é um conselho fácil, mas nem inventar o bitcoin foi fácil, não é?

Fica esta dica para o debate sobre o choque que é (ou os choques que são) a introdução do bitcoin no modelo.

Mas vamos aproveitar que o autor é bom e citar outro trecho!

“Eu já sabia. Pelo menos o Lucas deve ter lido meu artigo…”

Ah sim, em um outro excelente momento do texto, ele mostra seu conhecimento da evolução histórica do pensamento econômico. Vejam que trecho ótimo:

Now clearly the switch from the fixed-lag to the rational expectations hypothesis was the consequence primarily of theoretical, rather than empirical, analysis. At the time it seemed a rather drastic step, but after the fact it has come to be recognized as an entirely natural extension of the usual approach of neoclassical economic analysis to an area of economic activity (expectation formation) that had previously been treated in a non-standard manner. Today, many economists trained after 1980 appear, empirically, to have difficulty in even contemplating any other expectational hypothesis. Also, it should be remembered that Lucas’s critique itself was not new, but merely a (brilliantly persuasive) application of Marschak’s (1953) fundamental insight that policy analysis requires a structural (as opposed to reduced-form) model.

Marschak é um autor bem mais antigo, nascido em Kiev (Ucrânia, Putin, Ucrânia…) e, como você pode ver, não era um sujeito qualquer. Não digo para sair por aí correndo para ler artigos dele, mas pense na questão que sempre destaco aqui: a importância do capital humano na formulação e condução da política monetária. De certa forma, o genial Bryan Caplan já pensou em algo assim quando publicou aquele artigo que sempre cito aqui sobre a idea trap (versão para iniciantes aqui, para alunos que já fizeram pelo menos um ano de curso e não temem as letras do alfabeto em combinações algébricas aqui).

Só para você ter um gostinho do que Caplan intuiu:

The current paper presents a simple political– economic model of the interaction of growth, policy, and ideas to explain this puzzle. Growth, policy, and ideas are mutually reinforcing, given a key assumption about the impact of growth on ideas. Countries tend to have either all ‘‘good’’, all ‘‘mediocre’’, or all ‘‘bad’’ values. An important implication is that social forces do notinexorably drive economically unsuccessful countries to reform. In my model, policy ‘‘turn-arounds’’ instead arise due to large random disturbances that shock economies into better equilibria. While this conclusion is somewhat counterintuitive, it is much more consistent with the empirical failure of the convergence hypothesis than the optimistic ‘‘learning’’ model (Williamson, 1994a).

Pense nisto um pouco. Não é o que ocorre no Brasil? Sai uma equipe econômica que coloca a economia no lugar, entra outra que parece não ter lido nem um livro-texto básico. Não há porque a política econômica ser sempre melhor do que a anterior porque ela é feita por seres humanos. Logo, diria o leitor de Buchanan, precisamos de amarras constitucionais para não dependermos de anjos, né?

Eu adoraria falar mais disto, mas notei que isto está se transformando em outro post. (a ser publicado em De Gustibus Non Est Disputandum)

Energy Primer for Libertarians (or anyone else)

Warren Gibson Current Events, Liberty , , ,

One of these days Brandon’s going to kick me off this blog for posting notes that aren’t “on liberty.” But maybe he’s not looking. I’ll take a chance.

This piece is about energy and on second thought, it is relevant to libertarians. We need to know what we’re talking about when we enter into controversies on current topics like energy. Insights into how markets work are crucial, of course, but not sufficient. We should arm ourselves with a few facts and Lord knows, maybe even a little understanding of basic physics.

I base my remarks on an excellent chart produced by (gasp!) a government agency, Lawrence Livermore National Laboratory. It appears here but if it’s illegible please find a better copy here.  Blame Brandon for squeezing our posts into a narrow column!Image

We see energy sources on the left. A couple of facts stand out. At the top, notice that solar and wind are negligible. The yellow line representing solar may be thinner than a single pixel on your monitor and therefore invisible. Geothermal is on the radar, but barely; same for biomass (wood chips, organic leftovers, corn used for ethanol instead of feeding people) that can either be burned or processed into methane or ethanol. Our three main sources are, and will be for the foreseeable future, petroleum, coal and natural gas.

At the top center we see electricity generation. We don’t consume electricity directly except maybe for executing criminals. We use it to power devices in the four broad categories shown on the right: residential, commercial, industrial, transportation.

Notice the fat grey line coming out of the electricity generation box called “rejected energy.” It tells us that about two thirds of the energy coming into power plants goes up in smoke or steam or other waste heat rather than electricity. That sounds like a terrible loss and indeed, there is always room for efficiency improvements at the margin. But, boys and girls, there’s something called the Second Law of Thermodynamics which puts an iron limit on how much energy in a particular situation is available to do useful work. In other words, a certain amount of the “waste” represented by that fat gray line is inevitable. It would be great if the good people at LLL could supply that calculation, but I suspect that reliable estimates of the necessary data would be difficult to come by.

Look at the residential box on the right. It only represents 11% of energy consumption meaning that relative to the big picture, home energy efficiency measures like insulation, solar panels, etc. can never do much for the big picture. I say this too keep things in perspective, not to deny the possibilities for cost-effective marginal improvements in many homes.

If your monitor resolution allows it, you’ll see a tiny orange line running from electricity generation to transportation. That means electric vehicles are, and for some time will be, utterly insignificant, though again, marginally beneficial in very special situations.

Another fat gray line comes out of transportation. When you burn gasoline, most of the energy goes out the tailpipe or the radiator; only a little ends up as kinetic energy and even that ends up as waste heat when you apply the brakes. (In the long run, it all ends up as waste heat. Look up “heat death” on Wikipedia.)

The overall message of this chart is: if we want to maintain anything like our present industrial civilization with its abundant heat/cooling, light, transportation, etc., we’d better keep the present main sources going – petroleum, coal, natural gas, nuclear because renewable energy sources are advancing only slowly and in many cases (wind and ethanol, especially), uneconomically. The stakes couldn’t be higher – significant losses of energy, more than anything short of nuclear war, will make life nastier, more brutish, and shorter.

How to decide which energy R&D projects deserve scarce resources? Solyndra, anyone? No, central planning of energy is just as much a disaster as any other form of central planning or maybe more so. Energy is a highly specialized field. A biomass expert, for example, may be ignorant of nuclear fusion. A transformer guy may know nothing of transmission line losses. I suspect there are dozens or hundreds of subspecialties within the biomass field. Knowledge, as Hayek taught us, is dispersed and often tacit. We need to let all these specialists use their particular knowledge and facilities to experiment around the edges, comparing present or expected future marginal costs and benefits. Other than an occasional nice chart like you see here, the Energy Department just gets in the way. (To see a boondoggle that dwarfs Solydra, google “national ignition facility.”)

Speaking of costs and benefits, one of these days I’ll comment on the strange notion that energy accounting – a perfectly legitimate engineering practice – should be used to judge the economic value of energy projects. Tallies of income/expenses and assets/liabilities, should, say proponents, be carried out not in dollars but in energy units (joules or BTUs.) Why is this wrong? Because the economic value of a joule depends on time and place and most critically, people’s ability to make good use of it. In fact, natural resources aren’t resources at all until and unless someone figures out how to make good use of them.  More generally, value never inheres in physical objects and materials but only in the minds of people who believe those objects and materials can help satisfy wants, theirs or others’.

Postscript: The oceans store unimaginable amounts of thermal energy. You can calculate this yourself: using your favorite system of units, just multiply the volume of water by its mass density by its specific heat at constant pressure. You’ll discover that if we were willing to lower the ocean temperature by a thousandth of a degree per year, we would have abundant energy from now till Kingdom Come. Try this idea on a “progressive” friend sometime, keeping the answer momentarily in your back pocket: the Second Law forbids it. Stated differently, even with perfect technology, you would have to put more energy into the conversion process than the usable energy end product.

Abstract Ideas Don’t Deserve Patents [NY Times]

Adam Magoon Current Events, Law, Liberty, Philosophy, Politics , , , , , , , , ,

In preparation for something special that I will finally complete this week (Rothbard willing) lets talk about this editorial from the New York Times.

 

The article starts accurately enough explaining the US government’s monopoly power of ideas saying:

The Constitution gives Congress the power to grant inventors a temporary monopoly over their creations to “promote the progress of science and useful arts.”

 

I am actually shocked at the strong language used here, the four letter word “monopoly” is rarely used in reference to any government service.  At least in polite company.  I would also like to point out the subjective language quoted from the constitution.  “Useful arts”.  Useful to whom?  To the inventor?  To consumers?  To the government?  To humanity?  Like most state activities the ability to decide what is “useful” is left to bureaucrats in service to the government rather than in the free market where useful services will generate profits and those that generate disuse (or disutility) are met with losses.  Back to the article though:

“But in recent years, the government has too often given patent protection to inventions that do not represent real scientific advances.”

 

No argument there.  The “copyright troll” phenomenon is more than enough to make this libertarian squeamish.  Where is this editorial going I wonder?

  “The issue in this case, Alice Corporation Pty. v. CLS Bank International, is whether using a computer to implement a well-established economic concept can be patented. The court should rule that such ideas are not eligible for patent protection.

 

Alice Corporation obtained four American patents that cover a method of settling trades between investors in currency and other financial markets. The approach depends on a neutral middleman to make sure traders complete the transactions they have agreed to. The corporation, which is based in Australia, has accused CLS Bank, a London-based company that settles foreign exchange trades for investors around the world, of infringing its patents.”  

To make a long story short the US patent office granted the Alice Corporation a copyright on a form of interaction between a buyer, a middleman and a seller.  An absurd concept to be sure.  Now the question is what does the editorial suggest?

“The Supreme Court should make clear that nobody should be allowed to claim a monopoly over an abstract idea simply by tying it to a computer.”

I agree; but why stop there?  Why the artificial endpoint of “abstract ideas tied to a computer”?  If we shouldn’t allow patents on abstract ideas what would the author suggest if we proved that all ideas are necessarily abstract and therefore not able to be owned, sold, or monopolized?  Would he follow his logic to the conclusion that perhaps all patents are invalid?

Open Access Gary Becker papers, and a couple of thoughtful links on him

Brandon Christensen Current Events, Economics , , , , , , , , , , , ,

Nobel Prize-winning economist Gary Becker died Saturday. For those of you who don’t know about his work, go here. For the rest of you, economist Tyler Cowen has compiled a great list of articles by Becker that you can read:

    1. “Irrational Behavior and Economic Theory.”  Can the theorems of economics survive the assumption of irrational behavior? (hint: yes)
    2. “Altruism, Egoism, and Genetic Fitness: Economics and Sociobiology.”  The title says it all, from 1976.
    3. “A Note on Restaurant Pricing and Other Examples of Social Influence on Price.”  Why don’t successful restaurants just raise the prices for Saturday night seatings?
    4. “The Quantity and Quality of Life and the Evolution of World Inequality” (with Philipson and Soares).  The causes and importance of converging lifespans.
    5. “Competition and Democracy.“  From 1958, but most people still ignore this basic point about why government very often does not improve on market outcomes.
    6. “The Challenge of Immigration: A Radical Solution.”  Auction off the right to enter this country.

Cowen also linked to sociologist Kieran Healy’s fascinating take on Michel Foucault’s thoughts about Gary Becker’s work over at Crooked Timber (and here is a pdf of Becker on Foucault on Becker).

And economist Mario Rizzo shares some short thoughts about Becker’s work in relation to the Austrian School of Economics (Becker is associated with the Chicago School of Economics). Rizzo’s account of the early 1960s debate on rationality between Becker and Kirzner is worth a look.

Update: Here is Gary Becker’s 1992 Nobel Prize lecture (pdf)

Eurocraine and Russocraine

Fred Foldvary Current Events , , , , , , ,

Elections are supposed to achieve social peace by providing a government that represents the people. But voting has not brought peace to Ukraine. Many people distrust the honesty of the elections, and many in Ukraine have disagreed with the policies of the government, both when policy favored association with Europe and when it favored association with Russia. The fact that many voters in the Crimea and eastern Ukraine favor union with Russia, or else independence, shows that many there do not feel well represented.

The election in Ukraine will not solve the governance problem, because it is just a continuation of the same system that some are rebelling against. Ukraine needs a new structure of government and democracy. The solution is to shift political power from the central government to the people as individuals. When a citizen of Ukraine holds power equal to that of all others, he will have nothing to rebel against.

Individual sovereignty can best be represented by a neighborhood council. The neighborhood should have a small population, such as a thousand residents. That is small enough for the people to personally know the candidates and for someone to be elected with little cost. The government of Ukraine can begin the decentralization by establishing neighborhood or village election districts. If the neighborhood population is a mixture of ethnic Ukrainians and Russians, and the people wish to have a council that is aligned with one of these groups, or other interests, then the residents may regroup their districts and have councils that best represent their individual interests. This is the level-one level of governance.

In the Russian language, “Soviet” means “council”. The Soviet Union was supposed to be a union of elected councils, and there was indeed a structure of bottom-up multi-level soviets, but in practice, the Communist Party ruled top-down. Ukraine should resurrect the old Soviet system, which actually derives from the 19th-century anarchist concept of associations of voluntary communities. The Bolshevik slogan was, “All power to the soviets!”, but instead they perpetuated the dictatorship of the proletariat, usurped by the party oligarchs.

The power of the neighborhoods has to be constrained by a constitution that recognizes and enforces natural rights. In most countries, constitutions that proclaimed liberty have failed to be implemented, mainly because the structure of mass voting facilitates plutocracy, with policies that transfer wealth from workers to the moneyed and landed interests, resulting in poverty that gets remedied by trickle-down government welfare.

But with the bottom-up system of genuine soviets, the government would much better represent the people, and constitutional rights would be more strongly protected. As the level-one councils elect level-two regional councils, and these elect the supreme soviet or national parliament, the structure would prevent the usurpation of power from the top. The president would be elected by the parliament and easily dismissed if the people are dissatisfied. Any council member could be recalled by the council that elected him.

Decentralized government gets hampered by centralized tax collection, such as an income tax or value-added tax imposed from the central government. Decentralized governance is suitable to decentralized public finance, and the source of public revenue best suited to local power is the tapping of the area’s land rent or land value. Taxing wealth and investment invites capital to flee, hide, or else it shrinks from the burden. But land cannot hide, and it does not run away, nor does land shrink when taxed. Revenue from land-value taxation can be applied by the level-two councils, with revenues sent to both the level-one and level-three governments.

Ukraine needs two things: better governance and strong economic growth. The replacement of the current complex of market-hampering taxes by taxes on land value and pollution would give the economy such a comparative advantage that investment would pour in, wages would rise, the government would be able to pay off its debts, and the economic misery that fuels much of the unrest would be replaced by an economic joy that would eliminate the economic motivation to join Russia.

With small-group voting, the residents of eastern Ukraine would have their own local Russian-speaking councils, and probably ethnic Russian level-two councils representing some 25 thousand persons. The constitution of Ukraine should devolve most government services to the level-two councils, including local security, education, and public works. The ethnic Russians would no longer feel alienated from the government, and the government of Russia would find it difficult to control the local governments, because the council members would come from the people.

As to the situation of takeovers of government buildings in eastern Ukraine, the national government should surround them with walls of troops while establishing new centers of administration in other guarded buildings. But a lasting solution needs to replace the current government with councils that people feel represents them. The one good thing about the old Soviet Union, the bottom-up multi-level system of soviets, was the element that was most discarded without any debate. Ukraine: bring back the soviets, only this time, make it “all power to the people” as individuals and their chosen councils.

Irrationality, Self-indulgence, Childishness, Bizarre Beliefs, and Innovation: From the Belly of the Beast

Jacques Delacroix Current Events, Politics , , , , , , , , , , , ,

I have lived for many years the People’s Socialist Green Republic of Santa Cruz in California, right in the Belly of the Beast. That’s not its real name actually, just the name it deserves. It’s a university town of about 50,000. A large campus of the University of California sits on the hills overlooking the town. The campus has several distinguished university departments, including Marine Biology and Astronomy. However, many more of it undergraduates believe in Astrology than know anything at all about Astronomy.

It’s a Bobo-land where LUGs prosper and the boys are quiet, timid, retiring, sweet, and too frightened to do the job that Mother Nature commanded for them. (LUG= Lesbian Until Graduation. I swear I have known several, young apparent lesbians who showed up a couple of years after school with a husband, a male husband, I mean. There is a logic to it: Lesbianism is the highest degree of feminism. It brings you a great deal of political prestige on campus. But then, soon, nature and convention re-assert themselves and everything returns pretty much to what the young woman’s parents always wished for, a dual income family, children, etc. Note that I have said nothing about or against lesbians by natural inclination.) The University of California at Santa Cruz has a healthy “Department of Feminist Studies,” not “Women’s Studies,” not “Feminine Studies, ” “Feminist,” with an “ist” indicating perhaps a certain lack of scholarly detachment!

Savvy faculty members of 70s vintage (like me) with more or less phony doctorates they invented have used this mass of ignorant, semi-literate, easily revolted, sometimes revolting, overwhelmingly middle-class young people to take over the running of the city. (Note for overseas readers: In California, you can pretty much register to vote anywhere where you have lived for I don’t know how long. I couldn’t even find it on the Internet. No identification is required or even permitted to actually vote. )

Picture it: a mass of voters who have no permanent stake in the city, whose parents in many cases pay their very indirect property taxes (via rent) determine who shall rule the city. When these voters graduate or go on Spring Break, permanent residents like me are left to live with their preferences. I hasten to say that their preferences are not always objectionable even when they are debatable. One example of the latter is covering the city hall parking lot with solar panels, an operation unlikely to be ever audited. I mean that I am not dead-set against such an experiment. I would just like to know how much it cost and how much power it actually produces. If it cost $500 per permanent resident of the city and it generates just enough power to light the city hall for three months, I am against it, dead-set against it. If it cost $50 per resident, anything goes, I think. Well, I will probably never know.

I will never really get old in Santa Cruz because I live here in a time warp. It’s still the sixties here and maybe the seventies. The radical professors go back to my time in graduate school. Some are young enough to have been “trained” by my graduate school colleagues when the latter became professors. They rule, often with the help of wealthy downtown businessmen who used to be hippies or Trostkysts, or both. The climate is a retro-mixture of the simplistic vulgar Marxism of those who have not read a single page of Marx, and of old New Age unexamined beliefs. There was a small demonstration downtown, just yesterday with signs reading: “Capitalism must die so we may live,” and also, “Four days work for five days pay.” (Why as many as four days, I wonder, why not three, or two?) What percentage of the young demonstrators could give definition of capitalism that’s not a mere slogan, I ask myself? (The answer is in Jacques Delacroix’s “Capitalism.” The Blackwell Encyclopedia of Sociology. Blackwell Publishing. Vol. 2, Malden, Mass. 2006.) I would bet the answer is close to 0%, or even less!

In Santa Cruz, there is a brisk local trade in chunks of quartz, loved for their esoteric properties. Their properties are so esoteric, no one is able to explain to me what they are. Earth Day is celebrate here in a lively way. If anyone ventured to declare that one of the two original Earth Day founders, Ira Einhorn, beat his girlfriend to death and left her to dry in a trunk in a closet, he would be accused of slander so absurd as to prove madness, my madness. Incidentally, Einhorn, who had fled to France for fifteen-plus years, was defended to the end against extradition by the French Green Party. Does it show that greenies have a criminal bent? No, it indicates that they lack ordinary criticality. By the way, I knew the other founder, Dennis Hayes, when we were both undergraduates. I am sure he did not murder his girlfriend. That’s half of the founding team. We can’t all be perfect.

Here, in Santa Cruz, I am surrounded by irrationalisms of several categories. They range from otherwise dead varieties of communism, varieties dead everywhere else on earth, including North Korea, to environmentalist cults, through a large number of diet fads the least of which is veganism. Often, I think that my wife, my daughter, my toddler granddaughter, myself, and a handful of friends are the only rational and fact-bound people around.

Why do you live there, JD if you are so critical, if it’s so painful, they ask? Several answers. First, Santa Cruz maybe the only place on earth with beautiful, uncrowded beaches within a forty-five minute drive of Silicon Valley, a strong engine of economic development, of jobs, of technical innovation (perhaps, the strongest engine anywhere in the world). Second, it’s a very beautiful location (Big Sur is next door). Third, there are fish in the ocean only one mile from my house.

Fourth, the stranglehold of the university on the town is not all bad for me personally. It creates a kind of modern serfdom all to my advantage as a mature consumer. There is an inexhaustible local supply of young people who need a job but who are not about to go pick strawberries two miles away, as everyone knows. As a result, hardly anybody here earns more than ten dollars an hour. This basic economic fact makes for well-staffed bookstores, coffee shops, restaurants. Santa Cruz is better endowed with those attractions than any town of its size that would rely on seasonal tourism of non-elite variety. (My town’s main tourist attraction is the Boardwalk, a permanent carnival -a “Luna Park”- attracting blue-collar families and recent immigrants from poor countries who live in and near Silicon Valley.) There is presence of a permanent middle class of professors determined to live la vida loca even and especially if they are ardent Marxist. This fact helps  Santa Cruz  support restaurants that would probably not be found here without them. The movie theaters are better than average for the same reason. We actually also have three brick-and-mortar bookstores, one of which, Bookshop Santa Cruz, is downright lavish. I am often annoyed in this town; I am seldom in excruciating mental pain.

Fifth, with a median age that must hover next to 25 (I did not bother to check,) there is a fantastic music scene around me. I am of an age where I am wont to doddle to sleep in front of the TV fairly early but I like to know that there is good music to be had should it strike my fancy to remain awake. In fact, the rich night musical scene often bleeds into the day time, within my reach.

In general, if you have an open mind however, it’s not always easy to dismiss the other airheads, I find.

On the rare occasions when I go to one of the several “natural” stores in town, I wonder at the sight of paper-thin, shabbily dressed young women clutching three dollars to pay for what looks like an equal number of organic, sustainably and locally grown salad leaves. I snicker secretly of course. Yet, yet, there is good scientific evidence that rats fed a starvation diet live longer than their brethren fed a normal diet. The young women may just be doing the right thing for the wrong reasons.

It’s unavoidable that I have friends who partake more or less fully of the local culture, of course. For one thing, I spend time in coffee shops. They don’t have coffee shops for old conservative curmudgeons, it turns out. If there were, I would probably not patronize them. There is a difference between being one and liking others of the same kind. Besides, old men in public places often try shamelessly to recruit you into their mutual misery clubs: Let me tell you about my arthritis, I will listen about your shingles. Second, I am a writer of sorts. That fact entails a need for services not always provided by narrow rationalists like me. (By God, even my car mechanic is a spiritualist!) So, for example, the person who will adeptly lay out my stories for printing is a friend who will also try to persuade me of the merits of various herbal medicines. (I Used to Be French: an Immature Autobiography is live in the Kindle Store)

Leave me alone, I protest, I go by science alone. I don’t think I have any choice on this. It’s science or it’s superstition from the days when life expectancy was about fifty. Of course, tea made from a flower in Asia the name of which I cannot pronounce is “natural,” but so is cobra venom; why don’t you try an injection of it, I ask my friend venomously? It’s sovereign against almost all ills and pains.

And then, I read an article in a trusted newspaper (the Wall Street Journal 5/3/5/14). The author, Nina Teichloz, argues rather persuasively that the health-based rejection of animal fats, going back to the fifties, is founded on pseudo-science, on almost-science, on exaggerated amplification of sparse research result, and on monstrous career ambitions. It may well turn out that bacon fat is good for you, and canola oil bad, she argues. It’s turning out, as I speak, that foods that tend to replace the banned animal fats in enlightened Americans’ diets, all based on carbohydrates, have recognizable, well- demonstrated noxious effects on health.

Wait a minute, I think, I am one of those enlightened Americans though reared in France! All my adult life, I have been what doctors call a compliant patient. They don’t have to tell me the dos and don’ts twice. Also most of my adult life, I have deprived myself of pâté, rillettes, terrine of this and terrine of that, cheese, marbled steak, etc. For a long time, I was even on a fairly stern macrobiotic diet involving a great deal of grain, several kinds of grain, three times a day. I have Type II diabetes although I am only moderately overweight. My four unenlightened French siblings – who share 50% of my genes – have no trace of diabetes. One is enormous. All ate everything they wanted on the extravagantly fat French menu all their lives. (But three out of four don’t eat much at all.) Did I get severely punished for my well-informed science-based rationalism, I wonder? (But to be fair, I have to remember that beer too is rich in carbohydrates, not just whole bulgur wheat.)*

I had smelled a rat for a long time anyway because French men, who do all the wrong things but one, persisted in not dying.

Anger wells up in me when I see a young father bicycling blithely in traffic with a his toddler in handlebar seat as if the kid were a bumper against oncoming cars. He is obviously trying to save the planet from “climate change” (formerly “global warming”). Yet, the child will most likely survive. Seeing the world from Dad’ bike at an early age may cause him to become a natural cyclist when he grows up. This may be enough to compensate for his relentless, ceaseless small screen habits, for his sedentariness, health-wise and with respect to the development of his imagination.

In the end, it may well be that my annoying town is a boon to the wider society, in the manner of a natural laboratory. If it’ turns out, for example, that a diet based largely on raw carrots causes cancer, the local vegans will be the last ones to know. Yet, they will constitute a valuable sample on which to run a serious epidemiological study, a real one. If it’s a fact that ten joints of cannabis a day is an effective remedy against aging, there is an excellent chance the discovery will be made in Santa Cruz. Also, this town fairly drips with bad artists. Many are mere artistry pimps, living at public expense for little in return. Some try but don’t succeed. But art may be like the Olympics: You need a broad base of practitioners of varying merits for a chance of a handful of medals.

Silliness and sometimes downright madness may just be the price we pay for a reasonably inventive society. In the other society I know best, France, there is far less mediocrity on all kinds on display than I see in the US and in Santa Cruz. In France, in the past thirty years, there is also little new to hear or to see, I believe. The main recent French artistic achievement is an original and pleasant way to light up he Eiffel Tower. (I am not contemptuous, I like it.) The French industrial achievements likewise have been modest and largely the result of precise engineering rather than of innovation.

In America, they say, “Far out; by all means try it!” even if it has only one wing to one side, and a motor made of twisted rubber bands. Our nonjudgmentalism is often exasperating. In France, they will tell you, “It will never fly” even if the article in question is a complete WWII jet. Accordingly, the first men to fly in a controlled flight were Americans and former bicycles repairmen, failed businessmen, as well as high school dropouts. Unlikely it would have ever happened in France. There, the Wright brothers would have been admonished to stay in school until age 23 or 24, earn a couple of proper engineering degrees first and then, ridiculed until they returned to serious business of building bikes.

Every time I grate my teeth at the irrationality, the childishness, the self-indulgence around me in Santa Cruz, California, I make myself repeat the obvious to myself: America invented live radio broadcasting, the Internet, the Windsurfer, country music as well as jazz, and the giant double roll of toilet paper in public accommodations. Irritation is a small price to pay, perhaps.

Still rock-solid among my beliefs: 1 Children should be vaccinated; 2 Almost every service the government provides could be better supplied by the market, private contracts, and insurance schemes. (It’s “Almost” because I have not seen my way yet to defense being outsourced to mercenary outfits. Libertarians hardly ever discuss this central issue.)

* full disclosure: I have been on the Paleolithic Diet – with some systematic cheating – for over a year. My diabetes number have never been so good in fifteen years. My doctor is speechless because he does not want inadvertently to promote another diet fad. I am not making any other claim except that I am rarely hungry. The cheating is this: I drink coffee and wine or beer every day. None is really part of that diet. It’s just good for my soul.

“The Economic Origins of Territorial States”

Brandon Christensen History , , , , , , , ,

That’s the title for a paper by Scott Abramson in the Department of Politics at Princeton. Among the gems in this excellent paper:

[…[ before the French Revolution, before the era of the mass conscript army, wealth could not only purchase the technologies of violence, but also the manpower required to prosecute major wars. That is, rather than being an age when large states dominated militarily, this was a period where the population and natural resource advantages of territorial states provided little benefit in the production of violence. Leaders of states could, for a negotiated price, hire a Hessian colonel or an Italian condotierro and retain their men for a campaign season just as they could use these resources to purchase the most advanced technologies of coercion like siege artillery or rearms. It was by virtue of their economic capacity city-states like Genoa and Florence or groups of independent towns like the Swabian league could raise armies that matched or even exceeded those of territorial states like France or England

and

[…] the relationship between geographic scale and survival probability is the opposite of what war-making theories predict. Over this span small states were more likely to survive than their larger counterparts. In other words, rather than being an age of the territorial state” the period between 1500 and 1800 was one in which small political communities not only persisted but remained the typical form of political organization.

Read the rest of the paper here. So small territorial units dominated much of Europe during the initial phase of modernity and industrialization. What I’m trying to piece together is a way to incorporate the ability of small states to provide for themselves while at the same time maintaining ties with multiple neighbors in a way that binds them economically and politically, but without the coercive apparatus of a central government.

I think Madison was thinking about the same thing when he drafted the federal republic of the US, but it seems to me there is a right way to do federal republics (US) and a wrong way (Latin America). Does this make sense?

In Utah

Brandon Christensen Current Events ,

Hello loyal readers. I’ve been in Utah for the last couple of weeks. It’s beautiful and cold here. I don’t know if I like the combination (reminds me of too many ex-girlfriends).

There is still snow on the mountain tops here. Weird. Beautiful but weird.

From the Comments: Open Borders and Substantial Increases in GDP

Brandon Christensen Comments, Politics , , , , , ,

Dr Delacroix gives us a great review of the most recent literature on the relationship between open borders and substantial increases in GDP (50%-150%):

A Long Comment on The Big Thing (open borders)

Thank you, Rick, for causing me to read this very good paper (and thanks to Brandon for making it easily available). I did not find the 150% increase in GDP you promised . That’s OK because it helps me point to one weakness of this paper that should be relevant to any discussion of emigration/immigration focused on policies. The author seems to have been unable to extract from the others articles on which his is based any coherent time dimension. A temporal dimension seems to be lacking. When discussing public policy it ‘s always necessary to consider: “In the short run, in the long run.” An increase of world joint GDP of 150% in fifty years thanks to relaxed immigration seems plausible; the same rise by next year is out of the question, of course.

On several issues, the author comes close to confusing “absence of evidence” with “evidence of absence.” This may be fine for a scholarly article in the discipline of economics. Difficulty to measure or to act upon should not constrain blog discussion however. Five things.

1 “Begin with the country of origin. The departure of some people such as the skilled or talented from a poor country might reduce the productivity of others in that country.”

“might”?

Qualitative differences between those who emigrate and the population of origin may be very large: This is “cream of the crop” vs “bottom of the barrel” issue. This should be obvious with respect to easily measured age and health status for example. The young and stalwart go first. It may be as true with respect to difficult to measure but obviously existing qualities such as the propensity to take economic risks, for example. Thus, I would be surprised if current Mexican illegal immigrants to the US where not economically more desirable immigrants than their own siblings of the same sex who stayed put. I mean more desirable from my viewpoint, someone who is already inside a country of destination. The risks the illegals took to move act like a beneficial sift in this respect, it seems to me.

Periodically African immigrants drown off Lampedusa in the Mediterranean just for a chance to set foot in the EU where medial jobs expect them. They all have close relatives living in the same economic circumstance at home who did not join them.*

The author calls these considerations a kind of externalities and mentions that they are difficult to measure. Difficult to measure does not mean non-existent; it does not even mean small, as he implies. Passion is also difficult to measure, and so is the wrath of a woman scorned. Neither is small in any sense of the word. Stuff that you do not enter into the equation does not show up in the results except in an unclear, residual sort of way. Those who should be in charge of measuring them, the government bureaucracies of countries of origin, are often inept, corrupt, uninterested or discouraged from doing so by government that prefer slogans to facts. Yet, that’s no reason to write these thing off from our thinking.

2 Author asks sensibly:

“Is productivity mostly about who you are, or where you are?”

Productivity clearly has a lot to do with where you are. (Take a man’s shovel in Sonora, teach him how to drive a backhoe in Brooklyn….) I don’t know what the proportions are between it and the answer to the “who” question but I think it would be absurd to set the “who” at zero. Even national origin may matter on the average: If you absolutely must choose between an unknown Englishman and an unknown Frenchman for a cook, which would you chose?

3 Author is too quick to dismiss the argument of impoverishment caused by emigrants’ departure in their countries of origin. He even uses a logically flawed argument, I think:

“But if human capital externalities from health workers were a first order determinant of basic health conditions, African countries experiencing the largest outflows of doctors and nurses would have systematically worse health conditions than other parts of Africa. In fact, those countries have systematically better health conditions (Clemens, 2007).”

Or, is it more likely that: African countries possessing quality health personnel training programs enjoy superior health conditions as a result (I am thinking vaccinations) and some of the health personnel they train are employable in rich countries.

By the way, this raises the general problem of losing at – least temporarily – the benefits associated with the cost of rearing labor. When a Filipina arrives in the US at 19, ready to work in a hospital, the fact is that I contributed nothing to the cost of bringing her up to that point. Someone else has, in the Philippines, most likely. It’s possible that on the average, the home remittances of such immigrant workers more than covers the cost of rearing and training them. I don’t know if it’s true, or how often. I would like to find out.

Author’s savant discussion of externalities seems (seems) to conclude that even if there is a loss to the country of origin, not much can be done. Of course, something can be done: Let the country of destination pay fees to someone or something in the country of origin that supported the cost of training the immigrant worker; in other words, re-imburse at low cost the expense incurred in creating an unearned benefit in the country of destination.

4 Policy makers in Europe are much exercised over the “lifeboat effect.” Even if immigrants’ arrival results in superior economic growth, even if it solves long term problems, as in Social Security, a sudden influx of large numbers may quickly overwhelm destination societies. It may markedly lower their standards of living. (Think of elementary school classes suddenly crowded with children who don’t know the teachers’ language.) I did not find that this article deals with this matter except between the lines, in an implied manner.

[Wholly theoretical Figure 1 does not help me with this although I am attracted to its curves.]

5 Author does his job as an economist well. He writes about the economics of emigration/immigration and he reports on solid research within the constraints of the discipline of economics discourse. But here are also political consequences of immigration we are free to discuss on this blog. (That’s what blogs are for, I think.) This is especially true for a libertarian blog because it poses squarely the problem of national boundaries, of the respect they are owed or not, of their convenience or inconvenience vis-a-vis libertarian aspirations.

Political consequences of immigration loom large in the imaginations of many people in the countries of destination. The manifestations of their concern are not all vacuous or ignorant, or hysterical. The 8 million Swiss -including many immigrants – may have good reason to wonder how many people they can absorb who think that separation of church and state is not only a bad idea but a major sin. Many French people of old French origin are openly racist. Among those responsible French people who are not racist at all, it’s common to worry about the short-term consequences of the legitimate burden high fertility immigrants place on their already sinking welfare system. (The high fertility is documented; it’s not a rumor.) Many American conservatives are worried about Mexican immigrants’ high propensity to vote Democratic. In the end, it’s possible to imagine a scenario where, in combination with other factors,** Mexican immigration helps turn the United States become a one-party state for all intents and purposes. Incidentally, I like Mexicans and I think they make first-rate immigrants. See my co-author articled with Nikiforov on my – Facts Matter – blog.

Sometimes, author handles humor a little too lightly: “Mayda (2006) finds that it is the wealthier, better educated, and less nationalist individuals in rich destination countries who have more favorable attitudes toward immigration.” Sure thing, I am thinking! They want a steady supply of maids and gardeners.

* As some readers already know ad nauseam, I am an immigrant myself. I had four siblings brought up in pretty much the same micro and macro environments as I. They all shared my mediocre level of educational attainment (high school or less). Three of my siblings never tried to move to a richer country as I did; another tried and failed. The difficulties inherent in emigration must select in favor of the desperate, the brave, and of the sociopathic. (Ask me for a good recent book on the latter.)

** The Republican Party’s current striking political incompetence (small p) looms large on my mind as I write this

Around the Web

Brandon Christensen Links , , , , , , , , ,
  1. Criminal defense attorney Ken White has the most thoughtful take on the recent SCOTUS ruling that pit Clarence Thomas against Antonin Scalia
  2. Ayn Rand versus evolutionary psychology. Economist Bryan Caplan explains why Ayn Rand was wrong
  3. Why were American Economics textbooks so Pro-Soviet? A great question from Caplan (again)
  4. Inequality: Haven’t we had this discussion before? Economist Peter Boettke, a specialist in the history of economic thought, asks the question
  5. Remembering Why Hayek Mattered. A political scientist from Princeton, Keith Wittington, provides a great example

A Racist Old Man. So?

Jacques Delacroix Current Events , , , , , , ,

A rich old white man instructs one of his black employees in private not to be photographed with black men. The black men include other employees he pays millions of dollars for their skills. (I have no quarrel with this fact; if he didn’t, others would. There is a real market here.) The employee so instructed normally provides the old man with lots of face among other rich old geezers because she is beautiful. She contributes to his image, he thinks. She may also sell him some affection. The old guy is 80. Who would bet she provides much more than affection? Part of the deal is that he is allowed to refer to her as his “girlfriend.” Nobody is fooled, I would think.

For my overseas readers,: I refer to the owner of the Los Angles Clippers, an average basketball team that is part of the National Basketball Association (NBA). The old man’s name is “Sterling.” The NBA official who punishes him is named “Silver.” Makes it sound like a family quarrel. And it would be if the press were doing its job. See below.

The media explodes in outrages when those few words are leaked. The manufactured scandal occupies the best part of a day of news plus some. Some African-Americans are permanently in a rage anyway (for reasons I understand, I think.) Other African-Americans find it expedient, political to be also in rage whether they feel any rage or not. What are the white liberal media figures – public friends of racial minorities all – supposed to do? Does anyone think they might have stated, “No big deal, boring,” and gone back to covering real news?

I, for one, am not outraged. I am bored. Why should I care about what instructions an employer gives one his employees who participates in this shaky image building? Why should I care when his own black employees, more than 2/3 black themselves don’t say a thing about the alleged verbal atrocity?

If I did care, what right would I have to do or even say anything? If they are offended, the man’s highly coveted black players and their offended white teammates can walk away, go on strike. Offended players on other teams can refuse to play with the Clippers. The paying public can boycott the team all it wants if it’s scandalized.

Instead, the Grand Poopah of the National Basketball Association – to which the Clippers belong – forbids the old man from attending his own team games forever and fines him 2.5 million dollars. Poopah Silver’s entourage makes loud public statements about forcing him to sell his team.

What is the Poopah going to do if the old man stands his grounds about the fine and flips him one? Does he have a private geriatric jail into which to throw the old man? It all sounds to me like a private confiscation of private property and a gangsterish restraint of trade. That’s a mafia-like action.

I hope the old man fights back and sues. I hope I am on the jury.

Yes, fascism is in the air. But it does not come from a rich old guy with a mind floating in another era and associated prejudices. We learn the next day that US GPD growth for the first quarter of 2014 is 1/10 of 1 %. That’s a French level. President Obama’s policies are all failing, domestic and foreign. The Democratic Party if facing congressional elections in the fall. Many Democrats are running scared. The party needs to draw attention to something else, to anything at all. The mass media are obliging as usual. Panem et circenses and the panem is  stale.

New Book

Jacques Delacroix Books, Current Events , ,

The electronic version of my book is up on Amazon.com. (The print version will soon follow.)

I Used to Be French: an Immature Autobiography

is live in the Kindle Store at: http://www.amazon.com/dp/B00JY0G3SA

Share it with your friends. Fling it at your enemies!