On Nancy MacLean’s Thesis

Nancy MacLean’s Democracy in Chains continues to yield surprises. Just a few days ago, Phil Magness now shows a “typo” that plays a significant role in MacLean’s thesis.

Despite all these detailed scrutiny of her work, it is not clear that MacLean understand the type of error is being pointed out about her book. There are two types of errors regarding a thesis: (1) the thesis is correctly defined, but the proof is flawed, or (2) the thesis is incorrectly defined, in which case there is no need to test the thesis. What MacLean and her supporters don’t seem to realize is that Democracy in Chains is built on the second error, not on the first one. Instead of ignoring her critics, MacLean should be up to the academic game and engage accordingly. Her behavior is very telling. If her research is so solid, what’s the problem?

Consider he following example. Let’s say you find a book built on the thesis that Milton Friedman was a french communist who lived in the 18th century. You don’t need to read this book to know that the author is wrong on her argument. This book on Friedman is both factually (Friedman did not live in the 18th century and was not French) and theoretically (Friedman was not a communist) wrong. This is how wrong MacLean’s thesis on Buchanan is for anyone with some minimal exposure to his work and Public Choice.

There a few reasons why someone would still read Democracy in Chains. For instance, if the book is a preach to the choir To try to understand how such a misguided thesis can actually be supported by by an author with so little knowledge and expertise on Buchanan and Public Choice. Etc. But a reason why MacLean thinks that their critics are unwilling to consider her thesis is because she is unaware her error is the second one mentioned above. Her thesis is just wrong from the go.


White Supremacists

“White supremacy” has become a central part of the left’s narrative. In an hour and a half of casual news watching on television in early October 2017, for example, I heard three references to white supremacy. That’s more than I did in the decade 2005 to 2015, I believe.

One utterance came from the sports channel ESPN’s African-American commentator Jemele Hill who called president Trump a “white supremacist.” She added that he surrounded himself with white supremacists. Perhaps, by implication of the term “surround,” she meant several millions of his 63 million voters, or even all of them. This kind of verbal hysteria is not new and neither are intemperate television commentators but, in the recent past, such breathless declarations would have been laughed out of the park or negatively sanctioned, or both. Not anymore. Ms Hill’s statement was not exactly an isolated incident either.

In the first two weeks of October 2017, I hear the word “supremacist” on radio or television at least once a day. I am sure it has not happened before in my fifty years in this country (as an immigrant). This new tolerance makes some sense in political context.

For the inconsolable of Pres. Trump’s election, I suspect – but I don’t know for a fact – that the claim is by way of passing the baton at a time when the investigation on “Russian collusion” to elect him, now in its thirteenth month, is going nowhere. If he did not betray the country, what can we accuse him of that’s difficult for decent minded people to forgive, they ask? Digging into this country’s complex and troubled past is always a good bet if you are looking for dirt to throw at an American.

Mr Trump’s own intemperate comments – although never directed at the usual African-Americans targets of real supremacists – helped identify a valuable, superficially semi-plausible charge. The sudden emergence in the collective consciousness of unhappy young white Americans on the occasion of the 2016 election also contributed. (“…in the collective consciousness…;” they were around before that.) Unhappy young whites can but with little effort be turned into the racist rednecks of countless movies. Thus, the white supremacy narrative may be part of a half-blind collective endeavor to discredit for the long term the social forces thought to be associated with the sensational defeat in 2016 of a moderate liberal (and a feminist to boot; more on this below).

My first impression of the reality of a white supremacist movement, based on reading and listening to radio – including National Public Radio – about five days a week, besides watching television, is that there isn’t actually much going on nationwide in this respect. Yet, I am mindful of the fact that I live in “progressive” Santa Cruz, in liberal California. In neither place would one expect to bump casually into white supremacists. And if there were one, he would probably just clench his teeth and keep his mouth shut. In lily-white Santa Cruz, on the contrary, a black supremacist would probably be elected mayor on the first try without really campaigning. (OK, I may be exaggerating a little, here.)

I realize also that my reading habits as a conservative may not lead to chance encounters with supremacist tripe.* So, I wonder: What’s the actual situation? To try and explore this question more deeply, I use a two-step strategy. I look first for existing credible empirical reports on the topic. Second, I look for what should be the products of white supremacist groups, the tracks they should logically be expected to leave on the internet and elsewhere. But first, a brief historical detour. Continue reading

North Korea at the North Sea?

Yesterday, both Houses of Dutch Parliament jointly opened the parliamentary year, which is always held on the third Tuesday in September, and is known as “Budget Day.” Normally, there is not much pomp and glory in the Low Lands, but on “Little Princes Day” (as the day is literally called), we go all-out: the King and Queen are driven in a horse-pulled carriage to the Hall of Knights, the oldest part of the parliamentary buildings (built around 1250), surrounded by military troops in full ceremonial dress. The King reads his speech (actually written by and under full political responsibility of the Prime Minister and cabinet) from a huge throne, announcing the government’s plans for the next year. Male ministers in morning coats, ladies in dresses and hats, with the powerful elites also assembled.

king and queen
King Willem-Alexander and Queen Maxima entering the Hall of Knights (source)

After the reading, the Royal couple make their way back to one of their palaces in the centre of The Hague, returning once to greet the masses from the balcony.

Meanwhile, the Minister of Finance officially presents the 2018 budget to the Lower House. The separate budgets of all departments are laws, which will have to pass both Houses before 31 December. This process is normally preceded by a two day debate on “the general state of the country,” but this year it is skipped because there is only a caretaker government in office. It awaits the finalization of negotiations for a new government, which started right after the elections on 15 March. Still no government is formed, although it is widely expected that a four-party coalition will be presented within a few weeks, consisting of small Christian left wingers, centre Christian Democrats, and two social liberal parties, D66, and Prime Minister Mark Rutte’s VVD.

Although much improved since the low point of the Great Recession, around 2011-2012, the public finances are still shocking from a classical liberal perspective. The income of the national government is 285 billion Euro (around 338.5 billion USD), which is 43% of GDP.

It consists mainly of several mandatory insurance premiums for collective arrangements (112.2 billion Euro), income tax (55.4 billion; the highest bracket of 51.5% tax applies to all personal income over 68.507 Euro), and VAT (52.8 billion). The rest are mainly specific taxes, related to companies, the environment, excises, dividends, et cetera. In 2011, the public share of GDP was still 47%, while in the 1980s it reached peaks of around 60%. Not exactly anywhere near an ideal liberal situation, no matter what liberal persuasion you are. Personally, I would argue that 25% should be the max for a decent set of state tasks, but I am sure that makes me some weird Northern European commie in some American libertarian eyes!

The situation is even more dire if we see where that money is spent. Health care (80.4 billion euro) and social security (79 billion) are always in competition as the largest spending departments. So that is 56% of the budget already and both increase annually, no matter the economic circumstances. The third post is public education (35.4 billion), followed by funds for provinces and municipalities (24.4 billion), foreign affairs and foreign aid (12), police and judiciary (10.3), defense (8.4), and infrastructure and environment (also 8.4), with the other departments taking parts of the rest. Despite a very rare expected budgetary surplus of 7.8 billion in 2018, the national debt is still 53.7% of GDP. Perhaps not bad in international comparison, still not good for any liberal.

These numbers are only part of the story, because there are also numerous local taxes, and the number of liberty-inhibiting regulations, from European, national, provincial and local origin are staggering. There is not one really free market, and there are hardly parts of individual life not regulated or influenced by the state. A comparison with North Korea is of course still far-fetched, yet socialism is alive and kicking on the North Sea shores.

In my view it is evidence of the remarkable power of capitalism that The Netherlands is still one of the richest countries on earth, a global top 15 economy (GDP per capita), with only 17 million inhabitants. No matter how hard you curb it, the capitalist system still delivers amazing results. Of course, the opportunity costs of the Dutch regulatory state are very high. In terms of personal liberty there are not many better places on the planet. Yet in other fields it is a different story. Economic freedom is a mess, which means that the material aspects of personal freedom are seriously restricted. Yet the worst is the mentality. Sadly, most Dutch have traveled the whole Hayekian Road to Serfdom, making a shift to classical liberalism highly unlikely.

The Dreamers and Me

President Trump just announced that he was rolling back an Obama executive order intended to give respite to illegal immigrants brought to the US by their parents when they were minors. I know what I feel about this action. I have to figure out what I think.  (I can cry with the best of them! Left-wing liars are having a field day right now. One just said on NPR that the purpose of the decision is to make America “white again,” N. S.!)

I am an immigrant. I immigrated into this country at 21. I was a high school dropout from France. I had no marketable skill but I knew English pretty well. I had no money. (That’s “Not any.”) I carried a small suitcase containing mostly some Navy clothing from my recent service. The Unites States did not need me.* No one had invited me except the late George and Rose-Marie McDaniel of Novato, California. (They had met me during my stint as a high school exchange student three years earlier, financed by others.) Don’t worry, I am not going to cram down your throat yet another heroic story of hard immigrant work and well deserved achievement.

I prospered in this country for more than fifty years. I had a very good American life. I lived well and I thrived unexpectedly from an intellectual standpoint. My wife, an artist and also an immigrant, was able to paint as we raised our children. All of this because many individuals and several institutions gave me a push and a pull, an encouraging word, and downright gifts along the way (including free tuition at both a community college and a major university). If I were given only two words to describe American society, they would be: “generous, fair.”

The American society I know does not visit upon the sons the sins of the fathers. It especially does not do so when the sins of the fathers were mostly misdemeanors at the time they were committed – entering the country illegally was only a misdemeanor. The American society I know would not throw over the fence its young neighbors to somehow manage in a foreign country they know little or not at all, in a language they may know badly or, again, not at all. Those among us who would do either must be blinded by anger. (And there are good reasons to be angry about immigration.)

In his announcement, President Trump did not throw out anybody, as the Left-leaning media made it sound. First, he gave Congress six months to do what Congress should have done in the first place: Solve through legislation the human and ethical problem posed by the presence in our country of hundreds of thousands of immigrants who are technically illegal through no fault of theirs. The president is playing chicken with Congress: If you do nothing, you will be collectively responsible for a gross, un-American injustice. Keep in mind that the president retains the right to promulgate his own royal reprieve it Congress fails to act.

Second, the president is using this opportunity to prod Congress, Republicans and Democrats alike, to begin instituting wholesale immigration reform. It’s a reform just about everyone agrees must take place. It has not begun because it’s a political hot, hot potato for both parties. For the Republicans, there is the honest realization that our borders must, in the end, be under control lest our cherished institutions end up dissolving. Let me give you an example. How many people can we admit who believe that separation of church and state is anathema, an insult to the face of God, and still live in our constitutional republic? (And, if you think the question is Islamophobic, you are just afraid of questions!)

For the Democrats the issue is how to stem the rising anger of many of their troops about immigration without turning off the spigot of automatic Democratic voters that immigrants mostly are. (The Democratic Party is vanishing, I think. That’s why it’s so mean. Without a steady flow of poor immigrants, its death will be hastened. The Republican Party has different problems which also threaten it existence, possibly.)

Notice what I did not say here: I did not say anything about any kind of immigrants having rights as immigrants. I don’t think we do.

* Nevertheless, I have a document somewhere that certifies that my continued presence in the US serves the welfare of the country. It was earned 12 years later, another story, obviously. If I could find it, I would frame it and put it online to enrage “progressives.”

Declare Peace on North Korea!

The United States should offer a peace treaty with North Korea and offer diplomatic relations. The Korean War did not officially end. Let’s end it now.

The chiefs of North Korea have feared an invasion by the USA. They recognize that several heads of countries without nuclear weapons, such as in Lybia and Iraq, were overthrown. It is recognized that nuclear weapons that can be sent to the USA provide a deterrent against an overthrow of the state and even against an assassination of the Korean head of state.

The government of North Korea has evidently convinced the people there that the USA is their enemy and a threat. That propaganda would be less effective if there were a peace treaty.

So the US government should, together with South Korea, China, Russia, and the United Nations, offer to negotiate a peace treaty with North Korea.

The USA has negotiated with North Korea on a stoppage of its nuclear weapons project, but North Korea will not give up its weapons, and negotiations along with economic pressure will not be effective, since their greatest accomplishment has been their nuclear achievements, and the Chinese leaders seek to avoid an economic collapse.

Therefore a peace treaty with North Korea should not seek to end the nuclear status of the regime, but eliminate the deeper problem of mutual fears. The peace treaty would state that the U.S. recognizes North Korea as a sovereign country, and that there will be no invasion.

If the government of North Korea refuses to negotiate a peace treaty, then it will be seen that the hostility is being generated by North Korea, not the USA. The USA should then declare peace unilaterally. With the governments of South Korea and China, the USA would write a peace treaty and they would declare unilateral peace. The US would offer diplomatic relations, and if refused, would appoint an ambassador anyway, who would reside in China.

The US government would then broadcast to the people of North Korea, and send them messages via leaflets and computer files, that the USA has declared peace.

The opponents of a peace treaty could argue that this would leave North Korea with weapons that could reach US territory. But if the North Koreans will refuse to give up their nuclear capability, the peace treaty does not increase the danger. Indeed, the treaty, when agreed to by North Korea, would increase safety by prohibiting North Korea from providing nuclear materials and technology to others.

If North Korea accepts the peace treaty, the US would withdraw its troops from South Korea. Their presence is antiquated, since the threat would be from missiles rather than from an invasion by North Korean troops.

North Korea would gain four advantages from a peace treaty. First, assurance that the US is no longer a potential threat. Second, global diplomatic recognition. Third, removal of US troops from Korea. Fourth, the ability to trade freely with the rest of the world.

If the North Korean regime is not suicidal and seeks to maximize its well being, it would accept a peace treaty. But even if it does not accept a treaty, a unilateral offering would deflate its fears and propaganda.


This article also appears in http://www.progress.org

No, natural disasters are not good for the economy.

Every time there is a natural disaster old economic fallacies make their appearance. And they are usually always the same. In particular, the argument that a natural disaster is good for the economy. This should make little sense. Wealth is not created by destroying things. A natural disaster destroys wealth, doesn’t create it. I doubt anyone affected by a hurricane would argue that he is better off after the natural disaster than before.

The argument that an event such as a natural disaster is good for the economy rests in the positive impact seen in GDP (as is argued) after the natural event. If GDP increases, then the economy is doing better. But this is a misreading of GDP. This variable is a flow of wealth, it is not a stock of accumulated wealth. It is possible that wealth creation (flow) increases at the same time the stock of wealth is decreasing. And this is what happens during a natural disaster.

Imagine that someone’s house caught fire and burns down. Because of this situation, this person decides to start working extra hours to increase his income and be able to buy a new one. The extra hours makes his income (GDP) increase. But his situation is considerable worst because he lost his stock of wealth (remember Bastiat’s broken window fallacy…?). Arguing that a natural disaster (or a war, etc…) is good for the economy is like arguing that this person is better of because he has to work extra hours to recover his loss.

This is just another case of a too common fallacy in economics. We know that if the economy is doing better the result will be better GDP and unemployment indicators. But from observing a better GDP and unemployment indicators we cannot, and should not, conclude that the economy is doing better. More important than observing what is happening to GDP is understanding why is changing its behavior.

It could be argued that one of the problem of the Keynesian view of the world is the focus on what happens to output and unemployment rather than why these variables are moving. Not surprisingly, we get to the conclusion that going to war (or having a natural disaster) would be a good way to achieve full employment.

What is going on in Brazil

I’ve been thinking about writing a short essay about some of the things going on in Brazil right now, especially concerning politics and economics, for my English speaking friends. I guess one can get really lost in the middle of so much news, and to the best of my knowledge, some left-leaning journalists are saying quite some nonsense already. So here we go!

President Dilma Rousseff was impeached over a year ago. Her party, the Workers Party (Partido dos Trabalhadores, or PT in Portuguese) is officially a social democrat party, close to the European social democracy tradition, i.e., socialists who want to attain power through a non violent, non revolutionary path. In the end, as it happens with so many big parties, PT has many internal tendencies and in-fighting, but I believe the party can be summarized especially in two tendencies.

On one hand you have cultural Marxists, in the Frankfurt School but even more in the Antonio Gramsci tradition. Many people in PT and other Brazilian socialist parties understood long ago that they had to win a cultural war before they won the political war. And so, these factions are much more interested in feminism, gay rights, and minority rights in general than in anything else. To the best of my knowledge, this is a strategy that backfires somewhat: cultural Leftism is a self defeating philosophy, and so, cultural Marxists are more and more into a witch hunt that damages even themselves. They make a lot of noise, to be sure, but they can’t run a country.

On the other hand, many Brazilian socialists are almost entirely pragmatic. It seems that they forgot about Marxism long ago, and are somehow even convinced of the Washington Consensus. They know basic economics, such as money doesn’t grow on trees and there’s no such thing as free lunch. But they also don’t want to lose face, and most importantly, don’t want to lose position. So, they surely won’t take measures that really shrink the size of the state to a healthy degree.

Dilma’s supporters still say she was the victim of a coup. Of course, she wasn’t. She was impeached with overwhelming evidence of her wrongdoings according to Brazilian law. Other than that, it is hard to believe in a coup where all branches of government agree and the military are not involved in any way. Eventually her supporters sophisticated the argument by saying she was the victim of a “parliamentary coup.” It is nonsense, but if we take it with a grain of salt we can be reminded of something important in Brazilian politics – or politics in general. Dilma was not impeached because of her wrongdoings. Many politicians in Brazil have done similar or worse things than her. She was impeached because she lost support, mostly in the legislative branch. For the wrong reasons (opposition to Dilma), the representatives did the right thing.

One of the problems that Brazil faces today is that the same congress that impeached Dilma for the wrong reasons expects from her successor, Michel Temer, the political favors they used to get from Dilma’s predecessor, Luis Inacio Lula da Silva. But these favors are not cheap. Other than that, even if he is a crook, Temer seems to realize that Brazil can’t suffer any more socialism. In the end Brazil is facing some (sort of) free market reforms, but without really shaking the basis of a state too big to function properly.