Current Events

Order, Order, Order

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

In the conventional wisdom, as you become older, you tend to like order more and more. That is, with age, one is supposed to become more “conservative” in the traditional sense of the term. Personally, I have escaped the curse. Instead, I find myself resenting more and more the growing imposition of petty rules by public entities.

It began a few years back when the city of Santa Cruz banned sleeping. OK, let’s be honest, you may still sleep legally in your bed. The city made it illegal to sleep in public. It’s true that the homeless are a plague here. Many are in a near-constant state of NDUI (not driving under the influence). Many are poor lost souls who are a danger to themselves and occasionally to others. Thus, three or four years ago, a local shopkeeper walking to work was knifed to death in broad daylight. Her killer had spent the previous 48 hours in a shelter muttering about and to his Bible. No one reported him,of course because he had not done anything illegal until then. Next!

The ban on sleeping made me acutely uncomfortable at the time. First, it was plainly inhumane. Second, if you prevent human being from doing what their human nature demands, they will find another way to do it. So, informal camps proliferate in the wooded areas juxtaposing the town. Here, in Central California, we are in a period of prolonged drought. Do we need unattended campfires and campfires attended by people who don’t play with a full deck?

A petty use of power, municipal power, applied in a search for orderliness led to greater and far more dangerous disorder.

I don’t even know if there are enough night shelters for everyone who wants one. I know that there will always be sane but houseless people who don’t want to be in a shelter, by choice. A sizable part of me respects their choice. You may not force people in places where they don’t want to be without due process. The Constitution is completely clear on this. And, I am not in favor of more shelters anyway because I believe they attract the economically feeble to Santa Cruz thus aggravating the problem.

You don’t have to be a “soft” to want the Constitution respected.

Now, since then, there as been a multiplication of city rules. This happens while the crime rate plunges. The fewer crimes the more rules. The crime rate is tanking all over the country; Santa Cruz city rules can hardly take the credit. What am I to think?

Here is a quiz: The Santa Cruz City Council is dominated by:

a Republicans;

b Democrats;

c Leftists to the left of the Democratic Party

Not far is the independent harbor. I used to admire the Santa Cruz (Small Yacht) Harbor. It was the only government and quasi-government organization I knew that stayed clear of reliance on taxes. Harbor users -in their many guises- supported the maintenance of the harbor. They included boat slip renters like me, of course, but also beach goers whose coffee paid for the rent the coffee shop paid to the harbor in return for an excellent commercial location. Harbor users also included patrons of the good restaurant that dominates the harbor entrance with its million dollar view. The restaurant goers gladly paid solid parking fees, of course, and a portion is remitted to the harbor.

I also liked the way the harbor administration put to work underused resources such as the large general parking lot reserved for boat owners that tends to stand more than half empty after four pm. The harbor had an agreement with the self- same restaurant to hold musical barbecues once a summer week evening on the beach it, the harbor, administers. The restaurant got its profits from the sale of barbecued food and the harbor pocketed full parking fees from those not holding slip stickers. The arrangement drew crowds. It was all a little bit untidy but not much. Twice, on such a barbecue evening, I leaned spontaneously out of my truck to congratulate the officer directing parking and to assure him, unsolicited, that this particular slip owner, me, was not (NOT) inconvenienced at all.

And then, someone retired and there was a new sheriff in town. Under the new harbormaster, several things that were allowed became forbidden overnight. The harbor hired a full-time parking enforcer, like the town next door. Suddenly, the one harbor employee the average harbor user interacted with was the parking enforcement officer. This necessarily hostile and heartless functionary supplanted the traditional harbor officers who save boats, and sometimes lives, every weekend. The mood changed and not for the better. I am not speaking for bitterness about parking fines here; with my slip rental goes a permanent parking sticker permit.

Maintaining a stricter order often requires stricter rules that make most people unhappy. Eve if it’s only a little bit unhappy, the bad feeling accumulates.

Then, stand-up surfboards had to be segregated from boats. Boats are limited to 5 m/h inside the harbor anyway. Some boats under sail inside the harbor regularly exceed the speed limit. Those are steered by aces. How bad can a collision be under these conditions, really? Has there been a single collision involving a standup board? Did a boat owner complain about stand-up boards being in the way? Maybe. Did ten complain? I doubt it. (I have not asked; I don’t trust I would get a valid answer I could cite.) My point is that one can always find a complainer or two. If you handed out free ice cream to poor children and cleaned carefully afterward, there would be some curmudgeons to object. I am sure there are boat-owning slip renters who complain even about the ocean swells. But everyone knows that good harbors are bustling with activity. Those who detest the corresponding moderate disorderliness have no business in a harbor at all. They should be reminded of the fact that there is a long waiting list for their slips instead of listened to.

The art of civilized administration requires that complaints be ignored up to a point. It also includes remembering the second most important American maxim: “If it ain’t broke, don’t fix it until it is.”

Then, there are the new signs that shout at you that fishing from docks is “prohibited.” For as long as I remember, 20 year-plus, children fished from the docks. It was an excellent, healthy, commendable form of leisure for kids, including poor kids, if you ask me. Were there ever any accident as a result, even one? I don’t think so. The signs affirm further and vengefully that the prohibition is: “strictly enforced.” No joking with serious matters here! We are not kidding. Don’t even think of enjoying yourselves!

The posted “minimum” fine is $174. Think about it: Your otherwise well-behaved 12-year old gives you the slip to try to catch a sardine or two. He gets caught. You are into it for about twenty hours of minimum wage. This comes close to a violation of the Eighth Amendment, prohibiting cruel and unusual punishment, I think. There may also be here a subtle breach of contract involved here. When I first rented a slip in the harbor, fishing from the docks was common practice. The locked dock that was part of the rental gave me special access to a pleasant fishing spot. Then, after twenty years, the contract becomes unilaterally modified to my detriment. The harbor did not bother to re-negotiate the contract.

I agree that this is a very small kind of tyranny but it’s tyranny all the same. The habit of being oppressed nearly always begins small in democratic countries. Our tiny liberties are eroded slowly until we don’t even remember we ever had them.

In the same period, I have heard the crew of one of the few remaining commercial fishing boats left in the harbor complain that they are made to feel unwelcome. I have no proof that their allegation is correct but, I wonder, why would they make it up? It jibes with the other forms of turning of the screw I mention. There is no doubt that the harbor would be neater without fishing boats. Fish smells and the rushed commercial fishermen drop the occasional dead fish into the harbor water. And, well, it’s a yacht harbor, after all. And, by the way, if slips only went to middle-aged nuns who work as librarians, the harbor would be even neater.

Occasionally, I take my grand-daughter to buy live crabs directly from a boat. It’s an expedition for her. It’s unforgettable. It shows her that some food does not come from the supermarket. But who am I to lay claim to such privilege? And who the hell are the commercial fishermen to insist on making a living from a harbor originally created by the Army Corps of Engineers with tax money?

On 2/3/14, coming out of a restaurant, my family and I were treated to a wonderful geyser-like spout of water reaching much higher than a three storied building. No, it was not a whale; the scene was a couple of miles inland, on a busy commercial artery, at a street intersection. We watched in utter fascination for more than fifteen minutes. (I posted a still picture of the event on my Facebook. Look for it.) I am obviously no expert, but I believe that while I looked on several hundreds of thousands of toilet flush- equivalents of city water were lost forever. I know, I know, accidents happen; no system is perfect. But why did it take so long to cap the leak? There is a fire station five or six blocks away.

I almost forgot to tell you: At the very same time, the same evening, there was an important meeting of the Santa Cruz Water Commission to make recommendations about water rationing to the City Council in view of the current drought.

Would I make this up? Would I dare? Do I have the talent?

In my immediate surroundings, the only rule or law I have seen abolished in the past twenty years or so concerns dogs. They used to be prohibited on the main commercial drag of Santa Cruz, Pacific Avenue. The prohibition has been rescinded. Dog owners are numerous and determined. Their victory renews my faith a little in democracy. I wish I could cite more examples though.

Sometimes, the ugly thought crosses my mind that public entities are increasingly run for the benefit of their nominal employees. Karl Marx was almost right about classes, maybe . (See, on this topic: “Karl Marx Was Right (Pretty Much)“)

More on local government action: “Coyotes: How Government Bureaucrats Think“

“Illegal Immigration: Bad Faith and Mental Confusion”

Jacques Delacroix Current Events, Politics , , ,

I wouldn’t change a word to this old posting.

Risks Of Regulation

Adam Magoon Current Events, Economics, History, Law, Liberty, Politics , , , , , , , ,

A bit dated but still very relevant.

Regulation; the four letter word of the business world.  Many people see regulation as a protective shield from the ‘dangers’ of the businessman; a way to protect people, property and the environment.  The oil industry is one of the most heavily regulated enterprises in the United States.  Despite being intended to protect us; these regulations failed catastrophically on April 20th, 2010 when the Deep Water Horizon oil rig suffered a mechanical failure resulting in an explosion which sank the rig two days later(1).  Yet, when the disaster happened, we were met with pleas for more government oversight and more red tape.  The regulations on that industry, both in the Gulf Mexico and throughout the country, helped cause the Deepwater Horizon disaster and removing them would help prevent similar disasters in the future.

Regulations in the Gulf of Mexico begin with the Minerals Management Service (MMS).  Created in 1982 due to the Federal Oil and Gas Royalty Management Act the MMS “both regulates the [gulf oil drilling] industry and collects billions[of dollars] in royalties from it”(2, 3).  The MMS’s responsibility to regulate includes monthly inspections, issuing safety documentation, and issuing safety citations(3).  Royalty collection is based on number of barrels of oil removed and varies from well to well.  The MMA also provides  “royalty relief“ to a number of rigs based on previous legislation. Until November of 2000 the royalty relief was issued based on the Outer Continental Shelf Deep Water Royalty Relief Act of 1995, better known as DWRRA.  This act “relieves eligible leases from paying royalties on defined amount of deep-water production”.  At depths over 2,526 feet oil companies did not have to pay the United States royalties on 87.5 million barrels of oil, between 1,312 and 2,625 feet the relief was 52.5 million barrels and between 656 and 1,312 feet the relief was only 17.5 million barrels.  While this act expired in the year 2000 it was replaced by an incentive program that allowed royalty relief to be “specified at the discretion of the MMS”(4).  This incentive program provides more relief if a drilling site is “more expensive to access” even if it is at the same water depth as another rig receiving less relief (2).  The royalty relief system provides incentives for Oil Rigs to operate in deep waters, especially those classified as “Ultra-Deepwater” by reducing the royalties paid on those sites(5).

While not specific to the gulf, there are a variety of moratoria on drilling throughout the country.  These moratoria take two forms.  The first set, known as “leasing moratoria” are general bans on drilling in select areas , the second set are temporary bans due to specific incidents.  Since   the fiscal year 1982 congress has denied funds to the MMS to “conduct leasing for the specified Outer Continental Shelf areas”.  Currently there is a “blanket moritorium” on leasing in effect “through 2012” that covers a large portion of both the East and West coasts( 2).  One of the largest bans on drilling however exists in the Arctic National Wildlife Refuge(ANWR).  Located in the “northeast corner” of Alaska over ten million acres of land are off limits to drilling.  In this wildnerness it is estimated that there exists “between ten billion and sixteen trillion barrels of oil” that could supply twenty percent of U.S. demand for nearly thirty years(6).  The most recent temporary bans have been a result of the Deepwater Horizon disaster.  A “30-day pause in offshore drilling” followed the sinking of the Horizon rig(11).  This did not only cover BP’s rigs but all offshore drilling “based on water depth”(7).  That ban was removed by a federal court, but was replaced with a revised ban that will be in effect until November, 2010(7).

Beyond physical limitations on drilling there are also economic regulations.  There are a number of federal subsidies and tax breaks for the drilling industry.  David Kocieniewski says that “examination of the American tax code indicates that oil production is among the most heavily subsidized businesses”.  These tax breaks occur for a number of reasons.  Many are simply to lure oil companies to American shores, others were “born of international politics” or “date back nearly a century”(8).  Beyond that the United States government has put “Liability Limits” on drilling operations.  The Oil Pollution Act of 1990 limits an oil companies liability for damages to only $75 million dollars.  Any remaining damages, up to $1 billion, are payed through the Oil Spill Liability Trust Fund.  This fund is “financed primarily through a fee on imported oil”(1).  Senator Robert Menendez from New Jersey recently introduced bill, S. 3305 which would raise that cap to $10 billion(9).

All of these laws and regulations have one thing in common.  They increased the probability of a catastrophic oil spill in the Gulf of Mexico.  Each regulation increased the risk of such a spill in some way and when combined they resulted in the disaster that is causing massive destruction in the Gulf today.  The Minerals Management service was organized to be the overarching regulatory body for the Oil Industry.  Why did it fail in its duty?  Why did “spills from offshore oil rigs…in U.S. waters more than quadrupled this decade” despite the MMS’s oversight(10)?  This question was answered by economist Walter Block in his book The Privatization of Roads & Highways (12).  Quoting Cecil Mackey, former Assistant secretary of transportation, he says:

“As the more obvious regulatory actions are taken; as the process becomes more institutionalized; as new leaders on both sides  replace ones who were so personally involved as adversaries in  the initial phases, those who regulate will gradually come to reflect,     in large measure, points of view similar to those whom they regulate.”

Quite simply, the MMS adopted the views of the Oil Industry completely negating their ability to regulate it.  Congressman Nick J. Rahall confirms this saying “MMS has been asleep at the switch in terms of policing offshore rigs”.  Using numbers supplied by the MMS in the prior 64 months before the incident “25 percent of monthly inspections were not performed”(3).  Are we to believe another agency would be any more efficient?  Bureaucracy and corruption are not the only things to blame however; legislation played a vital role in this disaster as well.  DWRRA, for example, incentivized the risk to drill in deep waters.  Under DWRRA the greater the depth being drilled the greater the royalty relief amount.  These waters are inherently less safe to drill in.   It is easy to compare the difficulties in dealing with a site 5000 feet below the ocean against one 500 feet below the surface.  These incentives were made worse when DWRRA expired.  Under the new program “the most economically risky projects would receive the most relief”, safer projects on the other hand would receive “little or no relief”(4).

While acts like DWRRA incentivize the risk of deepwater drilling the greater incentive to drill in the Gulf of Mexico is simply that there are so few places to drill in the continental United States.  The United States Exclusive Economic Zone extends “200 nautical miles” from all of it’s shores(2).  Yet, much of this area is off limits to drilling.  The “blanket moratorium” issued by former President George H.W. Bush in 1990  restricts drilling in “all unleased areas offshore Northern and Central California, Southern California except for 87 tracts, Washington, Oregon, the North Atlantic coast, and the Eastern Gulf of Mexico coast”.  The Gulf of Mexico is the only economically viable offshore area left for them to drill.  This of course pales in comparison to the Arctic National Wildlife Refuge.  Most of the 10-million-acre area is not even adjacent to the ocean, surely drilling on land or in shallow water is much safer than drilling 5000 feet under the ocean(6).  Beyond helping to cause the spill in the first place the government is increasing the risk of future disasters.  The temporary ban issued in response to the Horizon spill “neither improves safety nor mitigates risk”(11).  By forcing drilling to stop you immediately cause a number of problems.  Reentering a location is as dangerous, if not more so, than the original drilling operation.  Experienced workers have been fired, laid off, or relocated and will need to be replaced with less experienced ones.  Equipment in worse quality will be all that remains when the moratorium ends(11).

The economic regulations were the proverbial straw that broke the camel’s back.  A single tax break for the Deepwater Horizon oil rig covered “70 percent of the rent” or “$225,000 a day”.  Or, as policy analyst Sima J Gandhi describes it “We’re giving tax breaks to highly profitable companies to do what they would be doing anyway”(8).  These breaks are not only an unfair advantage, they incite these companies to make riskier choices.  If the potential cost of the Deepwater Horizon rig wasn’t offset by these breaks it may not have been economically viable to drill in such a dangerous location.  On top of the lower cost of the initial operation; the Liability Caps ensured that any potential risk was marginalized by the government.  The $75 million limit that has been in effect since 1990 was a message to the industry to attempt increasingly risky drills(1).

The oil companies should be liable for the full cost of any damages done by their rigs.  The worry that “operators and nonoperators in the U.S. Gulf of Mexico will be unable to obtain adequate protection from insurance” is totally unjustified (1).  If the site is not economically viable then there is no reason to drill there.  If BP and Transocean knew they would have been liable for all damages they would not have received a citation for “not conducting well control drills as required and not performing ‘all operations in a safe and workmanlike manner'”(3).  There would have been an incentive to spend money on safety, training and equipment instead of the incentive to take risks knowing they would be protected.  Or as one lawyer explained the situation “arbitrary liability caps are just not reasonable.  You cannot decide the expense of a disaster before it happens.  Liability caps allow companies like BP to avoid bearing the responsibility for the full cost of the damage they inflict”(9).

The oil has stopped flowing from the bottom of the Gulf; for now.  The question remains: How can we prevent this from happening again?  There, of course, is no easy answer.  Accidents, mistakes, and disasters can never be guarded against completely.  We can however mitigate the risk involved in those dangerous operations that are needed for the sake of humanity.  The best way to increase the safety of the oil industry is to remove the regulations that incentivize the risks involved in their industry.  Preventing drilling in safer areas, tax breaks, royalty reductions, liability limits; all these things make an already dangerous prospect that much more perilous.  We need to neither help nor hinder these companies, they must succeed or fail on their own merits.

Sources available upon request.

“Bizarre Conservative Ideas About Immigration”

Jacques Delacroix Current Events, Politics

This old posting is suddenly relevant again. Go to indented paragraph directly if you are in a hurry.

The Keystone Pipeline

Jacques Delacroix Current Events, Politics , , ,

You may have heard recently that the appropriate federal agency declared  the Keystone pipeline would pose no significant dangers to the environment. I doubt this will stop the green fanatics. Nor is the probability that oil no refined and used in this country will be mostly exported to China where environmental laws are lax and not often enforced. Rationality is not their forte, as a rule.

It appears that there may be a chance to influence the decision to build or not via an on-line petition. I don’t know what is the probability of its working is but the cost seems so low it would be a pity not to try a click. Besides, enough signatures may make Mr Obama squirm a little irrespective of the decision he makes.

Go to:   buildKXLnow.com [it’s actually buildKXLnow.org – bc]

Go to: “Go to Make Your Voice Heard,” [it’s  actually the ‘Take Action Now’ tab that you’ll want to click on – bc]

A simple sign-up box will appear.

Around the Web

Brandon Christensen Current Events, Links , , , , , ,
  1. Permanent War versus Peace; Professor Angelo Codevilla elaborates
  2. Law professor at Fordham deceptively carries on the tradition of censorship-cheerleading; Ken White elaborates (Senior Editor Warren Gibson has also touched on this before)
  3. What if Mengele cured cancer? Bryan Caplan (who else?) asks the question
  4. Another law professor from Fordham, Nicholas Johnson, has a great post on The Bad Gun Dumpster
  5. Negroes and the Gun: Non-violent Winchesters and the fine art of concealed carry in the modern civil rights movement; Another, newer post by Mr Johnson elaborating upon one of the concepts in his new book

Another Belated Warm Welcome

Brandon Christensen Current Events, Economics , ,

Readers have been enjoying Rick’s contributions for a while, but I just realized I haven’t formally introduced him yet. So finally:

Rick Weber received his B.S. in economics at San Jose State University and his M.S. in economics at Suffolk University, where he is currently working on his Ph.D. He is fascinated by the beauty of spontaneous order, and constantly astounded by the inexpressible wealth bestowed on him by the division of labor.

I met Rick at an IHS summer seminar waaaaay back in 2009. He was the toast of the town back then, and I’m really stoked that he’s blogging with us here at the consortium. Scroll through his musings. You won’t be disappointed. He also kicks it with the Free Market Institute gang at Texas Tech.

A Belated Warm Welcome

Brandon Christensen Current Events, Philosophy , ,

Readers,

Allow me to introduce notewriter Matthew Strebe to the team:

Matthew Strebe is a senior undergraduate student at the University of California in Santa Cruz, double majoring in Philosophy and Classical Studies. His areas of interest include political and ethical theory from antiquity to the present, particularly concerning the pre-Socratic philosopher Heraclitus and the classical philosopher Aristotle, along with the modern philosophers Kant, Schopenhauer, Nietzsche, and Heidegger. He considers political labels unnecessarily stifling, and contrary to a spirit of open exchange and inquiry, but nonetheless will provide a few: he is a member of Young Americans for Liberty, a registered libertarian, with viewpoints that are conservative to some and liberal to others. If you really want to know what he thinks, it is best to ask.

His debut post can be found here, and his most recent post is here. Please join me in giving him a warm welcome, and – as our small community is apt to do – be sure to keep him on his toes in the ‘comments’ section.

A Zoo in the Streets

Jacques Delacroix Current Events

A couple of years ago the kind of youngish women who spend two hours a day seven/seven at the beach starting showing up in the streets in tights, with nothing on top. Before I could catch my breath, the same streets were turned into zoos. I mean women who don’t spend two hours a day at the gym, or an hour a week, began joining the fad. Then, it was camels on one side (camel toes, actually), hippopotamuses on the other side.

The total horror! It makes you wonder if American women have any real girlfriends, friends close enough to say, “Don’t do it honey,” or boyfriends men enough to say, “Who do you think you are going with in this outfit, honey?”

I am almost sure this does not happen in France because French women have mean girlfriends.

I have been neglecting this blog because I am busy with the nth proofing of my manuscript: I Used to Be French: An Immature Autobiography. I will be back soon, I think.

О российском телеканале “Дождь”, особом пути, менталитете и памяти

Evgenii Grigorev Current Events , ,

Привет, друзья. Сегодня хочу вам рассказать одну неприятную историю, которая приключилась с российским телеканалом “Дождь”. Историю, замешанную на патриотизме, особом “русском пути”, памяти и банальном незнании истории.

Для начала давайте вернемся в нашей памяти на 70 лет назад во время Второй Мировой Войны и вспомним такое жуткое событие, как блокада Ленинграда, длившаяся почти 900 дней, и ставшая причиной голода и смерти сотен тысяч мирных жителей. Доподлинно известно, что у Гитлера было несколько планов на будущее города Ленинграда. Первоначально он планировал просто захватить город, потом же принял решение о полном уничтожении “Северной Венеции”. Стереть город с лица земли любым способом, не заботясь о мирном населении… Не ввязываясь в кровопролитные уличные бои, практически единственный способ сделать это – организовать полную блокаду и бомбежки. Тогда те, кто не умрут при артобстреле – умрут от голода. Я не буду сейчас рассказывать про беспрецедентные случаи человеческого мужества и верности Отечеству, которые проявили обычные горожане, и сразу перейду к смыслу: Гитлер не планировал сохранять нынешний Санкт-Петербург вообще. Любой ценой.

Недавно на одном из наших телеканалов появился опрос примерно следующего содержания: “Надо ли было сдавать город Ленинград врагу и тем самым избежать сотен тысяч смертей от голода, или же надо было защищаться до конца?” Из всего того, что я написал выше, ответ очевиден: сдача города врагу не сохранила бы ни его население, ни собственно сам город.

Перед нами обыкновенное незнание определенных фактов истории администрацией канала, ну или тем, кто отвечает за наполнение эфира информацией. Опрос этот вызвал широкий общественный резонанс, и вскоре был удален, а администрация канала извинилась.

Казалось бы, и забыть про это все надо – но нет. Отдельная категория людей, заседающих в нашем правительстве решила дать этому “вопиющему и кощунственному делу” дальнейший ход и написала заявление в прокуратуру, хотя по факту-то проблемы уже и нет. Однако канал начали везде закрывать и блокировать, и это лишний повод задуматься.

Что из всего этого лично я вынес? Существуют определенные события, категории знаний, факты и вообще “всякие понятия”, ошибки в которых недопустимы не при каких обстоятельствах. Не несущие никакого материального вреда, они могут оказаться бомбой замедленного действия в умах граждан, и вызвать совершенно непредсказуемую реакцию…

Думайте о том, что говорите, и о том, что пишете. Анализируйте свои слова и взвешивайте каждое слово.

New issue of Econ Journal Watch is out

Brandon Christensen Current Events, Economics, Links , ,

You can find it here, and here is the summary:

One Swallow Doesn’t Make a Summer: In a 2014 AER article, Zacharias Maniadis, Fabio Tufano, and John List grapple with the problem of the credibility of empirical results by presenting a framework for statistical inference. Here Mitesh Kataria discusses some of the assumptions and restrictions of their framework and simulation, suggesting that their results do not, in fact, allow for general recommendations about which inference approach is most appropriate. Maniadis, Tufano, and List reply to Kataria.

Should the modernization hypothesis survive the research of Daron Acemoglu, Simon Johnson, James Robinson, and Pierre Yared? New evidence and analysis is provided by Hugo Faria, Hugo Montesinos-Yufa, and Daniel Morales, supporting the hypothesis that there is a long-run positive relation between socio-economic development and political democracy.

Ill-Conceived, Even If Competently Administered: In a 2013 JEP article, Stuart Graham and Saurabh Vishnubhakat argue that the Patent and Trademark Office (PTO) is doing a good job of interpreting patent law, and suggest that the “smart phone wars” and related disputes are not evidence that the patent system is broken. Here Shawn Miller and Alexander Tabarrok argue that the main problem is not with the PTO but with patent law as it has been applied, particularly to software, resulting in patents that are overly broad and ambiguous, and hence vexing and stifling.

Ragnar Frisch and Norway: Arild Sæther and Ib Eriksen contend that for several decades bad policy derived in part from the climate of opinion among the country’s eminent economists.

The ideological evolution of Milton Friedman: Lanny Ebenstein explores developments in Friedman’s thinking, particularly after the mid-1950s.

EJW Audio: Lanny Ebenstein on Milton Friedman’s Ideological Evolution

I might add that notewriter Fred Foldvary is an Editor for the journal, and notewriter Warren Gibson is its math reader, so give the newest issue some family love!

The State of the Union and the State of our Liberties

Brandon Christensen Current Events, Liberty, Politics , , , , , ,

Nevertheless it is important not to fall into the delusion that President Obama presents the greatest danger to the culture of liberty. A historian looking back a hundred years from now is likely to group the Reagan, Bush I, and Clinton presidencies together as an era when the state receded or at least did not grow, as measured by regulatory and fiscal burdens on our lives. But Bush II relentlessly increased domestic spending and created more government involvement in health care with the Medicare D program for prescription drugs. It was President Bush who initiated many of the NSA programs.

In short, there are more similarities between Bush II and Obama than their supporters or detractors care to acknowledge. And almost all of the similarities suggest that the risks to our liberty today transcend the actions of any particular politician.

From John McGinnis. Read the rest.

UK considering long prison terms for file sharers

Adam Magoon Current Events, Economics, Liberty, Philosophy

https://torrentfreak.com/uk-considers-throwing-persistent-internet-pirates-in-jail-140123/

Up to ten years in fact.  While there is debate in the libertarian community over intellectual property laws I think that I would be hard pressed to find many libertarians that think downloading a movie should put an “offender” in prison for a similar amount of time as stealing a car. 
 

Is China running out of cash?

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Is China running out of cash?

China Halts Bank Cash Transfers

“The People’s Bank of China, the central bank, has just ordered commercial banks to halt cash transfers.”

Could we be seeing the start of total economic collapse? The answer, ceteris paribus, is yes and the Austrian Business Cycle Theory (ABCT) explains why.

To quote Ludwig Von Mises’ explanation of the final act of the ABCT:

“Ludwig von Mises stated that the “crisis” (or “credit crunch“) arrives when the consumers come to reestablish their desired allocation of saving and consumption at prevailing interest rates.[12][“

This means that when consumers finally realize that the money they have invested has actually been malinvested in the economy they then seek to acquire as much of their money as possibly from said investments. Most of which take the form of bank deposits.

The linked article reminds us that this is the numerous such time that China has adopted this policy saying:

“So what’s really going on?  This crunch follows similar incidents in June and December of last year.  In June, for instance, the central bank used the excuseof a “system upgrade” to allow banks to shut down their ATMs and online banking platforms.  As a result, they conserved cash and thereby avoided a nationwide meltdown.”

Other instances, such as this one in England where “[s]ome HSBC customers have been prevented from withdrawing large amounts of cash because they could not provide evidence of why they wanted it,” show that this problem may not be contained to China and may be spreading to the international market.

What does Murray Rothbard say will happen when this “credit crunch” inevitably occurs?

Wasteful projects, as we have said, must either be abandoned or used as best they can be. Inefficient firms, buoyed up by the artificial boom, must be liquidated or have their debts scaled down or be turned over to their creditors. Prices of producers’ goods must fall, particularly in the higher orders of production—this includes capital goods, lands, and wage rates […]

this means a fall in the prices of the higher-order goods relative to prices in the consumer goods industries. Not only prices of particular machines must fall, but also the prices of whole aggregates of capital, e.g., stock market and real estate values. In fact, these values must fall more than the earnings from the assets, through reflecting the general rise in the rate of interest return […]

“Since factors must shift from the higher to the lower orders of production, there is inevitable “frictional” unemployment in a depression, but it need not be greater than unemployment attending any other large shift in production. In practice, unemployment will be aggravated by the numerous bankruptcies, and the large errors revealed, but it still need only be temporary […]

Another common secondary feature of depressions is an increase in the demand for money. This “scramble for liquidity” is the result of several factors: (1) people expect falling prices, due to the depression and deflation, and will therefore hold more money and spend less on goods, awaiting the price fall; (2) borrowers will try to pay off their debts, now being called by banks and by business creditors, by liquidating other assets in exchange for money; (3) the rash of business losses and bankruptcies makes businessmen cautious about investing until the liquidation process is over.

With the supply of money falling, and the demand for money increasing, generally falling prices are a consequent feature of most depressions. A general price fall, however, is caused by the secondary, rather than by the inherent, features of depressions.

So is the massive failure of all economies imminent? Well not necessarily because the government can take some steps to prevent the immediate failure.

According to Mises:  

“Continually expanding bank credit can keep the borrowers one step ahead of consumer retribution (with the help of successively lower interest rates from the central bank). In the theory, this postpones the “day of reckoning” and defers the collapse of unsustainably inflated asset prices.[12][14] It can also be temporarily put off by price deflation or exogenous events such as the “cheap” or free acquisition of marketable resources by market participants and the banks funding the borrowing (such as the acquisition of land from local governments, or in extreme cases, the acquisition of foreign land through the waging of war).[15]

The “false” monetary boom ends when bank credit expansion finally stops – when no further investments can be found which provide adequate returns for speculative borrowers at prevailing interest rates”

These steps only “kick the can down the road” and delay the inevitable since “the longer the “false” monetary boom goes on, the bigger and more speculative the borrowing, the more wasteful the errors committed and the longer and more severe will be the necessary bankruptcies, foreclosures and depression readjustment.”

We may be seeing the beginning of the next great depression here but only time will tell.  One thing is certain though, a massive economic readjustment is coming and the central banks of the world have only been aggravating the problem.  When it will hit is anyone’s guess but in this author’s opinion we are either looking at a repeat of the early 30’s or a repeat of the early 40’s and I can only hope we can avoid going through both.

Around the Web

Brandon Christensen Current Events, Links , , , , , , , , , , , , , , , , ,
  1. Reading Tocqueville in Qatar and at Georgetown
  2. Colonialism and Anti-Colonialism: Blame Nationalism for Both
  3. The Issue of Selective Prosecution
  4. Eric Prince: Out of Blackwater and into China; The WSJ‘s weekend interview with the founder of Blackwater is particularly good. If you hit a paywall, just copy and paste the title and enter it into your Google search bar. Click on the first link and voila.
  5. A short history of economic anthropology (grab a cup of coffee first)
  6. The market may be colorblind, but politics isn’t: Race, class and economic opportunity