A Bit More on Ukraine

Brandon Christensen Comments, Current Events, Politics , , ,

Evgeniy’s plea for balance in the Russia-Ukraine conflict has produced, in my mind, an interesting dialogue on propaganda – both of the Western and of the Russian variety.

Let me come out and say with some conviction that I am not a supporter of the Putin regime. Nor do I believe much of the analysis that comes out of the Russian press. (This is because the vast majority of the Russian press is controlled by the state, and not because it is Russian or because it generally espouses pro-Russian sympathies.)

Evgeniy, for example, cites reports from the Russian press claiming that half a million people have fled Ukraine for Russia since the beginning of the year (when the demonstrations started). If half a million people fled from one place to another in a month, from anywhere in the world it would be headline news, but for some reason only Russian citizens have heard of this exodus? I don’t buy it.

Now, this number may be a misunderstanding based on a bad translation. In fact, I think this may be the case. My translation of Evgeniy’s comment states that the Russian press reports that “since the beginning of the year (January 2014) in Russia has resettled about 500,000 refugees from Ukraine.” Emphasis mine. Has this resettlement been ongoing since the end of the Cold War? However, judging by Evgeniy’s comment, it looks as if resettlement has only begun in January of this year, so if this is indeed the claim that the Russian press is making then it is obviously false.

Terry’s excerpted quote from the Daily Beast fares no better in the facts department, though, despite the Daily Beast being a private organization. The op-ed is an attempt to debunk “Putin’s Crimea Propaganda Machine” as if Putin has the power to control everything the Russian press publishes. State control of the media, especially in a country as large and diverse as Russia, does not mean that the bureaucratic process magically disappears. Bureaucracies and especially regulators are actors in their own right, and as such are beholden to certain constraints and processes that come with the way these institutions are organized.

So in the spirit of open inquiry and debate, there are a couple of facts I’ve gathered that I think are important to note.

  1. The President of Ukraine was ousted in a coup. He was elected by a very slim margin and accusations (from both sides) of voter fraud were rampant.
  2. The opposition that recently installed a new President therefore gave democracy the finger. This is not in itself a bad thing, but many Western observers tend to side with the pro-West faction as if it was democratic. It is not.
  3. The exiled President signed an agreement with the opposition last month guaranteeing early elections and more power to the legislature at the expense of the executive branch. This is as peaceful and as democratic as it gets, and the opposition gave, as I said, the finger to this agreement.
  4. The opposition has fascists in its cabinet. It has also installed Ukrainian Jews to high-ranking positions. The Muslim Tartars in Crimea stand to lose the most during Russia’s occupation.
  5. Ukrainians are sick of their government – right or left, pro or anti -and this has yet to be addressed by anyone other than Dr Foldvary as far as I can tell.
  6. No shots have been fired. Moscow has reiterated that it is in Crimea to protect its naval base and Russian citizens. I have a feeling that Russian troops will be back in Russia within the year. Crimea will get to keep its autonomous status within Ukraine, and Kiev will be forced to think twice before it attempts to impose its will on Crimea arbitrarily. This is a good thing, as it limits the size and scope of government.
  7. So far most, if not all, information about military activities have been coming from governments, not from the free press. This can only lead to more misunderstanding and more suspicion.
  8. War is the health of the state. In times like these, journalists should be criticizing their own governments rather than the governments of others. In the West, where the press remains relatively free, there is more criticism of government policies concerning foreign affairs than there is in Russia.

At the end of the day, I have to agree with Evgeniy’s plea for toleration and prudence: “Please do not judge this conflict only from one side.”

Towards a Free and Prosperous Ukraine

Fred Foldvary Liberty

The violence in Ukraine demonstrates once again the failure of centralized democracy. Whenever we see masses of people protesting and rallying in the city streets and squares, it shows that the structure of government has failed. The prime purpose of democracy is social peace. The mass demonstrations show that the people cannot express their views and make policy decisions through the formal channels of government, so they take to the streets.

When government fails, there is another path towards political change: civil disobedience. Rather than massing in the city square or taking control of government buildings, the protestors can stop obeying the government. They can stop paying taxes and stop obeying unjust rules. Civil disobedience is how India won independence and the US civil rights movement ended segregation. Today, protestors use social media to spread the message. Some activists will be put in prison, but there is not enough room to put half the population in jail.

The conflict in Ukraine originated in the 2010 election for president, in which the opposition accused the winner of fraud. The protests began in November 2013, when the president switched from making a trade agreement with the European Union in favor of a pact with Russia, which provided aid to the government of Ukraine.

The protests in Ukraine were intended to be peaceful, but mass protests often become an attractive nuisance for provocateurs. When a small minority of protesters start throwing rocks or fire bombs at the police, that becomes the signal for the police to use lethal force, and then the protestors return fire, and the result is violence and death. Peaceful civil disobedience is decentralized and does not provide such a venue for the chaos makers.

Ukraine is the largest country that is entirely in Europe. It was in the Russian Empire until the Bolshevik revolution of 1917, when it became an independent state. It soon became a republic within the USSR. The Soviet structure of councils and republics served to preserve the identity of Ukraine, which even had its own membership in the United Nations, and achieved independence with the break-up of the USSR in 1991.

Now, in February 2014, following the failure of government repression, the Ukrainian parliament has dismissed the president, restored the 2004 constitution, freed the previous prime minister, and appointed an acting president. The agreement between the government and the opposition was facilitated by the foreign ministers of France, Germany, Poland and a representative of the president of Russia.

The national anthem of the country is “Ukraine has not yet perished.” Millions of Ukrainians died during the years of forced collectivization under the Soviet Union, and more millions, including many Jews, were slaughtered during World War II, but the Ukrainian identity has persevered. Ukrainians now have a unique opportunity to reshape their future.

Some of the conflict in Ukraine comes from its ethnic mix. The westernmost part of the country was part of Poland prior to World War II, although that territory along other neighboring areas had been Ukrainian previously. In 1954, the Crimea was transferred from the Russian Republic to Ukraine. The eastern half of Ukraine is culturally Russian; the main religion is Eastern Orthodox. The western part is ethnically Ukrainian and Catholic, and the people of western cities such as Lviv identify with Europe. Ukraine needs to restructure its governance as well as its economy in order to achieve social peace and prosperity.

Ukraine has a centralized government, but also has 24 provinces, plus the nominally autonomous republic of the Crimea, and two city districts, Kiev and Sevastopol. The democracy of Ukraine can become more authentic by decentralizing the governance into a federation of its subdivisions. An association agreement with the European Union should reduce trade barriers, while the Ukraine should also pursue free trade with Russia and its other neighbors.

The economy of Ukraine suffers from its oppressive tax system. The new tax code adopted in 2011 has 18 national and 5 local taxes. The major taxes include corporate and personal income taxes, a value added tax, and excise taxes. But there is also an economy-friendly, though small, land tax, and royalty taxes on the extraction of natural resources. The current tax rate on corporate gross income is 16 percent. The value-added tax rate of 17 percent is imposed on the sale of goods, including imports. There is also a high social security tax of up to 49.7 percent.

Ukraine’s land tax is paid by the owners and users of land. The tax rates depend on the use of the land. For pastures, the rate is one-tenth percent of the land value, and for farms the rate is three-hundredths of a percent. There are also local real estate taxes per square meter of dwelling space with the tax rate from 1% to 2.7% of the monthly minimum wage.

The Ukranian tax system has been criticized for its complexity, its disincentives to labor and enterprise. and its inducement for tax evasion. Ukraine has the potential to become a great agricultural and industrial economy, but its tax and regulatory policies have been holding it back. The Fraser Institute’s index of economic freedom calculates Ukraine’s level at 6.16 on a range from zero to pure freedom at 10. Out of 152 economies, Ukraine ranks 126 in economic freedom, near the bottom among the countries of the world. The Heritage Foundation index also ranks Ukraine as “repressed,” especially low on investment freedom and freedom from corruption.

If Ukranians seek prosperity, they would be wise to eliminate all their taxes other than the land tax and also enact national and local pollution taxes. The land value tax should be uniform for all land, based on its current market price or rent when put to its best use, regardless of its current use. The elimination of the other taxes would stop tax evasion and liberate the underground economy.

Ukrainians should stop blindly copying the dysfunctional tax system of the European Union and adopt a modern 21st century public finance system suitable to the global economy and Ukraine’s position between Russia and the EU. They can avoid either joining the EU or a Russian-led Eurasian Union by legislating free trade with both regions. They should enact domestic free trade by avoiding the taxation of labor, enterprise, and produced wealth. With rising public revenue from land value, and with rising wages, Ukraine could reduce its social security taxes until the government either funds pensions from land rent or replace government pensions with private retirement accounts.

Land-value taxation would also promote a decentralization of governance and a reduction of corruption. The land of Ukraine is rich and can well support its public finance, and let Ukraine to not just avoid perishing, but to flourish.

Are small businesses entrepreneurial?

Rick Weber Economics, History, Liberty, Politics

Between 1958 and 1980 the number of businesses in the U.S. economy increased from 10.7 million to 16.8 million. But the relative economic importance of small business in the overall economy declined over this period. Between 1958 and 1977 the share of employment accounted for by firms with fewer than 500 employees decreased from 55.5 percent to 52.5 percent. Between 1958 and 1979 the share of business receipts obtained by companies with less than $5 million in receipts declined from 51.5 percent to 28.7 percent. Between 158 and 1977 the share of value added contributed by firms with 500 or fewer employees decreased from 57 percent to 52 percent. (Zoltán J. Ács, Bo Carlsson, and Charlie Karlsson 1999, 7)

That’s an enormous relative increase in the importance of big businesses. Consider that change in light of macroeconomic conditions and political thought at the time. It seems almost like the dark ages. I think it also shows an apparent correlation between business, government, and ideology. Since the mid ’70s, small businesses have gained importance in the U.S. economy while also leaving the dark ages of mid-20th century illiberalism.

From the Comments: Musings on the Ukraine Fiasco

Brandon Christensen Comments, Current Events, Politics , , , , ,

Riffing off of my post about the current crisis in Ukraine, Matthew writes:

Based on the track record of Russia vis a vis the West, I imagine the following scenario unfolding:

Russia (continues) to occupy the Crimea, while America and Europe (continue) to demand the withdrawal of Russian forces from the province. Putin, calculating that the West lacks the stomach for direct confrontation, refuses. Hysteria in the media and in government publications, which are ultimately the same thing, rises. A lack of direct conflict between Russian and Ukrainian forces, however, lends little credence to the mass panic broadcast over Western media. The furor dies down in time. Russian presence becomes normalized in the Crimea.

Or, the interim government, bolstered by further illicit monetary aid from America, pulls a Georgian move and attacks the Russian forces stationed in Crimea. Russian forces will quickly rout the Ukrainians sent against them, and most likely march towards Kiev – whether they take it or not will depend on the response of the international community, as with Georgia. Regardless of who instigated the violence, the Western media will blame Russia, and the war drums will grow louder. UN sanctions are unlikely, since Russia is a permanent member of the Security Council, but some form of economic punishment will occur. Russia will draw closer to China, Iran, and Syria. The status quo ante will be upended in no one’s favor: Ukraine will be in shambles, Russia and America will be set at odds.

Regardless of the above two scenarios, meanwhile, the Ukrainian economy is in free fall, and the IMF offers the dual poisons of austerity and liberalization to the interim government. Facing an intransigent Russia and the wolf-faced smile of the West, the interim government accepts the IMF’s offer. Like Russia before it, Ukraine is left even worse for wear by the rapid pace of economic liberalization, and is thus too weak to resist the Russian presence in Crimea. Thus, the West has succeeded in breaking off a chunk of post-Soviet Ukraine and bringing it into its influence, while Russia largely retains what it had beforehand: its Black Sea Fleet in Sevastopol, along with the de facto annexed province of Crimea. It is too early to tell, but perhaps the rest of Russified Ukraine will also join their brothers in Russified Crimea, and the state will break up along linguistic lines.

Who can tell what will occur? My money is on Russia, but maybe Obama will come up with some game winning stratagem (don’t snicker!).

Does anybody else care to make their predictions? You know where the ‘comments’ sections is!

О ситуации с Украиной и Россией

Evgenii Grigorev Current Events , ,

Являясь единственным автором постов в сообществе Notes On Liberty, который живет в России и может как-то “иначе” рассказать о текущей ситуации между двумя странами, хочу сделать небольшое заявление, которое, скорее всего, поддержит большая часть населения России. Я хочу обратиться ко всем авторам и читателям сообщества из других стран: будьте умнее ваших новостных лент и газет. Большинство ресурсов освещают ситуацию крайне односторонне – с той позиции, которая выгодна лишь одной стороне. “Правый сектор” (украинская неонацистская организация, которая сейчас имеет влияние в стране) рисует нас зверями и оккупантами, зарубежные газеты также поддерживают позицию нового правительства Украины, которое пришло к власти в результате переворота и пока что не может считаться легитимным. Сейчас против России ведется настоящая информационная война! Нам не нужна Украина, и нам не интересен и не нужен раскол этой страны, так как все мы “братья-славяне”. Совет Федерации России одобрил введение ограниченного контингента российских войск в Крым исключительно для защиты Черноморского Флота от возможных провокаций, а также для защиты русских граждан, проживающих в Крыму, так как в условиях нестабильности местные органы защиты вряд ли смогут в полной мере пресекать провокации анти-российских группировок. Еще раз повторю: фраза “совет федерации одобрил введение ограниченного контингента” по Российским законам означает лишь одно – у президента Российской Федерации теперь есть законное право на введение войск, НО не факт, что он им воспользуется. Разумеется, вооруженный конфликт никому не нужен, и нам в первую очередь. У нас всех есть друзья-украинцы, у многих на Украине живут родственники. Мы, по-правде, с недоумением относимся ко всем этим событиям, которые происходят сейчас.

Пожалуйста, не судите о конфликте лишь с одной стороны. Не знаю, какими новостными ресурсами вы пользуетесь там, CNN, BBC, Russia Today или чем-либо еще – потрудитесь разобраться в проблеме со всех сторон, потратьте свое время на всестороннее изучение вопроса, не удовлетворяйтесь первыми полученными результатами, которые скорее всего будут отражать позицию вашего президента или правительства.

Le nouveau racisme américain et l’impérialisme français

Jacques Delacroix Current Events, History, Law, Politics , , , , , ,

La tache est infinie d’eduquer les Francais pour leur faire jeter aux orties les cliches anti-Americains plus ou moins malveillants qu’ils trainent depuis soixante ans. Comme personne d’autre ne le fait, je me porte volontaire, de temps en temps, pour les aider a les remplacer par des cliches plus frais sur les Etats-Unis.

La Cour d’Appel qui correspond a la region de San Francisco vient de donner raison au directeur d’une ecole secondaire qui avait interdit a ses eleves le port ou l’affichage du drapeau …americain. Le tribunal a donne pour raison que ce drapeau risquait d’offenser les “Mexicains” de l’ecole.

Le debut de l’histoire remonte a Cinco de Mayo (en Espagnol dans le texte) de l’annee derniere. Il s’agit d’un fete officielle de l’Etat de Californie qui commemore une victoire militaire Mexicaine de 1862. C’est une fete qui passe inapercue presque partout au Mexique.

L’Etat de Californie l’a adoptee on ne sait plus trop pourquoi. Peut-etre que c’etait sous l’impulsion propre de la gauche cul-cul bien pensante locale aussi ignorante qu’avide demontrer sa sensibilite vis-a-vis des “minorites.” Peut-etre que cela a ete impose par un groupe de pression de Mexicano-Americains, raciste et fascisant qui se nomme lui-meme: “La Raza, ” “la Race.” (Ai-je meme l’imagination d’inventer de telles insanites?) En tous cas, selon mes sondages, forcement peu scientifiques mais tres frequents, le pourcentage d’Anglos capable de d’identifier les evenements ainsi commemores tourne autour de 0. Le pourcentage des jeunes d’origine hispanique monte jusqu’a 5. Il me faut ajouter pour etre honnete, qu’un 5% additionnel de ces derniers est en mesure d’affirmer: “Je ne sais pas ce que c’est mais je sais que ce n’est pas l’anniversaire de l’independance mexicaine.” En tous cas, cette commemoration a des effets positifs sur la consommation californienne de bieres mexicaines (d’ailleurs tres bonnes).

Et l’imperialisme francais alors, vous dites-vous? Et bien voila, en 1861, l’armee francaise du soi-disant Empereur Napoleon II (socialiste pour une bonne partie de sa carriere ploitique) a recu l’ordre d’aller attaquer la Prusse. Manque de chance, elle a tourne a doite au lieu d’a gauche. Elle s’est donc retrouvee au Mexique. De fil en aiguille, ell a fini par conquerir brievement tout le pays et a y installer un empereur fantome, un Autrichien obscur et palot. Ell profitait alors bien sur du fait que les Etat-Unis etaient eux-memes preocupes par le projet de s’entretuer pendant leur propre guerre civile. En attendant, au debut, les Mexicains de presidet Benito Juarez avaient bel et bien gagne contre le corps expeditionaire francais.

Pour en revenir a la Californie, le 5 Mai de l’annee derniere, dans une ecole sans importance d’une ville sans importance situee au sud de San Jose (Silicon Valley), des eleves d’origine mexicaine s’etaient presentes en class a portant des t-shirt figurant le drapeau mexicain. Des eleves Anglos avaient replique en enfilant des t-shirts a l ‘image du drapeau americain. Il y avait eu des bousculades entres eleves des deux groupes sans nulle doute echauffes par la presence de filles, aussi des deux groupes, en t-shirts sans dessins particuliers mais bien moulants.

La Cour d’Appel, en interdisant de fait de montrer le drapeau americain en Amerique a elle-meme fait la preuve d’une sorte de racisme, anti-blanc, cette fois-ci. En plus, elle a bien demontre son prejuge racial inconscient en identifiant comme “Mexicains” la categorie sociale que sa decision est censee proteger des bobos spirituels. Il est certain qu’elle voulait dire: “Americains d’origine mexicaine” car il n’y probablement pas ou que tres peu de “Mexicains” dans cette ecole. (N.B.: Toute personne nee aux Etats-Unis est citoyenne americaine, un point, c’est tout.)

PS Moi-meme, je suis tres satisfait de l’existence en Californie d’une forte emigration d’origine mexicaine (30% ou plus de la population de ‘Etat.) , y compris les sans-papiers. D’une part, se sont de gens faciles a aimer. D’autre part, ils apportent beacoup. Je crois meme bien que les enfants qu’ils font aujourd’hui supporteront la majeure partie du poids financier de la retraite Securite Social de mes propres enfants, vers 2045.

Constitutional Political Economy and Jeopardy

Rick Weber Current Events, Economics, Law

Arthur Chu, the “mad genius” of Jeopardy has continued his streak with the power of game theory! But apparently many viewers are upset. Chu is playing within the rules of the game, but he’s been accused of being unsportsman like. He responded:

‘Being unsportsmanlike is calling your opponents names or refusing to shake their hands. It shouldn’t apply to playing the game as hard as you can and trying to win as hard as you can, within the confines of the rules.

‘Not giving my opponents a chance to answer’, to me, is just like not giving your opponents the chance to shoot in basketball or not letting them get within range of the goal in soccer. It’s not ‘unsportsmanlike’, it’s playing defense,’

We know that rules affect how people compete and that in spectator sports that affects how fun it is to watch. So Chu’s success might mean that Alex Trebeck has to change the rules to give viewers what they want. If he does, this is what I would have to say:

 

Ukraine, Russia, the West and a Coasean Bargain?

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

Economist Tyler Cowen worries about the events in Ukraine:

For Russia, matters in Ukraine are close to an existential crisis, as Ukraine is intimately tied up with Russia’s sense of itself as presiding over a mini-empire of sorts.  Nor could an autocratic Russia tolerate a free and prosperous Ukraine, developing along the lines of Poland.  America cares about Ukraine less, and cares more about Syria and Iran, or at least cares about saving face in those latter venues.  Therefore there is a Coasean deal to be had between America and Russia, where Russia gets to partition part of Ukraine, create a buffer against Europeanization and democratization, keep the larger Ukraine unit weak, and also keep its Black Sea fleet.  In turn Russia would do something less than totally sabotage all American plans for Syria and Iran.  (Of course that is Coasean for the leaders, and not necessarily for the citizenries.)

The thing is…China.  What kind of signal would such a Coasean deal of partition send to China?

That is what I worry about.

I argee that there is a Coasean bargain to be had between the US and Russia in this case, but it’s not the one Dr Cowen sees. Let’s assume that the US does have more interest in the Middle East than it does in Russia’s backyard, but even with this assumption I don’t think it follows that the West will give up Ukraine for Syria and Iran.

The West has been down in the doldrums lately, it’s true, but there is still plenty of fight left in it and plenty of resources with which to do the fighting.

Really quickly: I know I’ve mentioned this before, but making two states out of one (“partitioning Ukraine”) will be a good deal for almost everybody involved (the minorities in Russian Ukraine will not fare so well). As it stands today, Ukraine is simply too big to be governed effectively. This is a problem with many, if not most, post-colonial states in Asia, Africa and Europe.

International recognition is something that would be observed by almost all sides (minorities in Russian Ukraine will not like it), which is one of the requirements I’ve pointed out that needs to be completed before secession (or partition) is undertaken in post–colonial states.

The other major requirement is that the new states are part of regional or international trading unions of some sort. The more the better, but any is a start. Russian Ukraine will be good to go, as it would be in Russia’s orbit, and the West could easily ensure that the Ukrainian Ukraine gets more attention than it now currently has. This is where the West should dig in its heels and fight: After partition. Ukrainian Ukraine will need to be drawn into the West’s economic orbit rather than offered up as a sacrificial lamb, and this definitely doable. This is the Coasean bargain, not Ukraine for Iran and Syria.

The China angle Dr Cowen brings up is also an interesting one. Beijing is authoritarian not stupid. Here is what conservative military leaders in Beijing probably see:

Ukraine might get no love from the EU or the US, but it is much weaker than Japan or South Korea or even Taiwan. So China could not take any of these states militarily without high costs, while Russia could conceivably take all of Ukraine without significant military losses (the political damage would be too much for Moscow, so it won’t happen; but it is a possible scenario).

Could there be a college bubble?

Rick Weber Current Events, Economics , , , ,

The essence of a bubble is that you can flip an asset one more time before the bubble bursts. Most people know it will burst, but as long as prices are still rising, we might be able to fleece one more sucker. But we have to get the timing right or we might be that sucker.

But what about college? I can’t sell my degree (and there are other things that Jon Lajoie can’t do with it, but that’s neither here nor there), so I can’t flip it. But I can get rents on it. I give up $100,000 to get a degree with a present value of $300,000, and I feel peachy-keen. That’s a recipe for increased demand leading to higher tuition, sure, but could there be a bubble?

Let’s start with equilibrium so we have a counterfactual. Basic supply and demand here: higher incomes for college grads increase demand, and increased demand increases prices. In equilibrium the marginal student’s value of the degree will be equal to or greater than the opportunity cost of getting the degree.The student’s value is the benefit of cool college parties, mind/horizon expansion, reduced expected unemployment in the future, and higher expected income. Their opportunity cost is tuition, loan interest, stress from doing homework, and time not spent working. The question of going to school is different for different students; some will enjoy college more, will get more out of it, will have an easier time of it, etc. And the financial return isn’t the only relevant variable. At this point I’m thinking that maybe the current market is actually pretty sensible… we can ask questions about the sustainability of subsidies, but given everything, it’s likely that the students going to school are making the right choice, as are the ones who don’t go. Mistakes will be made, but it isn’t necessarily the case that there are systemic, wide-spread mistakes.

Now let’s think about what it might mean for the bubble to burst. First off, there would have to be a bubble: too many people paying too much to be in school; too little incentive for any individual to change their behavior. Then all at once, there is a flood away from the market, and recent grads are left holding the bag. During the bubble, I can get financing for my degree and I can reasonably expect (even if I see that there’s a bubble) that I will come out ahead, as long as I jump ship soon enough. Let’s say that during the bubble, I pay $10k to get a degree and I earn an extra $1k per year (and lets also assume, for simplicity’s sake, that we don’t have to worry about discounted values… a bird in the hand is worth one in the bush). My behavior is rational as long as I expect to keep getting that extra grand for the next 10+ years. So our bubble has a weirder time dimension than, for example, a beanie baby bubble where I can buy and sell rapidly.

Also, our bubble requires that my income is inflated compared to it’s post-bubble level. That would certainly be the case for me as an academic; if that bubble bursts, my income will drop. Will that be true of someone getting a business degree? American employers are keen to hire people with degrees, and so there’s a de facto licensure system. The assumption is that if you don’t have a degree there must be something wrong with you. As long as everyone holds this assumption then all would/could-be students will have to get a degree. But if no degree means ‘idiot’, that doesn’t mean that degree means ‘genius.’ Employers could well figure out a better vetting procedure, and students could get sick of undergoing the opportunity cost of attending school. But if this is a gradual change, then ‘bubble’ doesn’t seem like the right word. Even if the change in hiring practices is instant, the change in the labor market won’t be. If every 30 year old has a degree and suddenly degrees become unimportant, companies won’t rush out to replace them with 20 year-olds. The supply of lightly-experienced, qualified workers won’t change in the short run unless there’s a reserve army of qualified but un-credentialed labor currently in limbo as baristas.

So is there a bubble? It certainly seems like enrollments don’t reflect underlying realities. It also seems like there are profit opportunities for entrepreneurs able to improve hiring procedures; placement services could vouch for a candidate’s abilities, employers could accept non-college interns and hire from that pool, would-be students could become self-employed. I think the market is far away from equilibrium. But I’m doubtful that re-equilibration will happen rapidly. There isn’t room to “burst” a bubble, so much as there is room to avoid wasting a lot of 18-24 year-olds’ time.

A review in n parts: Polystate, part 1

Rick Weber Books, Law , , , , , , ,

Zach Weinersmith of SMBC comics just published Polystate: A Thought Experiment in Distributed Government. I’ve started reading it and immediately needed to start commenting. Before I get into the review, let me say that SMBC comics is an excellent web comic that everyone should read.

The basic idea ZW introduces is the polystate, a system of government comprised of anthrostates. An anthrostate is “a set of laws and institutions that govern the behavior of individuals, but which do not govern a behavior within geographic borders.” It is essentially government that individuals get to choose in the same manner that they get to choose their insurance company; so to neighbors can live under a different set of laws and any disputes between them are a matter for their anthrostates to sort out. At this point you should be thinking: Nozick did it. The idea of a polystate is essentially Nozick’s Utopia of Utopias.

He contrasts poly/anthrostates with geostates, the geographically defined monopolies on the use of force we are used to today. Does it need to be thus?

Why should we suppose that a person who likes hot dogs, is familiar with a two-party electoral system, and believes Abraham Lincoln was a great man is necessarily someone who should live in a temperate climate in the Western hemisphere?… This is not to deny that history and culture and the choices of individuals matter, but rather to assert that many of the “essential” qualities of nationhood are not, in the long run, meaningful ones.

I’ll agree and disagree. These qualities are relevant to some sense of cultural identity, but are not essential for defining the boundaries of a state. This cultural identity is part of the environment of informal institutions, which are part of a broader polycentric order. This is the underpinning of law (the way Hayek characterized it) which is much broader than legislation.

ZW approaches the problem like a mathematician and sets himself up with a hard sell, by assuming there will be a huge need for technological advances to overcome transaction costs. His argument rests largely on technological possibility and is highly concerned with interaction at the anthrostate level.

A polystate would likely increase the complexity of business and legal transaction. In a world with only 200 or so geostates, most commerce is not interstate and even if it were, geometry tells us that the number of possible two-state transactions is given by n(n-1)/2.

Nobody thinks the distribution of such transactions is uniform, and in real life we see a large proportion of international transactions go through countries that specialize in trade. Hong Kong would surely have an anthrostate analog. In fact, there are historical antecedents. He foresees rules being designed at the polystate level to simplify interactions but, “whatever rules were put in place, the results would be too burdensome to exist without a large bureaucracy or some sort of computational way to arbitrate these many interactions.”

The basic flaw in ZW’s approach is that institutions and laws are provided from the state, and so technology is the answer to transaction costs problems. In fact, the issue is that ZW (though he’s not alone on this) wants a change in institutions that will require a new order to emerge. His book will help to peacefully guide the process of societal change towards that new order. Technology will surely play an important role as well.

That gets us through the first four chapters. I will continue with more tomorrow evening.

Conjugal Relations

Jacques Delacroix Liberty

My wife and I are discussing our investments. We don’t have investments because we belong to the hated 1% – wish we did – but because neither of us has a pension. She is annoyed because she does not understand some arcane point of finance.

Promise me you will die after me she blurts out. (She does not want to learn new, boring stuff.)

I don’t think so, I say, without missing a beat.

Selfish, self-centered, narcissistic, sexually ambivalent bastard, she throws out across the kitchen table!

The last charge holds no truth at all. I am a straightforward crude T and A guy. She is just doing her best to make me feel the horror of her hatred for me at that moment.

Yes, I know, men and women are almost exactly the same. That’s except when they are not. Would I ever think of calling her the same?

How about that coffee you promised me, I ask innocently?

I won’t prepare it because you refuse to promise that you will die even one second after me and you can put the coffee up your… (Note the illogicality.)

If you keep using this rude language, I threaten, I will put it on my blog.

You wouldn’t dare, she exclaims.

Done!

The socialist roots of Nazism (and the Left’s typical response)

Brandon Christensen History, Politics , ,

One of my constituents once complained to the Beeb [BBC] about a report on the repression of Mexico’s indigenous peoples, in which the government was labelled Right-wing. The governing party, he pointed out, was a member of the Socialist International and, again, the give-away was in its name: Institutional Revolutionary Party. The BBC’s response was priceless. Yes, it accepted that the party was socialist, “but what our correspondent was trying to get across was that it is authoritarian”.

Amazing! This is from Daniel Hannan writing in the Telegraph.

The Myth of Common Property

L. A. Repucci Liberty , , , , , , , , , , , , , , , , , , , ,

An Observation by L.A. Repucci

It has been proposed that there exists a state in which property — whether defined in the physical sense such as objects, products, buildings, roads, etc, or financial instruments such as monetary instruments, corporate title, or deed to land ownership — may be owned or possessed in common; that is to say, that property may be possessed of multiple rightful claimants simultaneously.  This suggestion, when examined rationally and exhaustively, is untenable from the perspective of any logical school of economic, social, and indeed physical school of thought, and balks at simple scrutiny.

In law, Property may be defined as the tangible product of enterprise and resources, or the gain of capital wealth which it may create.  To ‘hold’ Property, a Party, or private, sentient entity, must have rightful claim to it and be capable of using it freely as they see fit, in keeping with natural law.

Natural resources, including land, are said to be owned either jurisdictionally by State, privately by party, or in common to the natural world.  If property may be legally defined only as a product, then natural resources may be excluded from all laws pertaining to legal property.  If property also may be further defined by the ability of it’s owner to use it as they see fit, in keeping with Ius Naturale, then any property claimed jurisdictionally by the State and said to be held in common amongst the citizenry must meet the article of usage to be legally owned.  Consider Hardin’s tragedy of the commons as an argument for the conservation of private property over a state of nature, rather than an appeal to the economic law of scarcity or an appeal to the second law of thermodynamics ,

In Physics:  Property may be defined as either an observable state of physical being.  The universe of Einstein, Kepler, and Newton rests soundly on the tenet that physical bodies cannot occupy multiple physical locations simultaneously.  The laws that govern the macro-physical world do not operate in the same way on the quantum level.  At that comparatively tiny level, the rules of our known universe break down, and matter may exhibit the observed property of being at multiple locations simultaneously — bully and chalk 1 point for common property on the theoretically-quantum scale.

Currency:  The attempt to simultaneously possess and use currency as defined above would result in praxeologic market-hilarity in the best case, and imprisonment or physical injury in the worst.  Observe: Two friends in common possession of 1$ walk into a corner shop to buy a pack of chewing gum, which costs 1$.  They each place a pack on the counter, and present the cashier with their single dollar bill.  “It’s both of ours!  We earned it in business together!” they beam as the cashier calls the cops and racks a shotgun under the register…

The two friends above may not use the paper currency simultaneously — while the concept of a dollar representing two, exclusively owned fifty-percent equity shares may be widely and innately understood — the single bill is represented in specie among the parties would still be 2 pairs of quarters.  While they could pool their resources and ‘both’ purchase a single pack of gum, they would continue to own a 50% equity share in the pack — resulting in a division yet again of title equally between the dozen-or-so sticks of gum contained therein.  This reduction and division of ownership can proceed ad quantum.

This simple reason is applicable within and demonstrated by current and universal economic realities, including all claims of joint title, common property law, jurisdictional issues, corporate law, and financial liability.  A joint bank account is simply the sum of the parties’ individual interest in that account — claims to hold legal property in common are bunk.

The human condition is marked by the sovereignty, independence and isolation of one’s own thought.  Praxeological thought-experiments like John Searle’s Chinese Room Argument and Alan Turing’s Test would not be possible to pose in a human reality that was other than a state of individual mental separation.  As we are alone in our thoughts, our experience of reality can only be communicated to one another.  It is therefore not possible to ever ‘share’ an experience with any other sentient being, because it is not possible to perceive reality as another person…even if the technology should develop such that multiple individuals can network and share the information within their minds, that information must still filter through another individual consciousness in order to be experienced simultaneously.  The physical separation of two minds is reinforced by the rationally-necessary separation of distinct individuals.  There may exist a potential hive-mind collectivist state, but it would require such a radical change to that which constitutes the human condition, that it would violate the tenets of what it is to be human.

In conclusion, logically, the most plausible circumstance in which property could exist in common would be on the quantum level within a hive-minded non-human collective, and the laws that govern men are and should be an accurate extension of the laws that govern nature — not through Social Darwinism, but rather anthropology.  Humans, as an adaptation, work interdependently to thrive, which often includes the voluntary sharing and trading of resources and property…none of which are held in common.

Ad Quantum,

L.A. Repucci

People: neither blithering idiots nor towering geniuses

Rick Weber Economics, Liberty , , , ,

Or is it that they’re both?

As a young libertarian first exposed to economics (actually it was my third exposure where it took) I was struck with an exciting proposition: people don’t need the government to look after them because (we’ve assumed that) they’re rational! In that case, government can almost only ever do harm. Add in some public choice and Austrian insights and you’ve got a water tight defense of liberty.

But actually you don’t. Because as it turns out, people might actually be complete morons. I’ll bet if you marketed a brand of bottled water as having never been warm–cleaned with pre-chilled filters made in iceland, and never poured into room temperature bottles–it would sell. But if that’s the case, the world should be a scary place. People would be doing ridiculous things and electing ridiculous politicians to help them act even more absurdly.

I’m an economist and I still do plenty of irrational things. But it turns out that first taste of economics was econ of a particular variety: the study of what is rational. Not the study of how people rationally act. That’s not to say it’s worthless. David Friedman put it well in Hidden Order: if people are rational some times and act randomly other times, then we can still make useful predictions about their behavior. But I don’t think that economics is some sort of half-science that assumes away randomness in order to study some portion of people’s actions.

Mostly, I think the study of rationality lays a foundation, and offers a puzzle, to allow further study of ecological rationality. The world is orderly and roughly follows the predictions we make when we assume individuals are rational. And yet people seem far from rational. What gives?!

It turns out we have to pay attention to institutions. These often hidden rules of the game direct our actions and embed our learning in social rules. Those crazy (probably imaginary) sociologists might have been on to something when they said that individuals’ actions are shaped by social forces. It’s not that people don’t have autonomy, it’s that people don’t exist in a vacuum.


Yes they are.

What’s my point? Learning a little bit of economics goes a long way to making good arguments for liberty, but it doesn’t go far enough. We live in an a much more interesting world than the one we learn about in econ 101.

From the Comments: An embarrassment of riches, a stable full of straw

Brandon Christensen Comments, Liberty, Philosophy , , ,

Below are some more thoughts on “total liberty” and bad faith.

My argument in the threads with Marvin has intended to be one that displays two points of view, rather than to be one of persuasion. Due to his responses to Dr Foldvary’s argument, I realized that he was uninterested in having an honest debate. I also realized that persuading him would be futile. So I instead have tried to illustrate – to readers and curious passersby – how Marvin’s arguments are fallacious (dishonest) and what to do about them by exploiting Marvin’s position. In order to do this I have kept it simple and tried to argue on Marvin’s terms (“speaking past one another”). Rick has an insightful, must-read summary of our arguments, and he also furthers our understanding of freedom in the process.

I am not quite done, though. I am still unsure if I have accomplished my task of exposing Marvin’s arguments as fallacious. I want to be sure that readers don’t take him seriously in the future should he decide to continue trolling the ‘comments’ section. Marvin states matter-of-factly that:

The problem is that I have a better handle on the truth than you do.

Now, in the interest of honest debate, I hope that everyone can see how Marvin’s assertion shows how he is being dishonest. I have pointed out his straw man fallacies for a while now, and I want to get the point across that Marvin’s characterizations of libertarian ethics are based upon the above-quoted viewpoint.

Given that Marvin believes he has a better handle on truth than I, how can I (or you as a reader) expect to get an even-handed argument from him? If you believe that I have mischaracterized Marvin’s arguments (as he has done to mine and Dr Foldvary’s and soon-to-be [?] Dr Weber’s), please point out where in the ‘comments’ thread.

Again, my task is much more simple than Rick’s. I wish to merely show how Marvin’s argument is based on falsehoods. I think his comments elsewhere suggest my hunch is right. (Rick, by the way, has been much more generous to Marvin than I, a position for which he has been rewarded by being called a homosexual with an unhealthy obsession for Marvin (“My name can’t stay off of Rick’s lips,” according to Marvin the Truthspeaker).)

Marvin’s main error in reasoning, in my judgement, is that he creates positions that nobody has made and then draws conclusions from those created positions. Sometimes he restates arguments that nobody has contested as if they were contested and then proceeds to explain why libertarians should not (or do) contest such an argument. This is sophistry at its most vulgar.

Does everybody follow? Dr Amburgey?

His last response to me in the ‘comments’ is a good example of what I mean. Marvin writes:

Brandon [quoting me]: “Society A (the one with no rules prohibiting murder) does not have total liberty because its members do not have freedom from unwarranted aggression.”

[Marvin:] If a society has a consensus that murder should be punished then it effectively has a rule prohibiting murder whether the rule is explicitly written down or not.

Yes, and what exactly does this have to do with my argument? With Fred’s? With Rick’s? With Hank’s? Marvin continues:

If a society has no agreement that murder is wrong then its sense of justice either presumes any murder is justified or is indifferent to it until it affects them personally.

Again, this may be true, but what exactly does this have to do with my argument that “Society A (the one with no rules prohibiting murder) does not have total liberty because its members do not have freedom from unwarranted aggression”? Where does it follow from this statement that rules prohibit total liberty? It’s almost as if Marvin is talking to himself rather than to a group of people. There is nothing wrong with thinking out loud, but it seems to me – based on this response and on past responses – that Marvin thinks he is replying to an argument somebody else has made rather than thinking out loud.

Marvin continues to pummel me:

(b) The meaning of “liberty” is “freedom to”, not “freedom from”. “Freedom to” means you can pursue your happiness with minimal restrictions (“total freedom” would imply no restrictions at all, a liberty to do what you please without fear of punishment).

Marvin goes on and on (and on) from there. However, this is simply wrong. The Stanford Encyclopedia of Philosophy has a good summary of the ‘freedom to’ versus ‘freedom from’ distinction. Basically, the ‘freedom from’ folks look at external factors (such as government) that inhibit liberty, whereas the ‘freedom to’ folks look at factors that are internal to individuals (such as class). I don’t want to get into the details here, but suffice it to say this is not Marvin’s understanding of the distinction. Normally I wouldn’t have a problem explaining this misunderstanding, but given Marvin’s track record I’m going to skip out on doing so (unless somebody wants me to).

I’ve got one more example I’d like to use to hammer home my point that Marvin is not interested in having an honest debate. He writes:

Brandon [quoting me]: “Your attempt at distinguishing “private punishments” within Society A from “punishments of society” is also fallacious. Is society composed of numerous factions – most of them private – or is it a monolithic, dissent-free, homogeneous unit.”

[Marvin:] A consensus is not monolithic. If everyone had to agree to everything then nothing would be possible. To make cooperation possible, we created a democratically elected government with many checks and balances. And we agreed to respect the authority of the laws it creates, even laws we may disagree with, because we would expect others to respect the laws that we do agree with that they don’t. And the democratic process may correct or remove an unsuccessful law in the future. I may win the case today and you may win the case tomorrow.

My argument is that Marvin’s assumption about society is monolithic, not society itself. If you read my argument with an eye for understanding it you can easily see that. If you read my argument from a position of Truthspeaker it may be harder to do so.

One last point I’d like to mention is that Marvin also has a habit of changing definitions to suit his argument. Often he simply provides his own. This, of course, helps him to have that “better handle on truth” that nobody else at NOL seems to have.

Has this cleared anything up? Muddled it further? Am I coming off as an ideologue or somebody who is trying to weed out falsehoods?

There are plenty of rules in a libertarian society. The fact that there are rules does not mean that ‘total liberty’ is lost because of it. Such a characterization is the epitome of a straw man. Rick takes the idea of total freedom to the next level (so read up!), so all I’m trying to do here is make sure that everybody understands Marvin’s sophistry. I think understanding sophistry is important because it tends to mellow people out: If you can understand the falsehoods in an argument you can craft up a cooler response.