Sunday, September 30, 2007

Something in the tea leaves

The latest Newsweek poll in Iowa has some interesting information buried in it.
Support for HRC drops by about 25% when you factor in whether a respondent says they are a likely voter. Meanwhile, support for Obama and Richardson increases significantly when you factor this in, to the point that Obama goes from 6 point underdog to 4 point favorite.
On the Republican side, support for Huckabee and Ron Paul doubles or more when you factor in the likelihood of voting.
What this shows is that Hillary's support is disproportionately amongst people who don't really care too much about the primaries (and presumably aren't following politics closely). Similarly, support for Obama, Richardson, and especially Huckabee and Paul is disproportionately from people who do care about the primaries (and presumably are following politics closely).

Wednesday, September 26, 2007

What happened to the Republican Party?

Excerpt from a post I made a few minutes ago at Volkh (but which is more relevant here):

"When I worked on the Hill briefly in the 90's, Ron Paul was regarded by many Republicans as almost a folk hero who they wished they could emulate without paying at the ballot box. There was even loose talk amongst some staffers wondering why the LP didn't just fold into the Republican Party. Things have changed so much now, though, that people like Bob Barr and Dick Armey (both poster children for 1990s social conservatism) have joined the libertarian movement, and are now regarded by the Right as whacky leftists. The number of disaffected Republicans who were considered the "establishment" 7 years ago is staggering: Barr, Armey, Christine Whitman, Colin Powell, William Buckley, Bruce Fein, Richard Viguerie, the Chafee family, Bob Smith, Paul O'Neill, Chuck Hagel, Sen. Webb, and dozens more."

While we're at it, we may as well give credit to the original defector, Jim Jeffords, even if he wasn't exactly an "establishment" type at the time. Some others worth adding: George Will (can't believe I left him off the original list) Bruce Bartlett, David Kuo, Andrew Sullivan, Gen. Abizaid, John Dean, Alan Greenspan, Paul Kagan, Matthew Dowd. I would also consider adding Pat Buchanan, Joe Scarborough, and Tucker Carlson. Admittedly, some of these were never necessarily establishment Republicans, but they show the broad spectrum of conservatives, libertarians, and "moderate Republicans" who have suddenly found themselves abandoned by the Republican Party. I would love any additions to this list.

Ultimately, one has to wonder just how many prominent defectors it will take before the remaining Republicans get out of their denial and: 1. stop claiming that the defectors are just "wimps" or "RINOs"; and 2. realize that they've changed the character of the Republican Party from a collection of various types of conservatives and constitutionalists to a group that exists for the sole purpose of expanding the power of the federal government. The good news is that if the remaining establishment doesn't wake up to these facts, a continuing stream of defections will cause the Party to collapse and a new major party to arise from the ashes, much as the Republican Party rose from the ashes of the Whigs.

Monday, September 24, 2007

A better approach to global warming?

It occurs that perhaps libertarians and free market conservatives have taken the wrong approach to global warming. It seems libertarians and conservatives have decided that opposition to government environmental intervention requires a belief that global warming is a myth.

The problem with this, of course, is that it requires people who are essentially focused on economics and classical liberal political thought to debate on issues of natural science. This is turf that most libertarians are ill-suited to fight on. It may be that there is legitimate debate within the scientific community as to whether global warming is real; however, this debate is one best left to the professionals whose job it is to debate it. The fact is that, to the extent libertarians wish to engage "Progressives" (many of whom, by the way, are no better educated on the topic than the average libertarian) on issues of whether global warming is real, that debate can only result in a battle of statistics. This battle of statistics is not one that libertarians can win, if only because "Progressives" have more scientists to cite, and, frankly, have more invested in the debate. In fact, arguing with a Progressive about the existence of global warming is similar to arguing with a member of the religious right about whether the Bible prohibits homosexuality - whether you're right or not, they just know more statistics about the topic than you. This is especially true when you consider that statistics can often be used to prove or disprove just about anything (my all-time favorite example being the correlation between the rate of crime in Central Park and ice cream cone sales in Central Park).

Now, this is not to say that libertarians should completely abandon the global warming debate - quite the opposite, in fact. The fact is that while scientists have (and even deserve) more respect on things like climate models, global temperatures, etc., they aren't particularly well-trained in the disciplines of economics, policy, and law (similarly, your average fundamentalist preacher deserves more respect on issues of what the Bible says or doesn't say, but is completely out of his element when discussing the civil law and economics) . These disciplines, of course, are areas that libertarians know quite well, but others do not (see the now-infamous Civic Literacy Test for proof; I got a 58 out of 60, by the way). Indeed, rather than get bogged down in debating the science of global warming, libertarians can use the global warming debate as an opportunity to advance understanding of how and why free markets work. Specifically, libertarians would be best served to be officially agnostic on the issue of global warming, while explaining why free markets are better suited to solve the problem - if it is real - than big government and international treaties. Perhaps we could even demonstrate how, to the extent global warming is real, it is the result of (or at least exacerbated by) excessive government interventionism.

For instance, most of the world's most polluted cities, according to a recent report by an environmental group, are in states that until very recently (if at all) had very little respect for private property rights. We might also try to explain how stricter environmental controls in technologically advanced nations will only push manufacturing even further to nations with not only no environmental controls, but also far less pollution-reducing technology. We might also explain how minimum wage laws and labor unions exacerbate the problem by further pushing manufacturing jobs to countries with less ability to control carbon emissions. Better still, we should demonstrate how private industry will be far more likely to come up with solutions to environmental problems than will the government and how government's "occupying the field" in this respect actually discourages innovative solutions. Importantly, when government makes environmental policy, it does so in ways that must have a negative effect on the rest of their economy; but when private industry is allowed to create ecological innovation, the effect on the rest of the economy is entirely positive - more, higher paying jobs, and ultimately, production of eco-friendly energy that is cheaper than our current energy supply. Finally, if global warming is real, then consumers will have a high demand for eco-friendly products (see, e.g., the huge demand for hybrid cars); high demand for a product is the best incentive for private entrepreneurs to search for ways of creating that product.

Indeed, one could only imagine how far along the world would be on a technological solution if so many government-funded scientists weren't being paid to conduct additional studies to reinforce the belief in global warming, but were instead funded by private industry seeking to find ways of profiting on ecologically friendly technology.

Friday, September 21, 2007

Update on China Import "Scandal"

In light of today's news that Mattel has taken responsibility for the majority of the toy recalls as being design flaws, I wonder if Lou Dobbs will take back his comments that this case shows why intense government regulation of imports is necessary (and that free marketers and libertarians are thus "idiotic"). For some reason, I'm not holding my breath.

Key quote:

On Friday, Debrowski acknowledged that "vast majority of those products that were recalled were the result of a design flaw in Mattel's design, not through a manufacturing flaw in China's manufacturers."
Lead-tainted toys accounted for only a small percentage of all toys recalled, he said, adding that: "We understand and appreciate deeply the issues that this has caused for the reputation of Chinese manufacturers."
In a statement issued by the company, Mattel said its lead-related recalls were "overly inclusive, including toys that may not have had lead in paint in excess of the U.S. standards.
"The follow-up inspections also confirmed that part of the recalled toys complied with the U.S. standards," the statement said.

In other words, this was not a case where free international trade resulted in harm to US consumers. Instead, it was a case where a manufacturer had a poor product design that resulted in a marginally higher risk of injury from the product's use. As a result, Mattel pulled products with the potential for such a marginally higher risk off of the shelves. To the extent any injuries were caused as a result, Mattel will almost certainly be sued under the common law; as long as government regulations and protectionist laws don't get in the way, Mattel will then be forced to make the injured parties whole (to the extent possible of course). In other words, this is probably going to be a case that shows how the free market works - not how it failed.
Finally, it's worth pointing out that, had Mattel chosen to manufacture these toys in the US, the potential problems would have been even worse because of the higher labor costs. Higher labor costs would mean that Mattel would have to cut the cost of its raw materials in order to meet its price point- this means smaller parts made with more dangerous materials. Even if Mattel did not use smaller parts and more dangerous materials, it would have had less incentive to conduct the recall operation since the lower profit margins would increase the marginal cost of the recall.

Thursday, September 13, 2007

What could Iraq look like if we all just left?

Oddly enough, the story of Somalia after the UN withdrew (but before it returned in recent years) shows that power vacuums aren't always to the detriment of society. Of course, the situation in Iraq has significant differences from Somalia- most importantly that a Shiite-dominated centralized government (backed by powerful militias) would at least nominally exist if everyone left. As a result, we would not be leaving behind a true power vacuum, meaning that the group with control of the government apparatus would hold an important advantage over the other groups. This advantage would be enough that the other groups, especially the Sunnis, would have a huge incentive to undermine the government as much as possible, effectively resulting in a civil war.

On the other hand, if we were to combine our withdrawal of forces with an end to most or all international aid to the Maliki government, we would minimize the initial advantage to the Shiites of maintaining a violent grasp on power - in other words, they'd be a government with no money other than what they could get from Iran. As Hamas found out, controlling a government with no money is about as worthwhile as being President of your middle school student council. Indeed, you can't even pay goons to go out and extract money for taxes since they would have no incentive to actually give the money they extract to you.

The only way to make holding on to power worthwhile would be to attract private investors. Even though private investors would love to tap into Iraq's oil, the instability created by a government with no ability to enforce property rights would make access to the oil worthless. Thus, the Shiite government would have no choice but to make peace with the Sunnis, who would find themselves with a surprising amount of leverage to work out a fair deal.

If the government and Sunnis failed to reach an agreement, you would have a state of anarchy - but one very similar to the Somalia example. Of course, the key to all this is that the withdrawal be combined with a complete end to international aid; unfortunately, this is something that most liberals would be completely opposed to on a false belief that the aid would be necessary to prevent a long-term humanitarian crisis.

Wednesday, September 12, 2007

"Green" Energy policy starves the poor

It seems I am about 3 months late on this topic, but it is one of the greatest ever examples of how government intervention has horrible unintended consequences. One of the more successful purportedly "Green" campaigns in recent years has been the campaign to mandate use of biofuels. As a result of this campaign, governments all over the world have begun to subsidize biofuel production and/or mandate the use of a specific percentage of biofuels in various energy products. Unfortunately, the laws of economics turn out to be more ironclad than the politicians expected.
Importantly, the agricultural products that form the basis for biofuels are all what we might call staples: sugar cane, corn, maize (used mostly for livestock feed), and wheat. What politicians seem to have forgotten (or maybe they just flunked Econ 101 in college) is that you can't artificially increase demand for a scarce resource without an inevitable price increase for that product. In this case, it's even worse, though, because you also have subsidies for particular varieties of agricultural products - but only to the extent the product is used for biofuels. So, farmers suddenly have an incentive to only sell their crops for biofuel uses, resulting in not only increased overall demand, but also a decreased supply in the food market.
Not surprisingly, the subsidies and mandates have resulted in increased global prices for these crops. The price of maize more than doubled between Jan. 2006 and May 2007. Maize is considered the world's most important staple crop since it is an essential ingredient in hundreds of foods, and is a primary source of livestock feed. The price doubling came despite the fact that the biofuel maize production amounted to only 15% of the US maize crop. In addition, the government subsidy not surprisingly resulted in less planting of other staple crops, resulting in higher prices for those crops.
A doubling of maize prices was directly responsible for a sizable increase in the overall price of US food in early 2007. But the effects on Second and Third World countries have been huge. For example, in 2006, according to Foreign Affairs, tortilla prices in Mexico more than doubled. Corn prices and wheat prices increased by at least 50% between June 2006 and 2007.
A 30% global increase in the price of wheat this year alone - due largely to biofuel production - has resulted in Italians going on strike today against eating pasta, which has seen its price rise accordingly.
Sugarcane, soybeans, and other staples have seen their prices rise accordingly- all as a direct result of biofuels production. Since these foods are all staple foods, the most affected by the price increase are the world's poorest countries. The problem has gotten so bad that within 20 years, some estimates suggest biofuel production will result in twice as many individuals who are "chronically hungry" worldwide as would otherwise be so classified. This increase amounts to 600 million additional starving people - but at least we'll be able to feel a little more smug that we helped the environment in a marginal way.

Friday, September 7, 2007

Lou Dobbs, China, and "Idiot Libertarians"

So, I accidentally turned Lou Dobbs on for exactly one minute this afternoon. He was talking about the Chinese toy and food import "scandals" that were in the news over the summer. After ranting about Mattel's corporate greed, he then went into a diatribe against free marketers, asking where are the "free marketers and libertarians now?" regarding this whole Chinese import debate. Continuing his rant, he stated that the whole scandal should prove to "idiot libertarians" that government regulation of trade is necessary to protect the safety of the American people. Finally, he drew the connection - as usual - between corporations and their ability to influence government in order to screw the consumer.

I did some research and found that, indeed, the libertarian movement has been less than concerned about the China toy recalls. Most libertarian commentary on the issue has discussed it only tangentially discussing other issues of China trade policy. Of course, the reason for this silence is mostly because libertarians aren't overly concerned with toy "defects" that have apparently caused little or no actual harm to US consumers (so far as I can tell).
Nonetheless, I figured that I will answer Mr. Dobbs' challenge (since I'm sure he's a regular reader of Publius Endures).
So, here are 6 reasons why the Chinese toy recalls do not represent a failure of the free market:
1. As far as I have been able to tell, the tens of millions of recalled toys that Dobbs complained about have resulted in exactly zero reported injuries. Indeed, the Consumer Products Safety Commission, in the most recent round of recalls, indicated that no injuries have occurred as a result of the allegedly defective products. So, I can't see how the market has created an unacceptable danger to the consumer if tens of millions of the toys subject to the recalls have caused exactly zero harm, or at least such a low level of harm as to be statistically irrelevant.
2. The fact that US government rules have apparently been violated in terms of the materials contained in the products is not in itself proof of a market failure and of the need for stronger government rules. If rules had been followed, and a statistically significant number of injuries had resulted nonetheless, then one could say there was a market failure and new rules could be justified. But the fact that rules have been broken does not justify stricter rules.
3. In fact, since many millions of products were imported and sold in violation of the government's rules and few if any injuries resulted over a substantial period of time, the evidence would suggest that the government regulation is either far more strict than necessary or is totally without value. This means that the only possible reasons for the rules are either to act as a means of protectionism for US manufacturers or they are completely arbitrary since the government lacks the ability to precisely set its standards at the most economically efficient point.
4. Dobbs' ad hominem attack on libertarians clearly shows his absolute ignorance of fundamental libertarian and free market principals. Most importantly, it ignores the fact that a true free market approach opposes corporate welfare just as vehemently as it opposes social welfare programs. Corporate welfare such as government subsidies, special tax breaks, and - most importantly for these purposes - limitations on liability are completely anti-free market. Obviously, corporate welfare significantly reduces the economic incentives to provide a safe product for the consumer since the government policies artificially reduce the corporation's marginal costs for defective products. Corporate legal protections and subsidies diffuse liability costs amongst the entire company rather than on a handful of individuals with a personal stake in the company. As a result, a corporate decisionmaker will only see his earnings reduced by a comparatively small amount if the company is found liable for defective products; without corporate welfare, that individual might be personally liable for all legal damages.
5. The fact that the products in these cases were recalled despite a lack of any significant injuries actually suggests a market success rather than a market failure. Even in the case of the dog food recall fiasco, only a few dozen of the millions upon millions of dogs that had eaten the "tainted" food wound up dying or with permanent health problems- the risk of serious injury was statistically only slightly higher than the chances of winning the lottery. Most -if not all- of the relevant toy and food recalls were voluntary, despite absurdly high costs to the companies. This means that the companies involved were concerned about permanent or long term damage to their consumer image in the unlikely event of injuries occuring. The recalls, by and large, were not the result of government enforcement, then, but of the profit motive.
6. Tariffs. I don't know what, if any, tariffs were involved in the questioned imports. However, the existence of the tariffs has a perverse effect on market incentives. A realistic hypothetical can demonstrate how this is relevant: ABC Co. currently makes a particular product in the US; however, the cost of producing the product in the US is increasing, but demand for the product will not support a correspondingly higher retail price. ABC Co. also knows that, for a variety of reasons, it can produce this product for much less in China and keep its price at current levels or even less. Therefore, it agrees with a Chinese company to produce the product in China at a particular price. Suddenly, however, a tariff is put in place or an existing tariff increases. This creates an increase in production cost to ABC Co. However, it still must keep its retail price point the same. As a result, ABC Co. must choose between either discontinuing the product or obtaining a lower price from the Chinese manufacturer. If ABC Co. chooses to pursue a lower price from the Chinese manufacturer, that manufacturer will almost certainly have to choose between ending its production of the product or finding a cheaper way of producing the product - including, perhaps, lower quality materials.

Having proven that the "unsafe" Chinese imports are not a market failure but a failure of too much regulation, I would like to suggest that Mr. Dobbs take a refresher course on free-market economics. Hazlitt's "Economics in One Lesson" should do the trick.

Thursday, September 6, 2007

Romney Didn't Say That, Did He?

From the debate tonight:

"And I hear from time to time people say, hey, wait a second. We have civil liberties we have to worry about. But don't forget, the most important civil liberty I expect from my government is my right to be kept alive, and that's what we're going to have to do." - Mitt "Battlefield Earth" Romney

I know this sounds great to those who call themselves conservatives nowadays, but really this is a blatant justification of authoritarianism/totalitarianism. Indeed, it was the underlying (if sometimes unspoken) justification for every authoritarian or totalitarian government action in history.

If the right to be kept alive by the government is the single most important civil liberty, then there are no other civil liberties. If the government's primary job is keeping people alive, then anything which can be potentially perceived as dangerous to life can be prohibited: "dangerous" speech, "dangerous" press coverage, the habeas corpus rights of "dangerous prisoners" held without trial, "dangerous" property rights like the right to buy or sell "dangerous" products (ie, guns, drugs, cigarettes, McDonald's, etc.). And this says nothing of the socialist implications of Romney's statement, since the "right to be kept alive" by the government necessarily implies that the government must provide its citizens free healthcare, free food, free water, and free anything that would tend to lengthen an individual's life.

Wednesday, September 5, 2007

Freedom IS Free

After 9/11, self-titled "conservatives" frequently liked to use the phrase "freedom isn't free," or talk about the "Cost of Freedom" as justification for sacrificing civil liberties in the name of so-called national security. It's time that this silly, self-contradictory exercise in Orwellian doublethink was put to rest.

The fact is that freedom IS free - it is the restriction of freedom that costs money and lives. For instance - freedom of speech and freedom of the press cost not a penny in a truly free society; the only cost of these freedoms is that of burnt calories from exercising one's mouth and mind, or that of the printing press. But when government regulates those freedoms, the cost is very real, not just because of the marginal loss of freedom but also because someone has to pay to enforce the regulation of those freedoms by the FCC, Secret Service, etc. We call those costs taxes. When we restrict guns and declare war on drugs, those restrictions cost money to enforce, not to mention lost freedoms in terms of civil liberties, lost production due to an excessive prison population, increased costs of imprisonment, shifted resources from more pressing priorities, etc.

Of course the foundation of the claim that "freedom isn't free" is that freedom must be protected by a strong national defense, characterized by a strong military, heightened surveillance by law enforcement, and "dirty" tactics by our intelligence agencies, and restricted due process rights. I will deal with the military question last, but the biggest problem is the assumption that these three things actually protect freedom. This assumption is faulty because all of these (particularly the last three) actually restrict freedom quite severely. The assumption thus becomes, in effect, that we must kill freedom in order to save it- a horrible case of doublethink. And this says nothing of the monetary and unintended consequences of these increased government powers.

As for the need for a strong military, it is difficult to argue that some form of national defense/public law enforcement is unnecessary. Legendary anarcho-capitalist Murray Rothbard famously made an attempt at such an argument, but I think he falls short because I am unconvinced that private security firms would have adequate incentive to avoid war with each other; a constant turf war amongst private security firms would be, in effect, the current state of Iraq or 1990-present Somalia. Thus, a publicly-funded military with constitutional restrictions is by far the lesser of two evils. Even if necessary, though, the existence of a taxpayer-funded military still requires coerced tax payments by the government and is thus a restriction on freedom. If it is a restriction on freedom, then by definition it cannot be a protection of freedom, and thus it is not a cost of freedom but a cost of regulation.

Even if the coercive payment of taxes for national defense is not a restriction of freedom, a national military offensive or occupation of a foreign country is most certainly not an actual cost of freedom. To engage in an offensive or to occupy a sovereign country is inherently to act to restrict freedom in that country because offensive military force is the most violently coervice action in which one can engage. Some would say that it is the freedom of the other country that we are restricting, rather than our own. This is true as far as it goes, but ignores other consequences:

1. "Blowback"- restriction of other people's freedom by coercive aggression creates an understandable justification for the victims of that aggression to act aggressively towards us (resulting in increased needs for law enforcement and defensive military posturing on our part).

2. It is impossible to be simultaneously free and justify the restriction of other people's freedom. To do so ultimately requires doublethink or an acceptance of restrictions on one's own freedoms (or at least that of their countrymen).

3. Most importantly, it implicitly assumes that freedom is not a human birthright, but is instead a birthright only of those fortunate enough to be born in a particular nation.

To the extent that governments are necessary (and they unfortunately are), we are deluding ourselves in thinking that even necessary government functions actually protect freedom when those functions still rely on coercive tax payment or regulation of individual behavior. The fact of the matter is that if (and only if) government did not exist at all, humans would be completely free- freedom does not need protection, and thus does not have a cost as defined by the Fox News Republicans.

Ultimately, when someone claims that freedom isn't free, they are really making the self-evident claim that the American system of government isn't free. But just because American-style government allows for more freedoms than most doesn't make it synonymous with freedom.

Not since Reagan and Thatcher...

In the last 20 years, has there been a nationally elected leader in any country who has been willing to say something like this (from the President of Georgia, per an article in the WSJ):

"A day or two later, at a dinner for Georgian businessmen, the president delivers a speech hammering home his well-honed message of self-help. "The government is going to help you in the best way possible, by doing nothing for you, by getting out of your way. Well, I exaggerate but you understand. Of course we will provide you with infrastructure, and help by getting rid of corruption, but you have all succeeded by your own initiative and enterprise, so you should congratulate yourselves."Mr. Saakashvili's style of leadership feels like a permanent political campaign -- which it is, in a way. He seems determined to show citizens how it's being done, visibly to demonstrate accountability, transparency and political process, so they grow accustomed to the sight of politicians answering to them -- in short, to Western political habits. All the while, he's exhorting and explaining, striving to change attitudes ingrained through decades of Soviet rule and 15 years of stagnation, strife and corruption. "I keep telling people that this is not a process like some silver-backed gorilla leading them to new pastures. They must do it themselves, and they are."" (emphasis added).