Sunday, March 27, 2011

Essays, Articles, Blog Posts, Podcasts, and Videos

~Isaac Chotiner reviews Stephan Collini's critique of cultural relativism and unfounded offense taking.

~Robert Murphy
explains why unemployment is as high as it is.

~Robert Higgs
explains why the West is awesome.

~Does Obama's Libya campaign harmonize with the Weinberger/Powell Doctrine? According to Christopher Preble, no.

~Richard Salsman argues that Obama is "our latest neocon president."

~Michael Tanner assesses the notion that we are not broke.

Tuesday, March 22, 2011

An Oddity of Price Gouging Laws

The latest issue of the Cato Institute's exceptional magazine Regulation includes a delightful critique of price gouging laws by Michael Giberson in which he examines the economics of such laws and critically assesses ethical arguments in favor of them. Giberson's economic argument against price gouging laws should be familiar to lay readers of economics. Price gouging laws are laws that impose controls on the price of a specific good. Typically, these laws impose a kind of price ceiling P, where suppliers of a good are prohibited from charging prices beyond P. Thus, if is the price charged by suppliers of a particular good, then price gouging laws forbid suppliers from setting S above P. In other words, S cannot exceed P. Thus, price gouging laws keep prices lower than what they would be within a free market environment. Of course, the problem with such price controls is that they cause shortages. Take gasoline. Natural disasters cause gas prices to rise by reducing the supply of gas. Price gouging laws prevent gas prices from rising however. As gas prices fall due to the laws, the quantity of gas supplied by gas retailers falls and the quantity of gas demanded by consumers rises, in accordance with the laws of supply and demand (some suppliers may even temporarily halt transactions). As the quantity demanded exceeds the quantity supplied, a shortage ensues and the availability of gas falls significantly.

There are an infinite number of examples within economic history of price ceilings yielding shortages.
Giberson makes the economic argument but also cites a 2008 paper by University of San Diego philosophy professor Matt Zwolinski on the ethics of price gouging. While deliberating on a South Carolina investigation conducted by the attorney general's office on alleged price gouging that occurred after the havoc caused by Hurricanes Gustav and Ike, Giberson writes that
"The South Carolina report on price gouging also indicated that some retail stations went to extraordinary lengths to secure supplies during the emergency even though they were uncertain as to whether they would recover their costs. Zwolinski argued that while such efforts may be laudable, merchants are not under an ethical obligation to do so. In fact, merchants face no ethical obligation to remain open during emergencies, even though closing may contribute to hardships among some potential consumers. And if merchants may ethically close, Zwolinski pointed out, it can hardly be unethical for merchants to remain open but offer goods at a higher-than-usual price. By remaining open even with high prices, the merchant is providing potentially helpful opportunities for consumers in need."
The pertinence of Zwolinski's point cannot be overstated. Price gouging laws do not reprimand or punish business owners whose goods are subject to such laws if the owners choose to halt operations completely. During or after natural catastrophes, when price gouging laws are usually activated, firms subject to such laws can shut down with impunity if they determine that further operations will be unprofitable due to the laws. If the firms to cease business activity are gas retailers, then shutting down ensures that gas exchanges will not occur, i.e., that no positive-sum transactions will take place. Neither the gas retailers nor the gas consumers are capable of making gains under these circumstances.

Now surely it is worse for the welfare of the community for gas retailers to abort distribution then it is for gas retailers to charge higher-than-usual prices for their gas, since an end to economic activity means the absence of the possibility for positive-sum exchanges. If retailers are allowed to charge disaster prices, then consumers are still able to acquire the gas that they need. If retailers shut down, gas is denied to all consumers. The oddity of price gouging laws here is that they penalize gas retailers for charging higher prices, but exempt them from penalties if they close up shop, the latter decision being one that negative affects consumers even more than charging higher prices. If policymakers propose price gouging laws on the premise that charging disaster prices qualifies as exploitation, then perhaps consistency would require them to impose laws forbidding firms subject to price gouging laws from aborting transactions because doing so is, according to the logic of the exploitation argument, even more egregiously exploitative than charging disaster prices. If not, then policymakers will have to narrow down their definition of exploitation.

Friday, March 18, 2011

Essays, Articles, Blog Posts, Podcasts, and Videos

~The latest issue of the Cato Institute's Regulation publication has just been released for free in pdf form. If you want empirical arguments against various kinds of government intervention, then Regulation is a must read.

~Mark Brandly beautifully explains what ought to be done to reduce gas prices.

~Damon W. Root assesses the claim the the Robert's Court possesses a "pro-business" bias.

~Bryan Appleyard reviews Edward L. Glaeser's defense of dirty, filthy, crowded, industrialized cities.

~The Cato Institute examines the economic freedom of the various states of India in this formal report.

Thursday, March 17, 2011

Une Femme Fatale?

The notion that the French are enamored with socialism is as common as it is false. France has, since the end of the Second World War, been a semi-capitalist nation (page 21 of 64), i.e., a market economy with an actively intervening central government. The French face a melange of government controls upon economic activity with which to cope, no doubt, but they live, for all intents and purposes, in a free society (no exceptions please - exceptions are like excuses and we all know what excuses are like).

The typical narrative on French socialism has been popularized by an overemphasis on particular aspects of French intellectual and political history. Yes, perhaps the serious enthusiasm for a socialist or communist type of collectivism in Europe began with Rousseau and the French Revolution. Yes, there was the 1848 Revolution. Yes, there was the Paris Commune of 1871. And yes, similar, in intellectual and aesthetic depth, to the appeal an anonymous rear end has to my vizsla, a romanticized genre of socialism has seduced and continues to seduce an array of French intellectuals. The threat posed by socialists is a real one, but this and the above events hardly qualify France as a socialist state.

Unfortunately, the remaining liberty of the French people may be jeopardized by a new threat in the form of the National Front, France's premier nationalist political organization founded by holocaust de-emphasizer and xenophobe Jean Marie Le Pen. Le Pen's daughter, Marine Le Pen, was appointed as head henchwoman of the party in January. Lacking her father's tactless, anti-Semitic disposition, Marine Le Pen is looking to enhance the growing popularity of her father's political legacy and, according to recent polling data, it seems that the Front is well on its way to becoming a significant presence in France's political environment. Now conservatives and libertarians make careers out of expressing disgust and disapproval with European and especially French social democrats. That's hardly objectionable. But foul as social democracy may seem, its doubtful that diet fascism is a sound alternative, particularly given the nefarious history of the Front. Here's a brief, translated list, thanks to Daily Kos, of some objectives sought by the Front straight from their website:

Our platform for the Department:
  • Combat the unfair dismantlement of social subsidies
  • Improve security in schools
  • Lower local taxes
  • Provide financial help to small businesses and fight outsourcing
  • Restore local services, especially for the elderly and the handicapped
  • Repair local roads and infrastructure
  • Stop subsidies to political organizations
  • Fight waste and corruption
  • Restore moral values

Our platform for the Country:

  • Create hiring priorities for French citizens
  • Restore law, order and security
  • Restore fairness before taxes
  • Defend republican values, traditions and our way of life
  • Stop illegal immigration and expel illegal immigrants
  • Increase financial support to poor family & single parents
  • Guarantee affordable housing to everyone
  • Restore the right to health care and the reimbursement of quality care
  • Leave retirement pensions as is

The Wikipedia description of the Front is more revealing, claiming that the Front endorses the following:

  • A return to traditional values: to include making access to abortion more difficult or illegal; giving an income to mothers who do not go out to work; promoting local traditional culture
  • Greater independence from the European Union and other international organizations
  • The establishment of tariffs or other protestionist measures against cheap imports
  • Firm sentences for all crimes and reinstatement of the death penalty for "the most heinous crimes"
  • The end of non-European immigration and the establishment of the jus sanguinis

If one opposes the French social democrats and socialists on the grounds that they champion government intervention in the economy, then one ought to treat the National Front with the same scorn. Choosing between French nationalism and French socialism is analogous to choosing between havoc and calamity. They are united in their opposition to free trade, to liberalization, and in their support for the welfare state. Unfortunately, as economic troubles persist it seems that the approval of the Front will expand, especially given the efforts of Madam Le Pen to curtail the party's crass racial bigotry.

As usual, the UMP is the only tolerable alternative. They are perhaps the only real political hindrance to the rise of either the socialists or the nationalists. All one can do is hope that French voters come to their senses. France remains a relatively free country, but this freedom requires the presence of a cautious, ever vigilant electorate.

Thursday, March 10, 2011

Essays, Articles, Blog Posts, Podcasts, and Videos

~Ron Rosenbaum considers the morality of using nuclear weapons and our nuclear fail-safe system.

~Tyler Cowen lists the alleged errors of "left-wing"and "right-wing economists".

~According to Ronald Bailey, "Ten of the last 11 recessions were preceded by oil prices hikes." Is there a causal link?

~Shikla Dalmia argues that Obama's clean energy project is economically imprudent.

Sunday, March 6, 2011

The Enviable Brilliance of the Swiss

How else shall one describe a people who have maintained the integrity of their civil society for so long? It appears its become necessary to qualify Daniel Hannan's generally accurate proposition that "America must not follow Europe".

Just recently, 56.3 percent of Swiss participants in a national referendum, appealing to their most cherished values of security and limited government, voted against an initiative "banning army-issue firearms from the home and setting up a central arms register in a bid to curb gun violence." There was a considerable campaign in favor of the initiative, staffed by "a broad coalition of NGOs, trade unions, churches, pacifists and centre-left parties." Fortunately, the Swiss as a whole can be counted on to make sound decisions regarding matters of civil liberties.

Perhaps the high rate of civilian gun ownership helps to explain why crime is extraordinarily low in Switzerland. I'd wager that the risk involved in engaging in violent criminal activity in Switzerland must be relatively high since the high rate of civilian gun ownership means the risk of begin deterred, apprehended, or shot during the commission of a criminal act is correspondingly high.

In addition to upholding gun rights, 51.7 percent of participants from the canton of Bern voted within a canton referendum in favor of replacing the old nuclear reactor at a location called Mühleberg with a brand new one. The Swiss affinity for nuclear power has waned considerably in the past but a renewed desire for nuclear power as a significant source of electricity, fueled in part by clean energy concerns, has compelled the Swiss to oppose further moratoriums on the production of nuclear power.

Naturally, recent Swiss wisdom does not end here. My mother can recall, when she traveled to East Germany in the late 70s, how unsettled she was when she discovered the extent to which socialism left Eastern Europe bespattered in filth and poverty. By contrast, when she headed south towards Zurich she remarked that it was probably the most immaculate place she had ever been, easily overcoming New York, Paris, or any other part of Europe she had been to. This tradition of cleanliness is continued by Swiss citizens such as Thomas Niederer, founder and president of the Swiss Association of Environmental Trash Divers (SAET). Niederer has recently announced that he will embark upon an endeavor to cleanse Switzerland's lakes and bodies of water of their human contaminants. Niederer expresses his intolerance towards a fouled landscape when he insists that “I can’t turn a blind eye to the rubbish, the waste produced by society, that one encounters underwater. I can’t simply swim past it.”

Though it may be true that a perfect society alludes us so far, its arguable that Switzerland bests every other nation in terms of its proximity to this ideal. It enjoys an extraordinary level of government non-intervention, as indicated by the 2011 Index of Economic Freedom andFreedom Houses' 2010 Country Report. Its citizens have refused to vote in favor of transforming Switzerland into a member of the EU, perhaps a wise decision given the dubiousness of the EU's commitment to liberalization. It has a stellar record on governmental respect for private property rights, as indicated by the 2010 International Property Rights Index (page 69 of 79).

In fact, Switzerland is so free that it has been aggravating its European neighbors for years. Despite unlettered bullying from Washington and the OECD, the Swiss engage in a delightful kind of tax competition, where they attract firms and financial capital from around the world by imposing minimal taxation. The tax policy works like a charm and now Swiss locales like Rolle can brag about coping with the problem of too much economic growth. We feel their pain.

Similarly, the 26 cantons within Switzerland are free to engage in tax competition as well. According to Paul Green,
"the canton of Obwalden formerly had one of the higher tax rates, but to compete brought it down to a flat 10% – though cantons Zug and Schwyz are better known for their low taxes. In the south, cantons Vaud, Geneva and the Italian-speaking Ticino are currently lowest. Also, it is perfectly possible for any reasonably wealthy person to cut a special deal with a canton for a much lower rate. In fact, the wealthier the better – the lack of social envy and its politics is unusual and noteworthy.

There are also occasional amnesties to provide for tax which is not paid. The evaded amounts are actually lower percentage-wise than the much more oppressive surrounding countries. This can only be due to lower rates, more local accountability and less violent collection methods leading to less resentment and motivation for resistance. Tax evasion, if found out, might land an offender in a somewhat uncomfortable civil action, but it is not a crime."

The logic of tax competitiveness is not different to comprehend. If two governments A and Bmaintain the same tax rate X and one government, government A, decides to tax liberalize the market within its jurisdiction by reducing its tax rate to (X - R), then, ceteris paribus, economic agents and their financial capital within the jurisdiction of government B will most likely either remain within jurisdiction B (unlikely) or will move to the jurisdiction of government A because as tax liberalization occurs, it increases the freedom of economic agents to generate profits and keep those profits. The Swiss understand. The EU doesn't.

The Swiss tradition of respect for civil liberties comes in part as a result of its political configuration. Political power is severely decentralized. The country is a confederation of 26 regional constituents called cantons. Similar to our now abandoned 10th Amendment, Article 3 of Title 1 of the Swiss Constitution states that "the Cantons are sovereign insofar as their sovereignty is not limited by the Federal Constitution; they shall exercise all rights which are not transferred to the Confederation." This is significant because the administrative privileges given to the federal government mostly concern foreign policy. Domestically, local governments are in charge. Political jurisdictions are small, the assignment of tasks to local authorities is maximized, popular referenda are a staple of Swiss political life, and power within the federal government is deliberately spread out. This decentralization of political power ensures that the federal government is less capable of becoming repressive.

Add to this the fact that four languages are spoken in Switzerland - German, French, Italian, and Romansh - and the people nevertheless manage to co-exist peacefully. Oh, and the Swiss government doesn't subsidize foreign dictators or finance nation-building fiascos. So next time when we exalt ourselves as citizens of the greatest country on Earth, perhaps instead we should second guess ourselves in light of the existence of our Alpine ally.

Saturday, March 5, 2011

To Surly, With Love: Are Teachers Overpaid?

Essays, Articles, Blog Posts, Podcasts, and Videos

~Bryan Caplan argues against the current consumption of news and downgrades the nation of Italy.

~John Markoff writes on how computer software is drastically reducing the costs of legal research.

~Frances D'Emilio documents Italy's road to nativism with the introduction of new language conditions for work permits.

~Remember those banks that were "too big to fail"? According to David Cho, now they're bigger than ever.

Wednesday, March 2, 2011

Raising the Debt Ceiling: It Just Makes Sense. Not.

Essays, Articles, Blog Posts, Podcasts, and Videos

~David Henderson hearkens back to the days when Keynesians got it right on minimum wage laws.

~Ronald Bailey weighs in on the lives and deaths of dictatorships.

~I discovered
EconTalk with economist Russ Roberts a few months ago and came to the conclusion that it was perhaps the best political economy podcast on the internet. Here are some of my favorites:
-Robert Service on Leon Trotsky
-Christopher Hitchens on George Orwell
-Paul Gregory on his book Politics, Murder, and Love in Stalin's Kremlin
-
Bryan Caplan on Eugene Richter, F.A. Hayek, and Socialism
-Daniel Okrent on his book Last Call: The Rise and Fall of Prohibition

Top 10 Hedge Funds Earn $28 Billion for Their Clients

According to AFP,
"The world's top 10 hedge funds netted 28 billion dollars (20 billion euros) for their clients in the second half of last year, the Financial Times reported Wednesday.

Data calculated by hedge-fund investor LCH Investments showed that the top 10 funds made two billion dollars more for their clients than the net profits of Goldman Sachs, JPMorgan, Citigroup, Morgan Stanley, Barclays and HSBC combined.

According to the research, the 10 funds have generated a total of 182 billion dollars in profit for their investors since they were founded, the British business newspaper said."

According to the report, John Paulson, a fellow competitor of George Soros, was the hedge fund exemplar in 2010, as his firm Paulson & Co earned $5.8 billion for its clients in the latter half of the year.

And that's without bailouts. The moral hazards that influence the behaviour of banks, created as a result of government interventions to maintain their financial integrity, do not exist within the hedge fund industry. According to consultant Dan O'Connor,

"What also separates the hedge funds from most of our financial system is that none of the hedge funds had their hands out in search of bailouts during the turmoil of 2008. In fact, a myriad of hedge funds went bust in this period. Some of them, worth billions of dollars, not only collapsed but did so in a very smooth fashion. Their collapse represents the natural process of liquidation, on which Mises and Hayek placed such a great emphasis in their analyses of the boom and bust periods historically caused by the expansion of money and credit."

There are important lessons to be learned from the hedge fund industry. If coercive regulatory restraints fall, the freedom to innovate and earn profits increases. Hedge funds are largely exempt from rules prohibiting short selling, buying or selling options, participating in futures contracts, or mingling in the derivatives market in general. Therefore, the opportunities for hedge funds to earn money are myriad.

Furthermore, as O'Connor indicates, hedge funds cannot rely upon the government for financial assistance, hence they are bound by the profit and loss system. Funds that speculate and hedge in accordance with correct forecasts of future market conditions make money and, therefore, are rewarded for their wisdom. By contrast, funds that act in accordance with false or inaccurate forecasts lose money and go under and, therefore, are punished for their imprudence. Under such a system, profitability is made contingent upon performance and those firms with the best track record of profitable forecasts are thereby allocated the the most capital. The potential for profits, the threat of losses, and the existence of competitors encourage hedge funds to innovate and carefully assess risk.

Is Washington paying attention?

Tuesday, March 1, 2011

UN Suspends Libyan Membership to Human Rights Council

According to Forbes.com,
"The full membership of the United Nations on Tuesday suspended Libya from the U.N. Human Rights Council in the latest international effort to isolate Moammar Gadhafi's government for its violent attacks on civilian protesters.

The U.N. General Assembly voted by consensus on the council's recommendation to suspend Libya's rights of council membership for committing "gross and systematic violations of human rights."

Is it inappropriate to ask why Libya was a member of the Human Rights Council to begin with? To clarify, when it is said that "Libya" has had its membership suspended, what is meant is that the Libyan government's permission to preside upon the Human Right's Council has been revoked, at least temporarily. Well, isn't it odd that a government with a human rights record as spectacularly bad as that of Libya's government would have nevertheless been allowed to have its opinion respected within a council professing a concern for human rights? What does this say about the quality of the UN's Human Rights Council?

Essays, Articles, Blog Posts, Podcasts, and Videos

~Glenn Greenwald takes David Frum to task on the law and foreign policy on Bloggingheads.tv

~Jackie Spinner introduces us to the civility of Iraqi Kurdistan. Its quite clear to me that the Kurds deserve their own nation-state.

~Tomasz Sommer and Marek Jan Chodakiewicz unearth a questionable new habit:
Stalinist apologetics. Yes, such a thing exists.

~Russian dissidents stick it to Putin and support jailed oil tycoon Mikhail Khodorkovsky.

~Bryan Caplan takes Amy Chua to task for her book World on Fire: How Exporting Free Market Democracy Breeds Ethnic Hatred and Global Instability.

Questions for Christian Libertarians

It puzzles me how self-professed libertarians can simultaneously subscribe to the Christian faith (or any faith for that matter). How do they reconcile their belief in non-aggression, or at least in the general absence of coercion, with the text of Leviticus, particularly with Leviticus 20? The passage is rife with injunctions from God that require the Israelites to kill those who commit adultery or engage in homosexual behaviour. Now neither appeals to me, but that these activities should solicit capital punishment makes very little sense to me. Would killing these individuals not qualify as a violation of the non-aggression principle? Don't ask me to consider the context; why are these requisitions in their holy book and how do they reconcile their libertarianism?

There are, to be sure, more passages within the Bible, in both the OT and the NT, that seem to be equivalently specious but I'll leave it at that.

Walter E Williams - Ownership and Preservation

A Primer on Slippery Slopes

Assume someone makes the following argument:

-All unhealthy activities are things that should be prohibited

-Smoking is an unhealthy activity

-Smoking is something that should be prohibited

The argument is valid, meaning its structure prevents the conclusion from being false if the premises are true. However, it is extremely vulnerable to a slippery slope rebuttal. Take the first premise, the major premise (the major premise is the one that shares the same predicate with the conclusion). The implications of the major premise are extraordinary. A legal system that took the major premise seriously would have to ban the overconsumption of liquor, the consumption of smokeless tobacco, sleepless nights, marathons, loud concert music, etc. Any argument with the same major premise would imply legal proscriptions for all unhealthy activities, just as the major premise indicates, not merely the activity as expressed by the subject of the minor premise (the one that shares the same subject with the conclusion), in this case, smoking. Consider this argument:

-All unhealthy activities are things that should be prohibited

-Eating fast food is an unhealthy activity

-Eating fast food is something that should be prohibited

If the major premise is subscribed to, then the above conclusion follows as well. But do we really desire a prohibition upon the consumption fast food? If one accepts the major premise as true, there is nothing one can do to mitigate its implications. If one wishes to prohibit smoking without prohibiting all other unhealthy activities, then one must adopt an alternative major premise.

So, the above argument is susceptible to a slippery slope counter argument and a slippery slope argument/counter argument is one that accuses another argument of containing a major premise that logically leads, if applied consistently, to unsatisfactory implications.

The trick to properly applying slippery slope arguments is to identify the major premise of a deductive argument that one suspects is vulnerable, assuming the argument is deductive (the vast majority of deductive arguments are syllogistic, so they will contain a major premise even if the arguer is unaware or denies it). If the major premise does not imply the disquieting consequences that the slippery slope argument alleges it does, then the slippery slope argument is no good.

Let's use an example of a slippery slope argument that I've become annoyed with. It is often said of arguments in favor of abortion rights that they imply, among other things, that people should retain the right to euthanize mentally challenged infants. Both are examples of human beings and the law allows for the killing of one. Why not the other as well?

This slippery slope argument would work if it was intended to criticize the following pro-abortion rights argument:

-Activities that involve humans killing other humans they deem as undesirable are activities that should be legal

-Abortions are activities that involve humans killing other humans they deem as undesirable

-Abortions are activities that should be legal

Consider a grim implication if one accepts the major premise above:

-Activities that involve humans killing other humans they deem as undesirable are activities that should be legal

-Murders are activities that involve humans killing other humans they deem as undesirable

-Murders are activities that should be legal

This, however, is an argument in favor of abortion rights that one will be hard pressed to discover. Now consider this alternative argument:

-All activities that involve human beings modifying their own bodies without resort to duress against others are activities that should be legal

-Abortions are activities that involve human beings modifying their own bodies without resort to duress against others

-Abortions are activities that should be legal

The major premise in this pro-abortion rights argument doesn't even approach sanctioning infant euthanasia, hence the aforementioned slippery slope argument from euthanasia fails to demonstrate that the major premise here yields a slippery slope.

Failing to demonstrate the presence of a slippery slope is not the only possible flaw of a slippery slope argument. Some successfully identify a slippery slope but then subsequently assign a false evaluation to the "slippery slope" in question. No doubt, it must have been argued at one time that compliance with the proposition

"We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty, and the pursuit of Happiness"

should be adjusted due to the fact that, if taken literally, such a statement would imply that blacks would be worthy of legal rights sanctioning their exemption from slavery, laws mandating segregation, prohibitions against interracial marriage, etc. We can agree with a slaveowner's assertion that such a categorical interpretation of Jefferson's famous dictum would imply that slavery, segregation, and the whole array of laws aimed at repressing blacks should be annulled. However, what we must disagree with is his estimate of the logical implications and his classification of them as a "slippery slope".