The Libertarian Straw Man

I’ve become thoroughly sick and disgusted at the continual perpetuation of the libertarian straw man. The straw man is an image of libertarians, put forth mostly by liberals, as not caring about important issues and being nothing more than shills for corporate power and political control.

Recently, our colleague Ed Brayton wrote a post about “Regulation vs. No Regulation vs. Smart Regulation, in which a fairly predictable discussion ensued about the virtues of regulation in general, and specific types of regulation in particular. Not a stupid discussion by any means, just fairly predictable for those who’ve engaged in such discussions before.

But at the very end, there was this comment.

Anyway Offshore oil liability is legally limited to 75 million dollars. That is pretty small compared to the amount of damages likely. … This is why I constantly point out how the “less regulation” argument is used to make rational regulation of real externalities impossible. My problem with libertarians is that they debate endlessly on the merits of licensing haircut providers while oil is washing up on the beach.

Libertarians do indeed debate the merits of licensing haircuts, because it’s an example of a set of pretty silly regulations–an attempt to protect our precious womenfolk from the horrors of finger curls gone wrong. But libertarians (at least those who know what they’re talking about) really dislike negative externalities, because negative externalities are costs imposed on others against their will, and libertarians don’t think it’s legitimate to impose costs on other people. Another way of putting it is that libertarians like markets, but negative externalities are a market failure, and an appreciation for markets does not logically lead to an acceptance or approval of market failures.

So it seemed to me that surely I could find some libertarians who were discussing the oil spill instead of haircuts. Cato being chock full of libertarians, that’s where I turned first. I googled, “reason magazine” and “oil spill,” and lo and behold the first result was a “Reason: Hit and Run” blogpost titled, “Limited Liability, Oil Spills, and Moral Hazard.”

Not only is the author, Jesse Walker, talking about oil spills, he’s talking about the very same problem, limited liability, that the Dispatches commenter was complaining about. He doesn’t discuss it in detail, primarily just citing a New York Times article that explains the liability cap, but the mention of moral hazard in the title clearly indicates that he recognizes the problem created by the cap.

Walker then linked to a response by Steven Horwitz, who wrote:

…with a liability cap (beyond the clean up costs), the costs of any spill are less than they would be otherwise, giving firms reason, at least on the margin, to be willing to tolerate more risk of such a spill and reducing their expenditures on prevention measures, again at least on the margin.

If this all sounds familiar, it’s because it looks like it works much like bank deposit insurance does. Each bank pays premiums to the FDIC which in turn caps the liability banks face to their depositors if they should fail. There’s a nice long literature on the incentive effects of deposit insurance and the “heads I win, tails I don’t lose” nature of the deal. … It would seem reasonable, without having looked at the empirical data, that this Fund would have similar effects…

If we’re really interested in preventing oil spills and bank failures, punishing to the fullest those who screw up would seem to be a very effective way of doing so. Why doing so isn’t in play in both cases might have something to do with the political pull of large banks and oil companies. Crony capitalism/corporatism strikes again.

So not only are libertarians in fact talking about the oil spill (and other issues of more significance than haircuts, like banking regulations), they’re talking explicitly about the very problem the commenter bemoans, the liability cap. And not only that, it’s really easy to find the places they’re discussing these things. And not only that, their critique of the liability cap is perfectly congruent with what the liberals believe.

Thios dovetails nicely with what Ed Brayton and I discussed on his radio show–which was in fact a part of the basis of his post–about the potential for agreement between liberals and libertarians. It’s evident that there is room for agreement between them, not just on civil liberties issues, but to a greater extent than normally recognized, on economic issues.*

But do I expect that liberals will stop trotting out their libertarian strawman anytime soon? No. Do I expect even that the commenter in question will recognize his error and do some quick and easy internet research before he trots it out the next time? No.

Commenters at Dispatches are fond of saying, “Reality has a well-known liberal bias.” When I critiqued that, I was assured that they only meant it tongue-in-cheek, not seriously. I’m not actually persuaded. I think liberals do believe that,** and I think their confidence in that belief leads them to assume that any ideological view that doesn’t call itself liberal is, of logical necessity, wrong. And since it’s wrong, why would they need to take it seriously enough to pay real attention to it and actually understand it? Especially as Libertarian Party presidential candidates regularly get less than 1% of the votes, libertarians can be dismissed as a side show, wacky people with wacky ideas not worthy of serious consideration.

Whatever the reason for their persistent refusal to honestly engage libertarianism, that refusal means liberals persistently misrepresent libertarianism. When they do bother to give it any attention, they engage only a strawman. As one of the people hidden behind that strawman, as one who is consistently misinterpreted and misrepresented because liberals see nothing but that strawman,*** I’m damned sick and tired of it.

I don’t count myself as a Will Wilkinson-type liberaltarian, but I do think I have far more in common with liberals than with conservatives. My only conservative leaning values are that I’m a little bit Burkean in my approach to social/political change, pro-gun rights, and mildly hawkish in foreign policy (although I’m lightyears away from neocon hawkishness). On the other side, I’m pro-choice, pro-legalization, anti-religion in schools, pro-environment, pro-same-sex marriage, pro-due process rights, etc. Most importantly, for this discussion at least, I’m anti-government/corporation cronyism, as is every single libertarian I know. And that, specifically, is the strawman.

It’s ok if liberals disagree with us about the effect of free markets. We think it will restrict that cronyism, they think it will cause it. I think they’re wrong about how to prevent it, but I recognize that they still oppose it. They don’t grant us that same recognition. They not only think our approach would cause cronyism, they think we want that effect. My perspective is that they’re misguided, but not evil. Their perspective is that I’m not just misguided, but that I am evil.

It’s hard to carry on a reasonable conversation with someone who has preemptively assumed you’re a monstrous person. But the only monster is the strawman. And if liberals really want to be biased towards reality, they’ll need to learn to recognize strawmen and reject them. It would be good for both sides.

__________________________________
*Although certainly not complete agreement on economic issues. By “greater than normally recognized,” I mean greater than one would expect from liberals’ gross misrepresentation of libertarians as pro-corporate/government cronyism.

**Just as conservatives believe reality has a conservative bias and, I’m sure, we libertarians believe it has a libertarian bias.

***We don’t get many liberals commenting on this blog, but those who do are ones who do see beyond the strawman. They are not the target of my ire.

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About J@m3z Aitch

J@m3z Aitch is a two-bit college professor who'd rather be canoeing.
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87 Responses to The Libertarian Straw Man

  1. pinky says:

    Maybe a small dose of Shadia Drury would do some good here? The quote is in regards to Allan Bloom’s book, The Closing of The American Mind.

    “According to Bloom, America’s Founding Fathers were the heirs of early modern philosophers such as Hobbes and Locke. These moderns were not privy to the sublime insights of the classics or their recent heirs–Rousseau and Nietzsche. Instead, they looked at man in his brutishness: untamed, uncultivated, and self-centered. And, incredible as it may seem, the early moderns set out to create a society made up of these selfish creatures. The result was a society of individuals whose natural tendencies for self-seeking and self-satisfaction were not suppressed by culture, but simply re-channeled into commerce. In this way, man’s natural egoism assumed a form that was not altogether destructive of social life. The result was a bourgeois society that is paradigmatic of American life>”
    .
    How are we supposed to take that in light of your comments on Libertarianism?
    .

  2. buddyglass says:

    Allow me to suggest that folks critique libertarian straw men because some libertarians really are straw men. By that I mean they decry regulation, then dismiss the possible negative effects of deregulation with a bit of hand-waving.

    You get people who argue for no public education, no FDA, no EPA, no driver’s licenses, car registration, etc. then answer all objections with, “the market will take care of it.”

  3. James Hanley says:

    Pinky, I’m missing the connection.

    Buddyglass, yes, we’re all familiar with wackos with blogs (hello!) and a penchant for writing letters to the editors. By focusing on them you’re focusing on the strawman. It’s like defining conservatives by focusing on the birthers, or defining liberals by focusing on truthers. The mere fact that such people exist doesn’t mean they’re not strawmen, nor does it mean that focusing on them is anything more than an attempt to dishonestly frame one’s ideological opponents. You’re not going to find those people writing for Cato, or the Independent Institute, or the Political Economy Research Council. Ignoring the intellectual voice of the movement and focusing on the folks hoarding gold behind their barricades in the desert because someday the Fed is going to purposefully destroy the money supply? Do yo really think that’s an intelligent approach? It says more about those who do it than it does about us.

  4. pinky says:

    .
    I guess what I copied from Drury was similar to what Buddyglass wrote.
    .

  5. buddyglass says:

    Sure, it’s not fair to focus on those guys. But its somewhat understandable when the public “face” of the movement is R{on|and} Paul, Peter Schiff and the Tea Party.

  6. As a liberal-leaning non-libertarian, I can attest to the fact that some of my other liberal-leaning and leftist-leaning non-libertarian friends indulge in this strawman or in others like like it. I have only to mention libertarianism and I get a long lecture outlining the situation you just noticed.

    I think one possible point on the economy that liberals can really be helped by the libertarian perspective is in libertarianism’s critique (as I understand it) of the actual results of any specific regulation (i.e., a critique that takes into account perverse incentives and unintended consequences). I presume that an liberal of good will would want to see the regulation he or she supports actually work rather than make the problem worse.

  7. pinky says:

    .
    All of which brings us to the place where we can ask the question, “What is a liberal and how is that different from what it means to be a libertarian?

  8. James Hanley says:

    Buddyglass,

    Well I apologize for not being able to successfully make Jason Kuznicki the public face of the movement. For Christ’s sake, it’s not as though any of us non-wackos have any way to control the media, you know? And just why do you think the media focuses on those folks and makes them the public face? It couldn’t possibly suit their pre-conceived beliefs and convenient plot line, right?

    But back to the point I tried to make in my post, if liberals really want reality to be biased in their direction, maybe they should stop being so shallow and careless that they only look at what the media presents as libertarianism, and actually start looking at what intelligent libertarians are writing.

    When you’re accused of not doing your homework, blaming the media for not spoonfeeding the real story to you isn’t so much an excuse as an admission of guilt.

  9. “It’s ok if liberals disagree with us about the effect of free markets. We think it will restrict that cronyism, they think it will cause it.”

    Great point and one that needs to be put forth more. I would suggest a series of posts to lay out this case.

  10. James K says:

    It’s almost like there needs to be a term for a near-strawman, because while there are some very dubious libertarians out there, there are plenty of good libertarian arguments that those in favour of bigger government should have to answer.

    The frustrating thing of course is that libertarian viewpoints are only included when journalists are looking for “colour” pieces, and that means you get the guy who turned his skin blue and not the Cato Institute or Reason.

    this is part of the reason why I went into government, one way to influence the process is to bypass the media entirely.

  11. ppnl says:

    Hey, I’m being quoted!

    I left a reply over there. But anyway…

    First I don’t consider myself a liberal in the democrat sense. I do not fear them. I do not hate them. But I’m not one. I consider myself a small government republican.

    My criticism of libertarianism here was not intended as an attack. Consider it more of a call to arms against a weakness that I see in the movement. My criticism isn’t that your principles are wrong even though sometimes I do think they are. My criticism is that so often libertarians fail to live up to their principles. Well no great shock there. What party does? But the way libertarians have failed their principles matches a way republicans have failed our principles so as to increase the damage to both.

    I absolutely do see the liberal focus on the birther issue as a legitimate concern considering how many republicans are birthers. I have a brother who is a birther. It’s bat shit insane and we republicans should eat shit over it. That’s the only cure.

    You are certainly correct that there are many libertarians who do understand the need for dealing with externalities but that is not really the point. You really need to consider the extent that some libertarian views are distorted to give cover to politicians selling out. Those selling out politicians are often republicans.

    There has been some talk about a coalition of libertarians and liberals. The irony is I think this would be a boon for the republican party. Republicans are in a trap where they have no choice but to cater to the party “base”. If libertarians deserted the republicans for this cause this might give republicans the backbone to stand up to the monster they have created and called the base.

  12. tom van dyke says:

    The phony libertarians are conspicuous in their absence in criticizing the Obama administration. No true libertarian would abide an ounce of its communitarian agenda. The only criticism of it comes from his left, waterboarding, etc. How brave.

    The phony libertarians use “libertarianism” as a vanity, to pretend they are beyond partisanship, although their partisanship is clear as day. Why they think they aren’t transparent, I don’t know.

    Perhaps it’s a belief that most people are even stupider than they are. Yes, I think that’s it. But even stupid people can see through them.

    The phony libertarians are a joke to both the left and right, but convince themselves they are fooling both. They fool neither and are respected by neither. They are useful idiots at best. I’ve learned a lot here.

  13. I do think that a coalition among liberals/Democrats and libertarians would be potentially more fruitful than a coalition among conservatives/Republicans and libertarians. In terms of economic and fiscal policy, both Republicans and Democrats have proven adept at enacting big government enterprises and feeding and creating even more categories of rent seekers. Yet Democrats appear (to me) to be slightly better at recognizing such items as due process rights and other civil liberties. So, if one is going to get the bad (in the view of many libertarians) economic regulations and other policies anyway, one might as well get the half of loaf that the Democrats can offer.

    I oversimplify, of course. Bad economic policy pursued by Republicans does not necessarily have the same goals, results or beneficiaries the same people as the bad economic policy pursued by Democrats. And perhaps from a libertarian point of view, divided government is the best way to go, at least when it comes to what they probably see as “damage control” in limiting even further excesses in governmental largesse.

  14. “And perhaps from a libertarian point of view, divided government is the best way to go, at least when it comes to what they probably see as “damage control” in limiting even further excesses in governmental largesse.”

    No, they both just keep spending on the same shit no matter what. They do not compromise by not spending what the other guy is against they do it by saying, “Give me this and I will give you that.”

    I also have to take exception to, what it seems is, some sort of implication that Cato type Libertarian thought is the only true libertarian thought. Cato and Ron Paul have a lot more in common than most would think. I think Ron Paul would agree with almost all of what James stated his views were.

  15. In fact, all that you would disagree on is abortion and possibly religion in schools depending on what that means. So it would seem that I have been right the last months in that libertarians are divided over religion and that this schism has caused the Paulians to throw in with the Republicans. Seems silly to me because Ron Paul has more in common with the so called left than right. Especially in foreign policy.

    No wonder Beck has been trumpeting the religion thing and making it out to be the the core issue that Tea Party types care about. The Paul branch seems to be very willing to overlook some religion issues to unite with the left. But Beck and company co-opted the whole thing and is trying to make it seem like the Religious Right is all of a sudden pro-liberty and small government now. These are the same people that elected Bush who spent us into oblivion and never said a word. Abortion is their issue not liberty and small government.

    What a shame that non-religious liberatarians keep smearing the religious ones as backward. The Religious Right win.

    Here is to a dialogue James, Jon, DA. I would rather throw in with you guys but the Dispatches crowd scares me so much that I ran off. Nothing against Ed. He is a good dude it is some of the commenters there. James and I seem to share some of the same concerns.

  16. pinky says:

    .
    Where do we find a crisp defintion of what it means to be a libertarian from a libertarian’s point of view rather than a Democrat or Republican Party’s understanding?

  17. No, they both just keep spending on the same shit no matter what. They do not compromise by not spending what the other guy is against they do it by saying, “Give me this and I will give you that.”

    I don’t disagree, but I claim that divided government makes it less likely (although not impossible) to create even more governmental programs that would require even more spending later on. In that sense, I’d call divided government “damage control” in the sense that the growth of governmental programs would be less possible.

    As a non-libertarian, I don’t think that simply making it difficult for government to get things done is a good thing (not to imply that libertarians would, either, except insofar as inefficiency in getting things done means slower governmental growth), and I believe certain programs that libertarians probably disagree with need to be enacted. For example, I supported Obama’s health insurance reform (not that the support of an anonymous blogger with a readership of about 10 people means anything to policymakers).

  18. James Hanley says:

    ppnl,

    I apologize for misidentifying your politics. I hear the type of comments you made from the left far more often than from the “right” (obviously not real far right in your case–I’m not trying to identify you with Glen Beck, etc.), so I made the assumption.

    Besides, you hang out at Dispatches….

    Ah, but assumptions took me where assumptions usually do take us, into errors.

  19. James Hanley says:

    The phony libertarians are conspicuous in their absence in criticizing the Obama administration.

    As usual, Tom van Dyke is laughably, hysterically, wrong. It’s almost as though he’s making a sustained effort to bring ridicule upon himself by making claims that are so easily proven that even I can do it.

    “Obama’s Stale New Deal,” Will Wilkinson.

    “Obama’s Jobs Errors,”, Daniel J. Mitchell.

    “Cato Institute’s List of Creative Obama Taxes, David Boaz (via Tax Lawyer’s Blog).

    “Obama’s Economic Agenda: This Is Change”? Edgar K. Browning.

    That took longer to type out than it did to Google.

  20. tom van dyke says:

    Those would be real libertarians. I was speaking of the phony ones. Cheers.

  21. Tom,

    What is the difference?

  22. James Hanley says:

    Tom,

    Are you talking about the straw men I mentioned? Because I think they’ve probably said quite a bit about Obama = socialism.

    Or are you talking about some made up mythical libertarians that exist only in your head?

    Once again, you’re making no sense whatsoever, and engaging in obscurantism because you are unable to carry on an intelligent discussion. Why don’t you go away and stay away? In case it hasn’t been made clear, I don’t welcome your participation here at all, because you add nothing of value. If others don’t mind you commenting on their posts, stick to those and stay off mine.

  23. tom van dyke says:

    King, Dr. Hanley knows exactly what I mean; that’s why it gives him such a rash.

  24. pinky says:

    Obama = socialism.
    .
    What is it with people who are so concerned about “socialism” in the twenty-first century?
    .
    If individual capitalism is going to be de rigor, then, it follows that the lower classes must necessarily be taken care of in one way or another. What does libertarianism offer, a feudal society with all that entails?
    .

  25. pinky says:

    .
    I know, I know

    de rigueur

  26. D.A. Ridgely says:

    “What does libertarianism offer, a feudal society with all that entails?”

    Precisely! So, effective immediately, please refer to us as the Earl of Hanley, Baron Babka, Cardinal Rowe, Count Kuznicki and Ridgely, Duke of Dallas.

    [tosses a few coppers to the peasants and retires to his castle]

  27. pinky says:

    .
    How about higely rigely pigely?
    .
    :<)
    .

  28. James Hanley says:

    Tom,

    I have no clue what you mean, and don’t appreciate you lying and saying I do. Consider yourself banned from any of my posts. Any comments you make on my posts will be deleted. Persistent attempts to comment on my posts will result in your being banned from the blog.

  29. D.A. Ridgely says:

    Well, if you’ll start calling yourself Pinky Shrinky Dinky, I’ll consider it.

  30. pinky says:

    I’ve been called much worse.
    .
    As long as I’m not called late for dinner, it’s okay.
    .
    Seriously, there is a problem when jobs disappear. Capitalism is built on putting money to work. But, when the money is putting people to work in other places rather than in the neighborhood, what happens with the ne’er do wells? I have heard talk of feudalism.
    .

  31. ppnl says:

    James Hanley

    I get the rino label or worse a lot. I remember once getting it because I suggested it was not a good idea for republicans to lie about being creationists in order to get elected. The irony is that it happened at a place called Darwin central where republicans who actually believe in evolution hang out.

    I do read Dispatches but I have probably posted more comments here since you started than I have posted there in a year of lurking. I read dispatches, PZ Meyers blog, Greg Laden’s blog and several other liberal leaning blogs. But I also read Frum Forum, Freespace and several libertarian blogs. Cognitive closure is a bad bad thing.

    Cato has been offered as an example of a good libertarian organization. What policy recommendations has Cato made regarding global warming? I really don’t know but my impression is that they simply give cover to denialists. Maybe this could be a test case for how well libertarians handle externalities.

  32. James K says:

    pinky:
    Feudalism definitely won’t be happening. A feudal system requires an economy based on static rent extraction, like an agricultural economy or a petrostate or something. You can’t have a feudal industrial or post-industrial economy any more than you can have feudal hunter-gatherers.

    As for what to do with people in depressed areas, they should be encouraged to leave, economic patterns change and habitation patterns change with them. My parents are moving to Auckland in a month because Dad couldn’t get work in Hamilton, but could find a job in Auckland. This is the fourth time they’ve changed city for career reasons.

    Beyond that, I’m OK with welfare, so long as it’s sustainable. There’s no good in having a system that will crash on you, that just creates false complacency.

    ppnl:
    I’m not sure about Cato, but Ron Bailey at Reason, Megan McArdle and Will Willkinson take global warming seriously, and the first two have actually called for carbon taxes. I tend to be more with Willkinson, in that I don’t think a global carbon tax regime will work, but I would support it if I thought it would work.

  33. pinky says:

    .
    A feudal system requires an economy based on static rent extraction, like an agricultural economy or a petrostate or something. You can’t have a feudal industrial or post-industrial economy any more than you can have feudal hunter-gatherers.
    .
    Yes, I understand that. But, here is what’s happening in reality land: people are losing their homes left and right. Banks are being left with foreclosed properties that are being scoffed up by landlords able to carry the load. Those houses will be empty unless someone either buys them or rents them. Generally, they are being “fixed up” minimally and rented out to people on some sort of subsistence or who eke out a living doing cash under the table work for landlords.
    .
    There is a direction taking place there.
    .

  34. I have to agree with Pinky. I have even heard of Fannie Mae just renting the houses to the people who live there but taking back full title to the house. I cannot imagine why they, or any other mortgage or banking institution would want to do that and give up the interest money made but I guess it really is that bad. The good news for areas that will hook into the new economy is that these homes will be tear downs when the people come from the non-viable areas for the good jobs.

    We are going to see a mass relocation in the next two years. Look at the states where the Community Reinvestment Act is concentrating on for where the jobs will be. Too bad the government got to decide where to invest because they will probably screw it up.

  35. pinky says:

    .
    I suppose we’re getting off topic; but, like my original post implies, the subject brings up related thinking.
    .
    I sent my representatives a suggestion that they create an agency to hire the unemployed to methodically dismantle houses that are vacant for some specified period of time. To sort and keep any good building materials and to recycle that which is not.
    .
    It would provide jobs, get rid of excess housing, open land for other than building use and teach workers new job skills.

    It would be productive.
    .
    What do you think my representatives had to say about that?
    .

  36. D.A. Ridgely says:

    And when they run out of houses they can go around breaking windows.

  37. pinky says:

    .
    You’re joking; but, I’m serious.

    I know you are far too intelligent a person to claim such a thing in earnest.

    No, I think the entire project creates a great opportunity to teach civic pride and responsibility. Something we sorely need to help keep our sinking ship of state afloat so it can be refurbished and built up to our potential.

    It’s just an idea any way you look at it.
    .
    Maybe it’s not a good one.
    .
    I would think that some of the workers would find that they like carefully dismantling condemned housing and sorting out the good building materials from the scrap. They might want to get involved in the new building projects that might result. I’ve heard that, in Flint, Michigan, there are stretches of land waiting to be put to good use. Community flower land vegetable gardens? Parks? Recreationals facilities? The process would most certainly save a few forests here and there from future destruction. Instead, we use bulldozers to tear down such property and we burn the piles as left over rubbish.
    .
    Remember what we used to do with automobiles that were condemned? We smashed them flat into small cubes and melted them down in mills to make steel for new products. Some of the lumber in old houses is far superior to the new lumber we buy at Lowe’s and Home Depot.
    .

  38. D.A. Ridgely says:

    Well, perhaps I was being prematurely facetious. Then again, perhaps not.

    Assuming now that we’re talking about genuinely abandoned and / or condemned properties and not merely vacant houses, and assuming the condemnation was itself a morally legitimate exercise of government power and not, for example, a taking merely to increase the government’s tax revenue, there are already for-profit building materials reclamation companies that will pay to disassemble and resell, e.g., old brick, wood moldings, etc. Moreover, if the properties in question are in any unpoliced urban area, there’s an excellent chance that the metal and especially copper pipes and plumbing have already been, um, recycled by, well, let’s say freelance reclamation specialists.

    As a general rule, recycling is economically inefficient and of only dubious value ecologically. It may make many people feel better if they don’t think about it too carefully and there’s some utility in that, but it’s generally bad policy, especially when it is imposed on the citizenry at large.

    I’m all for teaching responsibility and, properly construed, civic pride to children but inexorably opposed to such ‘lofty’ objectives when aimed at adults. I’m also opposed to taking what was private property and turning it into public property, thus creating commons problems or, at the very least, greater public expense in maintaining these parks, recreation areas, etc.

    Most importantly, however, claims that the “ship of state” is sinking are wildly premature (although I could make a reasonable case for the claim that the ship is carrying altogether too much government bilge). Nine out of ten people desiring employment are employed, and not in minimum wage jobs, either. (Bear in mind, too, that part of the current unemployment is frictional.) The overwhelming majority of mortgages are being paid off. Many, though to be sure not all of the mortgages that defaulted and are in foreclosure were not on lower middle income working class houses but on increasingly lavish upper middle class houses speculatively purchased with hopes of turning a fat profit when sold to the next sucker in the bubble. I have no sympathy for those people whatsoever. Neither should you. And neither of us should have to pay to bail any of them out.

  39. pinky says:

    ./
    These figures are hearsay.
    .
    I was in Saginaw, Michigan, over the weekend and talking with extended family members. One is making a decent living doing remodeling and rehab work on housing. Saginaw, I know, is not the average city–it’s about 30 miles due north from Flint and about 90 from Detroit. It provided a major part of the labor pool for General Motors. And, being located on a navigable river with access to the high seas, it provides excellent factory and foundry sites.
    /
    I was told there are some 16,000 foreclosures in Saginaw alone. That seems like a large number. But, I don’t know. We saw that many, many houses are boarded up as we cruised the streets. There is a large number of abandoned houses no matter how it gets cut. Here’s the bit. Absentee owners hire local property managers to handle renters and maintenance. At a certain point, property values drop so low it doesn’t make sense for corporate profits to continue making payments on any mortgage; but, it still is sensible to collect rent. Eventually, there is a sheriff’s sale and the tennants are evicted.
    .
    We’re talking abandoned houses that have not been well maintained.

    Here’s the dilemma. Sell the property for land, bull doze down the buildings to save taxes and wait for the economy to turn upwards. Make unemployment and benefit payment to the unemployed who have nothing to do but watch television, argue and fuss, take drugs, smoke cigarettes, and work the system. You name it.

    or.

    Create “make work” programs similar to those instituted during the Depression of the 1930s. There’s bound to be people leaning on shovels and “gold bricking”; but, for the most part, people will work. Playground programs and other projects can be initiated to help the underclasses gain a sense of worth in community. Society, itself, will be the great beneficiary.
    .

  40. D.A. Ridgely says:

    or

    Don’t make unemployment and benefit payments to the unemployed, especially in perpetuity, don’t create expensive make work programs and do thereby encourage the unemployed to relocate where they can become employed.

    Of course, such relocation will take time. Especially in Saginaw where it takes six four days to hitchhike from.

  41. pinky says:

    .
    I suppose that would work. Eventually the people will all dry up and blow away. It will turn back to the way is was when Tocqueville and Father Marquette first visited there.
    .
    I was born in Saginaw.
    .
    The place has been devastated.
    .

  42. D.A. Ridgely says:

    *shrug* We could give the area to the Chippewa, too, with a note saying “We’re done here, you can have it back.”

    Look, Michigan has been especially hard hit by this recession, but it took decades and decades of bad state and city government to make it and its cities so vulnerable. In a sense, the automobile industry has been the “single cash crop” with the implicit expectation either that somehow the American auto industry would make a comeback (see, on that point, the textile industry in the South) or that it would be deemed “too big to fail” by the federal government and bailed out in perpetuity.

    Sadly, there seems to be some truth to the latter, but it is just once again a case of visible benefit to a few paid by the largely invisible detriment/cost to the many. It isn’t, pace Mr. Hanley, sustainable in the long term. And however well intentioned your jobs program proposal may be, it won’t work, either. Yes, paying a man to perform uneconomical work might be marginally preferable to paying him the same amount of money for doing nothing. But, then again, he won’t be looking for better work while he’s building those parks, either, so it might actually end up making him worse off, too.

  43. pinky says:

    .
    And, all informed people know that the arguments can go on indefinitely in a he said she said manner. No end to that sort of thing.
    .
    The point is, we have to get off our merry-g0-round horses and start coming up with ideas.
    .
    In the meantime, we can think about what we should do with these abandoned houses. The absentee owners have milked what they could and, then, they let them go for taxes. The houses remain unoccupied (??) to be used for vermin of all sorts. What you do when you get a batch of lemons is that you make lemonade and sell it for whatever the market will bear. Do we go after the absentee owners who acted within the limits of the law? Do we force them to pay their mortgages or do we allow them to cut their losses?

    People are people and we can expect the worst and the best from each and every one. But, in the meantime, there are those of us who want to see society improve.
    .
    Self interest? Gimme a break! Cancer cells are good examples of what self interest does to the greater body.
    .

  44. D.A. Ridgely says:

    No they’re not. Cancer cells don’t act intentionally, they simply behave the way they do because that’s the way they are. But if you want to use dubious biological metaphors, the general economic result of intentional self interested conduct is symbiosis.

    As for “those of us who want to see society improve,” I wish I had a nickle for every pint of blood spilled by society’s would-be improvers.

    ETA: You’re absolutely correct about one thing, though. This argument has gone on too long. I’ll therefore make this my last comment and permit you to get in the last word.

  45. pinky says:

    It cannot be symbiotic when individuals operating separately are out for their self interest.

    I think you mean a group in which the members hold the value of the group above the self interest of themselves as individuals. See T.M. Mills on Groups.
    .
    http://78.31.105.177/~infed/groupwork/what_is_a_group.htm
    .
    Like I say, if we want to argue, this can go on indefinitely or until one of us falls asleep.

    Until I have a comprehensive definition of what it means to be a Libertarian …
    .

  46. pinky says:

    .
    I like your hat.

    I have one like that.
    .

  47. stuartl says:

    “It cannot be symbiotic when individuals operating separately are out for their self interest.”

    No, that is exactly what symbiosis is. The bacteria in our gut just need the food we provide them when we eat. We need the byproducts the bacteria produce. Both the bacteria and humans are blissfully unaware of each other*.

    *Bacteria are unaware of anything and many humans are now aware that there is an ecosystem in their guts. Evolution will of course favor both bacteria and humans that work well together, but evolution works by blind self interest as well.

  48. James Hanley says:

    DAR–It actually took only four days to hitchhike from Saginaw. But maybe Paul Simon wasn’t wearing that hat.

    Pinky–If a house falls into such disrepair that it creates dangers for the neighbors (including an unacceptable increase in vermin), or becomes an irresistible lure to drug dealers, vandals, etc, then it can make sense to tear it down. Otherwise we’re just engaging in the broken windows fallacy, as DAR notes.

    And landlords or banks buying houses and renting them out isn’t feudalism. Nobody’s tied to that property. I’ve had landlords in the past, and I’m currently a landlord (precisely because there’s a house I can’t get rid of), but nobody ever suggested there was any feudal element to it. It was pure exchange of money for service, no different than the milkshake I bought at Burger King today. I benefited as a tenant, and my landlord benefited from my tenancy. (Besides, there are so many foreclosures in part because so many people overbought on their homes–stupid move on their part, and you can’t have a productive economy when you protect everyone from their mistakes.)

    And DAR and StuartL are precisely right about symbiosis. In fact an important area in evolutionary theory is understanding how self-interest can lead to mutually productive outcomes. It’s a big focus in game theory as well. And it was a focus in economics before either of those fields existed. As Adam Smith said (paraphrased): It’s not through the benevolence of the baker and brewer that you get your bread and beer, but through each of them pursuing their own interest.

    This relates back to what I think is the primary difference that will keep libertarians and liberals from managing to even recognize where they have common ground: liberals tend to be hugely distrustful of self-interest, while libertarians strongly believe in it. I, personally, think that the structure of the interaction and the type of rules determine whether the self interest is mutually productive or only unilaterally advantageous, but that it’s pretty easy to design such interactions and rules.

  49. pinky says:

    J.H., maybe you misread my comment on feudalism. I said we were headed in that direction.

  50. ppnl says:

    James K,

    I am truly impressed by how far back Ron Baily accepted global warming. But the point is not that there are no libertarians who accept global warming or even that the majority do not accept global warming. The question is what effect the libertarian leadership is having on the construction of a rational response to global warming and other externalities. If Cato is AWOL on the global warming issue that raises serious questions about libertarians ability to see past their hatred of government to deal with large expensive externalities.

    The “small government” message is an important message and one I agree with deeply. But it is easily perverted. Believe me I know. My party elected a man who concentrated massive raw power under the presidency, started an unfunded war on two fronts and decided that waterboarding some dumb jerk 87 times really isn’t torture. All in the name of small government.

    I agree that an across the board carbon tax would be a bad idea. It is government heavy, economically costly and poorly directed. And trying to do it on a global basis right now is pointless and impossible.

  51. James Hanley says:

    Pinky,

    Maybe I misread you. But maybe we have different understandings of what feudalism entails. To me it’s a system in which land is inherited and can’t be alienated (sold) by the inheritors, ownership of it is open only to a select few (as a matter of law), and those who can’t own it are tied to particular plots of land and that land’s owner, from which they cannot legally remove themselves. I don’t see that happening, because private property ownership is not only still legal, and going to remain that way, but home ownership levels are still high even with the current number of foreclosures (which, I re-emphasize, mostly occurred because people overbought: It’s not that they couldn’t afford homes, they couldn’t afford those homes). In 1900, less than half of American households owned their own home. Today 2 in 3 does, and the mortgage crisis hasn’t, so far as I know, substantially changed that proportion.

    If all that’s really meant is a greater divide between rich and poor, that’s indeed something to worry about, but feudalism would be a dreadful misnomer.

    There’s also the whole aspect of responsibility flowing both up and down: peasants responsible for working the land for a lord who’s responsible for protecting them and adjudicating their disputes, and who are in turn responsible to provide men to fight in defense of king and country, which king is responsible to them for organizing said defense. But I think that’s well outside the scope of discussion for our purposes here.

  52. Pinky,

    The bottom line is that many people that went to the Midwest to work in a factory are now going to have to move somewhere else. DAR is right that much of this is frictional. Very soon when this whole thing gets revved up again(my prediction is by Spring and Obama will cruise to a 2nd term remember I said it) there are going to be a lot of new economy jobs. I am already seeing them in Florida. One dude is building a 100 percent solar city. A solar plant is the first phase. In the end this will create thousands of jobs.

    In fact, now that I have settled, after months of flutucating to see how the oil thing worked out, back into Real Estate my whole long term focus is going to be to sell to or develop places for Midwestern clean tech yuppies to live in Fort Myers. Watch it happen. Comparative advantage. I cannot get into why right now but to sum it up:

    Many of those houses need to either knocked down or just let up rot because people are not going to be there anymore or at least not as many. As far as some of these places that they took government funny money and built just to build I have no idea what to do . the demand was investment demand not someone actually saying they wanted to live here. As much as I think SWFL is going to be in a great position in the next 5 years there are still places here I would not sell someone a house. They just built where no one wants to live. At least for now. But that makes these brand new houses cheap rental property in those places. What a waste.

  53. James Hanley says:

    King,

    Minor correction. If you’re talking about solar, and Florida vs. the Midwest, I think you have an absolute advantage, not just comparative. But that doesn’t detract from your point (which I’m not really qualified to evaluate). It will be interesting to see if it happens.

    We’ll keep your prediction on record here. You have a 50% chance of being right!

  54. Mark Boggs says:

    In light of the conversation, I’m dying to know what people think of the exploding oil rig off the coast of Louisiana and what exactly government’s role should be in this.

  55. ppnl says:

    James Hanely,

    Maybe a better term than feudalism would be Balkanization. I’m all for letting local communities and governments handle their own problems as much as practical. I think there are sever limits on how much local autonomy is practical.

    I am an atheist. I live in Georgia. I depend on a federal government with the power to limit local excesses.

  56. James Hanley says:

    ppnl–Balkanization is fundamentally different than feudalism. I know we’re just using analogies, but if we don’t use them carefully they lead the debate partner far down the wrong path. I don’t think we’re headed that direction, either, but I agree that local government power shouldn’t be unlimited. If I did, I wouldn’t be pro-federalism, I’d be pro-dissolution.

    Mark Boggs–They’re creating negative externalities. The role of government as I see it is to force them to internalize those costs. E.g., they need to pay the whole cost of the cleanup and fully compensate those they harm.

    As I understand it, it’s the third explosion in the gulf this year. I realize there are literally hundreds of drilling platforms there, not just 10 or 20, but it still makes me wonder if this isn’t an unacceptably high accident rate. (On the other hand, I read recently that the long term trend for oil spills is downward, so maybe things are getting better, but we’re just getting more reporting of the incidents–like with violent crime.)

  57. pinky says:

    .
    James, (OK?)

    I’m sure you’re correct with your definitions of feudalism. At least in its classic form .

    I fear we might be involved in changes where feudalism in some form can coexist with other economic systems all in the same dimension.
    .
    Something like the different universes existing in the space occupied by each other–some scientists talk about that.
    .
    Not universal feudalism; but, some new form.
    .
    It’s crazy, I know. But, you have to keep your mind open if you’re going to stay apace of the times.
    .

  58. ppnl says:

    James Hanely,

    Yes feudalism and Balkinization are very different. But the point is that both lack a powerful center. My concern is that the drum beat of government hatred is driving us that way. Now mostly that drum beat is coming from the social conservatives. But they are finding synergy with libertarians that make it more difficult for reasonable republicans to resist them.

    The thing about the risk of offshore oil drilling is that we are using oil anyway. If we don’t drill we are just exporting those risks to some place less able to deal with the externalities. Look here for example:

    http://www.guardian.co.uk/world/2010/may/30/oil-spills-nigeria-niger-delta-shel

    I hate NIMBYism with a passion. The environmentally responsible thing for America to do is “Drill baby drill” while harnessing the economic engine powered by it to find alternatives to it. The ecological damage caused by oil spills is fairly short lived by natures standards. The carbon dioxide emissions are a much more long term problem but don’t go away if we simply buy oil elsewhere. As for the economic risks – ask the states most affected by the BP spill if they want drilling to stop.

  59. James Hanley says:

    Pinky–by the way, yes it’s ok to call me James. That’s actually my preference.

    ppnl–I have faith that the overriding lust to use government power to control people will continue to ensure that whichever party holds the reins of power keeps things firmly centralized. That is, my fear runs the opposite direction of yours. Only time will tell which, if either, of us is right.

    If we don’t drill we are just exporting those risks to some place less able to deal with the externalities.

    Good point.

  60. Mark Boggs says:

    Mr. Hanley,

    I agree with the idea that the companies need to pay the costs of clean-up, etc., but did I also read the other day about a BP plant in Texas — http://www.chron.com/disp/story.mpl/business/7159288.html
    http://www.khou.com/news/local/BP-500000-pounds-of-emissions-released-in-Texas-City-95688539.html
    –that had one of their systems break that handles benzene exhaust, but instead of shutting the plant down until the cleaning system was fixed, they went ahead and tried to rerout through a smokestack and burn off the poisionous exhaust and apparently didn’t do a very good job of it.

    If you read the articles it sounds like BP did what they were required to do in terms of notification to the proper authorities, but the authorities didn’t bother to tell any of Texas City’s residents that the plant was pumping out 17,000 pounds of benzene. And I can’t help but think (wrongly possibly) that this is an instance where the regulators and the businesses they regulate as well as the legislators who are responsible for determining the regulations, may all be so cozy with each other that they can’t determine whose interest they’re actually serving at the end of the day.

    But with even less regulation or more porous and meaningless regulation, what would BP have done?

    I’m just wondering your libertarian opinion on these instances where it seems like the whole system is screwed up.

  61. James Hanley says:

    Yeah, thanks. I was hoping for a softball question, and you throw me a high hard one.

    This is the classic tough case. I think what’s necessary is to develop rules that make it hard for the regulators to get too cozy with the regulated, that gives them incentives to not be so cozy. That’s not easy to do, though.

    Some libertarians would argue that regulation isn’t so necessary here, what we need is just good application of the traditional common law, where those harmed can sue the causer of harm for negligence. That’s no guarantee, either, because 1) harm can be hard to prove, 2) negligence can be hard to prove, 3) Deep Pockets, Inc. can often afford better lawyers, and 4) the path common law principles of negligence have taken in the U.S. haven’t always been amenable toward holding firms accountable when they should (and sometimes hold them accountable when they shouldn’t).

    As I like to tell my students, there are no perfect systems in this world, especially when we’re dealing with great complexities. The real question is which one gives us the best benefit to cost ratio, while recognizing that each one will be easily critiqueable precisely because its imperfections will be easily recognized. For me this is an important element of my libertarianism, giving up the faith that we can–if we just have smart people with good intentions–design perfect, or near perfect, political and legal institutions.

  62. ppnl says:

    James Hanley,

    I don’t think we disagree over the danger of big government. What we disagree on is the extent to which small government arguments are deployed to achieve big government ends and to create dysfunctional government unable to stand against the largest and most powerful operators.

    But actually Ed Brayton makes my point better than I can:

    http://scienceblogs.com/dispatches/2010/09/addington_joins_the_heritage_f.php

    Dammit! Now I’m a liberal again.

  63. Michael Heath says:

    James,

    Do you have an opinion on any notable trends in the Libertarian party or American libertarianism?

    As you know I enjoy having such a movement as a standard bearer that should serve as a test when considering all/most policies, in spite of my not being a Libertarian/libertarian. The reason I ask is that it appears some emergent leaders are coming out of the movement who might actually wield real political power but also are representative of the type so despised by Raging Bee (conservative-libertarians or arguably neo-confederates). My most recent stomach twitch was hearing Nick Gillespie note at Glen Beck’s rally that he supported the Austrian school approach to economics. For me that’s equivalent to promoting intelligent design creationism or weatherman arguments against the theory of AGW – not just that they’re wrong, but they’re accepting and promoting an approach to understanding reality that insures they’ll always be wrong about everything except for the occasional coincidence.

    So while I enjoyed hearing your support for liberaltarianism on Ed’s radio show, I wonder if it’s not shrinking before our eyes or just being temporarily overlooked because of the rise of the Tea Party and some demand it put forth some candidates to run against establishment Republicans.

  64. ppnl says:

    Holy crap, I just visited Frum Forum and it appears there is a purge at Cato.

    http://www.frumforum.com/the-purge-at-cato

    One of the people appears to be the person that James K mentioned above as someone who may have a good approach to global warming. Will Wilkinson.

    The key to comedy gold is timing.

  65. Mark Boggs says:

    Well, I’m honored to think I gave you a tough question. Alas, you handled it with aplomb…or did you merely evade it?

    Seriously, I agree with your answer, however, and this is of course where I’m going to stick my foot in it probably, what can anyone do to keep BP from pumping the benzene out in the first place while hoping to out-lawyer the other side. At that point, the damage is already done to citizens in the area. I understand a class action suit can be penal, but again, if they outspend and out-lawyer the other side, they not only get to do bad things, they never pay a price for doing so. In fact, if they win, it only adds steam to the tort reform arguments that contend that we’re an overly litigous society that needs to protect corporate behemoths from these kinds of lawsuits.

    And maybe I’m wondering why there is never any individual accountability for some of these horrible moments of corporate malfeasance where the person(s) who make these decisions can be held financially and criminally accountable. It seems right now, you can make some dastardly decision, cause a great deal of harm, get hauled before some congressional committee, still get a multi-million dollar bonus or better yet, a huge golden parachute for your wonderful leadership. It doesn’t strike me as a disincentive for greedy or short-sighted decision making.

    I realize Ken Lay and Jeff Skilling got some jail time and financial penalties, but I think that was the extent of it. For managing to evaporate all their employees’ life savings, dupe many of their investors, while managing to roll in a ton of money doing so, the penalty should be harsher both financially and Dept. of Correctionally. I think if you waterboarded them, I’d struggle to call it torture. (/sarcasm)

  66. James K says:

    Mark Boggs:

    what can anyone do to keep BP from pumping the benzene out in the first place while hoping to out-lawyer the other side.

    Nothing, but the government is in the same position. Regulations do not prevent a company from polluting, all they can do is threaten punishment to a company that does pollute. And since regulators and legislators can be subverted it’s far from clear that government regulation helps matters.

    ppnl:
    Purge is probably an exaggeration, and Willkinson is still blogging at The Economist, which may not be Cato, but it’s hardly a left-wing rag either.

  67. ppnl says:

    James K,

    My concern is not with Willkinson but with Cato. Libertarians are only a tiny percent of people yet Cato is one of the most influential think tanks. If they represent the best of libertarian thought then you need to be concerned about where they are going as well. If they are infected by the same cognitive closure virus that took down the republicans then that is a bad thing for libertarians. And given the influence Cato has on republicans it is a bad thing for the recovery of the republican party.

    ” And since regulators and legislators can be subverted it’s far from clear that government regulation helps matters. ”

    If the mechanism of that subversion is bogus “small government” arguments then who is responsible for the inability to deal with externalities? It isn’t any wonder that liberals see libertarians as shills for industry.

    You cannot kneecap government and then complain that it is lame.

  68. James K says:

    ppnl: I’m a government employee in my country, so believe me when I say I take the importance of good quality government seriously.

    What I see as undermining government’s ability to function are:
    1) good old fashioned regulatory capture. It isn’t the case so much in my country, but in yours lobbying exerts a powerful pressure. Those lobbyists aren’t demanding small government, they’re demanding favourable government.

    2) Policy as symbolism. What politicians care about more than anything else is looking good to voters. Since voters don’t have the skills or interest to examine policies in depth, that means that what politicians are interested in is a policy that looks good on the surface. Don’t get me wrong, a politician would rather have a good programme than a bad one, but politicians don’t follow though the way a policy wonk like me would like them to. That means policies tend to be implemented half-assed.

    Now, as far as I’m concerned if government’s not willing to do something properly they shouldn’t be doing it. But that’s not the prevailing opinion among political decision-makers the world over. And I do realise that many libertarians seem to care mostly about getting the cost of government down without due regard to the quality of government spending. But that’s not my perspective, I’d like to see governments that do a small number of things well, as opposed to modern governments that tend to do a lot of things badly. In fact I’d say the US typifies the “do many things badly” approach.

  69. Mark Boggs says:

    James K,

    Well, you got me on that one. I guess, to me, it seems that if the regulators are independent enough and the penalties strong enough for such an environmental hiccup, that might serve as a deterrent? Especially if the individuals who make the decisions are held accountable rather than punishing employees and shareholders through big financial penalties. Nothing better than the guy who made the bad decision, trying to negate the losses by cutting him some labor costs.

  70. James Hanley says:

    Mark Boggs–Re: Lawsuits are fine, but the injured people are already hurt (a paraphrase of part of your argument). The idea is that the threat of a lawsuit will spur good behavior, and prevent people from harming others. How well that works is an empirical question, of course. And one reason, not necessarily the only one, few execs go to jail is that many of their actions aren’t illegal per se. As the old saw has it, the exec yells at his lawyer, “Don’t tell me what I can’t do; tell me how I can get away with doing what I want to do.”

    Michael Heath–Congratulations. Your question has been promoted to the main thread.

  71. pinky says:

    .
    No deprecations intended; but…
    .
    Regulators, fegulators–there is a real world outside of Oz.

    Whether regulation is done by government or if business is “self-regulated” makes some difference. But, what is the difference? I’d like to see some answers.

    Some members of an industry in which I worked created an organization for the purpose of established rules of conduct. The purpose was, partly, to establish regulations under which each individual enterprise operated. Who was there to enforce any rules? The unscrupulous bopped right along as if there were no tomorrow.

    Members of a competitive industry organized and lobbied for governmental regulation to control not only their operations but, to identify ours as being a subset of theirs. In effect, my business suffered.

    Who was I to blame? Government or the special interests of the big boys?
    .
    All this talk about government is all b.s. Government is responsive to lobby groups. Shrinking government will only make it that much easier for the big boys to f*** over the rest of us.
    .
    Ger real.
    .
    There’s more than one side to every story.
    .

  72. James Hanley says:

    Pinky,

    It depends “how” you shrink government. If you deny government the authority to create protective regulation, it becomes harder for lobbyists to get what they want from it.

    As to private vs. gov’t regulation, I have a real fondness for private organizations like Snell, ANSI, Green Seal, and whomever creates the ISO standards. That approach works so well because there is such an economic disincentive for businesses to not meet their standards. There is no way in hell I would ever buy a bike helmet, for example, that didn’t have the Snell seal of approval.

  73. pinky says:

    .
    I guess I just have a problem when the foxes are guarding the chicken coop. But, I’m sure the foxes would set up a really good program to make sure the chickens were allowed to grow fat and juicy.
    ..
    As long as someone is going to eat the chickens, it might as well be the foxes.
    .
    Yuh think?
    .

  74. James K says:

    pinky: There are ways to make self-regulation work. One of them was suggested by Milton Friedman in Capitalism and Freedom:

    You have a regulation requiring all producers of a product to get some private certification for their product. You then require the certifier to provide liability insurance to anyone they certify. If certifiers are too restrictive, they lose customers to a competitor. If they’re too lax, they lose a fortune in lawsuits.

    Naturally there will still be errors and injustices in such a system, but there are under the status quo as well.

  75. pinky says:

    .
    I always drink CC with a dash of dry vermouth and pray for world peace.
    .
    Seriously, there’s the slight problem of corruption.
    .
    How do we regulate that out of the honor system?
    .
    I go along with learning what it means to be in a democracy of informed citizens that have been educated to a level somewhere near the one you are so very fortunate to have. I sure with I had an education near that level.
    .
    In other words, as long as we’re discussing what can be, why not say something about reforming our educational system? We could start with kindergarten.
    .
    Consider all the brains in Ann Arbor, Albion, Battle Creek, and Kalamazoo. We should be able to come up with some pretty good ideas.
    .
    .
    .

  76. James Hanley says:

    Pinky,

    Snell, Ansi, etc. are not foxes guarding the henhouse. You assume they’ll become corrupt (and if they did, they wouldn’t be noticeably worse than many of our federal bureaucracies), but they have an incentive to not become corrupt. Their only product/service of value is their independence. Government bureaucracies can become corrupt and maintain their authority and income for the long term. Ansi, Snell, and Greenseal would lose authority and income fairly quickly if they became corrupt, because they’d lose the only value they can sell.

    You aren’t looking at incentives accurately. You seem to think the only incentive is towards corruption. But if that’s the case, then you might as well stop asking what we can do about, because there’d be nothing to do about it. You’re setting an impossible standard then complaining we can’t meet it.

  77. pinky says:

    .
    I know there is any number of good guys out there to make self regulation work.
    .
    But, it only takes one bad apple to spoil the bushel.
    .
    And, I know that many people are motivated by the highest ethical standards.
    .
    I also am well aware of the fact that there are wolves dressed up in sheep’s clothing.

    I can discujss self regulation as well as I can discuss almost anything else.
    .
    I just think we should be able to spend some quality time discussing the possibilities of how government might be developed to work better than it does. I know it has problems; but, the devil, as they think in Germany, walks through our history.
    .

  78. James Hanley says:

    Pinky,

    Here’s the fundamental difference between our views. You’re focusing on good people vs. bad people. JamesK and I are focusing on incentives to shape good behavior.

    We’re working in Madisonian mode. “If men were angels, no incentives would be necessary, but since men are not angels, we have to design institutions that channel their self-interest into socially productive modes of behavior.”

  79. pinky says:

    .
    I think my focus is more on ideas and I’m happy to read everything you guys have to offer.
    .
    But, I’ll ask questions if just to satisfy my curiosity.
    .
    Thanks for being responsive.
    .

  80. James Hanley says:

    I don’t know if we’re really responsive, or if we just like to hear ourselves talk.

  81. James K says:

    The two aren’t mutually exclusive 😉

    BTW, I listened to your interview with Ed today, very nice. Incidentally, Bryan Caplan specifically addresses the issue of Wisdom of the Crowds in The Myth of the Rational Voter and makes a persuasive case that it’s inapplicable to electoral politics.

  82. James Hanley says:

    Yeah, I wanted to mention Caplan’s book, but I was in L.A., while my copy of the book was home in Michigan. So no chance to review and I didn’t want to make a fool of myself.

  83. pinky says:

    .
    I am a little confused.

    James, you’re at Albion and not Hillsdale. Is that correct?

  84. pinky says:

    .
    Or be published?

  85. James Hanley says:

    Pinky,

    Adrian College. Perfidious Albion is our mortal enemy in the Michigan Intercollegiate Athletic Association. They’re also a school that has traditionally been a better educational institution than us, but which is on a very fast downhill slide at the moment, while we’re improving. Hooray for us, but what’s happening to them is rather frightening (the classic struggle of an expensive private college in an era of recession coupled with fewer students in general going to private colleges).

    And Hillsdale is in a different sports division, so nobody pays attention to them. What I hear of their school’s culture I don’t like (rumors of increasing pressures to conform religiously). But they’ve got an endowment that would allow them to gild every inch of the college, so they’re in good shape.

    And we have had a dramatic upswing in enrollment, from 900 to 1600 in 5 years, but with an attendant increase in expenditures that leaves us as financially tight as we were when our enrollment was declining. I’m not sure if we’re better off or not.

  86. James K says:

    Lawsuits can act as a deterrent just as much as criminal penalties, especially when most penalties are levied against the company, and not the individuals running the company (and for good reason, don’t you think your country throws enough people in prison?)

    As for companies “cutting labour costs”, wages are driven by market forces, not employer fiat. If a business tries to cut pay in response to an internal event (as opposed to market conditions like a recession), they will bleed workers to their competitors. If a company could get away with cutting pay, they would already be cutting pay.

  87. James K says:

    His argument is one I can cite off the top of my head because it’s basically a statistical argument. But then I’m a hard core quant even by economist standards, so I can see why you’d want to be cautious, especially in words that were to be immortalised in digital form.

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