Friday, May 16, 2008
Doggy Discrimination occurs daily. When I read this I laughed not taking it seriously, all dogs are cute right? Well apparently some people prefer a certain color of dog. This is understandable, but color discrimination among dogs? Black dogs are not being adopted in shelters. They seem to be the last ones adopted from almost every kennel in the country. A Kennel in Ohio even posted a banner pleading with people to check out their beautiful black dogs. This is in part due to perceptions people have about black dogs, maybe they are mean, or sometimes are perceived as being old, they are also not as eye catching as other more brightly colored dogs. There are also preferences and biases, and people seem to prefer lighter colored dogs. There biases lead them to believe certain things are untrue about a dog because of the color of its fur. Hmm... sounds vaguely familiar. Unfortunately this results in many lovable dogs left in animal shelters. People’s preferences and self interest at work even when it comes to dogs people are biased.
Student Loans the new Sub Prime Crisis?
Recently while zoning out in front of the T.V. I heard several advertisements for student loans. These ads suggested that students could borrow up to $40,000 per year to cover college expenses. This seemed exorbitant so I researched a little and sure enough websites such as Astrive.com and ThinkStudentLoans.com both offered these amounts. I know some high profile private schools are expensive, but to offer a young adult right out of high school $40,000 a year for school seems ludicrous. Someone could potentially accumulate $160-200,000 dollars of debt before the age of 25. This seems like a recipe for disaster with tons of kids bogged down by enormous debt my guess is a large number will default on the loans. Sometimes I feel overwhelmed with a car loan that will only take me four years to pay off, not the rest of my life.
Granted there are some stipulations different from Sub Prime mortgages. The loans require a credit check and some require a co –signer; however the amount of debt students generally between the ages of 18-25 can incur in a short amount of time seems to indicate a high amount of young adults defaulting on loans because they were unable to grasp the financial situation they put themselves into.
Stephen Colbert, host of the Colbert Report began a new series in February called Better Know a Lobby, in which he interviews lobbyist and examines their agendas. The humor of the series is that it supposedly consists of 35,000 parts because that is the approximate number of lobbyist in Washington. On Wednesday March 12, Colbert introduced the series by saying “I thought our laws were written by lawmakers, but like the best literature they are often crafted by ghost writers… called Lobbyists” (Colbert). This quote while humorous is also disconcerting. 35,000 people whose sole purpose is to create laws in order to further their own self interest. That is a perfect example of the sclerosis that leads to lowered productivity in an effluent society according to Mancur Olsen.
The Fed messing around with the economy
Now this is a worth-while goal but can it really be accomplished? When the Fed keeps printing money and lowering the interest rate I just see more problems for us in the future. Many are starting to surface now. I agree with those who would say that money is a commodity and needs to be protected. If the Fed just keeps printing money for all the spending the U.S. does there will be negative consequences in the future. The consequences we are facing now were long coming.
The Fed is unconstitutional and I have even heard some conspiracy theories about the beginning of the Fed. There was never intended to be a power like the Fed in our country. I'm afraid that we will suffer some of the consequences for what the Fed had done in the past. The recession that we have had building up for a while could be coming.
So these are all things that most economists know and all things that are mentioned in Power and Prosperity by Mancur Olson. The scary thing that some people don't realize is the connection between taxes and private property. Now, before going further let's explain what a tax is. At a bare minimum a tax is a portion of societies money that it used to pay the government to enforce private property, enforce contracts, and in today's day and age to provide a country with national defense. I believe that this type of tax is good. However, when a government taxes beyond these boundries the tax becomes a redistribution of wealth.
This redistribution of wealth acts is the government infringing on private property instead of enforcing it. Our possessions are our private property. When the government takes from some people in the form of a tax to give to others where is the enforcement of private property.
Now we are overtaxed in America but I can live with that. This doesn't mean that I won't stand up for the economic freedom I believe is rightfully ours as outlines in the constitution but we are taxed much less that other countries. In some countries taxing takes away much more production than it does in America.
However, here is the scary thing. The government in America sometimes uses taxes to take over private property. Sometimes taxes are intentionally raised so high that people can no longer afford to live there. I have some friends that own some really nice property up in the mountains of Colorado. They have lobbying pressures from developers that want to mine the surrounding area including their property and they have lobbying pressures from environmentalists that want to make the area accessible by hiking only. As a result taxes are beginning to sky rocket. If this continues they won't be able to own the property for too much longer...and they are even pretty well off.
It is ironic how our governement infringes on private property sometimes when it has the duty to protect it...probably more scary than ironic though.
Thursday, May 15, 2008
The country for all intensive purposes has been under military rule since 1962. Today there is much unrest and instability in the country. The junta refused to give up leadership of the country to the rightfully elected president in 2003. There are are other major corruption issues in the country as well. It is a big source country for human trafficking and there is bound to be other major humanitarian issues in the country.
The country has been devestated by the cyclone and the situation is just getting worse. The latest state media report raised the death toll to 43,318, with nearly 28,000 still missing and another two million in dire need of help. Red Cross says there is a good chance that 128,000 people could be dead already. We'll probably never know the real numbers. Even the number of people who died in hurricane Katrina in the US was vastly under-reported. I learned this by talking to people who were there when the storm hit. But what we do know is that the situation is bad.
There are many ideas from Mancur Olsen's writings that can be applied to this situation. The main story obviously is corruption's negative impact on the country which is discussed in power and prosperity. International aid is not being allowed into the country. Why would the junta government refuse aid to its people? There must be big issues, probably humanitarian, in the country that the government is hiding. I'm suprised that the junta isn't letting aid in just for the sake of its perception in the eyes of the people.
It could be that a revolution rises up because of this situation. This is a catastrophic event that could completely change the country around. It could be that good comes out of this tragic situation if you follow the reasoning from the Rise and Decline of Nations. We will wait and see what unfolds.
I found myself in a parking lot at approximately 11:00 pm. The parking lot was empty except for my friend's car beside my own and a hidden police car. The police car remained hidden until I was saying my goodbyes to my friend. The police stopped me and my friend. After that scripted interrogation the policeman concluded that I was a criminal because I had alcohol within my car and I was not yet the age the state had considered that to be acceptable. The police officer then gave me a tacit ultimatum, he would either act upon my criminality or I would give him permission to search my car. The stakeout and subsequent ultimatum imply a forward thinking tactic designed to entrap a greater (or lesser if you care for irony) criminal. This is by no means a fluke, it is not even the most striking example within my experience. However, this event lead me to ponder the reasons of the criminalization of everyone.
It is unimaginable to find someone who has not violated at least one traffic law. Such edicts create a society where everyone is a criminal. Is this a coincidence? A waste product of a vast bureaucratic bumbling? Or a deliberate process on the part of a minority group within the state? I will answer these questions in the second part of this writing. It is important to understand by conscious action or not, the American system of government has created a system in which every person commits a crime in the process of living. If we have abundance of criminals we will have an abundance of their antitheses, the police.
The police are the sacred cows of American society. Linguistically, the police are raised above the average man with designations like “officer.” More importantly, police forces are also above the same laws that brand most men as criminals. For example, the policeman going above the speed limit is “doing his duty.” In such a manner the police are the only “clean” or “pure” class of citizens. If many crimes are crimes by fiat and not by the aggression upon property, it would also hold true that police are not criminals by fiat. It is a decree that that allows police to function in the super-legal fashion. This unequal application of the law creates a privileged class of individuals.
The privileged legal position is police power. In my example it was the leveraging of this power that allowed the policeman to issue the ultimatum.
The further criminalization of everyday life expands the gulf of power between the police and the common man. The gulf is represented in my example by the ultimatum. An expansion of police powers might mean I could be facing a prison sentence instead of a fine or court date, thereby raising the opportunity cost of resistance. Put simply, if the opportunity cost of resistance increases, the amount of resistance from a society will decrease. As the opportunity cost of resistance increases there is another important shift; the opportunity cost of coercion decreases. The lower amount of resistance will be met with a higher rate of coercion. A coerced transaction is unproductive. Unlike a voluntary transaction, the forceful nature of an involuntary transaction means that one party is losing. However, the other side of this truism is often ignored; one party is benefiting. In my example, it is possible the ultimatum was issued in the hope of finding drugs or cash that could be used personally by the policeman or maybe a satiation of the puerile detective thrill. From the perspective of a legislature the benefits of such transactions is the lower opportunity cost of further coercion.
The criminalization of everyday life creates a privileged caste within society, the police. The extent of this disparity in law is the gauge of police power. The exercise of police coercion lowers the opportunity cost of further coercion in “street” transactions and, on a larger scale, legislative coercion. The decrease in opportunity cost will lead to an increase in aggressive actions of individuals. And an increase in aggressive action is why “____ the police” isn't just an NWA verse.
by Alex Devore
Efficiency and Defense
Usually the question is asked by people with a modicum of economic understanding or sometimes by people with much greater insight. It's these people and not the women and effeminate males goaded into outbursts of "WELL WHAT ABOUT" with the necessary follow up of "environment, homeless, community" and any other sundry non-existent plebeian prattle who attend the same social functions as me. I descend further into a stupor of belligerency and the only substance that makes other people tolerable. As the crowd gathers, a clever and observant bystander might see me slurring my words and unleash four years of state education, blurting out "WELL WHAT ABOUT DEFENSE", which is unfortunate for us both because I suddenly break out into a fit of laughter as I imagine Daniel Day-Lewis shouting,
But going back to people that matter a little bit more, these are the people that understand defense in an efficiency framework. In other words, they would understand that defense must be provided for by an external third party because of "free riders" or external beneficiaries. Because there exists a group of people that do not pay for the service of defense yet gain from it. The optimal amount (that's where your lines cross or your equal sign is happy)is now achieved. In this case, the economist would say there is not enough defense provided. Ergo, the super humans that comprise what we call government will intervene. This is commonly called taxation. Productive people have money taken from them and that money, without a doubt, goes to pay for defensive things like spreading democracy.
Actually, that's how I imagine almost every paid economist's day occurs. They slide open their drawer and pull out their TI-89E (Economist's Edition). Their eyes glaze over as they take off the plastic casing reveling Ben Bernanke's autograph on the back panel. Then they plug in a couple numbers, make their equal signs happy with a couple assumptions or a larger margin of error and call it a day.
Now that we understand how real world economics work we can proceed.
The problem comes in the "ergo" (that's a fancy word for therefore). It is true, defense of a nation will benefit people who do not pay for it. If I live on the southern boarder and pay to defend it with a wall, then the person living directly north of me might benefit without paying for it. The problem is the common argument leaps from saying external benefit to intervention. It does this because underneath the sleek exterior of contemporary economics lies a monster of JJ Abrams' proportions; also equally as corny. It is the assumption of pareto efficiency. To put it simply, pareto efficiency is the movement of resources to make someone happier without making anyone sadder. Thats right, the nation that brought us parmigiano reggiano, prosciutto di Parma, and Monica Bellucci also spawned Mr. Pareto. Its why we in economics draw the belly button where the two lines intersect.
"Hey look Pa, my economy is pareto optimal"
So using our fancy new words let's rephrase the argument. Privately provided defense will not be pareto optimal because of externalities. Therefore, to achieve
pareto optimality, government intervention is required. The problem is that this argument assumes a framework of both parties. When discussing with economists
subjects like defense it becomes difficult when they don't have the same normative judgments. I don't want pareto optimality. I would rather be pareto un-optimal
and remain untaxed. Now the clever TI-89E wielding economist would retort, "but without defense you couldn't have your utopian free-love libertarding society." This thinking represents the most common flaw in economics, the failure to see the unseen costs.
It is likely that within a system of private defense you would not see billion dollar stealth bombers or giant bases occupied by 19-21 year olds with bad taste
in music. Is this a bad thing? The unseen cost is how much better would my life be if the money that was stolen from me to support this system was instead used
to expand my collection of pretentious German expressionist film? Although this doesn't fully answer the retort. It cannot be answered in any quantifiable sense because it requires us to know things that will never be. For example, for the last one hundred years government was the sole producer of cars, and I come before you and make the claim, "government should stop producing cars". After the gasp of horror has subsided and you ask if I am serious and I nod my head to suggest
I am actually, the retort might be something similar to the one of defense. We very well might not have the tools of what is considered modern war but that is irrelevant because it assumes that what exists now is the best possibility. Going back to the car analogy, it would be similar to expounding on the beauty and performance of a Zaporozhet because it is the only thing that can be seen, ignoring that something like a Maserati would emerge.
The fundamental problem with thinking that defense could not be privately provided is to ignore another possibility. It is failure to understand the opportunity
cost of government intervention. What would emerge if government was to stop providing defense? I cannot say for sure. What I do know is that a system would emerge and in years' past has emerged.
"It is more a subject of joy that we have so few of the desperate characters which compose modern regular armies. But it proves more forcibly the necessity of obliging every citizen to be a soldier; this was the case with the Greeks and Romans, and must be that of every free State. Where there is no oppression there can be no pauper hirelings."
- Thomas Jefferson to James Monroe, 1813.
by Alex Devore
What makes these two men and a handful of other intellectuals rise above the mediocrity of popular opinion and demagoguery? Szasz once wrote, “Clear thinking requires courage rather than intelligence.” Szasz, having a gift for writing, has provided the answer to my question in seven words. The eloquence of the statement is obvious, the power of the statement comes from observation.
Much is spoken of courage, medals are given for it and if your parents had no taste you might even be named after it. Courage seems to be the exclusive realm of the physical. Soldiers are courageous, firefighters are courageous, intellectuals are stodgy. Although this is to be expected. We live in a time when reading a book written by a television pundit qualifies you as a thinking man. However, true intellectualism requires something more than reading rubbish authored by the common man's “thinker du jour”. Being a thinker requires the sacrifice of your happiness. Possessing knowledge is like coming upon a chasm; on one side lay what is, on the other lay what should be, in the middle an abyss. The common man my never see the such a chasm, the common thinking man will only wonder along the shore of what is. Clear thinking, unrestricted thinking, is coming to the end of the cliff and stepping into the abyss. In the case of Szasz he stood upon the “shore of mental health” and did not meander or look back, he pressed forward. His conclusions implied the illegitimacy of institutions, laws, and social structures. In a similar fashion, Von Mises not knowing the result of examining Austria's housing crisis pressed forward and in the process came upon knowledge that the single most influential actor in our economy acts only to harm us.
Szasz's eloquent statement becomes more powerful every time I hear a trite lecture or read an uninspired article. People that posses the mental faculty to undo their own lecturing and writings do not. It is a sudden seizure in thought, a pang steaming from accepting a harsher world, a world that becomes more and more foreign with each consecutive blow of logic. Because of this, Szasz is right. Clear thinking isn't the domain of the intelligent, most of us posses the intelligence required to understand that behavior cannot be classified as an illness or that intervention between consenting parties results in less prosperity. Clear thinking requires courage because as one steps farther into the abyss, the shore of what is disappears until you are deposited upon a foreign shore bearing little resemblance to the one you knew.
by Alex Devore
Friday, May 09, 2008
Here is where I am getting this. In Becker-Posner's farm bill blog, they discuss the farm bill and such, but more importantly to me is their comment, "All the subsidies should be repealed.
This of course will not happen, and that is a lesson in the limitations of democracy, at least as practiced in the United States at this time, though I doubt that it is peculiarities of American democracy that explain the farm programs, for their European counterparts are far more generous."
Also, today at work, I was talking to a co-worker about the situation of things and how government needed to keep it's hands off of the fuel cost. His response to me was things will never change. Therefore, I ask- WHY NOT?
Why is it that we give the politicians so much power without them using violence? It is like we sit around just asking ourselves when will it change? I have been reading of late about Russia's situation with Putin reluctant to give up his power, but I also see him parading his nuclear arsenal in the streets. Thankfully our congresional leaders have not gone that far.
If there is no threat of violence, then the power must come from us- we must be letting it happen? Again, I will ask what will it take for us to get back our liberties and limeted government back?
Thursday, May 08, 2008
Definition: The Theory of The Logic of Power
|The theory of the logic of power is that it is adaptive and it evolves. From anarchy in the sense of privately enforced trade, to roving banditry, to stationary banditry to autocracy to the cooperation of autocrats to the emergence of democracy, power disperses. As power disperses, so does prosperity; prosperity grows. If a government holding power allows for the prosperity to disperse, power perpetuates more prosperity and thus the logic behind power and prosperity.|
Unfortunately because of problems as described in The Logic of Collective Action, a government must refresh its power lest the power disperse to roving bandits in the form of special interest groups. The refreshing of power is simply to scrape away clinging interest groups that make a government lopsided or partial. In a sense, as power grows, so must grow prosperity otherwise power will stifle prosperity and issues of distributional conflict will give cause to collective action. If prosperity isn’t perpetuated, then a reverse evolution of power will occur, leading to less real power and certainly less prosperity for constituents. In this manner, anarchy would occur in the form of black markets and instable societies.
In the evolutionary chain of power, democracies that are not stable, and don’t protect property rights, may become the source of decline for a state in the form of special interest-caused sclerosis and stifled prosperity in the form of handicapped rights to speech, religion and other liberties.
The theory of the logic of power
Power is simply defined as “the ability or capacity to perform or act effectively.” Breaking this down to power in the realm of political and governmental, power might be construed as “a specific capacity, faculty, or aptitude” of a governing body to exercise power in a manner that is conducive to gaining more power in the form of progress for the government as well as progress for its constituents.
Mancur Olson writes of Power and Prosperity in a manner that is consistent with this basic definition. The logic behind this definition of power is that a stationary bandit is relatively better than a roving bandit because of the protection offered by a stationary bandit against that of a roving bandit. In turn, a stationary bandit might be able to maximize it’s earnings (banditry) through offering public goods as an exchange means for taxation (the banditry). In economics, we’ve learned that in the long run, competitive firms will operate at a zero profit so as to attain efficiency, carrying this logic over to government, if constituents are taxed at a rate that seems fair for the exchange of public goods, then the government is considered non-predatory. The second invisible hand is that an authority who expects a long term of rule, will actually work to perpetuate progress of his/her constituents because through freedom, people will work to profit maximize, and if the taxation margin is small enough, there will be little disincentive to produce, trade and progress, thus allowing longer, steady progress of the government.
Further analysis of the logic behind power takes us to special interest collective action which Olson attributes to the stifling of progress. Special interest groups will be concerned with slowing progress for the many so as to hold monopolistic power in their industry, which actually would stifle the progress of the stationary bandit; the government. In this regard, special interest groups behave as roving bandits within a society that has reached a modicum of efficiency regarding taxation and public goods. Collective action, as described in Olson’s Logic of Collective action will work to influence governments to use its power to benefit some at the cost of others, usually the majority of others. This deterioration of efficiency is what Olson calls Sclerosis.
In Power and Prosperity, Olson explores further the dynamics of prosperity of a nation, and hypothesizes that a government that is interested in prosperity will not only behave as a stationary bandit interested in maximum utility, but will also work to curb the effects of sclerosis. In this sense, prosperity of the constituents leads to the prosperity of the government. The government is the body that has power to tax, to protect and to provide public goods.
There is an incentive for government to provide and protect at an efficient level of taxation, as well, there is an incentive for constituents to pay taxes at an efficient level to afford protection and public goods. In this sense, there is a market for efficient allocation. However, there are situations that supersede this market, such as the overthrowing of government by some who may want to power that comes with being government. As well, there are troubles of considering who will succeed in government, which lead to what Olson calls the autonomous emergence of democracy. Because of the nature of autocrats overthrowing autocrats, democracy emerges much the same way special interest groups do and that is strength in numbers. Even though democracies lead to sclerotic occurrences, they also provide stability in government through pluralistic dispersion of power. (32) There is an incentive for leaders to share power in order to assure protection of that power, in much the same way constituents prefer stationary bandits to roving bandits and good governments to bad governments.
Thursday, May 01, 2008
The Costs of war vs. the Benefits
The first and easiest factor affecting the United States economy is that war affects the deficit that is occurred. The United States entered the war under an economic deficit, and since all wars cost money, the Iraq war has only skyrocketed the deficit. A deficit is paid for mainly by taxes, however the United states economy is so tight, that tax cuts have been a number one priority. As a result we see an ever increasing deficit. our government budgeted about 9 billion in debt through 2008, we are already at 13 billion in debt.
We shouldn't be too hard upon a county's economic deficit. Deficits do have an important task in the economy, and that is that the Fed will sell or purchase bonds to pay for, or broaden the deficit. many in the economy depend on this relationship for investment purposes. The problem is is that foreign banks and foreign agreements have taken over the ownership of our debt. So far we have been able to pay these debts off, however we are taking this relationship for granted that our foreign partners are going to be there to continue lending us money. One thing that we have seen in the last 11 years, is that foreign loans are costing us more and more, since interest rates are continuously rising.
In some of the past wars, the United states has boosted the economy and GPD due to spending withing the United states. This relationship worked well, beings that it got us out of our first major Great depression. however in the Iraq war, all of our war-type candidatures are being spent in other countries. One way that we are helping the Iraq government take off, is by signing contracts with the Iraqi's for our supply. This is great incoming capitol for them, however those available "investments" are not flowing to the American people.
If we must be at war, ok! however we need the United states government to bring war investments and expenditures back to the American people. We also need to think about the rate that the national debt is rising, and how our government and majority of citizens are focused on tax cuts and economic stimulus packages.
By Brandon Weber