Liberalism

As we have dicussed throughout the entire semester, most of us agree that a liberal economy is the best way to go. With all of the interventions that the government makes it drives our economy down and is one of the main reasons that we are in such an economic turmoil right now. Why, if this is so obvious of an answer to most of us in class is it so hard for the politicians and the high ranking government officials to figure out. They should have people that are more educated than us, as undergraduate students. Why don't they see the same things we do. Could it be that we are actually wrong, or is it that with all of the interventions that have already been made that it is already too late to change what we have? Whatever the answers we need to fix this mess we have made and need to have the right people in place to be able to do the things that this country so desperately needs.

Is America Still Racist?

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 Brings to light the sclerosis of America

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

I used to believe that the Fed was doing more good for the economy than doing it harm. I'm starting to question these thoughts now. How is the the Fed's impact on the economy by changing the money supply and interest rate going to help? It's natural to have times of economic growth and have times of economic recession. That is just all part of the economic cycle. Now the argument has been made that the Fed minimizes the volitility of this cycle to prevent an extreme recession.

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.

Private Property

Private Property rights are pretty much the best thing since sliced bread...ok, they probably came before sliced bread. Private property creates stability in a society. When someone own's something they are going to take good care of it. It is in their self-interest to take good care of their own possessions. Private property also aids in law enforcement. With private property there is an incentive for the owner to protect his or her possessions from theft.

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.

Myanmar Crisis

Since I've been following the recent crises in Myanmar I thought I would check out the Economic situation of the country and share what I learn with you all. I went to CIA World Factbook at this link: https://webmail.uccs.edu/SRedirect/www.cia.gov/library/publications/the-world-factbook/geos/bm.html to get a quick overview of the country. The country obviously includes most of the symptoms for a bad economic situation.

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.

Police Power

A theory of power within society allows one to examine the mundane coercive forces of life with a clear mind free of emotional attachment. It is my hope to expound on such a theory. I start, ironically, with an observation.

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

How can be defense be privatized? I cannot answer that more than I can answer how watches and delicious miniature pickles could be provided for privately.

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,

"draiiiiiiiinnnaaageeeee".

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.

"draiiiiiiiiiiinnnaaageeeee"

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

Clear Thinking

Thomas S. Szasz is to psychiatry as Ludwig Von Mises is to political economy. Szasz is most noted for his opposition to classifying behavior as an illness; that so-called “mental-illness” is a myth. This is as close one can get to “swimming up stream” without touching water. In a similar manner, Von Mises was writing about the idea that less government intervention was the answer to prosperity in the time of the new deal and the coming of the Third Reich.

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

Why Not?

So I am really having a time trying to figure out the root of this power thing. I know in class we decided that one "reason" for power was the one with the greatest capacity for violence usually yielded the power. But what about those in power that do not use violence?

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?

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. OR 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.

The Costs of war vs. the Benefits

Crossfire on NBC lately has been covering the war vs. our economy, and most of the important information is there but they fail to see where one expenditure affects another in war. In todays United states economy, war surrounds us in every direction. someone has to pay for it, such as the American taxpayers. Disregarding the legitimacy of actually entering a war, the following post will attempt to show what Iraq war does or does not do in an economy, and the example used will be the United States economy.

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

Are some cultures better than others?

The discussion in P&P about Iraq and what would bring greater success there got me thinking about a very basic question that many people don't consider when forming the foundation for a logical and sensical analysis--namely, can you say that some cultures are inferior?

I believe that unlike most of the major controversies or conflicts that dominate the agenda of our society today, the question of whether or not some cultures or nations are morally "better" than others is one with a very clear answer, so long as one strips it of its political correctness.  The notion sounds piggish and arrogant, simply something that an uneducated, overzealous right-wing American might say when the subject of, say, Africa or any other place in the world that is in relative shambles comes up.  Being the quasi-liberal that I am, I am by default tempted to dismiss any such notion as utter nonsense, because in the perspective of humanity taken from an anthropological standpoint, "morality" itself is merely an artificial, abstract construct that we as American society like to apply as some kind of universal to every other society by which to judge it.  I am tempted to say that no, it is not ever acceptable to assert that some cultures are morally better than others.  However, after much consideration, I have come to the conclusion that indeed yes, it is all right to make such an assertion, sparing all the other racial and other such ramifications for a separate set of controversies and discussions.

I guess the basis for my belief that it is acceptable to deem one culture morally better than others eventually works its way down to the definition of morality itself.  One needs an operational definition before one can even think about what is right nor not.  Is morality only an artificial construct?  On the surface, sure.  Things such as monogamous marriage (arguably) or not using "swear words" are indeed artificial constructs of Western society's morality.  Things such as exposed lower legs on girls, which are morally reprehensible in the Middle East, are morally acceptable here.  Many Moslems believe that we Americans are morally depraved because of such things.  If an American finds such an assertion to be ridiculous, than what would, say, an African tribesman think of an American accusing a practice of, say, female circumcision to be morally depraved?  Under this train of thought, the conclusion that might follow is obvious.

But are there some things about morality that are universal?  And is morality only abstract?  I believe it is neither of these.  I believe that the framework for any concept of morality must be based in something real.  Morality's intent as a set of concepts is to facilitate the maximization of relative pleasure and joy for the maximum number of people.  Think about it: take some of the things that pretty much no person would object to as not being morally wrong, like murder.  Having a code that demonizes murder as a "mortal sin" works to the greater good of everyone in a society.  I guess it is sort of like Locke's "Social Contract."  But what about something that is a little more shady, such as the unacceptability of, say, a swear word?  Well, in a sense, this is different.  Why should anyone think that what amounts to only a combination of letters and sounds is morally wrong?  My response to this would be, that it is not the letters and sounds that make the word morally wrong, obviously.  It is the ideas and attitude that such a word has come to be associated with.  Someone who chooses to use such a word frequently is someone who is choosing to express the meaning that we society have placed on the word consciously.   Because that meaning involves a negative attitude towards others and such, then the lack of morality in the world becomes valid.

My ultimate point is that regardless of the societal and cultural ramifications of "morality," I believe that there is at least a foundation of morality that is universal.  So long as this is true, then one can use the universality as an objective measure with which to assess societies.  Taking that as a tool, then I think the answer to the initial question becomes much more obvious.  A quick look at the world today will show that some countries are more successful than others, just from such objective measures of success as the UN Human Development Index, GDP, political freedom, etc.  Now I understand that these are not the only measures of success.  Bhutan, for instance, has declared that "GDH," or Gross National Happiness, is more important than GDP.  However, they are probably the most valid, most objective macro measures out there.  Countries with high GDP's, low infant death rates, low illiteracy, etc. seem to be the ones with the largest majority of people who are the happiest.  If that is true, then a strong correlation can be made: countries with Westernized cultures which believe in (and enforce) such concepts as freedom of speech, religion, property rights, contracts, etc. are the ones that are the most successful in the world.

With few exceptions all other countries, or the ones who fail to achieve those goals for one reason or another, are not as successful.  My conclusion, aside from any Christian or religions shade of context, is that some cultures are better than others, morally or otherwise.  And Western culture is one of the better ones, if not the best.  

Are some cultures better than others? Of Course.

Zimbabwe - Recipe for disaster

Zimbabwe is currently in an economic crisis. According to the CIA World Factbook, inflation in the private sector rages well above 100,000%. The country is suffering from a -6% growth rate, 80% unemployment, and 68% of the population is below the poverty line. “Botswana built electric fences and South Africa has placed military along the border to stem the flow of thousands of Zimbabweans fleeing to find work and escape political persecution (CIA World Factbook).” How did Zimbabweans find themselves in this mess?

Robert Mugabe has been the president of Zimbabwe since it declared independence from Great Britain in 1980. Under his leadership, Mugabe has turned the country into the poster child for political and economic upheaval. Beginning in 2002, Mugabe forced thousands of white farmers off their land and gave the farms to his party leaders and cronies. Unfortunately, the new land lords were uneducated in farming. The resulting crop failures lead to severe food shortages. This seizure of land is only one example of the president’s property and human rights violations. Beyond this, Mugabe continues to print more money to pay off the national debt which only fans the flame of inflation. In spite of the economic turmoil, Mugabe has held his position of power through government-backed violence and rigged election.

In his book Power and Prosperity, Mancur Olson outlines his research on the conditions required for a nation to be prosperous. Among his major themes is the idea that economic prosperity is nearly impossible in the presence of corruption, government predation, and lack of private property rights. Clearly, Zimbabwe’s President Mugabe blatantly practices corruption, government-backed violence and predation, and disregards all private property rights. Is it any wonder that Zimbabwe is in such dire economic straits?

The Incentives of War

Olson offers powerful insights on why it is sometimes necessary to go to war in order to exhibit our military might – for that exhibition of strength and military dominance may help to keep others in line. We must occasionally prove that we can “organize the greatest capacity for violence” in order to maintain our status as a world superpower (11). I can appreciate the fact that we must carry a “big stick” so that others will not pick on us, but I question whether or not it is truly necessary for us to spend almost as much as the rest of the world combined to protect our nation. According to the Stockholm International Peace Research Institute, in 2005 “the USA was responsible for 48 percent of the world total” military expenditures, and was “distantly followed by the UK, France, Japan and China with 4–5 percent each”. This leads me to believe that there may be something wrong with the financial incentives that are built into the system. http://yearbook2006.sipri.org/chap8/chap8

After reading Olson I have a greater understanding as to why we go to war even when it seems that there is more opposition to war than support. His Logic of Collective Action provides powerful insights into this issue. The forces that advocate going to war are much stronger and well organized than those who oppose the war, and they certainly have a lot to gain individually since the multi-billion dollar defense contracts are spread over such a small number of corporations. Professor Eubanks is always pointing out that it all boils down to incentives, and the incentives for these multi-billion corporations are certainly stacked in favor of war. In the 2005 documentary “Why We Fight,” Chalmers Johnson points out “the defense budget is ¾ of a trillion dollars. When war becomes that profitable you are going to see more of it.” War certainly has been extremely profitable for a few, and those few sure seem to carry a lot of weight in Washington. http://www.sonyclassics.com/whywefight/

I believe the excessive expenditure of our taxpayer dollars is due to major flaws with the incentive system. These corporations have little to gain in times of peace, especially if there is no perceived threat to our national security. The vast majority of us find peace to be more profitable than war (in the form of lower taxes), but unfortunately this is not the case for the defense contractors who have greater profits to gain in times of war and therefore, more incentives to promote war. Until we solve the incentive issue it seems likely that a small segment of the population will advocate war even if is it not in the best interest of our country…and you and I will end up paying for it.

Anarchy: The Nonexistent State

I’ve been considering Alex’s contention that Olson is wrong to simply assume banditry is to occur, or exists as some sort of necessary evil. At the time this argument was written off with the assurance that Olson understood the reality of the situation, which is that bandits will naturally crop up. However, in giving more thought to the idea I’ve realized Olson’s theories could well be applied to the question of anarchy, and explain why no stable anarchist state has ever existed or is likely too.

Let’s begin with the basics which Olson explicitly covered. The starting point which he theorizes is akin to Hobbes’s state of nature, or a sort of dog eat dog world for those unfamiliar with the philosopher. In this world there might well be productive activity going on, but there’s also a large amount of stealing because, for many, taking from another represents a way to better themselves in an easier fashion then actual production. What’s more, since there’s no entity that exists to discourage the bad behavior, there’s no real reason not to act on these impulses, assuming the thieves, or roving bandits, believe they can overpower or in some way sneak by the person currently in the position of having.

From this the supposition is that some person, or perhaps group of people, is going to realize they have more power then than their neighbors and stand to consolidate even greater power if they flex a little muscle and do a little taking to finance themselves as stationary bandits, who continue to take from their particular area of power. Now, of course, these stationary bandits have an interest in protecting those under their swath of influence from other bandits, and governments, or at the very least protection rings, begin to form.

I think this is where Alex parts ways and seems to believe one of two things, either people need not accept these bandit kings and would prefer to be without them, or the consolidation of power doesn’t necessarily have to happen at all, and some form of a permanent anarchy state would be possible.

In regards to the first, I would have to disagree. People seem to like security of some fashion, and supposing a world where at least roving bandits abound, the average person seems more likely to prefer the stationary one. I think this is actually to better ensure the process of production. If the possibility exists of being wiped out at any given moment, and could occur any number of times it would have a freezing effect on most productive activity, because activities of this nature occur only because people believe themselves likely to reap the rewards. Thus a stationary bandit, who takes a portion of your production, but leaves you at least some of it, as well as protecting you from the threat of having none due to roving bandits, while perhaps not ideal, seems infinitely preferable to the likely alternative.

In terms of the permanent anarchist state, in order for it to exist, it would require individuals to be able to protect themselves from the bandits. But in order to do this that individual, or perhaps group of individuals working together, would need to display power greater then the bandits in order to scare them off. Where does this power come from, and how is it nurtured and maintained? More then likely through a process similar to that described above, because no individual could stand for long against the combined force of an opposing group of bandits, and any commonwealth formed to fight the bandits would require some sort of tax or wage garnishing (a form of banditry) enforced by the threat of the fighting power itself in order to avoid free riders. One may ask, why the need to avoid the free rider problem? The answer is because your opponents have avoided it, and are that much more powerful because of it. Unless you can face them on somewhat equal terms you’ve consigned yourself to failure.

Thus far I’ve avoided discussion of a world without bandits entirely, roaming or stationary, as well as the idea of an benevolent power that exists solely to fight the bandits. This is because imagining it ignores the incentives of human nature. Bandits exist because it is often easier to take then to produce, as discussed earlier, and moral conundrums about it just don’t enter the equation for every member of society. A benevolent power, that does not take, but fights the enemies may well exist for some period of time, but would be unlikely to last for the same reason there are bandits. Eventually those in charge are going to want to use the power to take because the incentives for it are strong, and they have the power to do so.

Legalize Marijuana

In class a few weeks ago we discussed the importance to distinguish self enforcing purchases from the ones enforced by the government. I think the main problem that lies with this is the illegal sector of the economy. The "black market" has to be self enforcing because they cannot rely on the government to uphold a sale, as they are all illegal. I think this fact has led to a lot of violence in this market, especially on the drug trade. People are getting injured and killed on a regular basis due to the fact they must enforce their own sales. The people who get caught selling these drugs are sent to prison where they have to become more violent just to survive. Something needs to change here. I am not suggesting legalizing all drugs, but I do think that legalizing marijuana would be a good idea as I think it would help reduce the amount of violence that goes on in the streets. The less illegal self enforcing sales there are the less violent of a society we will be.

A Question to Ask

Last week I was talking to a colleague/friend and I asked him what he thought our government was for. His response, though I was a little surprised, seemed par for what I would assume most Americans think what our government is for- "I think the governments responsibility is to make us more well off, to better our lives". Maybe a good experiment for this weeks discussion would be for you to ask as many people you know to tell you what they think our governments role should be in our daily lives.

A side note: he in turn asked me what I thought. When I told him that I thought the governments role was to protect our liberties and freedoms and to stay out of our lives, especially our economic ones, it was if he had never heard that before. Interesting.

I Suppose it Only Takes One

I have had this nagging question: in a nut shell, how can we trust the police? We have been discussing now for some time about how power comes about. My question has been if there was a revolution, per say, or a march on our Capital, what would keep the security (the ones with the power) from not joining the cause- what keeps a policeman loyal?

This article is about how the police are essentially corrupt, killing whenever they wish. I suppose it only takes one. Let's consider Olson and what we have learned. Assume that one cop ignores the rule of law and shoots, say a child rapist, and is concealed from the crime with help from his direct supervisor. This would definitely give the policeman incentives to continue taking the law into his own hands. Pretty soon, the entire force would be in a group that is able to do anything they want, seeing that they would have the greatest capacity for violence. I assume this is a way to see how the stationary bandit comes to power.

Maybe, the stationary bandit already has some power, like a supervisor, but does not have to show his force, but let those under him get away with using violence, while he lets it occur. If enough subordinates felt the supervisor would "ignore" there forceful evils, they would give the supervisor more power, creating a stationary bandit, if the supervisor asked them to do his "dirty work".

I wonder if this is consistent with what we have learned. I suggest that the stationary bandit(SB) does not use force himself, but by allowing it to happen, he becomes more powerful. I wonder, though, what would happen if the SB never showed force (i.e. killing someone) if one of the subordinates would "challenge" him with force. Or, maybe more simply, can an OZ really exist- does it take only one?

What Really Happens with Forecloseure

I just skimmed an article that talked about why I should be concerned if my neighbors house forecloses. Though I just skimmed the article, the just was that when a house becomes foreclosed, there is a spike in crime and drugs in the neighborhood. I suppose this may be true for most, but I think it is a fallacy to generalize for all. Here is how I think it should be.

Now, most of you know me by now and know I am the furthest from a socialist. However, I think this "housing mess" could be handled in a different way. The press sees this crisis as a cause for government intervention- how wrong. I suppose that we could think of the other homeowners in the area as a group. They all have a stake in the conditions of the houses around them- one house is trashy, property values decline. So in order for their property values to stay up, I would think that homeowners (in a non-covenant setting) in a neighborhood would look out for each other. When they would see a homeowner in trouble, they would help him out, not a government bailout! And if the house is foreclosed upon, helping keep up basic upkeep and keeping an eye out on the house would help to prevent drugs and crime from setting into the house.

I have a friend who is in such a situation and he keeps an eye on the foreclosed house. This, I think, shows how neighbors, and not government, can work together to bring prosperity to everyone in the neighborhood.

The Russian Oil Taxes…… Ouch!

"It's never easy to find $1 trillion in investment capital, but the Russian government has made it hard for its oil industry to attract even a small part of that capital. The Kremlin has structured taxes so that most of the extraordinary rise in oil prices flows into government coffers, not oil-company profits.
When oil rises above $27 a barrel, the Russian government takes 80% of any additional revenue in taxes. That means at $67 a barrel, an oil company gets just $8 more a barrel in revenue than at $27. If the price climbs to $107 a barrel, the oil company's revenue increases by just $16 a barrel from what it was at $27 a barrel.
That may delight U.S. consumers who believe oil companies are making obscene windfall profits from soaring oil prices, but it hasn't made companies eager to sink their money into developing new oil in Russia.
The production decline in Russia would be serious enough if it were an isolated problem. But it's not. The same conjunction of geology and geopolitics is crimping production in Nigeria and Mexico."

the link to full article
http://articles.moneycentral.msn.com/Investing/JubaksJournal/WhyOilCouldHit180DollarsABarrel.aspx

This was an excerpt from a recent article link on the MSN website. Jubak was talking about how oil will go to $180 a barrel and most likely stay there. The most interesting part of the article I thought was this part. It’s hard to imagine that the Russian government has the tax system setup this way to really suck the life out of the oil industry not to mention the potential investors. Looking at it from a Power and Prosperity point of view we can clearly see the predation by the government. How will the oil industry grow and prosper with a government that takes 80% of the revenue? Most of the “greenies” here in America talk about getting off the dependence of oil. Over there the people should be talking about getting the government off the dependence of oil for revenue!

Add the money they bring in from the oil industry predation to the corruption and you get the Russian government. Wow, it’s so easy to see what Olson is talking about in Power and Prosperity. This could be one place the Russian government could fix to increase oil production and revenue for the firms and also increase investment. If the Russian government takes this amount in taxes from the oil industry, imagine what it takes in other industries. We do hear of the Russian come back, but imagine what it could do without this predation by the government.

Those Free Riding ______!

During time in between classes last week we had a discussion about how America is always fighting wars somewhat alone. It seems as though there is not really all that much involvement in conflicts by other countries that are a part of the “functioning core” as Barnett calls them. We see that American forces are stepping in to conflicts but we don’t here too much of France, Germany, Spain or Italy hoping on to the bandwagon to help out. Professor Eubanks had the idea that the number of soldiers in these countries probably have declined over the years because of the logic of collective action.
I took a look at the number of soldiers in the German army over the 90’s and early part of the 21’st century and found that there was a decline in the number of soldiers. At the beginning of the 90’s there were over 255,000 soldiers and by 2000 there were only 230,000.
Applying the logic of collective action to the number of soldiers seems to be proven true that the numbers would go down, but why? Well the answer is: they are free riding. Think of it this way, each country is part of a group of countries. As the number of countries in this group grows it becomes a large group. Well we all know that large groups do not function unless they offer selective incentives or have an element of coercion to force the countries to do things. Well if there are no selective incentives which there are none and each country cannot force another country to help out, then you will get free riders. I think that is what is happening now, America is stuck doing all the work well the free riding jerks are just sitting back and watching. There are a number of countries that could help out with rebuilding Iraq but no, you don’t hear of them really putting the large number of soldiers out there. All they do is complain about what we do. This is why their numbers have fallen, because they think America can do the work. Why have so many soldiers when it’s not going to match the numbers or power of the American forces? The logic of collective action rings true again. Large groups don’t work, and free riders always cruse along for the ride.

More Likely, Not Less

Recently MAX BOOT CONSIDERS comments on Admiral Fallon:

"What Fallon (and Barnett) don't seem to understand is that Fallon's very public assurances that America has no plans to use force against Iran embolden the mullahs to continue developing nuclear weapons and supporting terrorist groups that are killing American soldiers in Iraq and Afghanistan. It is highly improbable that, as the profile implies, the president had any secret plans to bomb Iran that Fallon put a stop to. But there is no doubt that the president wants to maintain pressure on Iran, and that's what Fallon has been undermining.

By irresponsibly taking the option of force off the table, Fallon makes it more likely, not less, that there will ultimately be an armed confrontation with Iran."

Considering Olson's Power & Prosperity what is your view of this assertion that Admiral Fallon made armed confrontation more likely, not less likely?

Why are wages declining?

In thinking about Economic Policy Analysis, I found an interesting link.

http://www.newschool.edu/cepa/

Considering CEPA stands for Center for Economic Policy Analysis, I think I've struck gold!

In reading through some of the abstracts, I found an article:

Increasing Earnings Inequality and Unemployment in Developed Countries: Markets, Institutions and the ‘Unified Theory’
by David R. Howell (CEPA)

“Fundamentally, the demand for less-skilled workers appears to be declining faster than the number of less-skilled workers, and their wages are therefore drawn downward.”

OECD, OECD Jobs Study, Evidence and Explanations, Part I: (Paris:OECD, 1994), 30.

So what does this mean? Well, it's a question that will lead to my exploration and thus final paper, writing an actual policy analysis, but what I think it implies at this point is simply this. One side of the argument might argue that unskilled labor ought to be protected through policy and justified by this policy analysis. The other side might argue that through specialization, markets may emerge, causing shifts of those who are unskilled labor to actually develop a skill that would allow them to attain better prosperity.

Though aggregation is a dangerous thing to do, the logic of collective action suggests that people will voluntarily align with others to form a group, thus making aggregation justified. In this vein, if those in a position to emphasize certain points of agenda decide to move towards unskilled labor industries, then they may actually be causing harm; whereas if they were to offer incentives to the 'group' to specialize and work as skilled labor, they may actually prevent harm from occurring.

We've spoken of roving and stationary bandits in terms of government and power and prosperity, but what about in terms of international power and prosperity? Considering that we won't move to one single over-seeing power in the world, we have economics to help us understand that power and prosperity is a dynamic phenomenon and that through paying attention to trends, we might understand what policy to implement. If "demand for unskilled labor" is going down, then wouldn't it make sense to get involved in some sort of specialized skill so as to avoid the repurcussions of declining demand? At individual levels, this makes perfect sense and it is assumed (by many) that this is how economics are applied on the small scale. But at larger levels, where collective action occurs, where government policy is influenced by special interest, then how could the argument to protect unskilled labor prevail in lue of this analysis?

Perhaps this has something to do with predatory governments and limited liberties of the governed.

Corruption

Since corruption was part of our readings this week I thought you might be interested in the "corruption perceptions index." In checking out the map above you can guess that the darkest shade of read represents lots of corruption.

TRANSPARENCY INTERNATIONAL is the organization that puts together the corruption index.

Chipping away at my liberal ideals

The duality between my conservative tendencies and my liberal instincts keeps becoming more and more distinct.  I am absolutely no longer amused about the situations in the world's poorest and most violent countries.  I tire of, after hours of research and surfing Wikipedia, confirming to be mostly false the politically correct notions of why the African third-world is in poverty and seeming perpetual misery and what can be done to solve those things.  I tire of hearing all these amusing anecdotes from left-wing citizens of Fantasyworld about how they did such things as join the Peace Corps or how they donated money to help save Darfur or how they think it's disgusting that the US only donates something like .002% of its GDP to global monetary aid to the third world (compared to Western European countries, which donate substantially more as a function of their GDP).  

I tire of all this for the same reason I have begun to get sick of many liberalist ideas:  they work very well in the abstract, but they don't translate well into reality when  you consider the negative aspects of human nature.  And many of these negative things, I believe, probably have far more to do with explanations vested in nature than in nurture.  This is important because if this is true, then on a macro scale it means that many of the problems we have today will never go away, and many of the inequalities we see on a micro and macro scale will probably never go away, even though they might lessen.  

The idea that there is inequality that exists and will never be neutralized is a hard idea to accept to someone who cares or has a fundamentally optimistic view of the world and of people (ie, a liberal).  However, this is a necessary concept to accept in order to be able to make tangible policy decisions and be able to render effective solutions.  

At the same time, accepting such a notion is, correctly, probably evil.  This duality I have described is one that I have understood for some time.  However, in the past I have advocated as part of my philosophy on life that shooting for the idea, even if the ideal is unrealistic or unlikely, is the correct and civilized thing to do, because in the abstract it is beautiful, and that had value to me.  I would say that the IMF, donating money to causes such as Darfur and Feed the Children, etc. are good things, even if the chances of them actually doing something positive are low (but not zero).  

Now, however, I don't believe I feel this way anymore.  I have come to conclude that the ideal is more fantastical than I had hoped.  Also, I believe the differences amongst peoples and cultures are deeper than one would like to think.  When you combine this with my belief that there are at least some things about life and of humanity that are absolute and universal, and that therefore value judgements can be made about one culture versus another, the result is a painful move towards pessimism.  I do think that our Western culture and way of life is superior.  Is it our right or responsibility to force what we know to be better onto other cultures, or at least try to?  I don't believe so, but partly because I believe it is not realistic to expect it to work.  We see this in Iraq.  It is a people's obligation to steward its own destiny.

What do we do with a Haiti, or a Sierra Leone?  Do you ignore it and watch as it wallows in misery?  Do you throw money and aid and resources at it, even though it has been shown that those things will make little to no difference in allaying the misery?  Do you hold as official policy some ethereal notion that "expanding and liberalizing trade and privatizing the economy" will solve any problem?  

There is no right answer, because in these situations there is no solution.  Food for thought:  one of the only large differences between the early progression of South Africa and the progression of the US as countries  is that the native population of the US was practically exterminated by Smallpox before Europeans really began settling and migrating west, rendering the whole continent easily conquerable.  This never happened in South Africa, and the Europeans were not able to penetrate the continent as a result; the natives were not killed en masse.  If it were not for Smallpox (and subsequent quasi-ethnic cleansing that the US engaged in until the late 1800's), the US might very well resemble closely South Africa today, a country clinging to life of the size of the current Eastern Seaboard, perhaps, with a minority white population and little global relevance or power.   

I am not necessarily advocating that the Smallpox or the killing were good things at all.  Some of the things that the Americans did were horrid.  However, when one considers what the US is today (I consider it to be a wonderful thing), one would be ignorant to ignore the painfully conflicting ideologies that result.

Capitalism embraces the negative aspects of human nature.  That's why it works.  

Safety in Groups

Reading through some of the previous posts I’ve noticed more than one focus on the idea defense and protection as a public good, the most recent being “A Public Good Via Self-Defense” by Michelle Rennolet. And while these articles do a good job reviewing Olson’s theory of collective action as it may apply to such a good and the applications thereof, I’d like to continue along the same lines, but now spend a little time covering some of the actual groups that have sprung up with an eye towards providing public defense, and invite all the previous posters to join in and highlight wherever I may get it wrong.

Now the most obvious groups that exist to provide defense are the United States Armed Forces. However, the incentive that brings members of this group together, outside of providing national defense, something that benefits soldiers as well as nonsoldiers, is obvious. It’s a job that not just provides a paycheck but many other benefits, such as transferable training and college scholarships. So while membership requires no coercion (except in times of a draft) providing for the costs of membership is a little different. Paying soldiers is an expensive endeavor, and one that would undoubtedly encounter free rider problems if left purely to good natured contributions from those attempting to pay for the public good provided for them. Thus the ultimate form of coercion is required in the form of compulsory government taxes.

There are, however, true volunteer groups that attempt, or at least claim, to provide for public safety. Let’s begin with militias. The question to ask here should be why members show up at all. Unlike the armed forces and local police there’s no pay and honestly, there’s little to no good being provided as there hasn’t been much call for militias to bolster national defense since the early 1800s. Thus if the good provided by the group is negligible at best, we could assume the benefit to each individual member to be less then minute, while the drain on time and energy continues to be constant. Why then continue to attend meetings and target practices? I think the answer is social incentives. Most militias, outside of the Texas Minutemen who claim to guarding the border, have devolved into something more akin to a club then a serious gathering. The true interests are in laughs and companionship not national defense.

Among the other volunteer groups you hear about attempting to provide a public good, perhaps the most often mentioned is the neighborhood watch. This is a bit of an interesting case because it varies from formation to formation. Often they’re formed in neighborhoods with little crime to begin with and can thus be chalked up to social incentives again, with the weekly meetings taking the place of ye olde neighborhood picnics and such forth. However, in other cases there is a specific need involved because of high crime rates, or a sudden local crime spree, and here I think the small group dynamic comes into play. In essence the benefit provided to each individual member is at least equal if not greater then the effort put out. A meeting and patrol every now and then isn’t high effort and neither is agreeing to call the cops or check in with neighbors if you witness something suspicious. But in high crime neighborhoods the benefit of getting your neighbors to do the same can be of untold value. Of course there’s still likely to be a free rider problem to some extent, but in a small group like this social pressure rather then incentives can prove to be the deciding factor in getting everyone on board.

-Jaeson Madison

Athletes vs. Farmers

What do Chinese farmers and the Olympics athletes have in common? Water. During the Olympics that will be held in Beijing this summer, the city’s water demand is expected to spike up by 30 percent above average. The northern province of Hebei provides the majority of Beijing’s water. Unfortunately, this province is now suffering severe drought due to a lack of winter rain and snow. The four dams that supply water to the regional farmers and the city of Beijing are reported to be 60% lower than average. On top of the current water shortage, China is in the process of building 309km of channels to draw water from the four Hebei dams to the city of Beijing. These channels are intended to bring an extra 300 million cubic meters of water to be used as a “back-up” supply during the time of the Olympics. What will be the consequences of this move? The drought has already affected 1.89 million head of livestock and left 2.43 million people without sufficient drinking water. According to the World Fact book, 43 percent of the Chinese population is employed in agricultural. What will happen to the Hebei farmers if they lose another 300 million cubic meters of water to the city? In China’s efforts to make a good impression on the international community and boost their economy by hosting the Olympics they are creating a situation that will potentially have many unintended consequences. Is it worth jeopardizing the health and livelihood of so many people for the sake of having “green” games and making Beijing the sparkling host city of the 2008 Olympics?

http://sport.guarding.co.uk/breakingnews.html

California Prison Guards

Unless drastic measures are taken, California will soon be spending more tax dollars on its state prison system than its public universities. Schwarzenegger’s 2007-2008 state budget even shells out more than our federal prison system - $3.3 billion more – even though federal prisons house almost 30,000 more prisoners.

The wealth of knowledge I gained while reading Mancur Olson lead me to believe that there was something more to this excessive expenditure of taxpayer dollars, so I decided to do a little research. Of course, I didn’t have to look far, for the second article that popped up on my google search was labeled “The California Prison Guards’ Union: A Potent Political Interest Group”. http://thirdworldtraveler.com/Prison_System/CalifPrisonGuards.html

Author Dan Pens eloquently states that there is “a well fed Political Interest Group feasting at the California public trough, and most taxpayers are unaware of the huge growth in this creature’s appetite and political clout.” The California Correctional Peace Officer’s Association’s (CCPOA) sudden rise to power began in the year 1980 with the installation of Don Novey as the CCPOA president. The ambitious Novey exhibited true genius in the arena of political lobbying, increasing prison guards’ salaries from $14,400 a year in 1980 to $44,000 a year in 1996 – an amount that totaled well over $50,000 a year with benefits. That amount was $10,000 more than the average teacher’s salary in 1996, quite a large sum when one considers that the position of prison guard requires only a high school diploma while a teaching position demands at least a four year college degree.

Novey found it all too easy to exert tremendous influence over California’s politicians, for as one would expect “there are no vested interests against spending more on prisons.” Everyone wants “to keep thugs off the streets and in jail where they belong” and no politician wants to be known as the man who was soft on crime, so the state prison budget steadily grew as the CCPOA’s influence increased.

Obviously the extra funds committed to the prisons must come from somewhere, so it should come as no surprise that the California prison budget has grown at the expense of other public programs, most notably higher education. In 1983-1984, California spent only 3.9 percent of its budget on its correctional systems and 10 percent on its public universities. The meteoric rise to power of the CCPOA will produce correctional system spending levels that are set to pass higher education expenditures in less than 5 years. Don Novey must be very proud.

The expansion of prison funding has also resulted in a tax increase. This tax increase has prompted a massive exodus of corporations and as these corporations flee they take with them thousands of jobs, leaving fewer taxpayers to shoulder the added tax burden.

Dan Pens concludes his article by speculating that “only after the state drives itself into an abyss that a radical revolutionary shift can take place.” Sadly, I believe he may be right.

South Africa

I recently went to a conference about the economics of South Africa. They had swithched their government process about a decade ago and their economy has been headed up ever since. They dropped the procedures that they had been using, cleaned house, and started fresh. In The Rise and Decline of Nations Mancur Olson talks about how an upheaval and change is a way that many economies get a boost. Finding out some of the information about how much more successful the new economy has been was just more evidence to Olson's stance. Everything that he stated in that book, particularly in Chapter 4 was validated in this conference. Although they still have a long way to go the economy there is looking up, and it is because they had a complete restart on the way they do things. I have tended to agree with Olson anyway, but this was just more validation for what he states in his book.

Zimbabwe

As we turn to Olson's Power and Prosperity, you might be interested in considering the views of MORGAN TSVANGIRAI, a presidential candidate in Zimbabwe's upcoming elections:

As the March 29 election in Zimbabwe approaches, the cards are clearly stacked in favor of President Robert Mugabe and his ZANU-PF party. Draconian legislation has curtailed freedom of expression and association. Daily, the representatives of the Movement for Democratic Change (MDC), the political party that I lead, are harassed, tortured, imprisoned without trial and even killed.

Economic mismanagement by Mr. Mugabe's government is an even more serious problem. Zimbabwe's inflation and unemployment rates are 150,000% and 80% respectively. Infrastructure is crumbling, and education and health-care systems have collapsed. Life expectancy is now among the lowest in the world, having declined, since 1994, to 34 years from 57 years for women, and to 37 years from 54 for men. Some four million of my fellow citizens have fled the country, taking with them both human and financial capital.

Out of the many reasons for Zimbabwe's decline, three stand out. First is the ruling regime's contempt for the rule of law. The government has repeatedly stole elections, and intimidated, beaten and murdered its opponents. It has confiscated private property without compensation and ignored court rulings declaring such takings illegal. Such behavior only scares away investors, domestic and international. Current circumstances make it impossible to have a growing economy that will create jobs for millions of unemployed Zimbabweans.

[ . . . ]

The second reason for Zimbabwe's decline is the government's destruction of economic freedom, in order to satisfy an elaborate patronage system.

Today, Zimbabwe ranks last out of the 141 countries surveyed by the Fraser Institute's Economic Freedom in the World report. According to 2007 World Bank estimates, it takes 96 days to start a business in Zimbabwe. It takes only two days in Australia. Waiting for necessary licenses takes 952 days in Zimbabwe, but only 34 days in South Korea. Registering property in Zimbabwe costs an astonishing 25% of the property's value. In the United States, it costs only 0.5%.

[ . . . ]

The third factor responsible for the country's decline is the size and rapaciousness of the government. Today, that size is determined by the requirements of patronage. But a government that provides hardly any public services cannot justify the need for 45 ministers and deputy ministers, all of whom enjoy perks ranging from expensive SUVs to farms that were confiscated from others.

The Central Bank too has departed from its traditional role of stabilizing prices. Instead, it dishes out money to dysfunctional, government-owned corporations that are controlled by the ZANU-PF and are accountable to no one. The result is runaway growth in the money supply, and the highest inflation rate in the world. Zimbabwe's potential for economic growth cannot be realized without macroeconomic stability. Hyperinflation must be tamed, in part by taming the government's appetite for spending.

If you lived in Zimbabwe, would you vote for this candidate? His views certainly seem consistent with Olson's Power and Prosperity. Come to think of it, I would like to hear candidates for our presidency who seemed to understand as much about power and prosperity as Mr. Tsvangirai does.

Sub-prime Crisis? Yeah, right.

There is perhaps a moderate economic crisis looming in the not-too-distant future, with the sub-prime crisis in swing, and there is some reason to worry that another economic boom is going to be in the distant future as opposed to the near one.

However, I believe that these concerns are largely exaggerated. The hegemony of the US economically is not something that can be disturbed easily, something that was certainly not true prior to 1950. Even the worst-case scenario economic ramifications of the sub-prime crisis do not really rival some other "crises" that the US has experienced in the last 50 years.

For one, the petroleum shortages of the late 70's and early 80's were a far greater macro threat to our economy. Back then the US's economy was far more dependent and reliant on petroleum than it is now (it's true). Inflation was off the charts (highest levels in modern history, at least in 100 years in the US), and interest rates were fluctuating wildly. Nothing short of the death of American auto was at hand, and Paul Volker, bless his soul, was doing his best to try and stem the tide. Any economics professor will easily tell you (and will have the graphs to prove it) that the early 80's was easily the most volatile time economically since the Depression. An assortment of figures and data points from the era would show up on econ graphs as statistical anomalies inconsistent with trends of before and after.

And you know what? America didn't hit the fan. There was recovery (which had some, but not everything to do with, Reaganomics). It wasn't the Great Depression II. And life moved on. Gas prices now are, in real terms, still not even as high as they were in 1982 (I believe it's getting close). America didn't collapse into a pile of anarchy and chaos.

A more comparable analogy would be the S&L scandal, also in the 1980's. Thanks to President [deleted by Professor] Reagan, the American public ended up losing something like $300 billion (I'm too lazy to look up the real amount, but it's big) in the government's bailout of all the private S&L's that went under. The government was partly to blame, amid scandal and probably corruption and collusion. You want to talk about bank failure though? This was the time to talk about it. The ramifications of the S&L scandal also far surpass anything we have today.

And yet we're still here.

Inflation happens. Stagflation happens. And neither of these things are happening now in amounts that even remotely rival the 1980's.

And as far as the Depression goes... yes the stock market is volatile. Yes it is subject to crashes. However, the Great Depression had many causes, and the stock market crash had little to do with it. It was certainly the cause, but the Fed back then had no idea how to handle things. Deflation was going on. The Fed should have pumped money into the supply. It didn't. If it would have, there would likely have been recovery (if it did that and a few other things) in relatively short order.

Now, there is the whole China-could-pull-the-plug-on-us-and-plunge-our-nation-into-anarchy-and-war-and-chaos-if-they-wanted-to thing, but that's another story. And it's extremely unlikely anyway.

Peak Oil? Hmmm. I'm not sold. The energy companies will get off their keisters and develop alternative energy when it becomes economically feasible. I'm confident of this.

Maybe I'm too optimistic.

A Loophole? Really?

What luck! Talking today about political entrepreneurs and low and behold an article specifically about them.

The article talks about how a recent smoking ban in Minnesota has a loophole that "contains an exception for performers in theatrical productions." So, bars are allowing "theatre performers" to smoke all night. The loophole, which we will speculate in a moment, was found by a political entrepreneur (actually a lawyer, but then who better?).

As we have discussed in class, a law passed by a citizen vote (democracy), like the one we have in the state of Colorado, is different from the law passed by the legislature in Minnesota. We should then look for who wanted the law passed in Minnesota. My guess would be those restaurants that have gone to no smoking were feeling the revenue pinch still found at smoking bars. Rent seeking?

""It's too bad they didn't put as much effort into protecting their employees from smoking," grumbled Jeanne Weigum, executive director of the Association for Nonsmokers." Hmm, are the employees FORCED to work there? Is this the only job they can get? My guess would be that the tips they get from the smokers are far better than those at Waffle House.

"The Health Department this week vowed to begin cracking down on theater nights with fines of as much as $10,000." I suppose that the health department knows that "out of one hundred smokers, fewer than six will get lung cancer. . ."(Why People Hate Economists (and Why We Don't Care))It would seem the health department knows what is best for me better than I do and feels I cannot make my own choices, maybe like the impending environmentalism movement?

Will they ever make a law without loopholes? Due to spontaneous behavior, I seriously doubt it.

Palestinian Terrorist

The tragedy today in Israel is deplorable and inhumane. I have neither the knowledge nor the insight to imply any economics to this situation. However, a caller to the Hugh Hewitt show today attempted to condone the terrorists actions with economics.

Specifically, the caller blamed Israel for causing this "man" to walk into a seminary and kill 8 people. And his reasoning? That Israel had enforced a blockade against Palestine and was causing Palestinians to starve and live in below poverty conditions. This is enough reason to cause terrorist actions. No way.

Economics is the study of choice. I say terrorists choose to cause terror for non-economic reasons. There cause is not any better off by killing 8 Israelis or 3000 Americans. I have studied economics now for two years and nowhere have I seen studies that terrorists use deadly force for pure economic reasons.

And what makes me nervous is the recent home fires in Washington. These "green" mansions were torched by environmental terrorists. For what reason? Terrorism is not even human, it is barbaric and cowardly.

I have heard argument after argument for economic reasons why terrorists act. This is CRAP!! The economics I love would deal with the choices these "people" have in a different way, not deadly force.

Clumsy economics may lead to ideas that are detrimental to liberty

So, I scrambled to come up with an interesting blog for Power and Prosperity; hey, a person who procrastinates and operates behind the 8-ball tends to scramble! So, instead of dealing with power and prosperity, I decided to play with the notion of collective action. One might view collective action as a common good; if that is the case, is there such a thing as common sense to determine the common good?

I googled common sense and to my surprise, I stumbled (stumbling is a normal thing for one who is scrambling) upon a website:

http://commongood.org/society.html

MISSION

Common Good is a non-profit, non-partisan legal reform coalition dedicated to restoring common sense to America. By conducting polls, hosting forums, and engaging with leaders in health care, education, law, business, and public policy from across the country, Common Good is developing practical solutions to restore reliability to our legal system and minimize the impact of legal fear in American life.

Not delving too deeply into the site, I quixotically jumped around from one page to another in the site and found myself thinking, “self, do we like this site or do we not?” To which my only reply was “I don’t know!”

After reading Olson’s book, “The Logic of Collective Action,” I felt like I intuitively understood WHY special interest groups occur and WHY people are drawn to becoming a part of a group; and groups want to be larger groups, etc. I felt like it all made sense and that things are the way they are because that’s the way things are!

I basically felt like my understanding of things was rudimentary at best! This feeling doesn’t feel very good, but it’s at least better than feeling rushed, scrambling and stumbling!

The website is something that certainly makes me wonder if there are ways to use government power to come up with a system that operates well. Reading the site, with an assumed intuitive knowledge of collective goods, I felt like what I was reading was promising and that there was hope!

It’s a good thing that my evolution of understanding economics and the farces of government-necessity is occurring! Because if it wasn’t, I might actually buy into the website and believe that by applying common sense and contributing to the common good, I might actually impact government to act in a way that would beneficial to me.

So, I maintain my skepticism of the government and of collective logic… no matter how flowery the website is. Maybe I can take something from it, without immersing in it. Perhaps I can gain an understanding of different vantage points and thus protect my liberty… hell, even preserve my own prosperity and develop my own power. Perhaps I need to get better organized so that I don't clumsily stumble and scramble my way into subscribing to ideas that sound good, but actually may harm my liberty!

What is I-70 After All?

The I-70 traffic-jams are a problem that all Colorado skiers are acutely aware of. As a skier myself, I have experienced this regular occurrence first-hand. On January 25, 2008, the Colorado Springs Gazette ran an article in regard to this dilemma. “Rush Hour Could Cost You,” by Chris Barge gives a brief overview one senator’s proposal for creating an incentive structure to relive the highway congestion during peak traffic hours.

Senator Chris Romer, D-Denver, proposed that skiers could be charged up to $12 for driving I-70 during the weekend rush hour. Romer explained that, “You’re just reallocation money from those who are time-sensitive to those who are price-sensitive, and that’s a perfect market-based solution.” Romer admits that most people will not be happy about paying for something that is currently free. For this reason he suggests giving a positive incentive to the people who choose to stay off the road during the most desirable times. For example “skiers who choose to go early or wait until after the rush could get a $25 check in the mail, or a coupon to spend that much at a slopeside restaurant while they wait out the afternoon rush. “

It is true that charging people to drive on I-70 will decrease the number of people who wish to be on the road. However, the problem is far too complex to be explained by a simple supply and demand graph. There are two main quandaries with Romer’s proposal. First off: is charging people to drive on I-70 an exploitation of a public good? I admit that I-70 is not a true public good. The space on the road is obviously rival as no two cars can occupy the exact same place at the same time. However, this interstate was paid for by taxpayer dollars and was intended to benefit the general public. Taxes are used to prevent free-riders. That means, in theory at least, that every driver on the road at rush hour has already paid to be there. By charging taxpayers to use I-70, the road is no longer a public good. Imposing a fee on drivers would make the road excludable, and therefore, a collective good. It may be economically more efficient to simply use price as a form of rationing for the highway in high demand. However, the struggle between efficiency vs. equity is impossible to overlook.

Secondly, Romer recommended offering an incentive to drivers who chose not to use the road during rush hour. This method of traffic reduction seems plausible at first and does not involve exclusion. However, offering a selective incentive for inaction has the potential to create a regulation nightmare. Romer envisions the ski resorts recording the time that each vehicle arrives and using that information to determine when the car was on the road. Gathering this data could be expensive and time consuming for the resorts. Would ski resorts willingly choose to bear the cost of solving a problem that is not their own?

Rush hour traffic on I-70 is a real dilemma. However, the unintended consequences of “fixing” the problem are equally real. Whether you are a skier or an economist, it may be worthwhile for you to ponder the implications of Senator Romer’s proposal.

Add snappy title here...

Link to the article: http://www.nytimes.com/2008/02/29/business/29cnd-tanker.html?_r=1&hp&oref=slogin

Here is a perfect example of special interest groups getting disrupted by one person shining a light on what they were doing. So to fill everyone in a bit, Boeing and Airbus are the two biggest commercial airline manufacturers in the world. Boeing has also been a major supplier of aircraft for the Unites States government. One would think that to be the natural result because Boeing is a U.S company and Airbus a European conglomerate. It’s only natural to think that a government should give business to companies in its own country. But could this hurt the country by sticking with its own businesses?

Boeing for the longest time has been buddy-buddy with the U.S government and has been handed deal after deal. However, even with how well their lobbying has been and how good their track record was, their expectations with the government fell trough and bit them in the ass. The Air Force is in need of replacing their fuel tanker aircraft. Boeing thought that they could easily get a deal with the government and reap the benefits. Well Senator John McCain being on the Senate Armed Forces Committee had the power to scrutinize the dealings between the Air Force and Boeing which lead the spot light to uncover the scandal within. A few of the Air Force and Boeing top officials were caught padding the deal for personal gain. Two people are in prison and more have resigned from their positions, one even committed suicide over the scandal.

John McCain brought to light that the public was getting raked over the coals with this deal that Boeing and the Air Force was trying to slide under the radar. This shows that there is still a little hope in defending the masses from the powerful small groups. But most likely it wasn’t from a benevolent feeling that McCain had. It seems as thought it was two special interest groups keeping each other in check. In the article it said at the very end that both sides spent millions in lobbying and advertising in Washington. But hey, we the people are getting more for our taxes now because the government is going with Northrop and Airbus for the deal as it is costing less than the Boeing deal would have been.

Economic Stimulus.... Really? Mr. President, Really?

President Bush entered his predidency when our nation was at a stong point since the late 70's and early 80's recession. Clinton made the economy stronger and ran down the national debt, than it had been for a long time. Between all the natual disasters, consecutive wars and attacks from 911 our nation's economy has seen many ups and downs. None have equalled the slowdown that we are now experiencing. Stocks down, oil up, housing market down, and general economic instability all face us.

I recently heard Bush's speach on the state of the nation, and I can say his view on the economy is correct, however he is off on the severity of the current state. Mr. Bush thinks that the nation is in a slowdown period, and he may very well be right, however I believe that we are on the verge of a major recession. We are currently in a GDP slump, and in one case an actual GDP loss. I have noticed the rate of unemployment has also risen, and I believe that this is because bussiness' have reacted to the early stages of a national economic meltdown.
I would like to bring some of my own insight to Bush's economic stimulus plan. Instead of putting money into the hands of those who do not need it, I would have focused on the national debt. Our national debt is an estimated 9,345,296,162,390.31, and I believe that this has caused the value of the American dollar to dramitically decrease. The decrease in the value has caused a currency deficit with other countries. If we were to decrease the national debt considerably, I believe that this will create a stronger dollar and give markets more security. Most of the U.S. is going to receive 600.00 per household. If we are approaching a recession, wouldn't most people opt to save their money instead of spending? Bush hopes that people will go out and spend spend spend money, but if it were me and I knew the threat of a recession lurked near I would drop that 600.00 in the bank.

I conclude with Economic stimulus....really?............ I mean really? <----probably not!