Confessions of a Right-Wing Libertarian

Ron Paul Blackout in Full-Swing

2011-08-15T15:16:00.000-07:00

Recent polling has Ron Paul well ahead of Michelle Bachmann and clearly in third place (without Rudy and Palin running) - yet he is not mentioned at all in the polls. Makes you want to believe in Conspiracy theories.

http://i2.cdn.turner.com/cnn/2011/images/08/11/gop2012poll.pdf

Debt-Ceiling Question

2011-07-27T22:46:00.000-07:00

If the US Government sees its credit rating deteriorate, won't that make other investment options look more attractive?

Can Romney be Beat?

2011-07-19T20:48:00.000-07:00

Probably not, and here are my thoughts on the 2012 GOP nomination at this point.

I don’t think Ron Paul has a chance at winning, but I will be backing him until the end. My hope is that he garners enough support during the process that he can *get his son on the ticket as VP*. That would be huge. Until about two weeks ago I thought Bachmann would be on the ticket – but I expect Rubio at this point: if Republicans truly believe they can win, Rubio HAS to be on the ticket because he is being fast-tracked up to leadership…if he’s not the nominee, he’ll be locked out for quite a while.

Furthermore, I expect the Democratic Party to throw everything they’ve got at him in 2016 – Rubio is the key to the GOP fulfilling their long-term plan to bring Hispanics into the party, so it may be prudent to protect him in the White House. Rubio swears he will not be the VP candidate in ’12, so Paul Ryan would be a strong possibility as well if he’s being honest. I have strong disagreements with Rubio on Foreign Policy, but otherwise he’s good.

I kind of wrote Romney off because of RomneyCare before, but not so much anymore. A while back, Ann Coulter (not like she matters) said that she would vote for Charlie Sheen over Barack Obama, and if that is any gauge of the GOP base's willingness to hold their nose and pull the lever for a moderate, it's nothing but good news for Romney. I think Romney's explanation for RomneyCare will satisfy most primary voters. Here's my summary of his explanation:

- Just like states have the right to mandate auto insurance coverage and the federal government doesn't, MassCare was the federalist approach to a mandate

- Mass had a significant free rider problem at hospitals and emergency rooms, and MassCare was able to redirect federal funds towards a better purpose. *This* is in line with the GOP platform position calling for MediCaid block grants, which Romney also advocates.

- The GOP used to advocate for a mandate. Conservative think tanks still call for a move to the Swiss Health Care Model, probably the most right-wing in the world: everybody is required to purchase insurance -- and everybody gets subsidies to purchase insurance...all insurance providers are private, as are providers.

- Any federalist would agree that each state should decide for themselves what policies they want. And since Mass is a very blue state, they got what they wanted -- and Romney injected some conservative principles into the bill.

- MassCare is incredibly, I mean INCREDIBLY, popular -- over 80% approval.

- Many of MassCare's budget problems are due to changes Deval Patrick implemented.

Let's be clear here: the "Movement" people in the GOP see Paul Ryan, Rand Paul, and Marco Rubio as the future of the conservative movement. Paul Ryan is seen as *the* next Reagan by many, and I saw at least two candidates in the last debate give deference to him...deference to a 40-year old policy wonk from Wisconsin...wow. I like Paul Ryan -- he has a decent grounding in Austrian Business Cycle Theory (ABCT), which is important...if you understand the boom-bust cycle, every other decision flows naturally. I think the best way-ahead for Ron Paul and his supporters is to garner a sizable chunk of the vote and agitate for Rand on the ticket: spread rumors that the Tea Party will walk out of the convention if the right person isn't on the VP slot.

More on Paul Ryan -- thinking this through strategically, Paul Ryan may be the VP no matter what if Rubio is a no-go -- they want to get their golden boy in the spotlight. Paul Ryan is *locked out* of any promotions in the House so he needs to be the VP -- WI has a GOP Gov., (1) GOP Senator, and the other senator is a retiring democrat and Ryan won't run (it's a set-aside for Mark Neumann, but Tommy Thompson has thrown his hat in).

Earlier I thought Pawlenty was the establishment’s answer to the base’s distaste for Romney. I’m not quite ready to write him off yet, but he has proven to be of weak character and is clearly not an “alpha male” – I think he’s even scared to look Romney in the eye. A poor showing in the straw poll could force him to hang it up.

Here’s how I see the race shaping up if Perry enters as expected. Personally, I think it could ironically help out Mitt Romney...for the same reason John McCain won the primary --

1. Perry will draw more votes away from Bachmann than from Romney, possibly giving Romney Iowa. Romney voters that would go to Perry would presumably be conservatives who support Romney for electability reasons.

2. A win in Iowa makes Romney UNBEATABLE in New Hampshire

3. Romney is already a lock in Nevada

4. Romney is leading by 10% according to today's South Carolina poll. Pencil him in for a win.

5. Romney is up 10% in Florida right now -- with the momentum from previous wins, he should win there and lock up the nomination. Cali is a lock after that.

Rubio will probably be Romney's running mate, and the ticket will beat Obama-Biden handily. The Bush family strongly backed Romney in 2008, so if I were a conspiracy theorist I would have to say that Perry is a plant to further splinter tea party support...but I won't go that far. Only way I see Perry catching on is if the Bachmann campaign totally implodes and the Tea Party rallies behind a single candidate -- I don't see that as likely...it will remain splintered, with anti-Muslim crazies backing Cain to the end, evangelicals splintered between Bachmann, Pawlenty, and (maybe) Perry. Libertarians will back Paul and Bachmann somewhat. Divide and conquer I guess...

The Chart that Says it All...

2011-02-04T09:23:00.001-08:00

The chart above from BLS, posted at Economix, shows the number of months it took for employment to recover after a recession. I've seen this chart a 100 times, and it never ceases to amaze me.

Our response to this recession has been more interventionist than any since World War II, and we have the slowest recovery. If you overlayed the recovery from the Great Depression, I imagine it would look like today. The malinvestment from the prior bubble has yet to be completely liquidated due to government intervention, and millions of workers are on the sidelines as a result. Oh, they'll eventually get back to work, but we're looking at 100 months (2016) before that happens.

Medicare Vouchers

2011-02-04T08:26:00.000-08:00

Economix has a review of the Medicare voucher plan put forth by Rep. Paul Ryan (R-WI) and Alice Rivlin of the Brookings Institute:

Under the defined-benefit plan, the government promised to procure specified medical goods and services for Medicare beneficiaries, as medical necessities assessed by the beneficiary’s physician. That puts the risk of escalating costs for that health care mainly onto the shoulders of taxpayers, although Medicare beneficiaries share in these costs through premiums for Part B of Medicare (chiefly physician services) and co-payments at the time of service.

However, Professor Reinhardt, who penned the review, doesn't like the plan because it pegs growth in the voucher at GDP Growth + 1%, while recent growth in Medicare costs has been GDP Growth + 2%. What Professor Reinhardt fails to understand is that the growth in medical costs over the past 40 years is due to a total lack of price controls -- massive overconsumption of medical care by those receiving insurance from the government and (to a slightly lesser extent) by corporations. If more people actually pay for their own medical services, there will be cost controls on medical care put in place by the market.

Essentially, what the Ryan plan does is reduce growth in federal health-care spending by about 1.2% annualized from the CBO baseline over 30 years from 2020 - 2050. That reduces medicare spending in 2050 by about 30%. If you locked in Medicare spending at GDP growth, you would cut it in half.

While I think the Ryan voucher plan is a good idea, I would prefer block grants for Medicare to states. Just as the Ryan plan would determine the voucher amount by the amount of medicare spending per enrolled member, each state would get a check equal to that amount for its members. Let's look at Florida as an example.

With 3.4 million seniors right now, and an $11,000 per enrolled member, Florida would receive a check for $37.5 billion for FY11 to cover the medical costs of their seniors. The state of Florida could distribute this money any way they see fit -- they could give everyone a voucher, provide medical care for all seniors, provide free medical for the poor and give everyone else a reduced voucher, etc. The point is that this system would allow each state to design the system that's optimal for their residents. If individual states wanted to augment the voucher with additional funding, they would be free to do so.

I could envision a system where voucher payments are progressively indexed based on the net worth of the recipient -- so seniors with a million dollars of net worth would receive less in a voucher payment than the senior with a hundred thousand in net worth. In order to smooth this process out, the Federal government could make 401(k) withdrawals to pay for medical care tax-deductible. Seniors are the wealthiest segment of the US population, and it amazes me that they are treated as if they are the poorest -- why should low-income twenty-somethings pay for the medical care of a 65 year old millionaire?

But what's important is that a state or local run system would (1) be decentralized and (2) costs would be controlled at the federal level. States that dished out too large of medicare vouchers would see their workforce disappear -- states that dished out too small of medicare vouchers would see their seniors -- and their sizable nest eggs -- disappear.

A Carbon Tax?

2011-02-03T13:21:00.000-08:00

Robert Murphy has a nice review of Alan Blinder’s call for a carbon tax in the WSJ. Murphy did not mention the possible attractiveness of a carbon tax over other taxes, as Holtz-Eakin did.

To begin, let’s start with the attractiveness of such a tax swap. With 6 billion tons of CO2 emitted in the US every year, a $100/ton tax would generate $600 billion dollars a year and allow us to eliminate (1) the corporate income tax and (2) eliminate the employee’s share of the payroll tax. Hundreds of billions in inefficiencies would be removed with the end of the corporate income tax, and labor productivity would increase drastically with the elimination of most payroll taxes. Additionally, this would give a huge relative advantage to renewable vis-a-vis hydrocarbons -- such an advantage that all of the subsidies and tax credits currently in place could be eliminated. This would, in my opinion, spur innovation in "green" R&D and allow more homeowners to go "off the grid". Finally, introducing a carbon tax swap would bring certainty into the future price of compliance with carbon regulations, eliminate all the mileage standards on cars, and "get the greens off our backs".

On the negative side, there would be a misallocation of resources from other sectors of the economy into the green economy. I don’t know if the cost of this misallocation exceeds the savings from the corporate income tax and payroll taxes – I don’t think it would. Furthermore, a $100/ton tax, which is the same amount Sweden taxes CO2, would discourage CO2 emissions so the price would have to go up over time.

Bottom Line: a carbon tax swap is a great idea, as long as its gradually implemented – perhaps a 1-year payroll and corporate income tax holiday before carbon taxes start getting implemented. Additionally, getting a carbon tax swap may be a much better deal for market-oriented Americans than what the Left would implement if they had their way.

Bittman's 'Food Manifesto'

2011-02-02T22:21:00.001-08:00

Mark Bittman has posted a "Food Manifesto" at the NYT blog, calling for a few changes to make food "healthier, saner, more productive, less damaging and more enduring". Here are his points, with my comments in Italics:

End government subsidies to processed food. No problem with me -- artificially-cheap corn-based products lead to less healthy food.
Begin subsidies to those who produce and sell actual food for direct consumption. Bad Idea -- this wouldn't do anything other than increase the cost of food.
Break up the U.S. Department of Agriculture and empower the Food and Drug Administration. I'm mixed on this one -- I'm all for getting rid of the USDA, but I'm afraid getting rid of the USDA would empower the FDA to regulate types of food (e.g. salt) as "harmful". A better idea is to just get rid of the USDA and (if you insist) move the inspection and education functions under the FDA. Ideally, I'd like to see the food-producing industry become fully liable for the safety of their products -- that would encourage them to set up their own quality inspection boards.
Outlaw concentrated animal feeding operations and encourage the development of sustainable animal husbandry. I like the goal, but is it really necessary to outlaw? If you get rid of the corn subsidies, you'd have more grass-fed, free-range beef, and if producers are liable for the safety of their products, they will maintain cleaner facilities.
Encourage and subsidize home cooking. Why??? Isn't this a personal economic decision?
Tax the marketing and sale of unhealthful foods. Another bad idea. This would just reduce the amount of information available on food products. And who's to say what's "unhealthy"?
Reduce waste and encourage recycling. Amen - but how? Perhaps we can get rid of the incentives that contribute to corporate agribusiness, like the estate tax and corn subsidies...that would go a long way.
Mandate truth in labeling. So would a government-ran "truth" commission determined what meets he "truthiness standard" -- another bad idea.
Reinvest in research geared toward leading a global movement in sustainable agriculture. The free market and NGOs are already doing this. With currently-high food prices due to QE2, I wouldn't be surprised if there's a misallocation of resources towards increasing production in agriculture. In accordance with ABCT, these R&D efforts will fold once commodity prices come back down to reflect true consumer demand.

re: The Corporate Income Tax

2011-02-02T22:11:00.000-08:00

Everybody knows that the corporate income tax is a horrible system that probably costs more in economic inefficiencies than it takes it, and even liberals want to reform it. But I still don't understand why we have to have a corporate income tax at all...the optimal rate is 0%. no individual can use profits from a firm without having to pay a tax on it, either on dividends, capital gains, or wages/bonuses. So if you simply put the rate at 0%, you would have the following benefits:

- market efficiency gains
- a reduction in overhead costs from the removal of tax lawyers/planners
- a sizable reduction in lobbyists
- revenue-neutrality

The only reason I can think of to explain why governments keep corporate taxes around is in order to keep a little bit of control over them...if they don't play ball, tax breaks can be taken away.

Constitutionality of ObamaCare

2011-02-02T15:31:00.000-08:00

I don't really understand the argument Reagan's Solicitor General is trying to make here, but if the government can force you to buy health insurance, they surely can force you to buy any other product they want.

After considering the implications of that new grant of power to the Federal Government, I think SCOTUS goes 5-4 and shoots down Obamacare.

If they uphold it, it removes any remaining notion of limited government. I also think SCOTUS could cite US v. Lopez (1995) as precedent in ruling that the commerce clause does not cover non-economic activity.

My First 2012 Post

2011-02-02T15:16:00.000-08:00

This got been thinking: Which freshman senator-as-VP-candidate is more likely to ensure the Tea Party shows up to vote for Tim Pawlenty in 2012 -- Rand Paul or Marco Rubio? I say Tim Pawlenty as the nominee because I think he's the front-runner in my mind -- front-runner because he's Mitt Romney without Romney's huge negatives (RomneyCare, elitist arrogance).

The answer to the above question will come down to who the true Tea Party is: a group of people truly worried about the US fiscal situation (Paul) or those who have cultural objections to the current direction and are worried that reckless spending will (eventually) curtail defense spending (Rubio).

I am a bit on the fence on this issue, because while Ron Paul is the politician who best represents my views, Rand might be a little too anti-immigration for me -- but he does support a guest-worker program. Rubio would push the GOP share of the Latino vote back up to the impressive 44% (or higher) that GWB captured in 2004...virtually guaranteeing GOP victory

I think Palin is done -- and I hope she is (perhaps Obama's only chance to get re-elected).

I Hope China Continues to Screw its Middle Class

2011-02-02T14:57:00.000-08:00

China's neo-mercantilist policies make America richer, impoverishes middle-class Chinese citizens, and keeps Chinese workers in the factory toiling away instead of in the streets demanding an end to CCP rule. I think everyone but Paul Krugman understands that Chinese currency manipulations are America's gravy-train: wonderful foreign products in exchange for little green depreciating pieces of paper that they then loan back to us at 3%. From Yglesias:

...China’s exchange rate policy is a huge ripoff for the bulk of the Chinese population. At market exchange rates, China’s per capita GDP is under $5,000 per head. Disbursing that horde of dollar-denominated financial assets to the population so that people could obtain additional foreign-made goods would be a boon to Chinese people’s welfare. But it would be bad for the owners of politically influential export factories, so it doesn’t happen.

Make-Work Bias

2011-02-02T14:49:00.000-08:00

Yglesias points out the make-work bias in the new oil and natural gas industry ads that point out how many jobs they support:

The Trouble With “Jobs”: But as an argument on the merits, it’s a huge fallacy. Suppose someone invented a Magical Energy Device tomorrow, a cube that costs about $1,000 to build and provides enough energy to power a city the size of Philadelphia. Even better, the cube has no operating expenses and causes no pollution. What should we do? Well, obviously, we should start building MEDs! A lot of them. We’d need somewhere between 300-400 of them to power the whole country, and we’d want more than that since with this new source of basically free, zero-pollution electricity we’d want to pursue electrification of our automobile fleet very aggressively. This technological breakthrough would be an enormous step forward for mankind. And not because of the jobs that would be created in the MED-manufacturing sector. Even if all the MEDs were built in China, America would benefit, and even if all the MEDs were made in the USA the benefits would be modest since the total size of the global market for MEDs would be pretty modest in dollar terms.

But Yglesias fails to mention that the green sector, and their "Green Jobs" push is far, far worse at falling for the make-work bias than the hydrocarbon industry.

Social Security May Not Be Going ‘Broke’, But It’s Still a Raw Deal

2011-02-02T13:48:00.001-08:00

Over at Angry Bear, the authors make the argument that Social Security is not going broke – the general fund is. And they are right – if Social Security were a private pension, it would be “fully-funded” through 2037. However, that is assuming their investments – Treasury securities – are still viable until then. If the Social Security Trust Fund cannot cash in their investments at face value, then it will be depleted much sooner; that is no different than a pension fund who made poor investments. Once the trust fund runs out, Social Security can only pay out what it takes in – I do not believe that the federal government is obligated to fund social security deficits. Benefit formulas will need to be re-written at that time.

While Social Security is not going to go ‘broke’, it is still a net economic bad – especially for those above the poverty line. To begin, for 70 years the Social Security Trust Fund has been a source of demand for US Treasury Securities: due to creative accounting, this has always made the deficit look smaller than it actually was. A great example was in the late 1990s, when President Clinton took credit for budget surpluses, even though they weren’t really surpluses. So instead of investing in the private sector and sparking economic growth, which other pension and retirement programs do, Social Security invested in government programs!

In addition to being bad for the economy, Social Security is a bad investment for the individual, regardless of their risk tolerance; the risk/reward debate is the result of excellent framing by the Left. Let’s first look at what Social Security is: an annuity. In general, annuities are a bad investment for most people – just Google “annuities” and “bad investment”; a social security annuity is even worse, because at least with private annuities you can get a provision where you will at least get your principle back.

Social Security is even worse for those earning above the median income, based on the Social Security Administration’s current bend points. The SSA has a progressive benefits formula, where workers earn a lower return on additional contributions. Here are the current bend points:

- 90 percent of the first $749 of his/her average indexed monthly earnings

- 32 percent of his/her average indexed monthly earnings between $749 and $4,517

- 15 percent of his/her average indexed monthly earnings over $4,517

These average monthly earnings are an average of a worker’s highest monthly earnings over their best 35 years of earnings (min. 40 quarters to qualify) – it’s called an AIME. As you can see by the highly progressive formula above, Social Security quickly becomes a losing proposition once you get out of poverty:

- A person with an AIME of $1498/month – twice the base level, only gets 35% more benefit…even though they’ve paid in twice as much

- A person earning six times the base level only gets 2.75 times the benefit

- A person earning maximum benefits -- $106,000 per year in income – pays 11.75 times as much in FICA and gets 3.75 times as much benefit

Keep in mind that these are also best-case scenarios. A person with 160 quarters of eligibility could pay as much as 50 times more in FICA with only 3.75 times as much benefit.

Based on these returns, please consider the break-even times. For the minimum-eligible person, break-even is one year, with a 100% annual ROI every year after that. For the maximum contributor who paid in for 40 years, we’re looking at over 20 years to break even, with an annual ROI of 5% after that. Even for the person making the median personal income, $32k a year and contributed for a full career (40 years), that’s a break-even period of 10 years and an ROI after that of 10%; with the average life expectancy for a US man at 75 years, he can expect to break even before he dies.

So, to summarize, Social Security is not going broke, but it is still a terrible program and a raw deal for most Americans. For every American who owns a home (at current interest rates), eliminating FICA and social security would allow them to convert their 30-year mortgage into a 10 or 15 year mortgage with no out-of-pocket difference…perhaps an even shorter term. With an extra couple of decades to save that mortgage payment, savings and retirement income would dwarf what they earned under social security. The 75% of American workers who make more than $15,000 a year are subsidizing those who have failed in life – those who cannot even hold on to a minimum wage job full-time. But hey, at least it’s not as bad as Medicare, which is nothing short of a fiscal train wreck (even the Left understands that).

Update: Some of these commenters at Angry Bear ignore reality. They think they can frame the SS debate in their favor if they simply say that SS is "insurance", not an investment. Well if we concede that point, there are still tons of insurance products that provide the same hedge against risk that SS does without any of the downside. Have they ever heard of private disability and life insurance? They must have, that's what exposes SS for what it really is -- a program to keep the most destitute amongst us as reliable Democratic voters.

How Much Immigration?

2011-02-01T12:52:00.000-08:00

Dave Henderson, on his blog, speculated that if the United States shifted to an open immigration position, upwards of 300 million people would move here over a matter of a couple of years. I think that number is far too high to be achievable. The US economy cannot absorb that many immigrants at any one time. While immigrants certainly grow the economy, there wouldn’t be enough opportunities at any single point in time.

If you spread it out over 10 – 20 years, a doubling of the US population through immigration is definitely achievable. Latin America, Southeast Asia, and Africa add about 50 million residents every year. We could probably absorb about half of that number every year without significant shocks.

So, just how large would the US population be? In order to have a population of 1 billion Americans by 2025, the United States, the United States would have to take in an additional 8% of its population every year – or about 25 million starting in 2011 and 75 million additional residents in 2025. A 1 billion person America in 2030 would have respective numbers of 18.5 million in 2011 and 50 million in 2030. For a very modest goal of 1 billion in 2050, we’re looking at 7.5 million in 2011 and 23 million in 2050.

The economic growth we would experience would be spectacular. Economic growth would be spectacular, as mentioned. Immigration has no negative effect on natives (perhaps even slightly positive), and if we assume the 1.8% in real per capita GDP growth we’ve had for the past 40 years – that’s the US growth rate since America entered “decline” from the Golden post WW-II era – we’re looking at a $90 trillion dollar economy (2010 dollars) in 2050.

I would suspect that most of these immigrants would move to regions of the United States where the cost of living is low, limited red tape to start a business is low, and there are right-to-work laws. Looking at America’s Mega-Regions in 2050, I would expect most population growth to occur in the Sun Belt and the right-to-work states – the Great Plains and the Mountain West (in addition to the Sun Belt). I expect the following regions to grow the most in the next 40 years, but these regions would experience even more growth with immigration:

- The 700 Mile Birmingham-Atlanta-Charlotte-Raleigh-Cape Fear corridor. Warm weather, low taxes, limited building restrictions, right-to-work laws, low regulation, good infrastructure
- The Texas Triangle (Dallas-Houston-San Antonio). Same reasons as above – it is also welcoming to Hispanic immigrants.
- Arizona Sun Corridor, stretching from Flagstaff through Phoenix and Tucson and down to Sierra Vista. Dirt-cheap cost of living expenses and (again) very welcoming to immigrants from Latin America.
- Gulf Coast. With the exception of the city of New Orleans, the entire region is pro-growth, pro-business, has good infrastructure, and a pretty good support network for Southeast Asian Immigrants.
- Florida. Same as above.
- The “Corn Triangle”. I named that one – Omaha/Lincoln-Des Moines-Kansas City. 3.5 million people – pro-growth, no red tape whatsoever, plenty of agrijobs, excellent infrastructure. I don’t know why this isn’t its own mega-region.

America is a huge country that can absorb a lot more people than it currently has – most of our mid-tier cities are pro-business and primed for explosive growth, but I don’t think it could absorb the shock of a few hundred million coming in over only a couple of years.

My Definition of Sticky Wages

2011-02-01T10:12:00.001-08:00

A commenter asked for me to define 'sticky wages'. My definition of sticky wages is as follows:

In an efficient market, there shouldn't be any real unemployment above the natural rate; if there is a recession (correction), workers would adjust their wages downward and full employment would be maintained. However, if wages are sticky, workers don't adjust their wages downward very quickly (or at all), and we get unemployment as a result.

That's my definition of sticky wages.

Why Are Wages ‘Sticky’?

2011-01-31T13:44:00.000-08:00

Bob Murphy had another great article at Mises.org today entitled “Are ‘Sticky Wages’ a Market Failure?”:

Finally, we should note that "sticky wages" are not a market failure at all, but a quite appropriate response to the worker and employer's desire for predictability. In other words, it is not some arbitrary fluke that allows copper and gold prices to adjust by the second, while labor contracts tend to be for periods of a year or more.

Suppose things were the opposite, and that worker' wage rates could adjust every minute according to supply and demand. Someone making $20 per hour today might make only $8 per hour tomorrow. In such an environment, workers would build up an enormous cushion of savings, because they would have to draw down their liquid assets to get them through periods of below-average wages. Very few workers would buy houses, but would instead rent apartments, ideally on month-to-month terms.

While sticky wages are no doubt a real phenomenon, there are multiple causes, both inside and outside the market. To begin outside the market, government-imposed regulations on labor – such as union laws -- cause wages to be stickier than they otherwise would be.

Within the market, there are also factors that cause wages to be sticky. Immature markets tend to be stickier than mature markets – look at the capital market: 30 years ago capital was fairly immobile, even when you discount the capital controls in place at the time. But as the sharing of market information advanced, capital became more mobile and less sticky. With labor, we have also seen advancements. 75 years ago, wages were much stickier:

- It was much more difficult to know what others were being paid in your profession, little alone in other geographic areas or in different professions.

- Labor mobility and the ability to relocate for work was harder

- There was a less-dynamic economy, so there were fewer options outside of your own profession if there was a secular downturn

As we move forward, I expect less-sticky labor markets – unless the government intervenes. There are, however, a few ways that we can “un-stick” wages and allow them to adjust a little more smoothly during corrections:

- De-Unionize; union labor contracts are very sticky and there is often an agency dilemma when dealing with union leadership. Union leadership will often fight a pay-cut and deal with higher unemployment, even if a pay-cut is in the best interests of its members. Individual, non-unionized workers are more likely to adjust their wage to reflect current market conditions than union leadership – no agency dilemma.

- Increase Immigration; As pointed out previously, an increase in migration can serve to satisfy the mismatch between consumer preferences and the structure of productive forces that occurs in an Austrian Business Cycle correction. Free labor migration – optimally in the form of guest workers – would be able to meet new preferences very quickly and lower overall prices in the economy. Previously-existing labor contracts would be more viable with a higher level of economic output. Additionally, higher levels of labor migration would increase specialization within the economy and make it more dynamic – opening up more opportunities for native workers.

- End Unemployment Insurance (UI); With current unemployment insurance stretching for longer than 100 weeks, the reservation wage is unusually high. While the average unemployment rate in the US is set at about minimum wage ($290/week), many states are far above that – Massachusetts’ benefit ranges between $16 and $24 an hour – over 2 – 3 x the minimum wage. Why would anyone take less than that when they can make more doing nothing? Personal reservation wages are even higher than the UI rate; we can’t know for sure personal preferences, but I would suspect many people would prefer to get paid $16 an hour to do nothing than get paid $20 an hour to be a construction laborer (digging ditches, etc) – that person’s reservation would be incredibly sticky.

- Increase Information-Sharing; as brilliantly pointed out long ago by Hayek, the sharing of prices and other market information is the key to an efficient market. This can be done in the labor market by reducing job-lock: if employees work for a larger variety of firms, they are going to have more knowledge of what different wages are…and would be more willing to take a pay-cut if they had a better picture of market conditions. Job-lock can be reduced by reforming our broken system of tying health and pension benefits to the individual; this could be easily done by shifting the quarter-trillion dollar health insurance tax credit to individuals – government will provide a tax credit equal to 1/3^rd of the premium…up to a standard premium amount. Additionally, the mountain of data the Bureau of Labor Statistics collects could be easier to sift through: If I’m a roofer in Portland, I should be able to know where wages are high and unemployment is low for roofers.

The Cost of Immigration

2011-01-30T22:11:00.000-08:00

I’ve been following the back-and-forth between Bryan Caplan, Will Wilkinson, and others on immigration and libertarianism. I ran across some slides that Caplan put together on public choice and immigration that illustrate – pretty clearly – that immigrants do not increase the size of the welfare state; defense spending and interest payments, for example, are non-rivalrous and more taxpayers reduce the per capita cost of those “public goods”. So, I decided to actually take a look at what goods and services government actually provides in the US – at all levels (federal, state, and local).

To start, we see that total government spending in 2010 was $6.1 Trillion. Right off the top, we can take out all the non-rivalrous goods:Defense ($873B) and Interest payments ($239B) -- $1.1 Trillion. Next, let’s look at entitlements that immigrants, who are young, do not get: Social Security ($950B) and Medicare ($460B) -- $1.4 Trillion. Now education; immigrants who go to college usually do so before becoming a citizen and pay the full, unsubsidized price. So what we’re really seeing as a welfare benefit to immigrants is primary and secondary education: College and R&D -- $362B.

So, what are we looking at here conservatively? $3 – $3 ¼ Trillion? About half? If we drill deeper, we see that those programs dedicated to a growing, lower-income population are an even smaller fraction:

Protection ($322B), Transportation ($292B), Primary and Secondary Education ($529B), Food/Family/Housing Subsidies (~$500B), and Medicaid and Medical Infrastructure ($500B)

In all, that’s about 1/3^rd of public spending in the US. As we move forward, that ratio will shrink even further with projected growth in entitlement programs and interest payments. This is all to demonstrate that even if we didn’t shrink the “welfare state”, increasing immigration to the United States would not increase the per capita welfare burden on American Citizens – it would in fact decrease it. We could even shrink the welfare burden of immigrants even more by implementing a guest-worker program – gone are Medicaid payments ($350B), Food/Family/Housing subsidies (~$500B), and primary and secondary education ($529B)…that cuts the immigrant welfare burden in half.

The way forward is to create a robust guest worker program that will allow the economy to grow on-demand. The number of guest workers that could come to the United States would be unlimited, provided that they pass a security screening. Guest worker permits could run in 5-year terms, with the worker eligible for a green card after the first term expires. The Guest worker permits would also come with a sizable fee, perhaps a few thousand dollars. Additional fees would be required to “buy into” a path to citizenship and a green card -- $25,000 or $50,000 would ensure that only the top-performing guest workers would have access to citizenship – the rest would remain as guest workers until they could afford citizenship or go home. Putting a price on citizenship also reduces the likelihood that future citizens – those with welfare rights – will actually need low-income welfare programs.

The Case for Open Borders

2011-01-25T15:33:00.000-08:00

The Case for Open Borders

In the past, I supported limited, restricted immigration for two reason reasons:

1. Immigrants are more likely to vote for statist policies
2. Immigrants would be a net drain on public resources

Recently, I have changed my stance on immigration. Massive immigration would (1) grow the overall size of the economy, (2) provide the additional labor needed during the reallocation process – part of the Austrian Business Cycle Theory, (3) increase specialization, (4) grow the global economy, and (5) fix our long-term fiscal problems. I will address each of these.

Domestic Economic Growth – Each additional worker in the domestic economy produces additional output, commonly measured in GDP. Empirical evidence shows that this does not take away from native workers – but enhances it. A recent article in The Economist article below links to studies that illustrate the benefits of a larger market — the increase in low-skilled labor makes the comparative value of higher-end skills (like speaking/reading/writing English and 8th grade math skills) go up. As a result, even semi-competent natives benefit tremendously.

The welfare impact of immigrants is over-stated. I used to add in the cost of education immigrant children, commonly cited as a per pupil cost….$14,000 in California for example. But really, isn’t this just teachers union propaganda? It does not cost an additional $14,000 to add a child to a classroom — the sunk costs are already there. So on the welfare side, we’re really looking at medical cost, workers comp, and the like. If you reform Medicaid, you eliminate 90% of the problem. Again, benefits far outweigh the costs.

Aiding Recovery Within Austrian Business Cycle Theory – As recently explained by Dr. Robert Murphy, once a bubble has been recognized within the economy, economic preferences shift back to what they should have been without the interference of the government or the central bank. During this time, unemployment spikes because workers have to find new lines of work, as the previous level of production is not supported by the new preferences. We are currently in that transition period.

One way to facilitate this process is to import the labor to perform the jobs. So if, say, there is a shortage of software providers because of a quick reallocation of preferences towards software, bring in a bunch of immigrant software engineers. If preferences are reallocated towards manual services, labor can be imported from Latin America. As these industries grow, the relative weight of the bubble sector diminishes...and those out of work workers can go back to their old jobs. Here's an example: Suppose that the pre-bubble housing sector was 25% of the economy...but grew to 33% during the bubble. If the rest of the economy grows through immigrant labor and reallocation, that higher level of housing output can be supported by the growing economy. In this case, the rest of the economy would have to grow 33% to support the bubble-era housing output. Immigrants would help this process, substantially.

Increased Specialization – If market forces are allowed to operate, a larger population leads to an increase in the division of labor – a more intense division of labor. Adam Smith pointed this out long ago in the Wealth of Nations when he stated that “the division of labor is limited by the extent of the market” – larger markets lead to a more intense division of labor. Christianity – especially Catholicism – have also understood since time immemorial that larger populations lead to increased prosperity…in additional to spiritual wealth.

Global Growth – While we are usually focused on domestic economic policy, we all participate in the global economy through trade and travel. With an increase in the division of labor, the global economy will blossom. The best way to think about it is that immigration is a market process for efficiently allocating human capital. A worker in Latin America or Southeast Asia produces under $5,000 of GDP annually, but that immediately becomes $30,000 – $40,000 upon migration to the West. So let’s say that the English-speaking world — the US, Canada, Australia, the UK, and New Zealand — absorbed the population growth of Latin American and Southeast Asia (about 25 million per year), global GDP would increase by 1/2 to 3/4 of a trillion dollars per year. That’s an additional point of GDP growth per year, a substantial sum. The economy suffers when capital is mis-allocated and suffers high unemployment when labor is mis-allocated domestically – either geographically or by specialization. The same is even more true on the global scale.

The American Financial Reckoning – If the United States does not change course, the massive entitlement programs of Social Security and Medicare will destroy the country within a couple of decades. Benefits need to be cut, the economy needs to grow, or the population needs to grow in order to alleviate the situation. While all free market-oriented persons favor a cut in future entitlements (or elimination), we know it is politically difficult. I believe that we will see some slight curtailment of long-term entitlements, but nothing drastic. As a result, we should focus on the other two options.

One possible solution I have is to open the borders over the next 40 years to increase economic growth and lower the burden of entitlement programs on the economy. Letting in an additional 2.5 - 3 million immigrants per year would double our population over the next 40 years (combined with our domestic growth rate). We would have an America with an inflation-adjusted GDP of $65 Trillion and 625 million citizens...the current trendline would give us 425 million Americans in 2050. Per capita GDP in 2005 dollars would be $100,000+ with this new growth. Economic union with Canada would also expand the division of labor and specialization -- giving us an even higher GDP growth rate. Canada should look to double their population by 2050 as well -- they only need to increase their intake of immigrants by 150,000 to 175,000 per year over the next 40 years (they have a much higher growth rate than us. We could easily have 700 million people in the US-Canadian economy with $100,000 per capita GDP in 2005 dollars; that can easily service our entitlement. Even without cutting one red cent from future entitlements, entitlement spending as a percent of GDP would be no higher in 2050 than it is today.

Conclusion - The populist libertarian right should take a more pro-immigration stance for their own self-interest and -- for those who are nationalist in leaning -- the best interests of their country. I have stayed away from the cultural and religious arguments in this article, but most immigrants to the United States are pro-family, pro-life Catholics, so increased immigration will also give us a more right-wing culture over time.

The Entrepreneur Will Pull Us out of This Recession

2010-07-17T09:17:00.000-07:00

The other day, Mish linked to a study by the Kaufman Foundation that identified the critical role new business startups have in creating jobs. According to their study, new start-ups create almost all new net jobs (on average). That got me thinking: should a GOP Recovery Plan after November include a pro-entrepreneur package? Yes -- and here is one possible way the GOP could do it:

1. Waive all corporate income taxes for firms in their first five years of existence. In addition to creating a ton of new jobs, this should significantly increase the survival rate of new firms -- with a higher survival rate, there would be less uncertainty about creating a new business. The waiver would be good through 2015. So firms started in 2011 would pay no corporate taxes for 5 years, firms started in 2012 would pay no corporate taxes for 4 years, etc. A firm that is already 2 years old in 2011 would get three years of tax holiday.

2. Waive payroll taxes for the first 12 months of a firm's existence; with the highest business failure rate in the first year, this stimulus would be very beneficial for entrepreneurs. This would be in effect for each year through 2015. All firms under 5 years of age when the bill is passed would get at least one year of payroll tax holiday.

3. Partially reimburse state and municipalities that waive taxes and license fees for start-ups. For example, if a state cuts start-up taxes by $1 Billion, the Federal Government would reimburse the local government with $500 Million. Same goes for local property and sales tax regimes. Here's an example: Here in Colorado, Commercial property is assessed at 29% of real value, while residential property is assessed at 7% of real value. So if Colorado assessed start-up property taxes at 7%, the Federal Government would make up 1/2 of the difference.

To me, this plan would be highly stimulative and would pull us out of the recession very quickly. Uncertainty for entrepreneurs would be reduced dramatically, and the payroll tax holiday would be a hiring boom.

It also appears to be relatively cheap, making it very likely to pass; questions/comments?

Libertarian Leverage

2008-05-27T07:57:00.001-07:00

Via Liberty Maven, Ron Paul Forums member 'Peace&Freedom' made an excellent post summarizing five ways that the Barr-Root ticket advances the rEVOLution. In a nutshell, the Barr-Root ticket will:

1. Ensure McCain's defeat, making it easier for Ron Paul Republicans to take over the party in the next cycle.

2. Pressures the GOP to move towards a pro-liberty position from within and without

3. A strong LP showing will prevent the GOP faithful from blaming the Paulites for the loss

4. Barr will continue Paul's themes, keeping Paul's campaign alive past the convention

5. Keeps alive the possibility that the GOP could choose to throw McCain overboard at the convention

Of all these benefits that the Barr-Root ticket provides, none is more intriguing than the possibility of the GOP rejecting a McCain candidacy that is 15 or 20 points behind in the polls at convention time. If McCain is down 55-35-10 (Obama-McCain-Barr) at the convention, couldn't the GOP libertarian caucus propose a joint Paul-Barr ticket in order to avert disaster in November? Although such a scenario is not likely to unfold, it remains a possibility.

Although we focus on a McCain-Paul swap-out at the convention, I wouldn't count out a McCain-XXX change. As I've stated before, I think that this race has the potential to become a lopsided victory for Obama. Although still in a primary fight, Obama is already leading in key swings states, and polls far better when Hillary's name is not included in the questioning. If he's down by 20 points at election time, what prevents one of his numerous health problems from being an excuse to drop out and the GOP going with Romney or Huckabee. Even without a backroom deal to have him drop out, what prevents the GOP from just throwing him overboard if he's down by 20 points? His only appeal, after all, to the GOP is his 'electability'.

At InTrade, McCain is currently trading at 95.5 for getting the GOP nomination. That's a 20-fold profit for anybody who has the foresight to short the contract if the GOP ends up dumping McCain.

Libertarian Leverage

2008-05-27T07:57:00.000-07:00

Via Liberty Maven, Ron Paul Forums member 'Peace&Freedom' made an excellent post summarizing five ways that the Barr-Root ticket advances the rEVOLution. In a nutshell, the Barr-Root ticket will:

1. Ensure McCain's defeat, making it easier for Ron Paul Republicans to take over the party in the next cycle.

2. Pressures the GOP to move towards a pro-liberty position from within and without

3. A strong LP showing will prevent the GOP faithful from blaming the Paulites for the loss

4. Barr will continue Paul's themes, keeping Paul's campaign alive past the convention

5. Keeps alive the possibility that the GOP could choose to throw McCain overboard at the convention

Why Obama-Hagel Makes So Much Sense

2008-05-23T13:39:00.000-07:00

As I mentioned earlier today over at LRC, an Obama-Hagel ticket is making more and more sense. After taking a look at the electoral college calculator, the Democrats win if they (1) win Iowa, (2) win Colorado, and (3) win Omaha's Congressional District (Obama could also win w/ NM and NV if they lose CO). Based on that, Hagel will deliver at least one of Nebraska's 5 electoral votes (maybe even take 4 out 5 there) and help shore up Obama's support in Iowa, where he is strong but could always use more help. Hagel could also add a couple of points across the board for Obama (and maybe even help in MO), giving Obama a lock.

From Jonah's Lips to God's Ears

2008-05-23T13:29:00.000-07:00

Yesterday, I fantasized about McCain running on a unity NeoCon ticket, a ticket that would be a political windfall for the Libertarian Party. Today, NRO's Jonah Goldberg calls for the very same thing:

Meanwhile, a national-unity ticket would, among other things, expose Obama’s fraudulent claims to be a post-partisan uniter and reformer. The party-line, left-wing Democrat has done almost nothing in his short political career to support either claim. He is a product of the profoundly corrupt Chicago machine, not an enemy of it. And his definition of bipartisanship amounts to welcoming the unqualified support of Republicans who support his liberal agenda. The most liberal member of the Senate in 2007, according to National Journal, wasn’t even a member of the bipartisan gang of 14.

Such a daring move on McCain’s part would also signal that the country might enjoy a timeout from partisan rancor. Even the Obama-sycophantic mainstream press would have to admire such a profound gesture. The benefit for Republicans might be substantial. The party could rightly claim to have the bigger tent and the stronger commitment to serious reform. And for movement conservatives, the next four years could be a time for much-needed rebuilding. Obviously, a Joe Lieberman or Sam Nunn would not be the presumptive front-runner for the GOP nomination in 2012. And the lack of an heir apparent would encourage a healthy and vigorous debate for the future of the party.

I sure hope Mr. McCain reads Jonah Goldberg's editorials. For one, if McCain picks Joe Lieberman as his running mate it will tear the GOP asunder. The pro-lifers, (remaining) fiscal conservatives, and foreign policy realists will walk out the party in disgust; the GOP will be left in a pile of rubble, eaten from the inside out by NeoCon termites. And after a disastrous loss in the fall, they will be looking for new leadership. A second reason I yearn for a unity NeoCon ticket is that it will serve as a realigning event: the new paradigm will be the war party vs. the (relative) peace party. When the GOP is stripped of its attractive facade of pro-lifers and fiscal conservatives, it will be seen as nothing more than the ghoulish monstrosity that it is: a collection of warmongers, corporatist hacks, and shills for the redistributionist state. Post '08, the GOP (or a successor party) would have to re-build a coalition of freedom-minded individuals.

NRO: 'Barr is Irrelevant'

2008-05-22T11:39:00.001-07:00

So irrelevant that the NRO brain trust had to put together an editorial excoriating Barr for changing his mind on the Patriot Act, the War on Drugs, and the Global War on Tactics:

We don’t begrudge anyone the right to change their views, and applaud Barr’s change on medical marijuana. But on the war on terror, he’s simply wrong, opposing laws that have updated and rationalized the government’s powers to counter terrorism, and doing so while balancing respect for constitutional liberties with the need for public safety. Barr has resorted to the most demagogic arguments against the laws, including hysteria over the “library search” provision of the Patriot Act.

In a close presidential race, every vote is important. The press is speculating that Barr could be John McCain’s Nader. We doubt it. It will probably be Barr’s fate to be ignored, and those libertarians who care about the credibility of their cause should be glad of it.

Guys, if he's irrelevant, why devote an entire editorial to attacking him for "flip-flopping", while you've never mentioned Romney's? The party hacks are scared – Lowry, Frummy, Kristol, and the rest of the Lincoln cult over at NRO (except for Derb, their token rEVOLutionary). When Rush Limbaugh talks about McCain 'crossing the aisle' to talk to conservatives', something is foul in the GOP air. They know they have a revolt on their hands as they're driving the GOP off an authoritarian cliff. This editorial was nothing more than an attempt to tell the kiddies to lock the doors, buckle up, and ignore all the other vehicles slamming on their brakes...

(thanks to Daniel McCarthy for first seeing the absurdity of loudly announcing the "irrelevance" of a candidate)

Update: More on Obamanomics

2008-05-22T11:12:00.000-07:00

Update: I received an e-mail from a reader who did not buy the ends/means argument, but Murray Rothbard sure did. From his essay "Left and Right: Prospects for Liberty" (1965):

Thus, with liberalism abandoned from within, there was no longer a party of hope in the Western world, no longer a “Left” movement to lead a struggle against the state and against the unbreached remainder of the Old Order. Into this gap, into this void created by the drying up of radical liberalism, there stepped a new movement: socialism. Libertarians of the present day are accustomed to think of socialism as the polar opposite of the libertarian creed. But this is a grave mistake, responsible for a severe ideological disorientation of libertarians in the present world. As we have seen, conservatism was the polar opposite of liberty; and socialism, while to the “left” of conservatism, was essentially a confused, middle-of-the-road movement. It was, and still is, middle-of-the-road because it tries to achieve liberal ends by the use of conservative means.

In short, Russell Kirk, who claims that socialism was the heir of classical liberalism, and Ronald Hamowy, who sees socialism as the heir of conservatism, are both right; for the question is on what aspect of this confused centrist movement we happen to be focusing. Socialism, like liberalism and against conservatism, accepted the industrial system and the liberal goals of freedom, reason, mobility, progress, higher living standards for the masses, and an end to theocracy and war; but it tried to achieve these ends by the use of incompatible, conservative means: statism, central planning, communitarianism, etc. Or rather, to be more precise, there were from the beginning two different strands within socialism: one was the right-wing, authoritarian strand, from Saint-Simon down, which glorified statism, hierarchy, and collectivism and which was thus a projection of conservatism trying to accept and dominate the new industrial civilization.

So, we're down to choosing a candidate (Obama) that pursues liberal ends (freedom, reason, mobility, progress, higher living standards for the masses, and an end to theocracy and war) by statist means (statism, central planning, communitarianism) with the chance that he is open to liberal methods, or a candidate (McCain) who pursues statist ends (statism, hierarchy, and collectivism) by statist means.

More on Obamanomics

2008-05-22T07:53:00.000-07:00

As I mentioned yesterday, the nuts and bolts of an Obama economic policy is much more market-oriented than the MSM has led us to believe -- to the economic right of Clinton for sure and possibly to the right of McCain (depending on whether you see another tax cut paired w/ a debt orgy as market-oriented or not). Now, David Friedman (the anarchocapitalist son of Milton Friedman) is coming out favoring Obama over McCain:

Perhaps I am too optimistic about Obama, but I do not think he is going to turn out to be an orthodox liberal. There is a group of intellectuals connected with the University of Chicago who have accepted a good deal of the Chicago school analysis but still want to think of themselves as leftists. They are, as I see it, trying to construct a new version of what "left" means. Examples would be Cass Sunstein and Austan Goolsby, both at Chicago, and Larry Lessig, who used to be there.

Sunstein describes himself as a libertarian paternalist, meaning that he wants to take advantage of elements of irrationality in individual decision making to nudge people into making what he considers the right decisions, while leaving them free not to if they so wish. Goolsby, judging by webbed pieces of his I've read, is a pro-market economist who happens to be a Democrat, rather like Alfred Kahn, who gave us airline deregulation under Carter. He is also Obama's economic advisor. I do not agree with all his views—for details of one disagreement see an earlier post—but I like them better than the views usually supported by Democratic politicians and their advisors.

Obama himself, while obviously constrained by the fact that he is trying to get nominated, has occasionally let things slip that suggest a more libertarian view than typical of liberal senators. At one point he said something mildly favorable about school vouchers, retreating rapidly under pressure from the teachers' unions, and similarly with marijuana decriminalization. His most visible disagreement with Clinton is over her plan to force everyone to buy health insurance. He appears uncomfortable with that degree of coercion, even though he is willing to use the less direct version—taxation to subsidize the insurance that he thinks people ought to have.

Bush was elected on a pro-market, small government, platform and proceeded to greatly expand the size of government—and not only in the form of military spending. His view of the legitimate power of the executive branch, including the authority to deliberately violate federal law, I find frightening. Perhaps, if we are lucky, Obama will turn out to be the anti-Bush.

Personally, I don't see any political reason why Obama wouldn't take market-based approaches to achieve liberal goals, as (1) it would capture centrist voters wary of intrusive government programs and (2) be more likely to be a policy success. Examples of possible "market-based approaches" (I apologize if I'm using the term too loosely) could include carbon surcharges paired w/ tax cuts (the Gore "green tax shift", his only half-decent policy idea) instead of carbon caps/bans (the McCain approach), payroll tax cuts, make savings and investment tax-deductible from the bottom bracket up (tax savings are based on the payer's lowest tax bracket, not the highest), hard money (inflation is a tax on the poor), eliminate corporate taxes and regulation that favor big firms and drive up the cost of consumer goods, replace the patent system with a prize system or patent buy-outs (the latter advocated by the Independent Institute), and a host of other policies.

As Mark at Publius Endures recently wrote, the difference between classical liberals and modern liberals is a question of means, not ends -- and Obama's history indicates he is willing to consider alternative approaches to achieve his liberal goals.

Obamanomics

2008-05-21T07:53:00.000-07:00

After I read the great review of "Nudge" at LvMI this morning, I started doing a little reading on the subject and I stumbled upon this upcoming NYT review of the book.

According to the article, Obama and his economic team oppose outright bans and strict regulations, but instead prefer the "nudging" approach. After reading the article, I've came to the conclusion that Obama is to the right of Clinton on economic issues (opposed to the narrative that he's to the left of her) and pretty close to McCain, with McCain possibly favoring more outright bans and restrictions on economic activity than Obama would -- and I include the environment in that category; McCain favors capping total economic output (by capping industrial CO2 emissions), while Obama favors CO2 taxes that would allow CO2 emissions to grow, but at a higher cost to them. Neither are good options, but an Obama CO2 tax paired with a payroll tax cut is far preferable to McCain's anti-growth plan that erects massive barriers to entry for new market participants (under his plan, emitters get credit for current emissions, while new producers have to pay for the carbon credits).

Combined with his opposition to the war and his support for civil liberties, Obama is far, far preferable to McCain, although I'll still be casting my vote for Barr (who I see as a flawed Paul -- similar in many ways, but nowhere near the real thing) if he gets the nod.

Barack Gorbachev?

2008-05-20T11:58:00.001-07:00

David Seaton of TPM asks if Obama is the American Gorbachev:

What can we expect from an Obama presidency? If he gets a huge mandate and a Democratic Senate and Congress, there are two possibilities that I can see, either he doesn't try to really change anything... a lot of disappointed kids and a lot of wasted time. Second possibility, he does try to change things, and it all falls apart....

The secret of much of what is happening today is that America was almost as badly damaged by the cold war as the Soviet Union. Like the Soviet Union, while others were learning to build good cars and TVs, airports and roads, Americans only built 'intelligent' munitions. People are waking up to reality and in true American fashion, they are reaching for the tranquilizer... the man with a plan, the change they can believe in... Not that dumb? We are talking about the same people who reelected George W. Bush, now with buyer's remorse... Wheeee! The USA is just waiting for an amateur to tinker with it.

If you buy the argument, either Obama ends the war and does nothing as far as legislation goes (much better than McCain's endless war and energetic domestic policy on climate change and free speech restrictions), or he tries to implement major, system-wide reforms and it all collapses. Gorbachev tried to reform a system that couldn't be reformed, and it collapsed. What's so different about what Obama's selling?

General Election Prognostications

2008-05-16T08:20:00.000-07:00

I really don't think it's going to be that close. For one, the polling data does not reflect the severely-depressed GOP turnout that we'll see in the fall, the anti-GOP sentiment, the energized democratic base, or the massive black voter turnout we'll see if Obama is the nominee. The Obama camp has said that their strategy is to capitalize on the resurgence of the party in the Mountain West to capture the presidency. If the '04 map stays the same, Obama wins if he turns CO, NM, and NV -- all close in '04 and all of them are far more blue in 2008. If Obama "goes west", he will focus his message to woo mountain state libertarians, probably more numerous in the belt that runs from Montana to the Mexican border than anywhere else in the country. He will probably pledge to protect gun ownership rights, offer a payroll tax cut with part of the money saved from ending the war, promise wind and solar energy tax credits (solar for AZ, CO, and NM, wind for CO, WY, and MT), and reluctantly support oil shale production as long as the energy companies (1) find their own water source and (2) are fully liable for any environmental damage; McCain's immigration policies will also severely depress the turnout of usually-reliable GOP voters in the region as well. Outside of the Mountain West, there's no way the GOP will win another squeaker in Iowa, nor will they edge out the Dems in Missouri, which has been blue-ing as well. Throw in a possible win in Virginia or even a Deep South state (especially in Georgia if Barr is running), and you have a democratic landslide. On top of that, the temporary lull in violence that the surge facilitated is collapsing rapidly, and McCain is wedded to that policy more than any other American politician, including Bush.

What you reap is what you sow, and 7 years of Red State Fascism will come back to bite them in November; It could get ugly...

Will the GOP Lose the South?

2008-05-14T08:04:00.000-07:00

Probably. Throughout the south, McCain remains very unpopular amongst GOP supporters -- if it wasn't for Romney and Huckabee splitting the dixie vote 50/50, McCain would have lost every southern state except for Louisiana (which Ron Paul won anyway). Throw in the tidal wave loss for the GOP that's coming in the house (and we saw a glimpse of it last night) and a massive, heavily-energized black voter block, McCain could lose large swaths of the south to Obama -- giving us a massive realignment of the US political map. If Bob Barr indeed wins the Libertarian Party nomination, Obama could even win Georgia by a significant margin.

Southern Republicans are not going to show up to the polls to vote for a leftist who sees the Confederate flag as a symbol of hatred (I'm talking about McCain), but blacks WILL show up in records numbers to elect Obama in a landslide victory.

Rebuilding The GOP From November's Ashes

2008-05-12T13:24:00.000-07:00

As I've mentioned before, SC Gov. Mark Sanford is the highest-ranking libertarian in the United States, agrees w/ Dr. Paul on 99% of the issues, and provides the best near-term hope of getting a libertarian in the White House. Despite his stances, the MSM has been floating the idea of McCain picking Sanford to prevent libertarians from defecting to the LP ticket (if it's Barr) or Obama. Today, TNR's The Plank pointed out how absurd such a notion would be:

McCain, of course, has also voiced displeasure with some aspects of Bush's record in this regard, so perhaps it's not as implausible a choice as it might seem. But given that the Republican Party's intellectual establishment has wedded itself to a theory of untrammeled executive power as a response to the ongoing war on terror, one wonders if the fiscal conservatives championing Sanford realize that in many respects, when it comes to the role of the state, he's a quasi–civil libertarian who's closer to Ron Paul and Bob Barr than to any other major figure in the party.

TNR Also had a short interview w/ Sanford after a recent CATO event, where he called 'liberty' the 'ultimate homeland security':

TNR: What sort of sacrifices is it reasonable to ask citizens to make in the war on terror, in terms of privacy? Is there anything that citizens will have to give up, compared to what they were used to before 9/11?
MS: I don't see 9/11 as a seminal event in that regard. Liberty is the ultimate homeland security, and anybody who promises, 'I can take care of this problem for you,' at the end of the day, I don't think is telling the truth. … Tragically, post-9/11, there's been a lot of earnest, well-intentioned but ultimately destructive activity that expanded federal power inappropriately and encroached upon state authority.
TNR: How would you assess President Bush's record in the realm of homeland security and the war on terror?
MS: History will be the ultimate judge. I will say, though, that I unabashedly come from the conservative side of the ledger. I think that some of his policies not been particularly conservative in their approach. In the long run, I believe that that undermines both homeland security and liberty.

After the GOP implodes in November, the Ron Paulians and the Huckabites will rebuild the party -- they are the only GOP grassroots left. If McCain does indeed lose (he may still win while the GOP loses 6 Senate seats and 15 - 20 House Seats), we should be able to utilize the rEVOLution for a Sanford 2012 run. But a McCain loss may require Bob Barr on the LP ticket to sandbag McCain in key swing states by taking 5 - 10% of the vote away from him -- making the LP race all the more important.

Can Government be Consensual?

2007-12-04T18:54:00.000-08:00

Can Government be Consensual? In my opinion, yes.

Take, for example, the phenomenon of homeowners' associations (HOA). Can anybody deny that HOAs perform similar to a state? They (1) regulate behavior, (2) can restrict membership, and (3) provide community services. HOAs are voluntary -- 100% contractual; any member can choose to sell his or her property or lobby to get the rules changed.

Of course, HOAs are a natural reaction to the decline of the state -- local governments cannot provide community services effectively (or at all), so private entities emerge to offer demanded services. And since they merely augment the state -- and do not replace the state -- they are not performing as many services as they would otherwise. If a local municipality allowed residents to "opt out" of public services, HOAs would become much more dynamic.

When I say "opt out of public services", I am of course talking about residents (1) refusing to accept public services and (2) keeping their tax payments for doing so. If municipalities were to make such offers, HOAs would step up to provide critical goods and services, such as co-op power, water, sanitation, security, fire coverage, etc. (although the later two could be purchased from a private agency through a subscription, as discussed here). As the local state withers away as private entities began to competitively provide community services, HOAs will join together to offer common services. These voluntary HOA groups can then voluntarily join together with other HOA groups and -- viola! -- government is re-born, only in a voluntary, 100% contractual form.

Now some anarcho-caps will take issue with such private community services, arguing instead that people will "buy their law as one currently buys soap", as David Friedman once wrote. That may very well be the case, but what evidence is there that such a system would occur -- and do such systems have any basis in history? After all, before the existence of the modern state, such services were provided -- not like consumer goods -- but through voluntary organizations, like voluntary community schools, community medical clinics, fraternal organizations, churches, neighborhood watches, community defense, levies, dikes, roads, etc. etc.

We could go a long way towards winning over our statist friends by merely arguing for peaceful, contractual relations instead of advanced markets that many may not be able to grasp.

The "Conservative" Nanny State?

2007-05-27T13:49:00.000-07:00

In his recently-published book entitled The Conservative Nanny State: How the Wealthy Use the Government to Stay Rich and Get Richer (available free online), Economist Dean Baker from the Center for Economic and Policy Research excoriates the Corporate Right for phony support for free markets. Although Baker is thoroughly statist, he makes a lot of good points. For one, he points out how the Corporate Right loves cheap immigrant labor, but vigorously opposes the immigration of tens of thousands of well-qualified foreign professionals, like the thousands of well-qualified Indian and Eastern European physicians. He also points out the sham of intellectual monopoly grants; he asserts that Microsoft gains more from their intellectual property monopoly grants every year ($40 billion) than the US government spends on the Temporary Assistance for Needy Families (TANF) welfare program doles out every year ($18 Billion); He also does a good job of exploding the myth of “big business”-“big government” animosity

An argument he made that I had never heard before was in regards to corporate taxation. Baker made the argument that corporate taxes are completely voluntary, since people don't have to incorporate. Furthermore, he states that corporate taxes must be cheaper than the alternative or individuals wouldn't incorporate in the first place. Baker concludes that the corporate tax is a fee paid by individuals for the privileges of limited liability and tax-deductible merger and acquisition (M&A) debt, among other things.

One of the sections that Baker really misses the boat, however, is his examination of the Federal Reserve. Baker regurgitates the old leftist claim that the Fed is designed to "throw workers out on the street" when they get too "uppity" by raising interest rates. While that may happen, he completely avoids examining how the Fed really transfers wealth from the middle class and poor to the rich -- through monetary inflation, investors and bankers further up the monetary food chain gain enormous profits while the rest of the country gets saddled with price inflation and increasingly-unaffordable property prices; the middle and upper-middle classes eventually catch on to the game an invest in the bubble, but they are the ones who are left holding the bag when it goes bust.

Presidential hopeful Rep. Ron Paul (R-TX) has recently made this argument, and I think it could resonate with the majority of Americans.

Bottom line: Baker’s book is a misnomer; true conservatism is the defense of free markets, tradition, non-interventionism, and the natural order. True conservatism is best exemplified in Presidential Candidate Ron Paul, Barry Goldwater, Robert Taft, Howard Buffett, and many others. Labeling corporate shills for moneyed interests as “conservatives” does the entire Right a disservice.

On Euthanizing Public Education

2007-05-22T14:26:00.000-07:00

A couple of years ago, I supported school vouchers. I thought "hey, why don't we get our local, state, and federal governments to give vouchers equal to the average education cost to parents. The parents can then use the voucher to go to private school." Since then, I've realized that any such program would be a de-facto socialization of all private schools in the country; the government would only allow vouchers to go to pre-approved schools with pre-approved curriculum; in order to capture the multi-billion-dollar windfall, private schools would conform to government guidelines, perhaps even unionizing in some states.

Today, I believe that the only real way to reform education is through tax credits -- tax credits for pulling your kids out of school.

This can be best accomplished by simply dividing up the Department of Education's annual budget among all K-12 schoolchildren who are not enrolled in public school. With about 6.5 million K-12ers either in private school or homeschool, the $65-billion dollar Dept. of Education Budget would give a $10,000 tax credit to parents for each student in the first year. Millions of Americans would pull their children out of public school in year two in order to get a piece of the tax credit money. If the number of K-12ers outside of public school increased 20% every year, the tax credit would decrease from $10,000 in year one, to $8,300 in year two, to $7,000 in year three, to $5,800 in year four, $4,800 in year five, to $4,000 in year six, etc. With a 20% annual increase in the number of K-12ers out of public school, there would be about 16.5 million K-12s out of public school after year 6, about 2 and a half times as many as there were before and about 1/3rd of all K-12 students. 1/3rd of our children would be freed from the government indoctrination and daycare centers, instead getting a real education.

With a 20% drop in the number of students enrolled in public school, state and local governments should be able to carve out their own tax credits to leave the public school system. If the level of education spending dropped in proportion to the number of students who left the system, the ~$500 billion a year state and local governments spend on education should drop to about $400 billion a year. With the $100 billion-dollars in savings, state and local governments could offer and additional $6,000 in tax credits to parents for pulling their students out of public schools. If parents flock to the tax credit like they did before (with 20% increases every year), over 2/3rds of K-12ers would be out of public school within five years.

At this point, only half of the remaining $400 billion in savings is being used. The State and local governments can then offer a $200 billion-dollar tax credit and cut the rest.

All students will be on a tax credit of about $6,600, and taxpayers will save $200 billion dollars a year.

An Anomaly in the Warfare-Welfare thesis?

2007-03-23T08:51:00.000-07:00

As many may know, there is a strong correlation between the size of government and the occurrences of wars and emergencies. Looking solely at American History, major wars and "emergencies" result in bigger government:

The Global War on Terror - Big Government "Conservatism", Bush-style. Non-defense spending is skyrocketing and we have the largest new entitlement program, the Medicare Prescription Drug Act
Vietnam - "Guns n' Butter"; The Great Society
Korea - Death of the Old Right ( the birth of "Buckleyism"); New Deal programs cemented into permanence
WWI - Progressivist programs, such as the Income Tax, the Federal Reserve, and the 17th Amendment
WWII/Depression - The New Deal, price controls, income tax withholdings
The Civil War -- Legal Tender laws, the Income Tax, centralized banking, etc.
The War of 1812 - Hyperinflation, price controls
The Revolutionary War - Hyperinflation, price controls

What is missing from this list is the Mexican-American War. The Polk Administration radically reduced the size of the government in domestic affairs (an independent Treasury, a massive tariff cut, etc.) while at the same embarking on a period of massive imperialist expansion. If the more hawkish members of his administration had gotten their way, Western Canada, Baja California, and Cuba would all be part of the US.

Furthermore, we saw a progressively-freer economy emerge from 1840 - 1860. The US experienced a hard money standard (harder than it had been), the Walker tariff enacted in 1846 paired with British repeal of the corn laws had a strong liberalizing effect on trade, and the Tariff Act of 1857 further reduced taxes and liberalized trade. So, the beginning of war in 1846 sparked a progressively liberalizing effect on the domestic economy for 15 years. According to Scott Trask at the Ludwig von Mises Institute, commodity prices only rose 4% from 1847 to 1860. This is all the more amazing with the California gold rush (and the Australian gold rush) going on; the US should have experienced hyperinflation, but instead experienced nearly flat prices.

So, how did it go wrong? Well, the still-Jeffersonian Democratic party suffered a period of massive instability from 1854 to 1860. They lost almost 1/2 of their House seats and the majority in 1854, only to recover half of those lost seats and the majority in 1856. The Democrats used the 1856 recovery to pass the last gasp of the Jeffersonian Democrats: The 1857 Tariff. In 1858, the Democrats lost all of their seats they gained in 1856 and suffered an even more stunning loss in 1860. Liberalization and de-liberalization nicely coincide with the power of the antebellum democrats.

But what does this tell us about the link between warfare and the size of government? Before the Civil War, periods of warfare, whether they were associated with wartime liberalization or de-liberalization, always followed a liberalizing trend after the war ended. It was only after the Civil War that the Warfare-Welfare link really materialized.

Here's my explanation: prior to the Civil War, there were enough Constitutional limits on the Federal Government that the States and the People were able to reign in the Federal Government after the Fed's wartime power spasm. After the Civil War, peripheral sources of power were not strong enough to counter expanded national government.

In fact, the more centralized the government is, the more likely it is for wartime government expansion to stick around. That's why more WWI measures stuck around (or were re-created) than the Civil War, and more WWII wartime measures stuck around afterwards than in the previous conflict. The pattern fits, IMHO.

So, the axiom should not be that "warfare permanently increases the size of the federal government". Instead it is that "short-term increases in Central Power, whether it be wartime or emergency measures, recede over time as long as peripheral powers have the ability to counter them. The weaker peripheral powers are, the more likely wartime/emergency measures are to stick around".

Based on the hyper-centralized structure of the current United States, it is highly probable that measures taken during the Global War on Terrorism will be made permanent, or at least be with us for a long, long time.

re: Different Kinds of Libertarians

2007-03-18T08:25:00.000-07:00

Complicated Visionary posted a piece a while back that categorized different types of libertarians. The author put libertarians into 10 broad categories:

Randians/Objectivists/Egoists - Meet John or Jane Galt. While most card-carrying Objectivists assert that they are not libertarian in name, the movement started by Ayn Rand (author of The Fountainhead and Atlas Shrugged) was and is an important influence on the thought of modern American Libertarianism (Cathy Young says that “Libertarianism, the movement most closely connected to Rand's ideas, is less an offspring than a rebel stepchild.”). They imagine an individualist/collectivist and egoist/altruist dichotomy and put it at the heart of their entire worldview as the supreme good vs. evil (along with some peculiar axioms like “A is A” and “existence exists”). According to those influenced by Randian Egoism, greed is a virtue, while compassion is a deadly sin. The word capitalism can stimulate a spontaneous orgasm. They are prone to histrionics and delusions of grandeur.
Dominionists - Business giants and empire-builders, moguls, magnates and tycoons who don’t want antitrust laws, industry watchdogs, trade unions or environmental, worker, or consumer regulation to get in the way of their ambitions. They often fund libertarian and right-wing think tanks and organizations. Silicon Valley had many Dominionist younglings in the 90’s until most of them perished tragically in the bursting of the dotcom bubble.
Market Fundamentalists - Focused on libertarian theories of economics/political economy, Market Fundamentalists believe the capitalist free market is best for the common good, and any interference with said market is contrary to the common good. They frequently use concepts like “the wisdom of the market” and “the invisible hand,” etc. Austrian and Chicago schools, neoclassical economics, neoliberalism, etc.
Naïve Libertarians - This was a hard to name category (I also considered “propagandist libertarians”). Naïve Libertarians are like Market Fundamentalists, except they usually parrot Market Fundamentalist arguments and harp on “how liberals are weakening America” instead of coming up with arguments and ideas of their own. They believe hardship doesn’t befall people who do what they should do, the environment isn’t in any real trouble and environmental/pollution problems are negligible, and big corporations are really responsible and good on their own (“Greenhouse gas emissions? Those are just ‘unrequested carbon surpluses’”). They are likely to listen to/host right-wing talk radio or do/follow right-wing journalism, and usually amount to little more than apologists for the Right.
“Liberty” Libertarians - Their libertarianism arises primarily from their ideas on the metaphysics of personal liberty, around concepts like “non-aggression” and “self-ownership.” Libertarian philosophers are usually in this category, some of whom were founders of the modern American libertarian movement.
Libertarian Republicans - More traditional conservatives; Republicans who are against neoconservative big government and/or the religious right; conservative critics of the Bush administration. They consider themselves the true conservatives, and usually base their libertarian ideas on their perspective on the U.S. Constitution. “Goldwater conservatives;” Republican Liberty Caucus.
Crazy Libertarians - Primarily concerned about gun rights and privacy. Many survivalists, conspiracy theorists, tin-foil-hatters, etc. tend to fall into this group. They are likely to live in a rural area, with an impressive arsenal and weeks worth of food stocked up to secure against a New World Order threat.
Lifestyle Libertarians - Like the Crazy Libertarians about guns, but also for drugs, sex, alcohol, uncensored material, not having to recycle, driving without a seatbelt, driving without a seatbelt at 100mph, driving without a seatbelt at 100mph while receiving oral sex, etc. They are basically people who want to do whatever they want. If conservatives want government to be your daddy, and liberals want government to be your mommy, Lifestyle Libertarians want to get rid of daddy and mommy and stay up all night eating ice cream and watching after-dark cable.
Localist Libertarians - Anti-Federalists, they would rather have autonomy distributed to the community level, like town halls, local school boards and churches, than a strong federal government or any centralized power. More Main Street than Wall Street, they are communitarians and traditionalists, largely Catholic, often Scouting enthusiasts, people with Norman Rockwell paintings throughout their homes, etc. More compassionate and worker-oriented than other libertarians, and more likely to be concerned with local environmental problems.
Left-Libertarians - A special category. Left Libertarians believe big, powerful government is as oppressive and bad as big, powerful corporations. They are anti-war (including the War on Drugs), pro-choice, and against government favors for corporations (or against large corporations altogether). They usually favor participatory action and mutual aid over government for social justice and environmental causes, as well as smaller, more local businesses and community-centered marketplaces. They may caucus with right-libertarians (“vulgar libertarians” is a commonly used phrase) for strategic purposes, which is the primary reason they are on the list at all. They are also likely to work with Green parties. Often Georgist on physical property and against extensive and restrictive intellectual property (and a major front behind Open Source), they are related to others of the broad libertarian left--agorists, mutualists, libertarian socialists, cyberpunks and anarchists; also “Buddhist Economics.”

The Overall, I think it is a good run-down of different types of libertarians and exposes the various differences between different libertarians. I do have a few comments on each section, however.

Randians/Objectivists/Egoists - I've always seen the Randoids as similar to "Naive Libertarians". Randoids quickly accept many of the primary functions of the state: the need for state police services, a state military, state court systems, intellectual property, etc. etc. I believe that any true libertarian should at least question the basic underpinnings of the state. I am personally not fond of their hostility towards religion, but that's another matter

Dominionists – I wish there were more dominionists. Sadly, many dominionists conform to the opinions of the state in order to get through life. You've gotta play by the rules if you want to play the game, I guess.

Market Fundamentalists - I wouldn't necessarily put the Chicago school in this category; the Chicago School has lobbied for government intervention in the markets since its founding: fiat currency, price controls, a negative income tax, antitrust regulation, etc. Chicagoites are useful at convincing socialists of free market principles in general, but they themselves are not the real deal. I would restrict the Market Fundamentalists to the Austrian School, period.

Naive Libertarians – As a former Naive Libertarian myself, I can see the appeal of being in this school of thought. Like Chicagoites, however, they are useful in convincing others of the merits of the free market. They are particularly useful because they have more interaction with non-libertarians, especially in the political realm. Naive libertarians are frustrating to me, because I "know" that they don't really believe half of what they say: the Heritage Foundation calling a $3T budget from Dubya "Conservative", Rush Limbaugh supporting the War on Drugs even though he personally believes it is fruitless, The near-total conservative (and mainstream, for that matter) blackout of Ron Paul's presidential run, etc. Their skepticism of environmentalism is useful, particularly since there are so many holes in the global-warming-is -caused-by-man-theory that most Americans never hear about.

“Liberty” Libertarians – The Hoppes, the Rothbards, and others are the bedrock, the foundation, for libertarianism. Their work on theoretical principles of self-ownership and property rights are necessary for libertarianism to exist at all. Perhaps that is part of the reason Rothbard has such widespread appeal across the political spectrum.

Libertarian Republicans – I consider my own views similar to those of the Libertarian Republicans: Against big government, against senseless foreign adventures, etc. But I am not opposed to the Religious Right in general.

Crazy Libertarians – This seems like an unfair criticism. They are totally within their right to suspect the government to grow totalitarian over time and arm themselves accordingly, although I don;t buy their conspiracy theories.

Lifestyle Libertarians – "ACLU Libertarians" are NOT Libertarians. How could one clamor for a constitutional right to public sodomy while at the same time denying all others the right to live free of government economic and religious repression. These "libertarians" are all to quick to cede authority to the federal government and deny any role to local government, which they have more control over.

Localist Libertarians – I am a "localist" libertarian. I believe that the Articles of Confederation were superior to the Constitution, that the latter was a move towards centralization by Hamilton & friends. I am also a decentralist, believing that states have the right to nullify federal laws and local governments have the right to nullify state laws. I think that taxes, to the extent that they exist, should be burdened on the undeveloped value of land (i.e. Georgism). I see problems that the Left complains about, such as environmentalism and big business, are not the result of private power, but state power.

Left-Libertarians - Although I consider myself on the Right, Left-Libertarianism is legitimate. My beef with them is their obsession with non-state forms of coercion: racism, feminism, etc. etc. They think society would be flatter than it would be without the existence of the state. More likely, I believe, would be a hierarchical structure to a stateless society, based on the different ability levels of human beings. Also, luck and poor decisions would play a huge factor. But on the whole, it almost seems like the political spectrum is circular, with the Far Right and Far Left having a lot of things in common at the fringes.

Thoughts on Land Value Taxation (LVT), Georgism, and "Good Greens"

2007-03-13T11:48:00.000-07:00

I have recently been reading literature on Georgism. Georgists believe that everything an individual creates is their own personal property and the government has no right to take possession of it. Separating Georgists from anarchocapitalists, however, is the georgist belief that land cannot be truly owned, only "rented" from the community. As a result, georgist assert that all forms of taxation, whether they be on labor, capital, or improved property, are unjust. Taxation on the unimproved value of land, i.e. the value of a piece of land if there were no improvements on it, is taxable.

Georgists assert that this land-value tax (LVT) is merely rent paid back to the community. As a result of a tax on only a piece of property's land, the growth of communities will be natural (no urban sprawl), and wilderness will be preserved without the coercive power of government.

While reading up on georgism, I couldn't help but think about Ward Republicanism, a "Confederation of Confederacies", and Direct Democracy. I began to think about what could be achieved if local governments in a "confederation of confederacies" exercised a pure LVT, with 100% of tax revenue being raised from land and 0% from labor, capital, and improvements.

The fusion of ward republicanism and georgism also negates the primary criticism of georgism, which is that land values cannot be accurately valued and are arbitrary.

In a ward republic that practices total direct democracy, an accurate land value can be determined by a bidding process:

All citizens would enter an undisclosed bid on the per acre price of land in the ward, with the median bid being chosen as the land valuation price.

Since land prices should be quite similar throughout the ward, the median bid should be very close to the true, self-assessed value of the land
By picking the median bid, extreme bidders on either end of the spectrum will be marginalized. large landowners who wish to avoid paying taxes will be cancelled out by small landowners or renters who covet their neighbors' wealth
For example, an agrarian community a low per acre valuation would be chosen, while a high valuation would be chosen in urban areas
The valuation will remain in effect until a majority of the polis elects to re-cast bids; however, individual citizens can change their bid price every year, generating a new land value

After all bids are cast, the bid will be revealed. After the community is made aware of the land prices, citizens will again cast bids, this time to determine the tax rate, anywhere between 0% and 100%, with the median rate chosen. The rate will remain in effect until a majority of the polis elects to re-cast bids; however, individual citizens can change their bid price every year, generating a new tax rate.

If for some reason a rate too high or too low was chosen, the misappropriation of revenue will be reflected in dropping property values. As property values fall, citizens can elect to re-cast bids to lower their tax burden. If the ward limited its scope to basic record-keeping, sewage, water, etc., property values would rise accordingly.

Over time, however, land valuations and tax rates would fall:

If land prices fall, citizens will move away; new owners will not want to pay the high yield (LVT/market land price) and will change their bid accordingly. If the government is mismanaged to a large enough extent and there is a severe drop in land prices, a majority of the polis will elect to lower their land valuation and/or tax rate
If land prices rise, new citizens who buy in will enjoy their new, low tax yield; word of low tax yields will encourage further immigration into the community and even higher land prices. Current owners, if they are happy with the status quo, will leave values and rates unchanged.

Under a georgist system of taxation, market prices for property will act as a self-regulating mechanism for the local governing authority.

What surprised me most about my readings is the discovery that not all Greens are neo-pagan statists. On the contrary, some of them have a deep suspicion of government and a respect for individual rights to life, liberty, and property. Green opposition to government subsidization of urban sprawl and automobile-centric lifestyles and the state-sponsored destruction of rural agrarian life is no different than conservative opposition to government subsidization of illegal immigration and the state-sponsored destruction of the traditional family and religious life through cultural marxism.

Interesting Results from CPAC

2007-03-05T11:20:00.000-08:00

Although I usually place little hope for Old Right libertarianism in the modern Republican party, there were some interesting Results from the 34th Annual Conservative Political Action Conference (CPAC) Straw Poll. The first reassuring piece of data from the Straw Poll is that the grassroots of the GOP has not completely bought into the big government conservatism of President G.W. Bush. When asked "All things being equal, would you be MOST likely to support a Republican candidate for President who called themselves a 'Ronald Reagan Republican' or a 'George W. Bush Republican'", only 3% of those polled responded with Bush, and 79% responded with Reagan:

From CPAC Results

In another straw poll question, respondents were asked "Which of the following comes closest to your opinion regarding America's foreign policy?", with answer choices being "America's foreign policy should be based on protecting its own economic and national security interests" or "America's foreign policy should be based on spreading democracy around the world." Surprisingly, those polled appear to prefer a traditional foreign policy and reject neoconservatism:

From CPAC Results

Only 17% of respondents choose the Wilsonian answer; This can be interpreted in one of two ways: either respondents feel that the U.S. should only act when directly threatened/attacked, or the respondents have a quite loose interpretation of "economic and national security interests".

In another question, respondents were asked "Which ONE of the following comes closest to your core beliefs and ideology?", with the choices loosely correlating to "Reducing the size of Government and promoting individual freedom", "Promotion of traditional values", and "American security at home and abroad":

From CPAC Results

Surprisingly, A majority of respondents (50%) feel that reducing the size of government and promoting individual liberty is the most important goal, while only 18% gave the neoconservative answer. When asked for their candidate preference based on their ideology (libertarian, traditional, or neoconservative), "libertarian" respondents chose candidates who are quite statist; Romney (21%) introduced socialized medicine to Massachusetts and Giuliani (20%) is to the left of Hillary Clinton on gun control and is accused by some of partially causing the 1990-1991 recession through excessive regulation as New York State Attorney General. Traditionalist conservatives favored Brownback (29%) to Romney (22%), while NeoCons favored Giuliani (25%), Romney (21%), and McCain (18%).

Now, for the polling on candidate preference...

Candidates were polled on both (1) their first choice for president and (2) their second choice.

Here are the respondents' "first-choice" preferences:

From CPAC Results

And here are the combined first and second choice numbers:

From CPAC Results

As is seen above, there is no clear-cut front-runner among the GOP grassroots. In addition, many of the candidates (such as McCain, Giuliani, Gingrich, and Romney) have similar policy positions, and would cancel each other out in a primary. Furthermore, the grassroots support for Romney is probably grossly overrepresented in the straw poll, as Romney spent $350,000 at the conference, far more than any other candidate. Romney had 200 supporters bussed in, paid their way, and only got 350 votes. That works out to $1,000 per vote, or $1,750 for every paid vote.

If we adjust for the paid voters, Romney only receives 10% of the first-choice vote, with Giuliani receiving 19% of the vote, Brownback receiving 17% of the vote, and Gingrich with 16%.

So what can we take out of the meeting. Well, as DailyPundit pointed out, the grassroots will not support the "Big 3" (Giuliani, McCain, Romney) long-term. And John Fund, writing in the WSJ Opinion Journal tells us

"...a third of RNC members expressed no preference for president--a high number given the intensity of the race. That leaves hope for a posse of second-tier candidates, ranging from Mr. Huckabee to former Virginia governor Jim Gilmore, that they can capture the attention of voters."

Hopefully, the wide-open field will allow Old Right candidate Rep. Ron Paul to get his message out to a grassroots base that is leery of American foreign policy based on "based on spreading democracy around the world". And, perhaps, the mainstream conservative base is not too far gone, as Llewellyn Rockwell believes.

A Confederation of Confederacies?

2007-03-02T12:23:00.000-08:00

I Recently Re-read Thomas Jefferson's Letter to Samuel Kercheval (1816). In the letter to friend Samuel Kerchavel, Jefferson intended to provide advice to his friend on the proper administration of Virginia's counties. In the process, he introduced his somewhat famous idea for "Ward Republicanism":

"Divide the counties into wards of such size as that every citizen can attend, when called on, and act in person. Ascribe to them the government of their wards in all things relating to themselves exclusively. A justice, chosen by themselves, in each, a constable, a military company, a patrol, a school, the care of their own poor, their own portion of the public roads, the choice of one or more jurors to serve in some court, and the delivery, within their own wards, of their own votes for all elective officers of higher sphere, will relieve the county administration of nearly all its business, will have it better done, and by making every citizen an acting member of the government, and in the offices nearest and most interesting to him, will attach him by his strongest feelings to the independence of his country, and its republican constitution. The justices thus chosen by every ward, would constitute the county court, would do its judiciary business, direct roads and bridges, levy county and poor rates, and administer all the matters of common interest to the whole country.

These wards, called townships in New England, are the vital principle of their governments, and have proved themselves the wisest invention ever devised by the wit of man for the perfect exercise of self—government, and for its preservation. We should thus marshal our government into, 1, the general federal republic, for all concerns foreign and federal; 2, that of the State, for what relates to our own citizens exclusively; 3, the county republics, for the duties and concerns of the county; and 4, the ward republics, for the small, and yet numerous and interesting concerns of the neighborhood; and in government, as well as in every other business of life, it is by division and subdivision of duties alone, that all matters, great and small, can be managed to perfection. And the whole is cemented by giving to every citizen, personally, a part in the administration of the public affairs."

So, Jefferson believes that each layer of government should be as decentralized as possible:

The Federal Government, for foreign affairs
The State Government, for issues relating exclusively for the citizens of said state
The County, for issues relating exclusively for the citizens of said state
The Ward, for all other issues

Jefferson's ideas amount to decentralized direct democracy. While direct democracy is considered unworkable with a population size larger than a few thousand, Jefferson's "Ward Republicanism" makes it feasible.

I am no fan of democracy, as it is tantamount to legalized theft and coercion. The more widespread it is, the more expansive and thorough the level of theft. According to Hans-Hermann Hoppe, author of Democracy: The God that Failed:

"Imagine a world government, democratically elected according to the principle of one-man-one-vote on a world wide scale. What would the probable outcome of an election be? Most likely, we would get a Chinese-Indian coalition government. And what would this government most likely decide to do in order to satisfy its supporters and be reelected? The government would probably find that the so-called Western world had far too much wealth and the rest of the world, in particular China and India, had far too little, and hence, that a systematic wealth and income redistribution would be called for. Or imagine, for your own country, that the right to vote were expanded to seven year olds. While the government would not likely be made up of children, its policies would most definitely reflect the 'legitimate concerns' of children to have 'adequate' and 'equal' access to 'free' hamburgers, lemonade, and videos."

What Hoppe fails to consider, however, is a far preferable (possibly even to to privately-owned monarchical government) form of democracy: decentralized democracy. In a decentralized democracy, the small polis size only allows theft from one's neighbor, limiting its size. The more expansive and centralized a democracy is, the more expansive and thorough the theft of total strangers can be.

This brings me to the possibility of a "Confederation of Confederacies", a model for true anarchocapitalism (or minarchocapitalism) to emerge in the 21st Century. Under such a system, government systems cannot tax individual citizens or corporations, but can only tax the treasuries of their own political sub-units. If applied to the United States, the system would look like the following:

The Federal Government can only levy a tax on the treasuries of the states
The State Governments can only levy a tax on the treasuries of the counties
The County Governments can only levy a tax on the treasuries of the Cities and Towns
The The City and Town Governments can only levy a tax on the treasuries of neighborhood associations
The Neighborhood Associations can only levy a tax on their voluntary members

Since taxes can only be raised on the treasuries of the political sub-units, local entities can opt for anarchocapitalism/minanarchocapitalism by simply reducing their own tax intake. The members of a Town, for example, could decide that they no longer need government and reduce their taxes to zero. As far as government composition goes, all government members above the lowest level will be appointed by their political sub-units, i.e. a state legislature comprised of county representatives voting to elect the state's representative at the federal level. Majority requirements, whether they be 50.1% or 100%, will be determined by each political unit. restricting democracy to the lowest level will prevent the widespread theft we now see in the present day.

Although I consider myself a right-libertarian, a "confederation of confederacies" should be quite appealing to those on the libertarian left as well as decentralized socialists. One could simply relocate to the place they feel most comfortable at: left-libertarian envionmentalist envlaves, right-wing anarchocapitalist cities, Theocratic counties, etc. etc. Statism for the majority, minarchy for some, and anarchy for others.

Return of the Blog

2007-03-02T12:05:00.000-08:00

After being busy with school and deploying to Iraq for six months, I've decided to re-start the Blog I never started.