Wednesday, January 28, 2009

Rents, Rand, and Rants

Okay, so this isn't the first time I've said it, but I'm concerned that Atlas Shrugged is being reenacted on our national stage, and it sometimes bums me out when Rand turns out to be right. (I feel the same way about Orwell, btw). Anyways, let's talk about rent-seeking.

For those of you who don't remember your Atlas Shrugged that well (and it's not like I've read it too recently), much hay is made in the book about having a "man in Washington." Rearden, one of the characters sympathetic to Rand's viewpoints, regards this necessity with alternating apathy and antipathy. The fear, Rand offers us, is that it's all too easy for the success of a company to depend not on the quality of its product, but on the influence of its lobby.

How, now, do we suppose that Bear, AIG sould live, and Lehman Bros should die, and upon what mechanism do we predict that the fate of GM and Chrysler will depend?

Imagine perhaps a car company whose business model actually relies upon the manufacture of cars that people want to buy. How might such a company compete with a GM that is backed by the full faith and credit of the US of A?

Now, look. The market sucks sometimes at allocating resources (tulip bubble?). We know this. That doesn't mean however that the government is any better. Heck, democracy sucks at picking leaders (Dubya?). Churchill reminds us though that suck though it might, democracy's the best we've got.

Just something for us to consider as Congress deliberates on the stimulus package, AKA rent-seeker's dream. With our noses in our newspapers and our eyes on our RSS readers, we'll have a front-row seat as state governments, corporations and federal agencies fight over their share of the trough. Upon whom will the lucre be dropped? Those who would martial resources to the best benefit of society collectively, or those whose "men in Washington" are better connected? I know what I'm betting on.

Thursday, January 22, 2009

Obama Macht Frei

Obama has kept his word and will shut down Guantanamo. It shouldn't be a controversial for modern nation states to hold among them as understood that you don't fucking disappear people. The rights to charge, trial and habeas corpus, those are fundamental rights. Yeah, they're guaranteed to us Americans under our Constitution and the folks in Gitmo aren't American, but that doesn't make a fundamental right any less fundamental.

It appears that we don't actually have a case against most of the folks there anyhow, but that's ancilliary. Even if they're as guilty as the frickin' wingnuts say they are, they deserve to be charged, tried, and convicted (or not) in a fair court of law (not the kangaroo court crap that Bush put forward). The Constitution, their citizenship, and the nature of their crimes don't enter into it. We'll do it because we're Americans, and that's the way we roll. Well, it's how we've been rolling since last Tuesday anyhow. McVeigh got a jury of his peers, same as Socrates, and so does every rapist, murderer and pedophile that finds himself in the care of US law enforcement. Terrorism is a law enforcement problem like any other. Treating it any differently doesn't do anything but distract from the issue and pump up the egoes of the terrorists themselves.

Anyhowz, props to Obama for doing the right thing. The Fox News crowd is probably stewing a bit, but it's not like they were in his corner anyway.

Tuesday, January 20, 2009

Don't let the door hit you on the way out

It's certainly a welcome thing to see W go. I remember watching with a sense of foreboding as he stumbled through the litigation to take the throne a little over 8 years ago. I don't know how many views I held then that I would now agree with completely, but my views on W haven't changed in the least.

W's failings were legion. He conflated "serious foreign policy" with "killing people and blowing shit up." His cowardice prompted sniveling, "creative" interpretations of the legal and moral guidelines regarding torture, eavesdropping, and general abuse of state power. Worse yet, the contagion of his cowardice spread from his office throughout the nation. Terrorism isn't among the top 10 most likely causes of death in America, nor the top 20. Fear-mongering on the part of the Bush Administration generally and the Sec. Treasury in particular lead to the passage of TARP. Fear-mongering on the part of the Bush Administration generally and the Sec. State in particular lead to our invasion of Iraq.

Then there's the "unsigning" of Kyoto, the huge deficits, Katrina (do we suppose that Obama would appoint a Michael Brown?), the well-meaning but fiscally questionable Medicare prescription coverage, the slipshod attempt at reforming social security. Guantanamo (Obama will have to straighten that out). Abu Ghraib (where was personal accountability on that one?). Scooter Libby (pardoned). NSA eavesdropping (another one for Obama). Political smothering of scientific evidence within Interior, EPA. Questionable firings of DOJ employees.

This is our country - Dubya was just renting it, and it's for damn sure that he's not getting his deposit back.

I haven't been entirely bullish on Obama either, but he's surely in an entirely different class from the menace we've just sent back to Texas. I'll have more to say about Obama soon, hopefully.

Monday, January 19, 2009

Borrowing, Lending, and Voting

Proverbs, 22:7
The rich ruleth over the poor, and the borrower is servant to the lender.
So Dubya was a big time deficit spender. Tax cuts, massive military spending. Obama is promising a giant (~700 bil) "stimulus" package.

Who's picking up the tab? Rich Americans who invest in US Treasuries, the British, the Japanese, the Chinese, etc.

I'd better not hear any complaints about China's ascendancy from anybody that pulled the lever for Dubya or Obama.

Wednesday, January 7, 2009

On Externalities

There was a recent post on Slashdot, where a submitter suggested that compact fluorescent light bulbs, though advertised as environmentally beneficial, were actually harmful given the carbon and fossil fuel use of transporting them. In the event, the claim looks to be false (incandescent bulbs must also be shipped, and the efficiency gain far outweighs the fuel cost within a few days). What if it wasn't, though? Some smart people seem to think that the ethanol push is at best an expensive wash, and at worst a waste of money, energy, and resource allocation. Does the production of a Prius battery harm the environment more than the excess fuel consumption and carbon production of a conventional auto? As consumers, do we have to Snopes all of this?

Well, yeah, the Libertarians want you to take charge here as a consumer. If a company does something you don't want, quit paying them to do it. If you don't know, look to a watchdog group that can figure these things out for you. And so on.

The Democrats naturally look to the government to look out for us, regulating or taxing away the bad stuff, subsidizing the good stuff, etc.

The Republicans, far as I can tell, don't care and want you to shut up and keep buying stuff from their donors.

What's going on here?

For starters, the vocab: in a transaction between two parties, any side-effects felt by third parties are known as externalities: effects that are external to the transaction. If the power company sells you power that was produced by a polluting factory that's in my backyard, I'm suffering from an externality. Externalities can be positive or negative.

There's a cool theory, called Pigovianism after the economist that crafted it. The way the theory goes: government should tax transactions that produce negative externalities, in proportion to the value of the damage that they do. The taxed producers will pass that cost onto the consumers, who now find the previous externality "internalized," that is priced into their transaction. In our CFL vs incandescent scenario above, Pigovian taxes on carbon and fossil fuel consumption would factor in the cost to society of shipping bulbs. A consumer wouldn't need to educate himself, read slashdot to get the math on the matter, or anything. Just buy the bulb that does the job, using price as a consideration.

Like I said, it's a pretty cool theory. There is however a pretty big hole - how the heck do we know what shipping a CFL bulb from China costs society in terms of pollution and non-renewable resource consumption? How do you put a dollar amount on that? It depends on who you ask, no? Ask a global warming skeptic, and he'll place way less value on the carbon expenditure. The matter of fossil fuels depends on whether you think we've hit peak oil production yet.

Any government agency that gets involved in Pigovian taxes will find itself highly susceptible to regulatory capture. That is, the folks doing the regulating will come largely from the regulated industry. They'll have friends in that industry, and they'll most likely plan on working in the industry after they finish government service. The costs to the regulated industry will dwarf the salary of the civil servants imposing those costs by such a margin that corruption becomes awfully tempting - spend a few grand here and there on gifts, or suffer millions in extra taxes, paperwork and regulatory hassle? Finally, industry players will waste resources on regulatory arbitrage, engaging in inefficient behavior in order to navigate through tax loopholes, etc. We see this all the time, from pharmaceutical companies to defense contractors to wall street bankers. Suffice to say that while the government might help here, it won't be a perfect solution. Government is large, slow, inefficient, and frequently at a game theoretical disadvantage in these situations.

So, it's back on us consumers again. To the extent that we as consumers worry about the environment, or the fate of the whales, or whatever the externality of the day might be, we need more information than price when evaluating products. Will that laptop leach chemicals into the ground after you're done with it? Were the metals in it excavated by child minors in Africa, working under apalling conditions? This is simply too much for us to handle.

So we turn to the watchdogs. Sierra club, PETA, Cato, you name it, there's a group for it. The watchdogs have some inefficiencies too. Their leaders for instance tend to fight hard enough and long enough that they become radicalized, opposing policies because they dislike the actors, rather than opposing actors because of sensible objections to policies. Organizations are also in competition for donations, and no one donates to a cause when everything is going pretty well, so there's a strong incentive to exaggerate claims and engage in sensationalism. That sensationalism then emboldens opponents, radicalizing them in the fight as well.

We count on Sierra and PETA to do the research that we don't have the time or expertise to do for ourselves, in the name of keeping government and corporate actors honest. But who keeps Sierra and PETA honest? Do we need a non-profit watchdog? If so, who would watch them?

Should we just watch documentaries like Inconvienient Truth and Sicko, running with whatever makes sense to us? How in that system do we guard against sophistry and demogoguery?

This is a tough problem, and much as your Republican friends might poo-poo it as the moaning of a wealthy liberal elite with nothing better to worry about, it's important. Global warming might well be a big deal, the oil isn't going to last forever, and as more and more countries industrialize, we have to recognize that the current American way of life probably won't scale from 300 million Americans to 6 billion (and growing) world citizens.

This is something we should all be thinking about.

Tuesday, January 6, 2009

Is Orren Boyle running GM?

Atlas Shrugged is kind of like 1984, Animal Farm, Brave New World, and Lord of the Flies. These are books that show what yucky things can happen to a country when folks aren't paying attention, or aren't paying attention to the right things. There's been a lot of 1984 in the post-9/11 US of A, but the 2008 crash and subsequent government response are basically a 300 million man reenactment of Atlas Shrugged. I half expect to find in a few years' time that a few hundred Austrian Economists have been lead to a gulch by Ron Paul and his wacky followers. As the interesting dude I met downtown said after predicting a massive earth quake on Christmas, "hopefully I'm wrong."

Thursday, January 1, 2009

Hooray for Nintendo

An old story, but a good one, about the awesomeness that is Nintendo. Lady has a problem with her Wii (no, that's not a euphemism for anything disconcerting), calls customer service, finds out she's near their campus and gets to pay a visit to Nintendoland. One wonders if the Cupertinoids of the world would get the same service for their iGear.

Headlines in combination

Snagged this shot while reading Google News yesterday. Cause and effect, perhaps?