Saturday, March 28, 2009

The Case for Legalization

It is understandable why politicians have convinced themselves that drugs are a third rail of public policy and that they therefore don't have to seriously address legalization. The media—the very institution charged by the First Amendment with facilitating intelligent discourse—colludes with the government's drug war rather than challenging politicians to engage a real debate. The Washington Post and The New York Times both require drug-tests from college students seeking summer internships. And both have given the federal government free advertising space to promote First Amendment-infringing drug policy, when the president's Office of Drug Control Policy acquires space for drug war propaganda. Would the Times and the Post ever alcohol-test an aging copy editor, or offer the Department of Defense free space to promote an elective war in the Middle East in return for a full-page ad touting "Mission Accomplished?"

In this time of national economic crisis, we keep looking in our collective rear view mirror for lessons from the 1930s for what we should do, and what we should avoid, in order to restore confidence in ourselves and create hope for our future.

While fiscal and monetary actions taken in that era offer mixed and muddled messages for today's policymakers, another action by a transformational leader in that far-off decade sends a clarion call to us at the beginning of the 21st Century.

Franklin Roosevelt supported the 21st Amendment to end the madness of the 18th, and in so doing halted the devastating social, economic, and cultural costs of Prohibition. That's a lesson Barack Obama needs to heed.

Thursday, March 19, 2009

Grab Your Pitchfork, Senator

Wonderful op-ed from Steve Chapman (HT: Roberts). Here's the best line:
These days, every politician assumes that because he has a driver's license and an ATM card, he must have all the necessary skills to run an automaker and operate a bank.
AIG could have refused to make the payments, but only by violating contracts it had made with employees. Officials at the Federal Reserve Bank of New York entertained this option, reports The Washington Post, only to realize that the spurned staffers would have sued and gotten not only the payments but "punitive damages that would make the ultimate cost perhaps two or three times as high as the bonuses themselves."

Refusing to pay would also have driven away any top employees with alternatives—which would tend to be the better people, who might just be useful in restoring the company to health. Congress' approach brings to mind the sardonic workplace sign: "The floggings will continue until morale improves."

Expropriating property from people who did nothing more than accept money they were legally due sounds uncannily like a bill of attainder—a legislative measure declaring someone guilty of a crime, and imposing punishment, without trial. This weapon was expressly forbidden by the framers of the Constitution because it is fundamentally unfair, at odds with the rule of law and driven by mass hysteria rather than dispassionate fact-finding.

Once upon a time, those were considered bad things.

Wednesday, March 18, 2009

Bonuses and Mob Rule

David Harsanyi knocks it out of the park in this Denver Post op-ed:
Here's an idea: If you stop nationalizing banks, there will be no need to engage in phony-baloney indignation over bonus payments anymore.

This cockamamie populism in Washington really hit its stride when Iowa Republican Sen. Charles Grassley suggested that AIG execs who earned bonuses should "follow the Japanese example and come before the American people and take that deep bow and say, I'm sorry, and then either do one of two things: resign or go commit suicide."

C'mon. If suicide were a proper penalty for piddling away taxpayer dollars, the National Mall would look just like Jonestown after refreshments.

These same senators who voted to nationalize banks with nary a pre-condition are also, apparently, stupendously talented actors. After all, most of these senators voted for a bill that contained a provision that specifically protected bonuses that were agreed upon before Feb 11. in the bank bailout legislation.

Harsanyi's last point is an especially good one: this Congressional "outrage," to be very polite, is disingenuous.

He continues:

How is it that all those who cast votes on this provision — because, we imagine, no trustworthy lawmaker would vote for legislation they hadn't vigorously examined — are now threatening a "special" tax to snag AIG bonuses? Not only is it dishonest, it also means they, in a breathtaking abuse of power, believe using punitive taxation to appropriate someone's salary is a legitimate function of government.

President Barack Obama, meanwhile, has asked Treasury Secretary Timothy Geithner "to use that leverage and pursue every single legal avenue to block these bonuses and make the American taxpayers whole," claiming it was all about "fundamental values."

You know what's a super useful value? A guarantee that contracts entered into by individuals or parties are respected. Or is the state ready to throw that fundamental value out and bend to the will of the angry mob?

Tuesday, March 17, 2009


Good advice, from Benedict in Africa:
But the Vatican's refusal to let Catholics use condoms remains controversial on a continent where AIDS has killed more than 25 million people since the early 1980s.

While medical workers advocate the use of condoms to help prevent the spread of AIDS, the Church insists on fidelity within heterosexual marriage, chastity and abstinence.

"The problem cannot be overcome by distributing condoms. It only increases the problem," the pontiff said on Tuesday.

More on the Bonuses

Andrew Ross Sorkin of the NYT gets it right on the AIG bonuses:

[T]he “fundamental value” in question here is the sanctity of contracts.

That may strike many people as a bit of convenient legalese, but maybe there is something to it. If you think this economy is a mess now, imagine what it would look like if the business community started to worry that the government would start abrogating contracts left and right.

As much as we might want to void those A.I.G. pay contracts, Pearl Meyer, a compensation consultant at Steven Hall & Partners, says it would put American business on a worse slippery slope than it already is. Business agreements of other companies that have taken taxpayer money might fall into question. Even companies that have not turned to Washington might seize the opportunity to break inconvenient contracts.

If government officials were to break the contracts, they would be “breaking a bond,” Ms. Meyer says. “They are raising a whole new question about the trust and commitment organizations have to their employees.” (The auto industry unions are facing a similar issue — but the big difference is that there is a negotiation; no one is unilaterally tearing up contracts.)

Monday, March 16, 2009

This Makes Me Very Happy

It drops April 28.

A Whiff of Fascism

President Obama vowed to try to stop the faltering insurance giant American International Group from paying out hundreds of millions of dollars in bonuses to executives, as the administration scrambled to avert a populist backlash against banks and Wall Street that could complicate Mr. Obama’s economic recovery agenda.

White House officials said that the administration is not looking to take A.I.G. to court to stop the company from paying out the bonuses. But they said the Treasury Department would be trying to figure out what they can do to block A.I.G. from making the payments within the legal confines of A.I.G.’s contractual obligations to the executives.
I agree with Russ Roberts: AIG should not be rewarding the people who destroyed the company. Unfortunately, the price of Obama's "populist" posturing is the rule of law. This set's a chilling precedent.

UPDATE: From Business Week:
At least on Wall Street, the honeymoon is over for President Barack Obama.

Polls still show the President has strong popularity among the general U.S. population, and Obama continues to command power in Congress. But among investors, fairly or unfairly, there is griping that the new Obama Administration is at least partly to blame for the recent slide in stocks. Since Nov. 4, Election Day, the broad Standard & Poor's 500-stock index is off about 25%, and since Jan. 20, when Obama took office, the "500" is down 15%.


A lack of details from Geithner disturbed investors, says Quincy Krosby, chief investment strategist at the Hartford (HIG). "Markets need certainty," she says. "The market has been sitting here waiting, waiting, waiting. That allows rumors and conspiracy theories to dominate."

Does anyone else see a connection here?

[HT: Micah]

Saturday, March 14, 2009

Bullshit in America

This is from ABC's John Stossel special Bailouts and Bull, originally titled Bullshit in America. This is my favorite segment, on the "struggling middle class." All six segments are great, though. You can watch them here.

Thursday, March 12, 2009

GMU in the Marketplace of Ideas

In 2002, when I decided to pursue my Bachelor's of Science in Economics at George Mason University, my decision seemed, at least on the surface, a bit risky. Mason was (and, as far as general rankings go, still is) seen as second-to-third-tier school. As a non-local, I was paying significantly higher tuition prices than locals who were opting to go to Mason for less-than intellectual reasons. Worst of all, my grades could have gotten me into a more prestigious institution, whose degree would have given me more marketability after graduation. Yet I still chose Mason.

The "why" of my decision became abundantly clear on arrival. Mason Economics' distinct, radical, intellectual culture attracted some of the best economic faculty in the country. Still, my exposure to Mason's economics education was limited to campus, to the classroom. It was a private, hard to describe experience; it was difficult to communicate the unique (sometimes oddball) point of view of the faculty to those who had not shared the experience first hand.

This is no longer the case.

GMU Econ professors are everywhere now. Their primary claim to fame (besides the prestige of the two Nobel Laureates in the faculty), is their blogging work: theirs are some of the most popular economics blogs on the web. It has translated to a plethora of op-eds, television appearances, magazine articles, podcasts. (Their blogging, with the help of the 2006 basketball team, has resulted in positive attention for the school, too.) The brand is now known as "Masonomics." The Economist has recently taken notice of this phenominon:
AT THE Kaufmann bloggers forum Don Boudreaux, chair of the economics department at George Mason University, said he rewards and encourages blogging amongst his faculty. Perhaps that's why George Mason’s department produces some of the most popular economics blogs. Professors at other universities lamented that this is not typical. Blogging is usually considered a source of distraction that sucks up valuable research time.

Compared to other economics departments, George Mason appears to have developed a comparative advantage in blogging. Lots of top departments produce good research and competition for talent (both new professors and graduate students) is fierce. Anecdotally, it sounds as if George Mason may actually be attracting more quality students and faculty because of the higher profile it gained from blogging.

Blogging may take away from the time professors at George Mason spend doing research. But if blogging is their comparative advantage to professors at, say, Harvard, it may be the most effective means to increase the quality and reputation of the department.

It is not completely surprising that this happened at George Mason. They also may have benefited from the Flutie effect. The past success of its basketball team may have also increased the quality of the university. The advertising effect of a successful sports team brings in revenue (by galvanising alumni with deep pockets) and increases the quality of students (by encouraging more students to apply). However, the Flutie effect generally only really benefits a university if the school turns out to be of high quality but would have otherwise been unknown. Perhaps that explains why blogging may have produced a Flutie effect on the George Mason econ department. They have not completely given up on research.

Joseph Lawler, of The American Spectator, responding to the Economist article writes:
I'm almost tempted to say that I've learned more reading Marginal Revolution, Econlog, Cafe Hayek, and Overcoming Bias than I did getting a degree in economics from a top-20 university. By maintaining these blogs GMU economists have raised the level of discourse with non-economists from basically zero. The GMU economists are not the only economics bloggers, obviously, and they trade arguments and observations with economists from other schools. Before blogs, this running debate and commentary simply was not available to anyone who didn't read the very narrow and officiated arguments in scholarly journals.

An economic historian once mentioned to me that half of all published economic research articles go uncited (except for by their own authors). Which do you think is more valuable: a medium that's one-half totally ignored, or a medium that attracts millions to read and comment every single day? I'll leave you to answer that one but as for me I wouldn't want to be limited to Tyler Cowen's thoughts just a few times a year.

Yet competing economics departments have criticized the new-found prominence of Masonomics. GMU Econ professor Peter Boettke writes:
There is a growing impression that all we do at GMU is public intellectual work in economics (blogs, trade books, op-eds, magazine articles, podcasts, TV shows, etc.) and that little scientific work goes on (journal articles and university press books, presentations at research seminiars and scientific conferences, etc.). A recent graduate from a rather low ranked PhD program actually told one of our students at the AEA meetings that 'Nobody at GMU is a serious economist, they are all philosophers who don't know technical economics.' Such ignorance could be dismissed if it was isolated, but this charge is often repeated by faculty members at would-be rival graduate programs.
Professor Boettke goes on to refute those claims, but that's beside the point. The only way bad economic ideas are defeated is through discourse in the marketplace of ideas. Mason is now a prominent voice for capitalism, one that was rarely heard in the past. The intellectual heft of Masonomics must be defended, yes. But, given the current political climate, Mason's ideological prominence is just as important.

The Heresies of Michael Steele

The NYT reports on some heretical remarks made by Michael Steele, the RNC chairman. First on abortion:
Mr. Steele said that Roe v. Wade was “wrongly decided” and that states should decide the issue. But he also said that the issue was one of “individual choice” and that women had the right to choose abortion. (The R.N.C.’s platform states the party’s opposition to abortion rights.)
And on homosexuality:
Asked whether homosexuality is a choice, Mr. Steele responded no. “I think that there’s a whole lot that goes into the makeup of an individual that, uh, you just can’t simply say, oh, like, ‘Tomorrow morning I’m gonna stop being gay,’” Mr. Steele said. “It’s like saying, ‘Tomorrow morning I’m gonna stop being black.’
The Republican party's backwards positions on the above issues is a function of their religiosity, which they sorely need to shed if they're to remain politically relevant. It looks like Steele, the new face of the GOP, is trying to do just that (or he is just really sloppy with his words).

It will take more than this meager effort, however: Steele has already hastily "clarified" his remarks on abortion, following a swift conservative backlash.

Wednesday, March 11, 2009

Thanks, But No Thanks

As public outrage swells over the rapidly growing cost of bailing out financial institutions, the Obama administration and lawmakers are attaching more and more strings to rescue funds.

The conditions are necessary to prevent Wall Street executives from paying lavish bonuses and buying corporate jets, some experts say, but others say the conditions go beyond protecting taxpayers and border on social engineering.

Some bankers say the conditions have become so onerous that they want to return the bailout money. The list includes small banks like the TCF Financial Corporation of Wayzata, Minn., and Iberia Bank of Lafayette, La., as well as giants like Goldman Sachs and Wells Fargo.

Take Fannie Mae and Freddie Mac, the housing-finance companies that the government now controls. In recent months, they have been told to spend billions of dollars buying bundles of mortgages for which there are no other buyers, and to let homeowners refinance their loans — even if they have no equity.

Such commands are echoes of the 1990s, when Fannie and Freddie tried to balance dueling mandates that required them to make a profit for their shareholders and to serve a public mission of increasing homeownership.

In service of both shareholders and what they asserted was the public good, they borrowed extensively in order to buy and hold mortgages in their own investment portfolios. They purchased billions of dollars in risky subprime mortgages.

As a consequence of having a public mandate, they also had a credit line with the Treasury and their risky business strategies were viewed by the markets as being guaranteed by the government.

Tuesday, March 10, 2009

Future Good News

The X axis is age, beginning with age 18 on the far left. Yellow is the percentage of respondents who replied "none" for religion. (Click on image to enlarge.)

[HT Sullivan]

Monday, March 9, 2009

Good News

From the Washington Post:
The percentage of Americans who call themselves Christians has dropped dramatically over the past two decades, and those who do are increasingly identifying themselves without traditional denomination labels, according to a major study of U.S. religion being released today.

The only group that grew in every U.S. state since the 2001 survey was people saying they had "no" religion; the survey says this group is now 15 percent of the population. Silk said this group is likely responsible for the shrinking percentage of Christians in the United States.

Northern New England has surpassed the Pacific Northwest as the least religious section of the country; 34 percent of Vermont residents say they have "no religion." The report said that the country has a "growing non-religious or irreligious minority." Twenty-seven percent of those interviewed said they did not expect to have a religious funeral or service when they died, and 30 percent of people who had married said their service was not religious. Those questions weren't asked in previous surveys.

Friday, March 6, 2009

On Pretention

BBC News reports on a UK poll, which reveals that two-thirds of the sample admitted to having lied about reading a classic novel "to impress someone." The most lied-about book: Orwell's 1984 (42%). Remarkably, the highly-accessible dystopian novel beat out War and Peace (31%) and Ulysses (25%).

I can't understand how a person can get away with this without being exposed as a phony. Are these people not being asked follow-up questions? Worse, lying about reading books one has no interest in only acknowledges and bolsters the influence that pretentious "taste-makers" wield in the world of the middle and upper brow.

What do people actually like to read?

Asked which authors they really enjoyed reading, more than six out of 10 (61%) chose Harry Potter author JK Rowling, nearly a third (32%) ticked legal thriller writer John Grisham.

More than a fifth (22%) chose Shopaholic author Sophie Kinsella.

I would guess that an intelligent person is more likely to lie in these circumstances, for fear of the dreaded raised eyebrow. In a way, this is the inverse of someone calling a popular or low brow favorite a "guilty pleasure." Chuck Klosterman wrote a brilliant critique of this trend for Esquire a while back:

In and of itself, the phrase "guilty pleasure" seems like a reasonable way to describe certain activities. For example, it is pleasurable to snort cocaine in public restrooms, and it always makes you feel guilty; as such, lavatory cocaine fits perfectly into this category. Drinking more than five glasses of gin before (or during) work generally qualifies as a guilty pleasure. So does having sex with people you barely know, having sex with people you actively hate, and/or having sex with people you barely know but whom your girlfriend used to live with during college (and will now consequently hate). These are all guilty pleasures in a technical sense. However, almost no one who uses the term "guilty pleasure" is referring to activities like these. People who use this term are usually talking about why they like Joan of Arcadia, or the music of Nelly, or Patrick Swayze's Road House. This troubles me for two reasons: Labeling things like Patrick Swayze movies a guilty pleasure implies that a) people should feel bad for liking things they sincerely enjoy, and b) if these same people were not somehow coerced into watching Road House every time it's on TBS, they'd probably be reading A Portrait of the Artist as a Young Man.

Both of these assumptions are wrong.

Klosterman is especially insightful in his analysis of the psychology of those who use the term "guilty pleasure":
[They] fail to realize is that the only people who believe in some kind of universal taste—a consensual demarcation between what's artistically good and what's artistically bad—are insecure, uncreative elitists who need to use somebody else's art to validate their own limited worldview. It never matters what you like; what matters is why you like it. (Emphases added.)
It also doesn't matter if you have no interest in reading a book some critic thinks you "need" to read. You can be an intelligent, well-rounded person and still like Jurassic Park. (The same is not true if you are a fan of its sequel, The Lost Word, however -- that book truly sucked.)

Sunday, March 1, 2009

Homophobia, Public and Private

Reason's Jacob Sollum distinguishes between governmental and private homophobia:

Ideally, the government would leave marriage to the private institutions that handled it for most of its history. Short of that, those institutions and the individuals who follow their teachings should be free to accept or reject gay unions as they see fit, which means they should not have to worry about being sued for unlawful discrimination.

Such fears played a conspicuous role in the Proposition 8 campaign, and the eHarmony case shows they’re not fanciful. Eric McKinley, the gay man who filed the civil rights complaint that forced eHarmony to start matching same-sex couples, says the company’s straights-only policy was “very hurtful,” making him feel like “a second-class citizen.”

Unlike a government that claims exclusive authority to approve adoptions or marriages, eHarmony has plenty of competitors, including online matchmakers that advertise themselves as gay-friendly. Yet McKinley could not bear the thought that one of many dating services chose to focus on heterosexuals. Such intolerance undermines the struggle for gay rights by feeding fears that equal treatment by the government means equal treatment by everyone.

Homophobia -- like racism, sexism, and antisemitism -- is a bigot's right. If the chief troglodyte of a business refuses to provide a service to gay persons (or hire them), then let him -- to his own detriment. Given competition, he and his business will suffer in the end. It is not the business of government to enlighten the hayseeds of America.

Instead, our energy should be focused on the pernicious practice of governmental discrimination, the kind of discrimination that we all pay for. Equal (not special) rights for a minority ultimately boils down to the fact that the individual is the smallest minority there is, and that minority's rights must be protected by the government. Gay marriage, like interracial marriage, should be legal not because gays need "special" privileges from the government, but the same status, as individuals, that straights enjoy.

As long as we still have some semblance of a constitutional republic, we cannot allow the majority to vote away the rights of an individual. But, in the same turn, those individuals also have a right to privately discriminate. It is the market, not the government, who is ultimately the arbiter. (This includes the "market" for friends and acquaintances, those who we choose to fraternize with.) No one is forced to deal with those bigoted individuals or companies.

We choose to deal with them. Unfortunately, the same cannot be said of our dealings with the government.

The Public Gets It...

...but do you, Mr President?

[HT: Cafe Hayek]