The policies foisted upon the country by the Left always hurt those constituencies they think they’ll help, and they backfire in very predictable ways. There are too many instances of that truism to recount, but just a couple of examples follow.
Economic Perils of Precaution
We can start with the interminable non-pharmaceutical interventions (NPIs) imposed in many states during the pandemic. These included shelter-at-home orders, limits on public gatherings, school closures, and the like. These lockdown measures were more severe in so-called blue states controlled by the Democrat Party. But NPIs were a policy failure and did little to stem the pandemic or excess deaths. Moreover, they resulted in the closure of many businesses and massive job losses. The economic burden fell especially hard on low wage earners, as the following chart shows:
For high earners (the red line), the employment decline at the start of the pandemic was small and relatively brief. Less fortunate were those earning under $27,000 annually (the blue line). They suffered a much larger initial decline in employment and had a continuing loss of almost 24% of jobs. While those who lost jobs ultimately received enhanced unemployment compensation and other benefits, the idleness and loss of work experience inflicted long-term damage to health, psyches, and future prospects. Thus, the party with pretensions of championing the cause of the downtrodden was pleased to intervene with policies that undercut the working poor.
But Some Precautions Are “Racist”
Another prominent case in which leftists have harmed those for whom they claim to advocate is the effort to “defund the police”. Low income and minority populations do not favor such a policy because they understand the value of protection against criminal elements who victimize their communities. The residents of these communities are most at risk from gangland violence and homicide. Furthermore, nearly all “victims” of police homicides are armed, and police homicides are closely associated with crime. And again, the sad fact is that crime is heavily concentrated in minority neighborhoods. The statistics do not support assertions of bias in policing. Obviously, these citizens have taken notice that the riots cheered on by the Left have been destructive to their communities.
Crime has spiked in Minneapolisand elsewhere since last summer, when George Floyd’s death sparked interest in the “defund the police” mantra promoted by the Left. And there followed a reduction in police budgets of about 5.2% in aggregate in the 50 largest cities in the country (though not all of these cities made cuts). Moreover, the effectiveness of policing has been undercut more broadly by the substantial legal risk now facing officers who earnestly attempt to enforce the law, as well as more restrictive use-of-force policies.
These changes are an unambiguous disaster for so many good people having the misfortune to live in high-crime areas. And the political disaster is starting to sink in among Democrats, who are already attempting to change the narrative (and seehere). It’s pretty transparent that the “black lives matter” dialectic appeals to Democrats primarily as a selling point of convenience, and not so much when there’s actual blood in the streets.
Only the Obvious Matters
Destructive lockdowns and efforts to “defund the police” are just two examples of a perverse phenomenon. It’s well known to keen observers of the history of Marxism in action that it usually victimizes its presumed beneficiaries. That dynamic is at play under school discipline policies that seek to avoid “disparate impacts” on minority students, leaving other minority school children in disruptive learning environments; gun control initiatives making it difficult for minority residents and businesses to protect themselves; rent controls leading to a deteriorating stock of low-cost housing; wage floors causing low-skilled workers to lose hours, benefits, and jobs; energy policies with regressive impacts on household budgets; tax policies destroying incentives for job creation; and a welfare state creating disincentives to work and promoting family instability. This list goes on and on.
The difficulty leftists have in coming to grips with these unintended consequences is that they can’t see past first-order effects. Like spoiled children, they grasp only the ostensible benefits of their demands. And like bad parents, they behave as if to seek approval of the most spoiled among their presumed charges.
There’s a big disconnect between recent news about escalating inflation and market expectations of inflation. In fact, there’s a big disconnect between market expectations and what we’re hearing from some conservative economists. The latter are predicting more inflation based on the recent spurt in prices and the expansionary policy of the Federal Reserve. Can these disparate views be reconciled?
Market Predictions
Market interest rates are considered pretty good predictors of inflation, at least relative to surveys and macroeconomic models. That’s because a fixed interest return is eroded by inflation, and fixed income investors will bid up interest rates to incorporate a premium to compensate for perceptions of increased inflation risk. This is known as the Fisher Effect, after the economist Irving Fisher. In fact, investors should bid rates up more than one-for-one with expected inflation, because the inflation premium will be taxed. A higher return must compensate for both higher expected inflation and taxes on the increased inflation premium.
After rising by about 1.2% from last summer through mid-March, interest rates on Treasury notes have declined slightly. The earlier run-up anticipated a strengthening economy, but if the increase was due to higher expected inflation, we could say it represented an added premium of about 1%, and that’s roughly in-line with changes in some other market-based gauges of expected inflation (ignoring pandemic lows).
Recent Inflation News
Meanwhile, measured inflation certainly has increased in 2021. I say “measured” because 1) “true” price changes are measured imperfectly, and 2) there is a difference between real inflation, which is a continuing process, and month-to-month changes in prices. Here, we’re really talking about the latter and hoping it doesn’t turn into a bad case of the former!
The green line in the chart below is the percent change in the consumer price index (CPI) from a year earlier. After declining during the pandemic, it rebounded sharply this year to almost 5% in May. The purple line is the increase in the CPI excluding food and energy prices, otherwise known as the “core” CPI. The jumps shown in the chart are well in excess of the market’s assessment of inflation trends.
Both versions of the CPI have jumped in the past few months, but it turns out that durable goods like washing machines, TVs, and (probably) Pelotons have jumped the most sharply. Most of the weakness in prices during the pandemic was in non-durable goods, which stands to reason because so many activities away from home were curtailed. Also noteworthy about these price movements: when measured over a span of two years, prices excluding food and energy have risen at an annualized rate of only 2.6%.
There are two other lines in the chart above that demonstrate much less alarming changes in prices: the orange line is so-called “median” inflation, which is the price change in the median component of the CPI. That is, half of all price components included in the CPI rose faster and half rose slower than the median. It has barely accelerated this year and stood at only about 2.1% higher in May than a year earlier. The blue line is the so-called “trimmed” CPI, or the average price change of the middle 84% of all CPI components. While it has accelerated in 2021, the year-over-year increase was only 2.6% in May.
Thus, the breadth of the jump in prices was limited. The Federal Reserve and a lot of market participants insist that the uptick is narrow and temporary — a transitional phenomenon related to the sluggish recovery of supplies in the post-pandemic environment.
But again, the accuracy of price measures is always in question. For example, the housing cost component of the CPI was up only 2.2% in May from a year ago, but it is calibrated to actual survey data only twice a year, the survey is a weak data source, and we know home prices and rents have risen aggressively. Quality and quantity adjustments are always in question as well. An old approach for businesses dealing with rising costs is to reduce package size, which has been called “shrinkflation”. It seems to be back in vogue.
Inflation Drivers
It’s not yet clear how much wage pressure is occurring now. The economy-wide average hourly earnings data has been distorted over the past 15 months by the changing mix of employment, first shifting toward greater concentration in high-wage (work-at-home) occupations and now shifting back toward lower-wage jobs as the economy reopens. But we know many employers are facing a labor shortage, due in large part to extended unemployment benefits and other pandemic-related aid, so this puts upward pressure on wages. In 2021, minimum wage rates are undergoing substantial increases in 17 states, and a number of large employers such as Amazon have increased their minimum pay rates. That creates competitive pressure for smaller employers to boost pay as well.
The fundamental cause of an “honest-to-goodness” inflation is “too much money chasing too few goods”. The Federal Reserve has certainly given us enough to worry about in that regard. The basic money stock (M1) increased by four-fold in the late winter and early spring of 2020, just as the pandemic was spreading. Today, it is almost five times greater than in early 2020, so growth in the money stock remains quite fast even as the recovery proceeds. No wonder: the U.S. Treasury is issuing about $1 trillion of new debt every four-to-six weeks, and the Fed is essentially monetizing these deficits by purchasing a huge chunk of that debt.
That’s a lot of “helicopter” money… new money! But are there too few goods for it to chase? Or is it really chasing anything? Is it just sitting idle? First, GDP is likely to exceed its pre-pandemic level in the second quarter, despite the fact that private payrolls are still down by about 7 million employees. Of course, that doesn’t eliminate the ostensible imbalance between money and goods, and one might expect a veritable explosion in price inflation under these circumstances.
So far that seems unlikely. The so-called velocity of money (its rate of turnover) has plunged since the start of the pandemic, with no discernible rebound through the first quarter of 2021. That means a lot of the cash is not being used in transactions for real goods, but financial transaction volume has been quite strong in 2020-21. Daily stock trading volume was up by more than 50% in 2020 from 2019, and in the first quarter of 2021 it stood another 34% higher than the 2020 average (though volume tapered in April). This is to say nothing of the increased frenzy in cryptocurrency trading. So, while some money is turning over, the expansion of the money stock remains daunting and pressure might well spill-over into goods prices.
Caution Is a Virtue
So long as the Fed keeps printing money, and assuring investors that it will keep printing money, the equity markets are likely to remain strong. There are mixed signals coming from Fed officials, but the over-riding message is that the recent uptick in prices is largely temporary and limited in scope. That is, they assert that certain prices are being squeezed temporarily by rebounding demand for goods while suppliers play catch-up.
Market expectations of inflation seem to agree with that view, but I have strong trepidations. There are cash reserves held in the private sector to support more aggressive spending.Large companies, consumers, and banks are still holding significant amounts of cash. The Biden Administration is doing its best to spend hand-over-fist. This administration’s energy policy is causing fuel bills to escalate. Home prices and rents are strong. The dollar is down somewhat from pre-pandemic levels, which increases import prices. Finally, the Fed is reluctant to reverse the huge increase in the money supply it engineered during the pandemic. If the recent surge in prices continues, and if higher inflation embeds itself into expectations, it will be all the more difficult for the Fed to correct.
The market and the Fed might be correct in predicting that the spike in measured inflation is temporary. The recent data show that these worrisome price trends have not been broad. Just the same, I don’t want to hold fixed income investments right now: if higher expectations of inflation cause market interest rates to rise, the value of those assets will fall. Stock values should generally keep pace with inflation barring stronger signals of tightening by the Fed. Unfortunately, however, many would suffer in an inflationary environment as wages, fixed assets, and benefits are devalued by rising prices.
Outward trappings of success, even at very modest levels, are seldom durable or predictive of future achievement if not backed by actual performance. That’s one reason why redistributionist policies are so unsuccessful at fostering upward mobility. They fail by focusing on outcomes rather than on addressing more fundamental causes, like skills, training, and well-functioning markets for low-skill labor. The same applies to programs that prescribe quotas on admissions, tuition aid, and hiring. The beneficiaries of these programs are often placed into situations in which they are unprepared. This makes them vulnerable to stigmatization and ultimately failure. And when poor performance is in any way ignored or forgiven, it has an impact on the psyche of the individual and their reputation, and it creates losses to the rest of society.
On the other hand, conditions and policies that lead to economic growth are likely to benefit the lower strata of society and minorities, to the extent that minorities are more concentrated in lower income quantities than non-minorities. We know incentives always matter, and incentives rely on the ability of individuals to act and succeed. Success implies gains to others who have occasion to avail themselves of the individual’s efforts. They are offering rewards for merit! Furthermore, those offers are always increasing in the value created, and thus, in levels of accomplishment. In that way, individuals always have opportunities to strive for growth.
But none of that works unless meritocracy holds sway. LittlBut none of that works unless meritocracy holds sway. Little wonder that meritocracy is so closely tied to a society’s prosperity, as documented in this article and a forthcoming book by Adrian Wooldridge. John Cochrane provides an excellent review and critique of Wooldridge’s thesis along with several lengthy quotes.
Wooldridge disputes the widely-accepted theory that democracy is a determinant of economic growth (also see here), noting that democracy can create economic pitfalls related to majoritarian excesses, whereas merit-based systems of rewards are common to almost all successful economies, including autocracies (Singapore, China) and democracies/republics (the U.S., Japan, Scandinavia), irrespective of the size of government. He offers examples of countries in which meritocratic systems are weak but nepotism or political “clientelism” are strong, with unfortunate results (Greece, Portugal, Italy). You certainly won’t get efficient outcomes when leaders prioritize family, friends, cronies, and political contributors for plum jobs and other rewards.
Of course, there is no pure meritocracy in the world. Rather, there are varying degrees of meritocracy across different societies. Traditionally, the U.S. economic system has relied on merit to a great extent; returns to merit are largely a matter of equal opportunity, though not entirely. Equally talented individuals do not always have access to the same opportunities. In fact, that is the major point of attack against the concept of meritocracy, but it does not imply that the benefits of meritocracy are a myth. There are many institutional dysfunctions that can and should be fixed to overcome the kinds of problems cited by critics, primarily public education, but the old expression “don’t throw the baby out with the bathwater” seems especially apt.
In fact, meritocracy promotes upward mobility. Here is Cochrane on the great paradox underlying the backlash against meritocracy:
“The US paternalistic/aristocratic elite is running away from meritocracy under the banner of ‘social justice’ and ‘racial equity.’ Yet meritocracy throughout history has been a great equalizer, a great leveler, the main way that excluded out-groups could get ahead.”
And on this point, Cochrane quotes Wooldridge:
“… Meritocracy is one of the great building blocks of modernity, along with democracy, capitalism and liberalism. … Is it really the case that meritocracy is a tool of White male privilege? W.E.B. Du Bois and Ruth Bader Ginsburg might have something different to say. Are lotteries or holistic assessments really better ways of distributing educational opportunities than standardized tests? Most of us would hesitate before flying with a pilot who had been chosen by lottery. Do we really want a society in which group identities trump individual abilities? “
To give the critics their due, however, a more refined version of their argument is that “meritocracy is a myth without inclusion”. Fair enough, but again, any shortfall in participation is not the fault of meritocracy per se, but of underlying conditions and policies fostering substandard education, family instability, high crime and incarceration rates, and high rates of unemployment among those with low skills.
An important strand of Wooldridge’s work is the implication that meritocracy is a redeeming feature of some autocratic regimes. Indeed, Wooldridge is not the least bit skeptical that autocratic rule is sustainable, just as long as merit drives rewards. This is a point on which Cochrane differs. An autocracy in which high echelons are populated by the meritorious will constantly grapple with temptations of the powerful to reward their pals. Lines of accountability must be all the stronger to prevent such decay. Furthermore, autocracy usually weds itself to meritocracy only in a conditional sense. For example, in China, one must support the party. These restraints undermine the benefits of meritocracy by offering less autonomy for individuals to leverage their talent.
“Pure” democracy has its own drawbacks, b“Pure” democracy has its own drawbacks, but at least leaders have autonomy while being accountable to a broader class. And as Cochrane says, the greatest dangers of democracy can be addressed under representative democracy along with other means of protecting minorities and individual rights.
The effort to banish meritocracy is madness and the product of a totalitarian mindset. To speak of the “illusion” or “myth” of meritocracy is to contend that talent, preparedness, sound decision-making, workmanship, precision, effort, and value-delivered represent trickery of some sort. Such is the viewpoint of those who take human well-being to be a zero-sum game. But it’s even worse than that. For example, placing lives in the hands of “randomly selected” pilots would invite catastrophe, and while that example is extreme, it clearly illustrates how non-meritocratic approaches are likely to produce negative sums! Putting resources into the hands of individuals with lesser qualifications is always a prescription for waste. Make no mistake: the road to serfdom is well-traveled and can be a very quick trip. Abandoning merit-based rewards would get us a fast start.
Suddenly it’s dawned on many people of good faith that our educational, business, and other institutions have been commandeered by adherents to critical race theory (CRT), which teaches that all social interactions and outcomes must be viewed through the lens of racial identity and exploitation. In fact, it teaches that racism is endemic, whether conscious or unconscious, among people deemed to have privilege. They are labeled as oppressors, especially anyone with white skin. Furthermore, CRT holds that racism is systemic, and therefore the “system”, meaning all of our institutions and social arrangements, must be radically transformed. Some or all of these tenets are taught to our children in public and private schools, and they are embedded in anti-bias and diversity training delivered to employees of government, non-profits, and private companies.
Standing Up To It
It’s easy to see why many have come to view CRT as a racist philosophy in its own right. Teaching children that they are either “oppressors” or “victims” based on the color of their skin, is a deeply flawed and dangerous practice. The revelation of CRT’s cultural inroads has prompted an angry counter-revolution by parents who hope to purge CRT from the curricula in their children’s schools… schools that they PAY FOR as taxpayers. Many other fair-minded people are offended by the sweeping racism and identity politics inherent in CRT. And yet its proponents continue in attempts to gaslight the public. More on that below.
The groundswell of opposition to CRT is evident in explosive meetings of school boards across the country, as well as recent school board elections in which slates of candidates opposed to the teaching of CRT have been victorious (see here, here, and here).
In addition, we’ve seen a number of recent legislative or administrative initiatives at the state level. There are now, or recently have been, efforts in 22 states to ban or restrict the instruction of CRT. In some cases, institutions found to be in violation of the new laws are subject to deadlines to remedy the situation. Otherwise, funding dispersed by their state’s Department of Education may be cut by ten percent, for example.
But It’s Speech
As happy as I am to witness the pushback, it’s fair to ask whether the most severe restrictions are reasonable from an educational point of view. For example, as a social philosophy, and as wrong-headed as I believe it to be, there is no reason CRT can’t be discussed alongside other social philosophies, failed and otherwise, without endorsement. For that matter, we should not insist that schools shield children from the fact that racism exists, and CRT certainly has its place along the spectrum of racism.
For my own part, I believe elective classes covering CRT as one philosophical position among others should be defended, as should instruction in the history of American slavery and Jim Crow laws, for example. However, mandatory training in CRT is unacceptable and, to the extent that students or employees are required to accept its tenets, it constitutes compelled speech. To the extent that certain groups of students are identified as inherently biased, it is a form of defamation and a personal attack.
Legislation
Some states are attempting to ban CRT outright. Others have imposed strictures on certain messages arising from the CRT curriculum. The Florida Department of Education just passed an extremely brief rule stating:
“Instruction on the required topics must be factual and objective, and may not suppress or distort significant historical events, such as the Holocaust, and may not define American history as something other than the creation of a new nation based largely on universal principles stated in the Declaration of Independence.”
The Florida rule prohibits teaching the 1619 Project as part of the history curriculum. This revised “history” of our nation’s founding was sponsored by the New York Times. It insists that the Revolutionary War was fought to preserve American slavery, an assertion that has been condemned as false by many historians (see here and here), though the Left still desperately clings to it. I have no problem with a prohibition on false histories, though again, it’s important for students to learn that slavery was the subject of much debate at the nation’s founding and that it persisted beyond that time. No one kept those facts from us when I was a child. And they didn’t brand white students as oppressors.
While a rulemaking by a state Department of Education is better than nothing, it’s a far cry from an actual piece of legislation. A bill signed into law in Idaho in late March contained substantially the same provisions as the rule promulgated in Florida, but it didn’t proscribe the 1619 Project. The same is true of the bill signed into law in Oklahoma in early May.
In Texas, the state senate passed a bill in May that would ban instruction in any public school or state agency of any of the following:
“… one race or sex is inherently superior to another race or sex
an individual, by virtue of his or her race or sex, is inherently racist, sexist, or oppressive, whether consciously or unconsciously;
an individual, by virtue of his or her race or sex, bears responsibility for actions committed in the past by other members of the same race or sex;
meritocracy or traits such as a hard work ethic are racist or sexist, or were created by … members of a particular race to oppress members of another race.”
A new law in Iowa and abill signed by the governor of Tennessee in late May contained similar provisions, essentially banning instruction of some highly objectionable tenets of CRT. However, the Iowa and Tennessee laws are careful to spell out what the law should not be construed to do. For example, these laws do not:
“—Inhibit or violate the first amendment rights of students or faculty, or undermine a school district’s duty to protect to the fullest degree intellectual freedom and free expression. —Prohibit discussing specific defined concepts as part of a larger course of academic instruction. —Prohibit the use of curriculum that teaches the topics of sexism, slavery, racial oppression, racial segregation, or racial discrimination, including topics relating to the enactment and enforcement of laws resulting in sexism, racial oppression, segregation, and discrimination.“
A bill in the Missouri House mentions a few such protections. However, the Missouri bill is general in the sense that it explicitly bans the instruction of CRT by name, rather than simply blocking a few unsavory messages of CRT, as detailed by Texas and a few other states. Utah’s legislation, which is awaiting the governor’s signature, is also quite brief and explicit in its prohibition of CRT. I greatly prefer the Texas approach, however, as it makes clear that discussions of CRT in the classroom are not precluded, as might be inferred from the language of the Missouri bill.
But, But… You Just Don’t Get It!
PProtests against these legislative actions have shown a certain tone-deaf belligerence. According to an organization called Black Lives Matter at School and the Zinn Education Project, all the protesters want is a curriculum that illuminates:
“… full and accurate U.S. history and current events … rais[ing] awareness of the dangers of lying to students about systemic racism and other forms of oppression.”
One advocate says they must be free to teach the “truth” of our nation’s foundational and ongoing structural racism. The Missouri bill, they say, “fails to note ‘a single lesson’ which is ‘inaccurate’ or ‘misleads’ students.” It’s not as if it’s necessary for legislation to provide a series of examples, but be that as it may, these CRT advocates know exactly what many find objectionable. Essentially, their response is, “You don’t understand CRT! WE are the experts on systemic, institutional racism.” What they believe is somehow, every negative outcome is actuated by racism of one kind or another, past or present.
Divining the “Fault” Line
Are you below the poverty line? Earning less than a “living wage”? Are you unemployed? Is your credit score lousy? Do you live in a high crime area? In a “food desert”? Are you a single parent? Did you receive a failing grade? Is your rent going up? Did someone fail to defer to you? Did they “disrespect” you, whatever your definition? Were you scolded for being late?
Of course, none of those “outcomes” is exclusive to people of color or minorities. But wait! Someone else is earning a decent income. They got good grades. They have a high credit score. They drive a nice car. They have skills.
Does any of that make them guilty of oppression? Does this have something to do with YOU?
Well, you see, CRT teaches us that every unequal outcome must be the consequence of unjust, “disparate impacts” inherent to the social and economic order. To be clear, outcomes are a legitimate subject of policy debate, and we should aim for improved well-being across the board. The point that defenders of CRT miss is that unequal outcomes are seldom diabolic in and of themselves. Real indications of injustice, past or present, do not imply that any one class of individuals is inherently racist or behaves in a discriminatory manner.
Critical Theory Is a Fraud
Critical race “theory” is nothing but blame in fraudulent “search” of perpetrators. It is fraudulent because the perps are already identified in advance. It is “critical” because someone or something deserves blame. The real exercise is to spin a tale of misused privilege and biased conduct by the privileged perps against a set of oppressed victims.
CRT is not just one theory, but a whole slew of theories of blame. The very attitudes of the purveyors of CRT show they do not believe their “theories” are falsifiable. And indeed, allegations of unconscious bias are impossible to falsify. Thus, CRT is not a theory, as such. It amounts to a polemic, and it should only be discussed as such. It certainly shouldn’t be taught as “truth” to children, university students, or employees. More states should jump on-board to restrict the CRT putsch to propagandize.
Factions comprising a majority of the public want to see SOMETHING done to curb the power of Big Tech, particularly Google/Alphabet, Facebook, Amazon, and Twitter. The apprehensions center around market power, censorship, and political influence, and many of us share all of those concerns. The solutions proposed thus far generally fall into the categories of antitrust action and legislative changes with the intent to protect free speech, but it is unlikely that anything meaningful will happen under the current administration. That would probably require an opposition super-majority in Congress. Meanwhile, some caution the problem is blown out of proportion and that we should not be too eager for government to intervene.
Competition
There are problems with almost every possible avenue for reining in the tech oligopolies. From a libertarian perspective, the most ideal solution to all dimensions of this problem is organic market competition. Unfortunately, the task of getting competitive platforms off the ground seems almost insurmountable. In social media, the benefits to users of a large, incumbent network are nearly overwhelming. That’s well known to anyone who’s left Facebook and found how difficult it is to gain traction on other social media platforms. Hardly anyone you know is there!
Google is the dominant search engine by far, and the reasons are not quite as wholesome as the “don’t-be-evil” mantra goes. There are plenty of other search engines, but some are merely shells using Google’s engine in the background. Others have privacy advantages and perhaps more balanced search results than Google, but with relatively few users. Google’s array of complementary offerings, such as Google Maps, Street View, and Scholar, make it hard for users to get away from it entirely.
Amazon has been very successful in gaining retail market share over the years. It now accounts for an estimated 50% of retail e-commerce sales in the U.S., according to Statista. That’s hardly a monopoly, but Amazon’s scale and ubiquity in the online retail market creates massive advantages for buyers in terms of cost, convenience, and the scope of offerings. It creates advantages for online sellers as well, as long as Amazon itself doesn’t undercut them, which it is known to do. As a buyer, you almost have to be mad at them to bother with other online retail platforms or shopping direct. I’m mad, of course, but I STILL find myself buying through Amazon more often than I’d like. But yes, Amazon has competition.
Anti-Trust
Quillettefavors antitrust action against Big Tech. Amazon and Alphabet are most often mentioned in the context of anti-competitive behavior, though the others are hardly free of complaints along those lines. Amazon routinely discriminates in favor of products in which it has a direct or indirect interest, and Google discriminates in favor of its own marketplace and has had several costly run-ins with EU antitrust enforcers. Small businesses are often cited as victims of Google’s cut-throat business tactics.
The Department of Justice filed suit against Google in October, 2020 for anti-competitive and exclusionary practices in the search and search advertising businesses. The main thrust of the charges are:
Exclusivity agreements prohibiting preinstallation of other search engines;
Tying arrangements forcing preinstallation of Google and no way to delete it;
Suppressing competition in advertising;
There are two other antitrust cases filed by state attorneys generalagainst Google alleging monopolistic practices benefitting its own services at the expense of sellers in various lines of business. All of these cases, state and federal, are likely to drag on for years and the outcomes could take any number of forms: fines, structural separation of different parts of the business, and divestiture are all possibilities. Or perhaps nothing. But I suppose one can hope that the threat of anti-trust challenges, and of prolonged battles defending against such charges, will have a way of tempering anti-competitive tendencies, that is, apart from actual efficiency and good service.
These cases illustrate the fundamental tension between our desire for successful businesses to be rewarded and antitrust. As free market economists such as Murray Rothbard have said, there is something “arbitrary and capricious” about almost any anti-trust action. Legal thought on the matter has evolved to recognize that monopoly itself cannot be viewed as a crime, but the effort to monopolize might be. But as Rothbard asserted, claims along those lines tend to be rather arbitrary, and he was quite right to insist that the only true monopoly is one granted by government. In this case, many conservatives believe Section 230 of the Communications Decency Act of 1996 was the enabling legislation. But that is something anti-trust judgements cannot rectify.
Revoking Immunity
Section 230 gives internet service providers immunity against prosecution for any content posted by users on their platforms. While this provision is troublesome (see below), it is not at all clear why it might have encouraged monopolization, especially for web search services. At the time of the Act’s passage, Larry Page and Sergey Brin had barely begun work on Backrub, the forerunner to Google. Several other search engines had already existed and others have sprung up since then with varying degrees of success. Presumably, all of them have benefitted from Section 230 immunity, as have all social media platforms: not just Facebook, but Twitter, MeWe, Gab, Telegram, and others long forgotten, like MySpace.
Nevertheless, while private companies have free speech rights of their own, Section 230 confers undeserved protection against liability for the tech giants. That protection was predicated on the absence of editorial positioning and/or viewpoint curation of content posted by users. Instead, Section 230 often seems designed to put private companies in charge of censoring the kind of speech that government might like to censor. Outright repeal has been used as a threat against these companies, but what would it accomplish? The tech giants insist it would mean even more censorship, which is likely to be the result.
Other Legislative Options
Other legislative solutions might hold the key to establishing true freedom of speech on the internet, a project that might have seemed pointless a decade ago. Justice Clarence Thomas’s concurring opinion in Biden v. Knight First Amendment Institute suggested the social media giants might be treated as common carriers or made accountable under laws on public accommodation. This seems reasonable in light of the strong network effects under which social media platforms operate as “public squares.” Common carrier law or a law designating a platform as a public accommodation would prohibit the platform from discriminating on the basis of speech.
I do not view such restrictions in the same light as so-called net neutrality, as some do. The latter requires carriers of data to treat all traffic equally in terms of priority and pricing of network resources, despite the out-sized demands created by some services. It is more of a resource allocation issue and not at all like managing traffic based on its political content.
The legislation contemplated by free speech activists with respect to big tech has to do with prohibiting viewpoint discrimination. That could be accomplished by laws asserting protections similar to those granted under the so-called Fairness Doctrine. As Daniel Oliver explains:
“A law prohibiting viewpoint discrimination (Missouri Senator Josh Hawley has introduced one such bill) would be just as constitutional as the Fairness Doctrine, an FCC policy which adjusted the overall balance of broadcast programming, or the Equal Time Rule, which first emerged in the Radio Act of 1927 and was established by the Communications Act of 1934. Under such a law, a plaintiff could sue for viewpoint discrimination. That plaintiff would be someone whose message had been suppressed by a tech company or whose account had been blocked or cancelled….”
Ron DeSantis just signed a new law giving the state of Florida or individuals the right to sue social media platforms for limiting, altering or deleting content posted by users, as well as daily fines for blocking candidates for political office. It will be interesting to see whether any other states pass similar legislation. However, the fines amount to a pittance for the tech giants, and the law will be challenged by those who say it compels speech by social media companies. That argument presupposes an implicit endorsement of all user content, which is absurd and flies in the face of the very immunity granted by Section 230.
Justice Thomas went to pains to point out that when the government restricts a platform’s “right to exclude,” the accounts of public officials can more clearly be delineated as public forums. But in an act we wouldn’t wish to emulate, the government of Nigeria just shut down Twitter for blocking President Buhari’s tweet threatening force against rebels in one part of the country. Still, any law directly restricting a platform’s editorial discretion must be enforceable, whether that involves massive financial penalties for violations or some other form of discipline.
Private Action
There are private individuals who care enough about protecting speech online to do something about it. For example, these tech executives are fighting against internet censorship. You can also complain directly to the platforms when they censor content, and there are ways to react to censored posts by following prompts — tell them the information provided on their decision was NOT helpful and why. You can follow and support groups like the Media Research Center and its Censor Track service, or the Internet Accountability Project. Complain to your state and federal legislators about censorship and tell them what kind of changes you want to see. Finally, if you are serious about weakening the grip of the Big Tech, ditch them. Close your accounts on Facebook and Twitter. Stop using Google. Cancel your Prime membership. Join networks that are speech friendly and stick it out.
Individual action and a sense of perspective are what Katherine Mangu-Ward urges in this excellent piece:
“Ousted from Facebook and Twitter, Trump has set up his own site. This is a perfectly reasonable response to being banned—a solution that is available to virtually every American with access to the internet. In fact, for all the bellyaching over the difficulty of challenging Big Tech incumbents, the video-sharing app TikTok has gone from zero users to over a billion in the last five years. The live audio app Clubhouse is growing rapidly, with 10 million weekly active users, despite being invite-only and less than a year old. Meanwhile, Facebook’s daily active users declined in the last two quarters. And it’s worth keeping in mind that only 10 percent of adults are daily users of Twitter, hardly a chokehold on American public discourse.
Every single one of these sites is entirely or primarily free to use. Yes, they make money, sometimes lots of it. But the people who are absolutely furious about the service they are receiving are, by any definition, getting much more than they paid for. The results of a laissez-faire regime on the internet have been remarkable, a flowering of innovation and bountiful consumer surplus.”
Conclusion
The fight over censorship by Big Tech will continue, but legislation will almost certainly be confined to the state level in the short-term. It might be some time before federal law ever recognizes social media platforms as the public forums most users think they should be. Federal legislation might someday call for the wholesale elimination of Section 230 or an adjustment to its language. A more direct defense of First Amendment rights would be strict prohibitions of online censorship, but that won’t happen. Instead, the debate will become mired in controversy over appropriate versus inappropriate moderation, as Mangu-Ward alludes. Antitrust action should always be viewed with suspicion, though some argue that it is necessary to establish a more competitive environment, one in which free speech and fair search-engine treatment can flourish.
Organic competition is the best outcome of all, but users must be willing to vote with their digital feet, as it were, rejecting the large tech incumbents and trying new platforms. And when you do, try to bring your friends along with you!
The world’s gone far astray in attempts to battle climate change through forced reductions in carbon emissions. Last Wednesday, in an outrageously stupid ruling,a Dutch court ordered Royal Dutch Shell to reduce its emissions by 45% by 2030 relative to 2019 levels. It has nothing to do with Shell’s historical record on the environment. Rather, the Court said Shell’s existing climate action plans did not meet “the company’s own responsibility for achieving a CO2 reduction.” The decision will be appealed, but it appears that “industry agreements” under the Netherlands’ Climate Act of 2019 are in dispute.
Later that same day, a shareholder dissident group supporting corporate action on climate change won at least two ExxonMobil board seats. And then we have the story of John Kerry’s effort to stop major banks from lending to the fossil fuel industry. Together with the Biden Administration’s other actions on energy policy, we are witnessing the greatest attack on conventional power sources in history, and we’ll all pay dearly for it.
The Central Planner’s Conceit
Technological advance is a great thing, and we’ve seen it in the development of safe nuclear power generation, but the environmental left has successfully placed roadblocks in the way of its deployment. Instead, they favor the mandated adoption of what amount to beta versions of technologies that might never be economic and create extreme environmental hazards of their own (see here, here, here, and here). To private adopters, green energy installations are often subsidized by the government, disguising their underlying inefficiencies. These premature beta versions are then embedded in our base of productive capital and often remain even as they are made obsolete by subsequent advances. The “putty-clay” nature of technology decisions should caution us against premature adoptions of this kind. This is just one of the many curses of central planning.
Not only have our leftist planners forced the deployment of inferior technologies: they are actively seeking to bring more viable alternatives to ruination. I mentioned nuclear power and even natural gas offer a path for reducing carbon emissions, yet climate alarmists wage war against it as much as other fossil fuels. We have Kerry’s plot to deny funding for the fossil fuel industry and even activist “woke” investors, attempting to override management expertise and divert internal resources to green energy. It’s not as if renewable energy sources are not already part of these energy firms’ development portfolios. Allocations of capital and staff to these projects are usually dependent upon a company’s professional and technical expertise, market forces, and (less propitiously) incentives decreed by the government. Yet, the activist investors are there to impose their will.
Placing Faith and Fate In Models
All these attempts to remake our energy complex and the economy are based on the presumed external costs associated with carbon emissions. Those costs, and the potential savings achievable through the mitigation efforts of government and private greenies around the globe, have been wildly exaggerated.
The first thing to understand about the climate “science” relied upon by the environmental left is that it is almost exclusively model-dependent. In other words, it is based on mathematical relationships specified by the researchers. Their projections depend on those specs, the selection of parameter values, and the scenarios to which they are subjected. The models are usually calibrated to be roughly consistent with outcomes over some historical time period, but as modelers in almost any field can attest, that is not hard to do. It’s still possible to produce extreme results out-of-sample. The point is that these models are generally not estimated statistically from a lengthy sample of historical data. Even when sound statistical methodologies are employed, the samples are blinkingly short on climatological timescales. That means they are highly sample-specific and likely to propagate large errors out-of-sample. But most of these are what might be called “toy models” specified by the researcher. And what are often billed as “findings” are merely projections based on scenarios that are themselves manufactured by imaginative climate “researchers” cum grant-seeking partisans. In fact, it’s much worse than that because even historical climate data is subject to manipulation, but that’s a topic for another day.
Key Assumptions
What follows are basic components of the climate apocalypse narrative as supported by “the science” of man-made or anthropomorphic global warming (AGW):
(A) The first kind of model output to consider is the increase in atmospheric carbon concentration over time, measured in parts per million (PPM). This is a function of many natural processes, including volcanism and other kinds of outgassing from oceans and decomposing biomass, as well absorption by carbon sinks like vegetation and various geological materials. But the primary focus is human carbon generating activity, which depends on the carbon-intensity of production technology. As Ross McKitrick shows (see chart below), projections from these kinds of models have demonstrated significant upside bias over the years. Whether that is because of slower than expected economic growth, unexpected technological efficiencies, an increase in the service-orientation of economic activity worldwide, or feedback from carbon-induced greening or other processes, most of the models have over-predicted atmospheric carbon PPM. Those errors tend to increase with the passage of time, of course.
(B) Most of the models promoted by climate alarmists are carbon forcing models, meaning that carbon emissions are the primary driver of global temperatures and other phenomena like storm strength and increases in sea level. With increases in carbon concentration predicted by the models in (A) above, the next stage of models predicts that temperatures must rise. But the models tend to run “hot.” This chart shows the mean of several prominent global temperature series contrasted with 1990 projections from the Intergovernmental Panel on Climate Change (IPCC).
The following is even more revealing, as it shows the dispersion of various model runs relative to three different global temperature series:
And here’s another, which is a more “stylized” view, showing ranges of predictions. The gaps show errors of fairly large magnitude relative to the mean trend of actual temperatures of 0.11 degrees Celsius per decade.
(C) Climate sensitivity to “radiative forcing” is a key assumption underlying all of the forecasts of AGW. A simple explanation is that a stronger greenhouse effect, and increases in the atmosphere’s carbon concentration, cause more solar energy to be “trapped” within our “greenhouse,” and less is radiated back into space. Climate sensitivity is usually measured in degrees Celsius relative to a doubling of atmospheric carbon.
And how large is the climate’s sensitivity to a doubling of carbon PPM? The IPCC says it’s in a range of 1.5C to 4.5C. However, findings published by Nic Lewis and Judith Curry are close to the low end of that range, and are those found by the author of the paper described here.
In separate efforts, Finnish and Japanese researchers have asserted that the primary cause of recent warming is an increase in low cloud cover, which the Japanese team attributes to increases in the Earth’s bombardment by cosmic rays due to a weakening magnetic field. The Finnish authors note that most of the models used by the climate establishment ignore cloud formation, an omission they believe leads to a massive overstatement (10x) of sensitivity to carbon forcings. Furthermore, they assert that carbon forcings are mainly attributable to ocean discharge as opposed to human activity.
(D) Estimates of the Social Cost of Carbon (SCC) per ton of emissions are used as a rationale for carbon abatement efforts. The SCC was pioneered by economist William Nordhaus in the 1990s, and today there are a number of prominent models that produce distributions of possible SCC values, which tend to have high dispersion and extremely long upper tails. Of course, the highest estimates are driven by the same assumptions about extreme climate sensitivities discussed above. The Biden Administration is using an SCC of $51 per ton. Some recommend the adoption of even higher values for regulatory purposes in order to achieve net-zero emissions at an early date, revealing the manipulative purposes to which the SCC concept is put. This is a raw attempt to usurp economic power, not any sort of exercise in optimization, as this admission from a “climate expert” shows. In the midst of a barrage of false climate propaganda (hurricanes! wildfires!), he tells 60 Minutes that an acceptable limit on warming of 1.5C is just a number they “chose” as a “tipping point.”
As a measurement exercise, more realistic climate sensitivities yield much lower SCCs. McKitrick presents a chart from Lewis-Curry comparing their estimates of the SCC at lower climate sensitivities to an average of earlier estimates used by IPCC:
High levels of the SCC are used as a rationale for high-cost carbon abatement efforts. If the SCC is overstated, however, then costly abatements represent waste. And there is no guarantee that spending an amount on abatements equal to the SCC will eliminate the presumed cost of a ton’s worth of anthropomorphic warming. Again, there are strong reasons to believe that the warming experienced over the past several decades has had multiple causes, and human carbon emissions might have played a relatively minor role.
Crisis Is King
Some people just aren’t happy unless they have a crisis over which to harangue the rest of us. But try as they might, the vast resources dedicated to carbon reduction are largely wasted. I hesitate to say their effort is quixotic because they want more windmills and are completely lacking in gallantry. As McKitrick notes, it takes many years for abatement to have a meaningful impact on carbon concentrations, and since emissions mix globally, unilateral efforts are practically worthless. Worse yet, the resource costs of abatement and lost economic growth are unacceptable, especially when some of the most promising alternative sources of “clean” energy are dismissed by activists. So we forego economic growth, rush to adopt immature energy alternatives, and make very little progress toward the stated goals of the climate alarmists.
In advanced civilizations the period loosely called Alexandrian is usually associated with flexible morals, perfunctory religion, populist standards and cosmopolitan tastes, feminism, exotic cults, and the rapid turnover of high and low fads---in short, a falling away (which is all that decadence means) from the strictness of traditional rules, embodied in character and inforced from within. -- Jacques Barzun
Sacred Cow Chips 