Author Archives: Nuetzel

Climbing Up: Economic Mobility In the U.S.

29 Monday Oct 2018

Posted by in Inequality, Markets, Redistribution

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One of the great sacred cows of current economic discourse is that U.S. living standards have been stagnant for decades, coincident with a severe lack of economic mobility (I know, those are goats!). These assertions have been made by people with the training to know better, and by members of the commentariat who certainly would not know better. But Russ Roberts has a great article on the proper measurement of these trends and how poorly that case stacks up. I have made some of the same points in the past (and here), but Roberts’ synthesis is excellent.

Those who insist that income growth has languished or even declined in real terms over the past 40 years have erred in several ways. They usually ignore non-wage benefits (for which workers often receive favorable tax treatment) and other forms of income. Roberts notes that income tax returns leave about 40% of income unreported, and a lot of it goes to individuals in lower income strata. In addition, the studies often use flawed inflation gauges, fail to adjust correctly for various demographic trends in the identification of “households”, and most importantly, fail to follow the same individuals over time. The practice of taking “snapshots” of the income distribution at two different points in time, and then comparing the same percentiles from those snapshots, is inappropriate for addressing the question of income mobility. Instead, the question is how specific individuals or cohorts have migrated across time. Generally incomes grow as people age through their working lives.

Roberts discusses some studies that follow individuals over time, rather than percentiles, to see how they have fared:

From a study comparing the 1960s and the early 2000s:

“… 84% earned more than their parents, corrected for inflation. But 93% of the children in the poorest households, the bottom 20% surpassed their parents. Only 70% of those raised in the top quintile exceeded their parent’s income.”

 In another study compared children born in 1980:

“… 70% of children born in 1980 into the bottom decile exceed their parents’ income in 2014. For those born in the top 10%, only 33% exceed their parents’ income.”

Another study finds:

“The children from the poorest families ended up twice as well-off as their parents when they became adults. The children from the poorest families had the largest absolute gains as well. Children raised in the top quintile did no better or worse than their parents once those children became adults.”

The next study cited by Roberts compares adults at two stages of life:

“The study looks at people who were 35–40 in 1987 and then looks at how they were doing 20 years later, when they are 55–60. The median income of the people in the top 20% in 1987 ended up 5% lower twenty years later. The people in the middle 20% ended up with median income that was 27% higher. And if you started in the bottom 20%, your income doubled. If you were in the top 1% in 1987, 20 years later, median income was 29% lower.”

And here’s one more:

“… when you follow the same people, the biggest gains go to the poorest people. The richest people in 1980 actually ended up poorer, on average, in 2014. Like the top 20%, the top 1% in 1980 were also poorer on average 34 years later in 2014.”

These studies show impressive mobility across the income distribution, but is it still true that overall incomes have been flat? No, for reasons mentioned earlier: growth in benefits and unreported income have been dramatic, and inflation measures used to “deflate” nominal income income gains are notoriously poor. When the prices of many goods are expressed in terms of labor hours, there is no doubt that living standards have advanced tremendously. It is all the more impressive in view of the quality improvements that have occurred over the years.

The purported income stagnation and lack of mobility are also said to be associated with an increasingly unequal distribution of income. The OECD reports that the distribution of income in the U.S. is relatively unequal compared to other large, developed countries, but the definitions and accuracy of these comparisons are not without controversy. A more accurate accounting for incomes after redistribution via taxes and transfer payments would place the U.S. in the middle of the pack. And while measures of income inequality have trended upward, consumption inequality has not, which suggests that the income comparisons may be distorted.

Contrary to the oft-repeated narrative, U.S. living standards have not stagnated since the 1970s, nor have U.S. households been plagued by a lack of economic mobility. It’s easy to understand the confusion suffered by journalists on these points, but it’s horrifying to realize that such mistaken interpretations of data are actually issued by economists. Even more disappointing is that these misguided narratives are favorite talking points of class warriors and redistributionists, whose policy recommendations would bring-on real stagnation and immobility. That’s the subject of a future post, or posts. For now, I’ll let it suffice to say that it is the best guarantee of mobility is the preservation of economic freedom and opportunity by limiting the size and scope of government, creating a more neutral tax code, and encouraging markets to flourish.

The Non-Trend In Hurricane Activity

18 Thursday Oct 2018

Posted by in Global Warming, Hurricanes

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People are unaccountably convinced that there is an upward trend in severe weather events due to global warming. But there is no upward trend in the data on either the frequency or severity of those events. Forget, for the moment, the ongoing debate about the true extent of climate warming. In fact, I’ll stipulate that warming has occurred over the past 40 years, though most of it was confined to the jump roughly coincident with two El Ninos in the 1990s; there’s been little if any discernible trend since. But what about the trend in severe weather? I’ve heard people insist that it is true, but a few strong hurricanes do not constitute a trend.

The two charts at the top of this post were created by hurricane expert Ryan N. Maue. I took them from an article by David Middleton., but visit Maue’s web site on tropical cyclone activity for more. The last month plotted is September 2018, so the charts do not account for Hurricane Michael and the 2018 totals are for a partial year. The first nine months of each year typically accounts for about 3/4 of annual tropical cyclones, so 2018 will be a fairly strong year. Nevertheless, the charts refute the contention that there has been an upward trend in tropical cyclone activity. In fact, in the lower chart, the years following the 1990s increase in global temperatures is shown to have been a time a lower cyclone energy. Roy Spencer weighs in on the negative trend in major landfalling hurricanes in the U.S. and Florida stretching over many decades.

Warren Meyer blames ‘”media selection bias” for the mistaken impression of dangerous trends that do not exist. That is, the news media are very likely to report extreme events, as they should, but they are very unlikely to report a paucity of extreme events, no matter how lengthy or unusual the dearth:

“Does anyone doubt that if we were having a record-heavy tornado season, this would be leading every newscast?  [But] if a record-heavy year is newsworthy, shouldn’t a record-light year be newsworthy as well?  Apparently not.” 

It so happens that 2018, thus far, has seen very close to a record low number of tornadoes in the U.S.

Meyer also highlights the frequent use of misleading statistics on the real value of damage from natural disasters. That aggregate value has almost certainly grown over the years, but it had nothing to do with the number or severity of natural disasters. Meyer explains:

“Think about places where there are large natural disasters in the US — two places that come to mind are California fires and coastal hurricanes. Do you really think that the total property value in California or on the US coastline has grown only at inflation? You not only have real estate price increases, but you have the value of new construction. The combination of these two is WAY over the 2-3% inflation rate.”

Recent experiences are always the most vivid in our minds. The same is true of broad impressions drawn from reports on the most recent natural disasters. The drama and tragedy of these events should never be minimized, and the fact that there is no upward trend in cyclone activity is no consolation to victims of those disasters. Still, the media can’t seem to resist the narrative that the threat of such events is increasing, even if it can’t be proven. Indeed, even if it’s not remotely correct. Reporters are human and generally not good at science, and they are not immune to the tendency to exaggerate the significance of events upon which they report. A dangerous, prospective trend is at once scary, exciting, and possibly career-enhancing. As for the public, sheer repetition is enough to convince most people that such a threat is undeniable… that everybody knows it… that the trend is already underway. The fact is that the upward trend in hurricane activity (and other kinds of severe weather) is speculative, not real.

Injecting Competition Into Health Care

12 Friday Oct 2018

Posted by in competition, Health Care, Uncategorized

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Competitive pressures in U.S. health care delivery are weak to nonexistent, and their absence is among the most important drivers of our country’s high medical costs. Effective competition requires multiple providers and/or substitutes, transparent prices, and budget-conscious buyers, but all three are missing or badly compromised in most markets for health care services. This was exacerbated by Obamacare, but even now there are developments in “retail” health care that show promise for the future of competition in health care markets. The situation is not irreversible, but some basic policy issues must be addressed.

John Cochrane maintains that the question of “who will pay” for health care, while important, has distracted us from the matter of fostering more competition among providers:

“The discussion over health policy rages over who will pay — private insurance, companies, “single payer,” Obamacare, VA, Medicare, Medicaid, and so on — as if once that’s decided everything is all right — as if once we figure out who is paying the check, the provision of health care is as straightforward a service as the provision of restaurant food, tax advice, contracting services, airline travel, car repair, or any other reasonably functional market for complex services.”

We face a severe tradeoff in health care: how to provide for the needs of more patients (e.g., the uninsured, or a growing elderly population) without driving up the cost of care? As a policy matter, provider resources should not be viewed as fixed; their quantity and the efficiency with which those resources are utilized are responsive to forces that can be harnessed. Fixing the supply side of the health care market by improving the competitive environment is the one sure way to deliver more care at lower cost.

Fishy Hospital Contracts

Cochrane discusses some anti-competitive arrangements in health care delivery, quoting liberally from an article by Anna Wilde Mathews in The Wall Street Journal, “Behind Your Rising Health-Care Bills: Secret Hospital Deals That Squelch Competition“:

“Dominant hospital systems use an array of secret contract terms to protect their turf and block efforts to curb health-care costs. As part of these deals, hospitals can demand insurers include them in every plan and discourage use of less-expensive rivals. Other terms allow hospitals to mask prices from consumers, limit audits of claims, add extra fees and block efforts to exclude health-care providers based on quality or cost.”

Mathews’ article is gated, but Cochrane quotes enough of its content to convey the dysfunction described there. Also of interest is Cochrane’s speculation that the hospital contract arrangements are driven largely by cross subsidies mandated by government:

“The government mandates that hospitals cover indigent care, and medicare and medicaid below cost. The government doesn’t want to raise taxes to pay for it. So the government allows hospitals to overcharge insurance (i.e. you and me, eventually). But overcharges can’t withstand competition, so the government allows, encourages, and even requires strong limits on competition.”

The Role of Cross Subsidies

In this connection, Cochrane notes the perverse ways in which Medicare and Medicaid compensate providers, allowing large provider organizations to charge more than small  ones for the same services. Again, that helps the hospitals cover the costs of mandated care, regulatory costs, and the high administrative and physical costs of running large facilities. It also creates an obvious incentive to consolidate, reaping higher charges on an expanded flow of services and squelching potential competition. And of course the cross subsidies create incentives for large providers to lock-in business from insurers under restrictive contract agreements. Such acts restrain trade, pure and simple.

Cross subsidies, or building subsidies into the prices that buyers must pay, are thus an impediment to competition in health care, beyond the poor incentives they create for subsidized and non-subsidized buyers. So the “who pays” question rears it’s head after all. When subsidies are necessary to provide for those truly unable to pay for care, it is far better to compensate those individuals directly without distorting prices. That represents a huge policy change, but it would also help restore competition.

Competitive Sprouts

John C. Goodman provides a number of examples of how well competition in health care delivery can work. Most of them are about “retail medicine”, as it’s been called. This includes providers like MinuteClinic (CVS), LASIK and cosmetic surgery, concierge doctors, and “retail” surgical services. Goodman also mentions MediBid, a platform on which doctors bid to provide services for patients, and Ameriflex, which matches employers with concierge doctors. These services, which either bypass third-party payers or connect employer-payers with competitive providers, are having a real impact on the ability of patients to obtain care at a lower cost. Goodman says:

“I am often asked if the free market can work in health care. My quick reply is: That is the only thing that works. At least, it is the only thing that works well.”

Conclusion

Some of the most pernicious Obamacare cross subsidies have been dismantled via elimination of the individual mandate and allowing individuals to purchase short-term insurance. Nonetheless, U.S. health care delivery is still riddled with cross subsidies and excessive regulation of providers, including all the distortions caused by third-party payments and the tax code. Many buyers lack an incentive for price sensitivity. They face restrictions on their choice of providers, they don’t know the prices being charged, and they often don’t care because at the margin, someone else is paying. Fostering competition in health care delivery does not necessarily require an end to third-party payments, but the cross subsidies must go, employers should actively seek competitive solutions to controlling health care costs, price transparency must improve, and consumers must face incentives that encourage economies.

The Court and Kavanaugh

08 Monday Oct 2018

Posted by in Supreme Court

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There are both great and hysterically negative expectations for Brett Kavanaugh’s seating on the Supreme Court, depending on one’s perspective. The changes are likely to be much less dramatic than many think, however, according to Glenn Reynolds in his Sunday column. As he says, most cases before the Supreme Court are decided by easy majorities, and that won’t change. On split decisions, Kavanaugh will be less of a “swing vote” than Anthony Kennedy, no doubt, and he will have influence over the choice of cases to be heard by the Court because the selection of a case requires only four justices.

Reynolds thinks Kavanaugh is not as conservative as partisans hope or fear. For example, Reynolds believes he is unlikely to vote to overturn Roe vs. Wade, when and if that question comes before the Court. There may be shifts on narrower questions, such as an earlier definition of fetal viability (in recognition of improved medical technology) and greater protection against arrangements that facilitate illegal funding of abortions by federal taxpayers. Reynolds acknowledges, however, that Kavanaugh is a stronger advocate of Second Amendment rights than Kennedy, so those protections are less likely to be eroded.

Reynolds’ also notes a shift that is likely to take place in legal academia:

“Strange new respect for judicial minimalism. As Harvard Law professor Adrian Vermeule remarked, ‘Law review editors: brace for a tidal wave of legal academic theories supporting judicial minimalism, Thayerianism, and strong — very strong — theories of precedent. Above all: the Court must do nothing without bipartisan agreement, otherwise it is illegitimate.’ The past half-century’s enthusiasm for judicial activism will vanish, as legal academia turns on a dime to promote theories that will constrain the court until a left-leaning majority returns, at which point they’ll turn on a dime again.”

That is all too likely. My liberal friends insist that the four justices on the left are free of political bias. Don’t laugh! I’ll be happy if Kavanaugh, as a justice, sticks to his traditional originalist philosophy on constitutional interpretation. I’m under no illusion that the left side of the bench takes the original meaning of the Constitution seriously.

My own concerns about Kavanaugh have to do with his earlier work in the Bush White House on issues related to national security, including work on the PATRIOT Act. In fairness, that work took place at a time when the horrors of 9/11 were still fresh in our minds. However, years later he wrote a favorable judicial opinion on metadata collection by the government. It’s disturbing that Kavanaugh has ever shown a willingness to relinquish the rights to privacy and due process as a routine matter of national security. The founders’ intent was to protect individual rights from the threat of tyranny, so they expressly limited the power of government through the Constitution. Those who would claim that threats to national security are so compelling as to supersede individual rights are perhaps the very tyrants the Constitution was meant to foil. Nevertheless, my hope is that Kavanaugh, having come face-to-face with those who would prefer to deny privacy and due process rights when it suits them, has gained additional respect for these protections.

School Discipline, Disparate Impact, and Disparate Justice

05 Friday Oct 2018

Posted by in Discrimination, Education, Uncategorized

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Sad to say, there are racial disparities in victimization by misbehavior in schools, and African American children are the most victimized in terms of their safety and academic environment. Yet since 2014, the Department of Education (DOE) has been enforcing rules against “disparate impact” in school disciplinary policies, often aggravating that victimization. In a paper entitled “The Department of Education’s Obama-Era Initiative on Racial Disparities in School Discipline: Wrong For Students and Teachers, Wrong on the Law“, authors Gail Heriot and Alison Somin expose these unfortunate policies and the distortion of actual law they represent. These policies and actions are presumed by the DOE and the Office of Civil Rights (OCR) to be authorized under Title VI of the Civil Rights Act of 1964, but Heriot and Somin show that Title VI is not a disparate impact law and that enforcement of strictures against disparate impacts exceed the authority of the OCR.

When are disciplinary policies discriminatory? Disparate treatment occurs when a student from a “protected class” is punished more severely than other students for an identical misdeed. That is obviously discriminatory and unfair. A disparate impact, however, is a statistical difference in the punishments meted out to a protected class relative to others, which is not prima facie evidence of discrimination. Given consistent application of disciplinary policies — identical treatment for all classes under those policies — disparate impact is possible only when there are differences in the actual behavior of students across classes. Of course, such a difference does not mean that the protected class is “less worthy” in any absolute sense; instead, it probably indicates that those students face disadvantages that manifest in misbehavior in greater proportion within a school environment. The consequences of refusing to punish that behavior are bad for everyone, including and perhaps especially the miscreants themselves.

Disparate impact enforcement rules are fundamentally flawed, as Heriot and Somin explain. Almost any decision rule applied in business or other social interaction has a disparate impact on some parties. Defining qualifications for many jobs will almost always involve a disparate impact when protected classes lack those skills in greater proportion than unprotected classes. In schools, such rules lead to more lenient disciplinary policies or a lack of enforcement, either of which are likely to bring even greater disciplinary problems.

In schools with large minority populations, these perverse effects penalize the very minority students that the DOE hopes to protect. And they often have harsh consequences for minority teachers as well. Walter Williams bemoans the difficulties faced by many teachers:

“For example, after the public school district in Oklahoma City was investigated by the OCR, there was a 42.5 percent decrease in the number of suspensions. According to an article in The Oklahoman, one teacher said, ‘Students are yelling, cursing, hitting and screaming at teachers, and nothing is being done, but teachers are being told to teach and ignore the behaviors.’ According to Chalkbeat, new high school teachers left one school because they didn’t feel safe. There have been cases in which students have assaulted teachers and returned to school the next day. …

An article in Education Week earlier this year, titled ‘When Students Assault Teachers, Effects Can Be Lasting,’ discusses the widespread assaults of teachers across the country: ‘In the 2015-16 school year, 5.8 percent of the nation’s 3.8 million teachers were physically attacked by a student. Almost 10 percent were threatened with injury, according to federal education data.'”

To state the obvious, this undermines the ability of teachers do their jobs, let alone enjoy teaching. For many, quitting is an increasingly tempting option. And Williams, an African American, goes on to say “… when black students are not held accountable for misbehaving, they are set up for failure in life.”

When it comes to misbehavior, equalizing discipline by subgroup is almost certain to be unjust. And disparate impacts are almost certain to be a byproduct of a just disciplinary system when other social forces lead to differences in preparation for schooling. When the focus is placed on a by-product of Justice, rather than justice itself, as when disparate impacts are penalized or prohibited, everyone loses. It obviously harms unprotected classes, but ultimately it harms protected classes even more harshly by subjecting them to degraded school environments, less educational opportunity, and fewer rewards in life.

The “Judicial Temperament” Ruse

02 Tuesday Oct 2018

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“Judicial temperament” applies to situations in which an impartial third party is or would be acting as a judge, weighing evidence that might support one side of a case or the other. It cannot apply to one of the parties to a dispute or allegation of wrongdoing, nor can it reasonably be inferred in other matters from the attitude or statements of one of the first two parties with respect to the accusation. Of course, an individual accused of a misdeed for which they KNOW they are innocent can be expected to react angrily. That would be natural and understandable, and it has nothing to do with the individual’s judgement in other realms. Any victim of wrongdoing has a right to be angry, and a false accusation is no exception.

Christine Blasey Ford has accused Brett Kavanaugh of a sexual assault that she says took place 36 years ago when the two were in high school, but without corroboration of any kind. The Left has characterized Kavanaugh’s righteous indignation as a “temper tantrum” unbefitting a Supreme Court Justice. “Oh, but why are you so angry?”, they ask. Really.

Assuming that he is indeed innocent of the charge, and there are many reasons to doubt its veracity, Kavanaugh’s reaction was well-justified. The allegation was unveiled by the minority on the Senate Judiciary Committee at the eleventh hour as they prepared to vote on bringing his name to the floor of the Senate for confirmation. A much earlier disclosure was possible and would have permitted an investigation weeks before the Committee hearings. Not only that, the minority presumed his guilt, he was called “evil” by one senator, he received death threats against his family, and he was forced to field a host of probative questions about his teenage scribblings in a high school yearbook. Only a Vulcan would greet such sabotage of character with equanimity, and I’ll gladly give Kavanaugh a pass on it. I mostly enjoyed his fire and emotional at the hearing last Friday.

Another dimension of judicial temperament is impartiality. The meaning of that term can be manipulated, of course. For example, one’s views on constitutional interpretation are at the very root of many political disagreements, yet when convenient, some pretend that the two are mutually exclusive. Shall we disqualify anyone with a specific constitutional philosophy? Does it somehow depend on which seat is open? Of course not.

On the other hand, Kavanaugh voiced what many knew to be true at the hearing last Friday: the Leftist minority on the Committee had prepared an ambush to destroy him. He also noted the possibility of lingering resentment for his role on Ken Starr’s staff investigating the Clintons in the 1990s. Perhaps Kavanaugh was unchaste to express what was obvious, and the Left has seized on those statements as evidence of a disqualifying political bias. But again, he stated what he knows to be true.

Kavanaugh’s is widely viewed as an impartial jurist, and he has a history of collegiality with judicial peers from across the political spectrum. As Randy Barnett states at the link above:

“His 300 opinions have been thoughtful and well reasoned. His reasoning has repeatedly been adopted by majorities of the Supreme Court. He gets high marks from, well, from everyone for his intelligence, decency, and judicial temperament.”

It is my conviction that Kavanaugh would rely on his legal scholarship and constitutional philosophy, as he has in the past, in deciding his positions on issues that come before the Court, rather than hearing cases with a view toward malice against particular individuals or one end of the political spectrum. I also believe he is wise enough to know that he should recuse himself in cases of obvious personal conflict. The charge that he lacks judicial temperament is an additional attack based on his judicial philosophy, and it is an opportunistic attempt to discredit him on the basis of his strong and understandable response to a smear campaign.

Preserve the Separation of Google and State

28 Friday Sep 2018

Posted by in Antitrust, Censorship, Privacy

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Little did we suspect that Google’s collection of personal data and manipulation of search results was mere practice for the job of censoring, curating, and providing behavioral surveillance for repressive governments (more on search manipulation here and here). Actually, some of us have expressed trepidation that our own individual liberty might face such a vulnerability, with Google working in concert with our own government:

“As a firm like Google attains the status of an arm of the state, or multiple states, it could provide a mechanism whereby those authorities could manipulate behavior and coerce their citizens, making the internet into a tool of tyranny rather than liberty. ‘Don’t be evil’ is not much of a guarantee.”

Now, however, the company is working with the government of mainland China to implement a version of its search engine that meets the needs of the Communist regime. J.D. Tuccille calls this “Privatized Authoritarianism”. Search results from Google’s Chinese utility might come back blank, or certain sites might be banned, or at least banned from the first page of results (e.g., Wikipedia, the BBC).

Not only that, the Chinese government is building a system of “social credit scores” for its citizens, essentially a one-number report card like the FICO credit score in the West. This one, however, is driven by more than financial transactions; it’s intended to account for a variety of behaviors including one’s record in criminal and civil matters, anything reflecting one’s “trustworthiness”, general comportment, and alignment with official doctrine. The country is building a gargantuan network of surveillance cameras with visual recognition technology and artificial intelligence that will be used to generate inputs to the social score. And Google’s Chinese search platform?

“… users’ interest in pursuing forbidden paths of inquiry will certainly become part of their permanent record. That’s no joke in a country that’s rapidly modernizing the hoary old mechanisms of the police state with a modern ‘social credit’ system that can effectively place people under house arrest with nary a trench coat in sight.

‘A poor Chinese social credit score can lead to bans from travel, certain schools, luxury hotels, government positions, and even dating apps,’ notes the Brookings Institution. Liu Hu, an investigative journalist, incurred the Chinese government’s wrath for exposing corruption among Communist Party officials. He’s among millions who have been punished with a tanked social credit score that prevents him from easily working or even leaving his hometown.”

Political search activity is one thing. What happens if you search for information on foreign news sources? Certain medications or certain disfavored goods? Movies? Books? Sex? What are the consequences of actually clicking on a particular link in a search result? Could the governments place “honey pots” into search results? Could the system be used by the government to entrap citizens? You bet it could!

The Chinese government is everything a liberal should hate, classical or otherwise. But they do what they do. Google, which takes pride in its “do the right thing” mantra, is most certainly not doing the right thing by contributing to this intrusive effort. And it could happen here in the West. In fact, it is probably already happening here to some degree.

Google was fined $2.7 billion by the European Union in 2017 for biasing its search results in favor of its own services. That ruling was made on traditional antitrust grounds: the bias in search results was judged to have anti-competitive effects on the searched-for service markets. But apart from a direct connection to some other form of commerce, traditional antitrust arguments are difficult to make against a free search engine. The company has a high market share but by no means a monopoly over search results, at least in the U.S.

Still, a partnership between Google and government is potentially troublesome, and more so than run-of-the-mill corporatism, though there is that, too. Many individuals are blasé about managing their privacy on social media, while many others seek a level of anonymity to those outside of their social circle. The latter may be wise, but it won’t do them much good if the government gains access to their on-line behavior. The real issue is ownership of our personal information, and that is an unsettled area of the law. Google acquires that information for free in exchange for providing a free search engine. But can Google or any other company with an online platform legally use your personal data as it likes? No, at least not in principle, but that’s no guarantee that the data won’t be used in ways to which you’d object. If anyone should have rightful monopoly rights over the use of individual data, it’s the individual. But strict data privacy might mean we’ll have to pay to use the search engine.

Government has a monopoly on force, but one can hardly bring antitrust action against government, Google partnership or not. That monopoly on force is why our constitutional rights are so critical. Those rights are primarily unenumerated in the U.S. Constitution, while the powers of the federal government are explicitly limited and enumerated. Individual liberty, including the right to privacy, must be respected and protected by our institutions. That should include data privacy. As the reach of government social programs grows, however, participation requires that personal data is increasingly shared with the government. That’s another good reason to keep government small!

Can Dems Keep a Straight Face Through Thursday?

21 Friday Sep 2018

Posted by in Defamation, Sexual Predation, Supreme Court

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A political party that wants voters to give them control of Congress also wants you to believe that a man is guilty until proven innocent; that presumed guilt is contingent on gender and race; and that sitting on accusations until the midnight hour is not a manipulative, politically-motivated stunt. With all due respect to victims of sexual predation from both genders (oops, perhaps I should have said all genders), the allegations and smears against Brett Kavanaugh smack of political motivation, and you can bet Kavanaugh’s detractors are proud of it.

First there was Professor Christine Ford’s allegation about an assault 36 years ago at a party that no one remembers, including her. Then there are the cloudy and shifting recollections of Deborah Ramirez about a dorm party at Yale 35 years ago at which she thinks Kavanaugh exposed himself as part of a drinking game, but no one else seems to recall that event either. In fact, it’s reported that Ramirez was not going forward with the claim until she was sought out by congressional Democrats. And then there is Michael Avenatti, the cartoonish attorney for porn star Stormy Daniels, who says that Kavanaugh and a buddy, Mark Judge, regularly drugged women and arranged for “trains” of men to rape them. Avenatti now says one such woman will come forward within 48 hours. Perhaps she’s still negotiating her deal with Avenatti. Why, you could almost get the idea that Democrats are actively recruiting accusers.

Here’s what Charlie Martin said:

“Okay, so we’re up to Kavanaugh and Mark Judge supposedly pimping out drug-addled high school girls to pull a train with classmates without anyone mentioning it for 36 years. Do the accusations of Satanic abuse and child sacrifice hold off until Wednesday, do you think?”

Ford claims that Judge Brett Kavanaugh, 36 years ago as a teenager, sexually abused her at a high-school party while his friend, Mark Judge, watched. She claims Kavanaugh pushed her down on a bed, groped her, attempted to remove all or part of her one-piece swimsuit, and placed his hand over her mouth to silence her protests before Master Judge piled on top, causing the three to fall off the bed and allowing her to escape from the room.

Democrats say this allegation should keep Kavanaugh off the Supreme Court or delay any vote on his appointment until after a full investigation by the FBI. Let’s review some facts in the case:

  • Ford can’t recall a specific location, how she got there or how she got home, how she wound up in the upstairs bedroom with the two boys, the name of the party’s host, or more specifics about the date of the alleged assault.
  • Ford says she never told anyone about the incident until years later when she revealed it to a therapist, whose notes say there were four people in the room and do not mention Kavanaugh.
  • The allegation was made by Ford in a letter to Senator Diane Feinstein on July 30, five weeks before the Senate Judiciary Committee held hearings on Kavanaugh’s nomination to the Court. Feinstein did not mention the letter during the hearings. She revealed it’s existence just a few days before a scheduled Committee vote on the Kavanaugh nomination, six weeks after her receipt of the letter. Feinstein has refused to reveal the unredacted contents of Ford’s letter to the Judiciary Committee.
  • Kavanaugh has denied the allegation and says that it could be a case of mistaken identity. Kavanaugh’s friend Mark Judge denies that the incident took place.
  • Ford named two other individuals as potential witnesses who could place both Ford and Kavanaugh at the party in question. Both have stated that they are unable to do so. The first, another male friend of Kavanaugh’s, released a statement praising Kavanaugh’s integrity. The second, a woman, stated that she does not know Kavanaugh and is unable to place the two at a party together. That’s a total of three witnesses who say they didn’t witness anything.
  • Some 200 alumni of Ford’s private all-female high school wrote a letter in support of Ford, but many of them are not even contemporaries of Ford and Kavanaugh.
  • Some 65 women who knew Kavanaugh during his high school years have signed a letter vouching for his character; a number of college and law school classmates as well as high-profile female attorneys who have worked with (and for) Kavanaugh have publicly stated their support and vouched for his integrity.
  • Originally, Ford and Kavanaugh both agreed to appear before the Judiciary Committee on Monday, Sept. 24; the vote on Kavanaugh’s nomination was delayed a week. Subsequently, Ford stated that she would not appear before the Committee until the FBI had completed an investigation of the incident.
  • The charge would not be a federal crime, so the FBI declined to investigate.
  • Later, she expressed a willingness to appear under the right conditions, but not as soon as Sept. 24; only questions from Senators; Kavanaugh cannot be in the same room; and Kavanaugh must go first.
  • After a week of repeated requests through Ford’s attorneys and several “deadlines” set by the Committee Chairman, it now appears that the hearing will take place on Thursday, Sept. 27, but the terms have not been fully settled.

I think the Committee Chairman, Chuck Grassley, got played in accepting the delays. It allowed the Democrats to raise these unprovable accusations in a campaign against Kavanaugh in the media. It also invited the very bandwagon effect of unfounded accusations we are now witnessing, as the underhanded effort to block Kavanaugh’s appointment began to bear additional fruit.

The alleged crime occurred when both Ford and Kavanaugh were minors (Ford was 15, Kavanaugh 17). The statute of limitations applicable to minors in the state of Maryland, where the alleged incident occurred, is three years or until the “injured party” reaches the age of majority. It is therefore too late for Ford to file criminal charges against Kavanaugh. The statute of limitations is reasonable to the extent that teenagers do a great many stupid and harmful things for which they should not necessarily be held responsible as adults. Sexual aggression, if proven, may well cross a line depending on its character and severity, but from a legal perspective that line is determined, in part, by the victim’s determination to bring charges at a time when the charges can reasonably be investigated. Ford did not bring them, and she did not so much as mention them to anyone for about 30 years.

Ford has been involved in some left-wing activism, but her social media profile was  scrubbed before the allegations went public. Her attorney, Debra Katz, has been a prominent member of the MeToo movement. This has, quite naturally, contributed to suspicions that the entire matter is a political stunt. That’s reinforced by Feinstein’s delays in making the matter public, Feinstein’s refusal to release Ford’s letter without redactions, and by the repeated delays in Ford’s commitment to testify before the Committee. In fact, Ford claimed that she cannot appear before the Committee until late next week because she must drive from the west coast to Washington, DC. That’s because Ford says she has a fear of flying and “closed spaces”. Not only that, these fears originated with Kavanaugh’s alleged attack. Just wow! The author at the last link wonders whether Ford took a boat to her internship in Hawaii a few years ago, avoided elevators for 36 years, or perhaps managed her issues with medication.

Ford’s high-school yearbooks were available on-line until just a few days ago, when they were suddenly taken down by the affluent private girls school she attended. The yearbooks do not reflect directly on Ford. They are, however, a bit surprising because they were presumably overseen by faculty, and yet they celebrated heavy drinking and the joys of blacking out, promiscuity, and they even contained hints of racism. The fact that the yearbooks were suddenly removed from the internet reflects on Ford’s defenders, who must have felt that the books would damage her credibility.

Again, the terms of the hearing involving Ford and Kavanaugh are still up in the air. Ford’s insistence that Kavanaugh should testify to the Committee prior to her is contrary to the normal procedure in any case involving criminal charges. The Senate follows the same rules. Putting Kavanaugh in a different room would deny him his right of habeas corpus. The Committee chairman has also suggested that questioning would be handled by a female attorney. Given these differences, it is far from certain that Ford will ever appear before the Committee.

The letter to Feinstein, as it turns out, was drafted by Ford at the senator’s request after Ford had first consulted her congresswoman, Anna Eshoo, earlier in July. The redacted portions of that letter are of interest. After all, they may either bolster or weaken the credibility of the charges. However, if there are allegations in the letter that are false, and if they were revealed to the Committee, it would expose Ford to criminal charges and imprisonment. Could this be why the full letter has been withheld by Feinstein?

However much we might desire justice for victims of sexual abuse, and however much we might sympathize with a victim’s emotional difficulties attendant to such an attack,  those matters cannot be used to deny the due process rights of an accused. Society cannot simply take an accuser’s “word for it”, especially when the accuser declines to take action within a reasonable period of time, one within which evidence and testimony might be gathered effectively. While the evidentiary standards in a criminal proceeding might be more stringent than in assessing an accused individual’s fitness for high office, mere late-hour assertions are not adequate when the record, as in Judge Kavanaugh’s case, is so exemplary, and when there is absolutely no corroboration. Indeed, it is dubious to raise serious allegations of this nature when they are unprovable, and only when the alleged attacker is due to receive a prominent appointment of some kind. Ford’s allegation, and the others, have all the earmarks of a politically-motivated smear campaign.

Socialism and Authoritarianism: Perfectly Complementary

19 Wednesday Sep 2018

Posted by in Socialism, Tyranny

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The socialist left and the Marxist hard left both deny their authoritarian progenitors. Leftists are collectivists, many of whom subscribe to an explicit form of corporatism with the state having supreme power, whether as a permanent or transitional arrangement on the path to full state ownership of the means of production. Collectivism necessarily requires force and the abrogation of individual rights. At this link, corporatism, with its powerful and interventionist state, is aptly described as “de facto nationalization without being de jure nationalization” of industry. To the extent that private ownership is maintained (for the right people), it is separated from private control and is thus a taking. But the word corporatism itself is confusing to some: it is not capitalism by any means. It essentially means “to group”, and it is a form of social control by the state. (And by the way, it has nothing to do with the legal business definition of a corporation.)

Of course, leftists distance themselves from the brutality of many statist regimes by asserting that authoritarianism is exclusively a right-wing phenomenon, conveniently ignoring Stalin, Castro, Mao, Pol Pot, and other hard lefties too numerous to mention. In fact, leftists assert that fascism must be right-wing because it is corporatist and relies on the force of authority. But again, both corporatism and fascism are collectivist philosophies and historically have been promoted as such by their practitioners. Furthermore, these leftist denials fly in the face of the systemic tendency of large governments to stanch dissent. I made several of these points four years ago in “Labels For the Authoritarian Left“.

I find this link from The Federalist fascinating because the author, Paul Jossey, provides quotes of Hitler and others offering pretty conclusive proof that the Nazi high command was collectivist in the same vein as the leftists of today. Here are a few of Jossey’s observations:

“Hitler’s first ‘National Workers’ Party’ meeting while he was still an Army corporal featured the speech ‘How and by What Means is Capitalism to be Eliminated?’

The Nazi charter published a year later and coauthored by Hitler is socialist in almost every aspect. It calls for ‘equality of rights for the German people’; the subjugation of the individual to the state; breaking of ‘rent slavery’; ‘confiscation of war profits’; the nationalization of industry; profit-sharing in heavy industry; large-scale social security; the ‘communalization of the great warehouses and their being leased at low costs to small firms’; the ‘free expropriation of land for the purpose of public utility’; the abolition of ‘materialistic’ Roman Law; nationalizing education; nationalizing the army; state regulation of the press; and strong central power in the Reich.”

Are you feeling the Bern? Does any of this remind you of the “Nasty Woman”, Liz Warren? Here is more from Jossey:

“Hitler repeatedly praised Marx privately, stating he had ‘learned a great deal from Marxism.’ The trouble with the Weimar Republic, he said, was that its politicians ‘had never even read Marx.’ He also stated his differences with communists were that they were intellectual types passing out pamphlets, whereas ‘I have put into practice what these peddlers and pen pushers have timidly begun.’

It wasn’t just privately that Hitler’s fealty for Marx surfaced. In ‘Mein Kampf,’ he states that without his racial insights National Socialism ‘would really do nothing more than compete with Marxism on its own ground.’ Nor did Hitler eschew this sentiment once reaching power. As late as 1941, with the war in bloom, he stated ‘basically National Socialism and Marxism are the same’ in a speech published by the Royal Institute of International Affairs.

Nazi propaganda minister and resident intellectual Joseph Goebbels wrote in his diary that the Nazis would install ‘real socialism’ after Russia’s defeat in the East. And Hitler favorite Albert Speer, the Nazi armaments minister whose memoir became an international bestseller, wrote that Hitler viewed Joseph Stalin as a kindred spirit, ensuring his prisoner of war son received good treatment, and even talked of keeping Stalin in power in a puppet government after Germany’s eventual triumph.”

Some contend that the Nazis used the term “socialist” in a purely cynical way, and that they hoped to undermine support for “real socialists” by promising a particular (and perverse) vision of social justice to those loyal to the Reich and the German nation. After all, the Bolsheviks were political rivals who lacked Hitler’s nationalistic fervor. Hitler must have thought that his brand of “socialism” was better suited to his political aspirations, not to mention his expansionist visions. Those not loyal to the Reich, including Jews and other scapegoats, would become free slave labor to the regime and its loyal corporate cronies. (It’s striking that much of today’s Left, obviously excepting Bernie Sanders, seems to share the Nazis’ antipathy for Jews.)

Socialism, corporatism and fascism are close cousins and are overlapping forms of statism, and they are all authoritarian by their practical nature. It’s incredible to behold leftists as they deny that the National Socialists Workers Party practiced a brand of socialism. Perhaps the identification of the Nazis as a fascist regime has led to confusion regarding their true place along the ideological spectrum, but that too is puzzling. In their case, a supreme corporatist state enabled its most privileged advocates to exploit government power for private gain, and that’s the essence of fascism and the archetypical outcome of socialism.

BS Bernie Blames Bezos

12 Wednesday Sep 2018

Posted by in Labor Markets, Living Wage, Price Mechanism, Welfare State

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Bernie Sanders keeps probing for ways to create a backdoor minimum income, and he’s eager to loot successful job creators and their customers in the process. Last month I wrote about the folly of his proposed legislation that would offer federal job guarantees to all. A new Sanders bill, introduced jointly with Rep. Ro Khanna (D – CA), is an equally bad idea called the Stop BEZOS Act, or the “Stop Bad Employers by Zeroing Out Subsidies Act”. It’s pretty obvious that the selection of the acronym preceded the naming of the bill. Imagine the fun his Senate staffers had with that! The logical flaws embedded in the title of the act are bad enough. The effort to garner attention by using the title to smear the name of a famous technology entrepreneur is sickening.

Jeff Bezos, of course, is the founder and CEO of Amazon, the online retailer, as well as the owner of the Washington Post. Amazon has been rewarded by consumers for its excellent service and aggressive pricing, and it is now valued at about $1 trillion. That makes Bezos a very wealthy man, and it is no coincidence that Sanders has chosen to make an example of him in an effort to inflame envy and classist passions.

While some details of the bill remain sketchy, firms with more than 500 workers would face a 100% tax on every dollar of federal benefits received by those employees. But the tax would apply only to “low-wage” employees, however that is defined, and not simply any employee receiving federal benefits. If the bill became law (and it won’t any time soon), it would require a costly federal administrative apparatus to coordinate between several agencies, including the IRS. Beyond the tax itself, the compliance costs for firms won’t be cheap, and it will create terrible incentives: if you own a business, you would have a strong incentive to avoid hiring workers with little experience or weak skills, or anyone you might deem likely to be a recipient of federal aid. If you have 499 employees, you’ll probably think hard about how to execute future growth plans. Nothing could do more to improve the return to investment in automation.

Is Amazon really a “bad” employer? That’s what the title of the Sanders bill says. In fact, the company has been accused of harsh labor practices in its fulfillment centers. Life for corporate managers is said to be no picnic, and labor turnover at Amazon is high. Nonetheless, the wages it pays attract plenty of applicants. Unskilled labor does not command a high wage, and that is no fault of an employer willing to provide them with work and experience. Yet the bill would punish those employers, as well as employers having part-time workers drawing federal aid.

An absence of punishment can hardly be described as a “subsidy”, as the bill’s title suggests. But that is exactly how leftists think, at least when they do the punishing. In this respect, the bill’s title is an assault on logic and a misuse of language. It would also represent a violation of constitutional principles like property rights and freedom of contract.

The idea of taxing employers to recoup any public aid received by their workers is intended to affect a de facto “living wage”. However, one benefit of an independent social safety net, as opposed to a living wage tied to that net, is that the former largely preserves the operation of labor markets, despite creating some nasty labor-supply incentives. Wage rates that approximate the value of worker productivity allow efficient matching of jobs with workers having the requisite skills, even if the skills are relatively low-grade. Those wages also minimize distortions in the economics of production within firms and across different industries. Furthermore, prices faced by buyers should reflect the real resource costs associated with demands for various goods. They should not be inflated by political decisions about the level of federal welfare benefits. Quite simply, preserving labor market efficiency enhances the ability of the economy to allocate resources to the uses for which they are most highly-valued.

There are independent questions about whether the structure and level of benefits provided by the welfare state are appropriate. Those are matters of legitimate policy debate, and those benefits must be funded by taxpayers, but they should be funded in the least distortionary way possible. Bernie Sanders imagines that the burden of those taxes can simply be imposed on large employers with no further consequences, but he is badly mistaken. Consumers will shoulder a significant part of that burden under his latest scheme. And, of course, Sanders’ beef with Bezos is a cynical political ploy. It amounts to cheap scapegoating intended to promote another one of Sanders’ bad policy ideas.