Author Archives: Nuetzel

There Oughta NOT Be a Law

11 Thursday Dec 2014

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We have too many laws and too many busy-bodies wishing to force others into conformity with their own moral and  behavioral strictures. It is more excessive in some jurisdictions than others, but the unnecessary criminalization of harmless behavior is a spreading canker. The death of Eric Garner  in New York City exemplifies the horrible consequences, an aspect which sets it apart from the death of Michael Brown in Ferguson, Missouri. Last week, Mark Perry posted links and summaries of three essays on Garner’s death “and what it teaches us about over-criminalization, government force, police brutality, the regulatory superstate, and the violence of the state.”

Both the Brown and Garner cases involved tobacco products, a primary target of busy-bodies worldwide. Garner was choked to death by police who restrained him for violating a law against selling individual cigarettes (“loosies”). Brown, then a suspect in a strong-arm convenience store theft of Swisher cigarillos, was shot by an officer claiming that Brown charged him in the street after a physical altercation moments earlier. Both incidents are said to have involved excessive force by police toward African Americans, but grand juries refused to indict the officers in both cases. Whether excessive force was used against Brown or Garner, or whether racism was involved, a major contrast is that the Garner case involved the enforcement of a law that seems ridiculously petty.

The three links provided by Perry are from:

    • J.D. Tuccille, who argues that over-regulation of behavior not only leads to conflict but also encourages corruption in law enforcement.
    • Randy Soave, who discusses the incentive structure faced by police and the extent of over-regulation, “from cigarettes to sodas of a certain size, unlicensed lemonade stands, raw milk, alcohol (for teens), marijuana, food trucks, taxicab alternatives, and even fishing supplies (in schools)“.
    • Jonah Goldberg, who elaborates on a simple truism: if you pass a new law, it must be enforced. Enforcement means force, and force is what government is all about. Therefore, if you insist on more detailed control over others, you can expect some violence.

Michael Munger makes the same point, condemning both the left and the right for their failure to understand the simple but far-reaching flaw in our polity:

“The left is outraged that the state is not doing exactly what the left expects from an idealized, unicorn state. In fact, the state is actually made up of actual human-style people, and people are flawed. The left wants to rely on abstract systems, and then be perpetually astonished when things go really wrong. It’s not bad people that are the problem. The THING, the thing itself is the abuse, folks…. The right is just denying that there is a problem, the system is working, the jury has spoken, etc.”

In “Worse Than Racism,” Eric Raymond discusses Garner’s death in the context of Alexis de Tocqueville’s  “soft despotism,” our penchant for promulgating rules for others “all justified in soothing ways to achieve worthy objectives. Such as discouraging people from smoking by heavily taxing cigarettes. Eric Garner died in a New York minute because ‘soft despotism’ turned hard enough to kill him in cold blood.”

Raymond presses hard:

“Every one of the soft despots who passed that law should be arraigned for the murder of Eric Garner. They directed the power of the state to frivolous ends, forgetting – or worse, probably not caring – that the enforcement of those ‘small complicated rules’ depends on the gun, the truncheon, and the chokehold. 

But we are all accessories before the fact. Because we elected them. We ceded them the power to pass oh, so many well-intentioned laws, criminalizing so much behavior that one prominent legal analyst has concluded the average American commits three inadvertent felonies a day.”

Finally, here’s an interesting connection: research  advocating high taxation of cigarettes  was published in 2008 by none other than Jonathan Gruber. Yes, the architect of Obamacare who often gloated on camera at academic conferences about the clever lack of transparency in the health care law and the stupidity of the American voter. He was also busy providing a rationale for the morality meddlers to more heavily tax and regulate “unacceptable” behavior. It is fitting and ironic that such an infamous elitist as Gruber has a connection to the soft despotism that led to the death of Eric Garner.

Labels For The Authoritarian Left

08 Monday Dec 2014

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Who said this? “I have put into practice what these peddlers and pen pushers have timidly begun … the whole of National Socialism [was] based on Marx.” And this? “What Marxism, Leninism and Stalinism failed to accomplish, we shall be in a position to achieve.” And this? “How, as a socialist, can you not be an anti-Semite?”

You probably know or can guess that it was none other than Adolf Hitler. But if you persist in thinking that the National Socialist German Workers’ Party was not really, truly a party of socialists, you are wrong. Daniel Hannan discusses the connection at length in “Leftists become incandescent when reminded of the socialist roots of Nazism.” Before you accuse Hannan (or me) of violating Godwin’s Law, read his piece. He’s simply noting an historical fact. He’s most sensitive about use of the term “right-wing” as a synonym for “authoritarian,” but in fact it may be authoritarian along some dimensions.

Still, it shouldn’t be much of a surprise to learn that the authoritarian Nazi regime was packed with socialists. Socialism is a philosophy based on the preeminence of society over the individual, emphasizing public provision of goods and services, and control (if not ownership) of the means of production. In such a regime, central authority must supplant decentralized decision-making to a significant extent. The word “authoritarian” is fitting. From Hannan:

“In fact, authoritarianism was the common feature of socialists of both National and Leninist varieties, who rushed to stick each other in prison camps or before firing squads. Each faction loathed the other as heretical, but both scorned free-market individualists as beyond redemption. …

Authoritarianism – or, to give it a less loaded name, the belief that state compulsion is justified in pursuit of a higher goal, such as scientific progress or greater equality – was traditionally a characteristic of the social democrats as much as of the revolutionaries.”

The Italian etymology of “fascism”, implying the strength of a “bundle” relative to individual pieces, also suggests the socialist roots of the totalitarian regimes in Nazi Germany and in Italy under Mussolini. Left-wing fascists or right-wing socialists? Take your pick. In a strong sense, the labels applied today make no sense, including the modern misuse of the term “liberal” to describe a preference for a strong central government. Perhaps labels are unavoidable, but words usually have meaning apart from the latest political usage. Unfortunately, distorting or co-opting words for political purposes has a long and dishonorable tradition.

Subsidies Are For Suckled Statists

07 Sunday Dec 2014

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Who told Congress the following? “We oppose ALL subsidies, whether existing or proposed, including programs that benefit us, which are principally those that are embedded in our economy, such as mandates.”

And this? “[We don’t] view these as ‘benefits’ even if they are in industries we’re in. They are wasteful and market distorting, and allow other firms to run businesses that aren’t making money any other way.”

This principled stand against one major type of crony capitalism was taken by none other than Koch Industries. According to this Free Beacon article:

“The company owned by billionaire philanthropists Charles and David Koch, as well as groups frequently associated with the fraternal libertarians, are pushing Congress to let 55 tax breaks expire, including several that provide billions in tax relief for corporations such as Koch Industries.”

They are similarly opposed to regulatory cronyism that restrains competition and the sort of public largess favoring lucrative contract awards for large corporate entities. These are the same Koch brothers typically demonized by the Left (but not always), as if their political contributions were an effort to garner public subsidies. Clearly that is not the case. Moreover, Left-leaning billionaires such as Tom Steyer, Michael Bloomberg and George Soros are far more prolific political contributors than the Koch brothers. And what do these corporatists want for their money? Surely not a smaller government; they’d like a big fat administrative state from which their many corporate interests can suckle.

Some kinds of subsidies are transparently wasteful, such as tax breaks for already-profitable businesses or bailouts to firms that have made bad decisions, or to firms in dying industries. More fundamentally, all public subsidies circumvent the unforgiving cost-benefit calculus imposed by the market, misdirecting resources via signals distorted by the visible fists of government. This often allows activity to continue that would otherwise be judged wasteful or unsustainable, or excessive investment of resources into particular activities. Self-interested politicians and public officials, however, often justify these subsidies by asserting the existence of external benefits unrecognized by market valuations. Too often, these assertions rely on value judgements. Regardless, the supposed benefits are never easily measured. Our experience with pervasive cronyism and waste in government should always lead us to insist on a skeptical evaluation of proposed subsidies. Rent-seeking behavior is usually at the root of such initiatives.

Well-Intentioned Souls For Sale

04 Thursday Dec 2014

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Most would agree that power corrupts. Some believe that greater wealth begets power, yet they cling to a naive hope that larger government can protect against “evil” private accretion. These well-intentioned souls forget that those holding power in government will not always have preferences that match their own. More importantly, they fail to account for the real-world implications of concentrating power in the public sector, conveniently forgetting that “control” itself is a problematic solution to the perceived “problem” of private power. They would grant ever more controlling authority to an entity possessing the police power, managed by politicians, employees and technocrats with their own incentives for accretion. Public administrative power is often exercised by rule-making, asserting more control over private affairs. It usually results in the granting of favors and favorable treatment, compensable in various ways, to certain private parties. Big government begets big rent seeking and the subjugation of market discipline in favor of privilege. It’s a devil’s playground.

The confusion of the statists, if I can be so charitable, now extends to the desire for control over the related issues of wealth inequality and political contributions. John Cochrane, an economist from the University of Chicago, has an interesting piece on these topics on wsj.com entitled “What the Inequality Warriors Really Want” (if this is gated, try googling the author and title). He points out some of the obvious hypocrisies of those calling for more government control, including limits on political spending:

“… the inequality warriors want the government to confiscate wealth and control incomes so that wealthy individuals cannot influence politics in directions they don’t like. Koch brothers, no. Public-employee unions, yes. This goal, at least, makes perfect logical sense. And it is truly scary.”

The presumption that redistribution of income and wealth can be achieved at low cost ignores the terrible incentives that such policies create for both the nominal losers and winners. In the real world, redistribution is not zero-sum; it is negative sum with compounding. Steve Simpson of the Ayn Rand Institute has some further thoughts on Cochrane’s piece as well as the work of Thomas Piketty, the new intellectual light of the redistributive statists.

Border Integrity or Lines In The Sand?

02 Tuesday Dec 2014

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The constitutionality of President Obama’s recent amnesty order is debatable, to say the least, Obama himself having admitted that he simply “changed the law”. If that’s what he thinks he did, the law professor should know that his action was out-of-bounds from a constitutional perspective. The executive branch cannot make or change laws!

In “Legal but Still Poor: The Economic Consequences of Amnesty“, Joel Kotkin puts aside the constitutional question to focus on difficulties that are likely to be aggravated by amnesty. Kotkin emphasizes the economic distress that now hampers the working class. Illegals already compete for certain jobs, of course, a point Kotkin doesn’t mention. Nevertheless, the amnesty order will create new competition among workers for some positions, many of whom already face difficult conditions:

“… the country suffers from rates of labor participation at a 36 year low. Many jobs that were once full-time are, in part due to the Affordable Care Act, now part-time, and thus unable to support families. Finally there are increasingly few well-paying positions—including in industry—that don’t require some sort of post-college accreditation.”

Furthermore, the order might create incentives for new illegal immigration, leading to further labor market stress. Politically, the order is seen as an act of betrayal by legal immigrants who have gone to considerable effort and expense to obtain their status. It is also likely to be viewed as betrayal by some minority workers, who tend to be more heavily represented in parts of the labor market most vulnerable to the new competition:

“African-American unemployment is now twice that of whites. The black middle class, understandably proud of Obama’s elevation, has been losing the economic gains made over the past thirty years. … Latino-Americans have made huge strides in previous decades, but now are also falling behind, with a gradual loss of income relative to whites. Poverty among Latino children in America has risen from 27.5 percent in 2007 to 33.7 percent in 2012, an increase of 1.7 million minors.”

Kotkin mentions several other administration policies that are likely to diminish prospects for new and existing workers.

“Ironically, the places where the cry for amnesty has been the loudest—New York, San Francisco, Los Angeles, and Chicago—also tend to be those places that have created the least opportunity for the urban poor. … Whatever their noble intentions, these cities generally suffer the largest degree of income inequality, notes a recent Brookings study.”

The amnesty order will be expensive for taxpayers. Many newly legal immigrants will qualify for various forms of public assistance and benefits. The negative fiscal effects will be compounded if, as expected, those immigrants and the workers with whom they compete have greater difficulty finding jobs:

“Herein lies the great dilemma then for the advocates of amnesty. In much of the country, and particularly the blue regions, they will find very few decent jobs but often a host of programs designed to ease their poverty. The temptation to increase the rolls of the dependent—and perhaps boost Democratic turnouts—may prove irresistible for the local political class.”

Obama’s amnesty order attempts to deal head-on with the impossibility of deporting a large number of illegal immigrants. Unfortunately, many others will be made worse-off by the order: legal immigrants, relatively low-skilled workers and taxpayers are all likely to suffer negative consequences. And the order fails to deal adequately with the real economic need for more highly-skilled immigrants; it might well damage the prospects of achieving any near-term reform in this area. Instead of working with Congress to achieve more comprehensive reform, the President’s hasty action fuels suspicion that the real reason for his amnesty order is simply to build a larger constituency for a statist agenda.

The Bee Population Is Stable

29 Saturday Nov 2014

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The extinction of the bees has been greatly exaggerated. I have questioned this from my own local perspective: despite a stream of ominous reports regarding colony collapse disorder (CCD), their numbers always seem robust in my neighborhood. While local is not global, fear not for the bees and the fulfillment of their important role in agriculture. The bee population in various parts of the world has been steady. There have been occasional bouts of decline (and later recovery) precipitated by various causes, and winter die-offs can magnify losses. And CCD is a real phenomenon, but it is not the end of the bees. Here is a link to Part I of a two-part series on the “bee death mystery.” Part II is here. Recently, the great bee bruhaha has been inflamed by: “…two controversial studies, both authored by the same researcher, that have become the linchpin for those who argue that bees and potentially the planet are facing a Beemageddon. It addresses:

  • Who is Chensheng Lu, the nutritionist who has become the face of the movement claiming that Big Ag is threatening bees, humans and our food supply?
  • What are neonicotinoids, the supposed time bomb at the center of the controversy?What role have journalists played in mis-reporting the bee death story.
  • Do prominent entomologists and beekeepers endorse Lu’s belief that the world faces a “bee crisis” as Lu’s research, held up by activists as seminal and groundbreaking, contends?
  • Will—or should—’neonics’ be banned as a precautionary measure?“

The findings of the nutritionist-cum-bee expert Lu are hyperbolic in light of the bee population numbers, and they receive little support from entomologists. Part II demonstrates that the evidence against the supposed culprit for CCD, neonicotinoids, is rather weak:

“… Lu’s data suggests the opposite of his stated conclusion—bees appear to do fine when exposed to field realistic doses and even increasingly higher amounts of neonics, but ultimately succumb to astronomical levels.”

The so-called “bee crisis” thus appears to be a fraud, and the campaign against a whole class of pesticides is without merit and a tremendous waste of resources. This is another misapplications of the precautionary principle by well-meaning advocates of naturalism (who happen to be enemies of agricultural productivity). Just wash your produce, especially if it’s composted organic!

Obamacare’s Verity Disparity

26 Wednesday Nov 2014

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Increase demand for health care and reduce the cost of care… that was the the major thrust of the Obamacare sales job. It didn’t take an MIT economist to realize that the promise would be unattainable without major steps to enhance the supply of medical care. Unfortunately, nearly everything in the ACA and its implementation ensured the opposite, from the medical device tax to compliance burdens on providers and low reimbursement rates. Given the supply constraints, it should be no surprise that access to care among the newly insured is limited. Scott Atlas notes that Obamacare placed an emphasis on general care rather than specialist care, despite the growing need for specialists to serve the needs of an increasingly elderly population:

“Virtually all patients with serious diseases today are managed by specialists and with advanced technology. For seniors, visits to specialists have increased from 37% of visits two decades ago to 55% today. And that’s appropriate, because those are the doctors who have necessary training and expertise to use the complex diagnostic tests and devices, state-of-the-art procedures, and novel drugs of modern medicine. … Fittingly, Americans unambiguously prioritize the latest medical technology.”

Atlas also points out that most of the newly insured obtained their coverage via Medicaid:

“Medicaid is already refused by more than half of doctors across America, according to 2013 data from a 2014 Merritt Hawkins survey. Likewise, more than 20% of primary care doctors already accept no new Medicare patients, five times the percentage who refuse new privately insured patients.

In 2012 alone, CMS reported that almost 10,000 doctors opted out of Medicare, tripling from 2009. And, counter to the administration’s demonization of private insurers, it is Medicare that consistently ranks at the top of the charts for the highest rates of claim refusals….”

In describing the campaign to make Obamacare law, the pejorative “sales job” never seemed more appropriate in light of the recent revelations provided by the Jonathan Gruber videos. He is the aforementioned MIT economist, and his statements indicate that the law’s team of elite architects knew full well that selling it would require deceit. Here are links to two perspectives on this crew’s dishonesty and contempt for voters: first, Clive Crook provides a Democrat voter’s perspective on certain tendencies in the party that he finds regrettable:

“This syndrome of Democratic disdain, I think, has two main parts. First, liberals have an exaggerated respect for intellectual authority and technical expertise. Second, they have an unduly narrow conception of the values that are implicated in political choices. These things come together in the conviction that if you disagree with Democrats on universal health insurance or almost anything else, it can only be because you’re stupid.

Voters recognize this as insufferable arrogance and, oddly enough, they resent it. Democrats who might be asking where they went wrong in the mid-term elections — not that many of them are — ought to give this some thought. The conviction that voters are stupid, however, isn’t just bad tactics. It’s also substantively wrong.”

Jonah Goldberg offers a view of the Obamacare deceit from the right:

“Speaking of transparency, the Washington Examiner’s Timothy Carney notes that Obama frequently attacked the ‘special interests’ opposed to the bill even though the very same interests supported the bill thanks to the generous bribes — er, ‘subsidies’ — included therein. From the Rose Garden in 2009, Obama attacked drug companies for opposing the bill, even though he knew the drug lobby helped craft it. (Carney notes, ‘Behind closed doors, the White House apologized to drugmakers for that line, blaming a ‘young speechwriter.’’)”

Here is an earlier SCC post on the Gruber videos, including the damage wrought by Gruber to the government’s argument in the upcoming King v. Burwell case to be heard by the Supreme Court next year.

Down On The Organic Farm

24 Monday Nov 2014

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Organic agriculture is a low-yield alternative to conventional agriculture, despite some claims to the contrary and counter to assertions that organic farming can “feed the world.” The inferiorities of organic techniques were described last week by Henry I. Miller and Richard Cornett:

“The low yields of organic agriculture–typically 20%-50% percent lower than conventional agriculture–impose various stresses on farmland and especially on water consumption. A British meta-analysis published in the Journal of Environmental Management (2012) addressed the question whether organic farming reduces environmental impacts. It identified some of the stresses that were higher in organic, as opposed to conventional, agriculture: ‘ammonia emissions, nitrogen leaching and nitrous oxide emissions per product unit were higher from organic systems,’ as were ‘land use, eutrophication potential and acidification potential per product unit.’”

Organic production is also more soil disruptive, which leads to greater erosion and run-off, to say nothing of the pathogens introduced by heavy application of composted animal and sometimes human waste (the video on sewage treatment at this link is very interesting). Also, as the article notes, we have known for a couple of years that organics are not necessarily more nutritious than produce grown conventionally.

Organic food should always remain a viable choice for consumers should they insist on organic standards and are willing to pay the cost. However, the conceit that the world can be fed using organic agricultural techniques (like the trope that only organic farming is “sustainable”) is nothing less than cruel naivete. Given the low yields typical of organic farming, such an effort would imply a massive increase in land use, require major investment in the development of water supplies in many regions, and increase food costs to consumers. And it would fail to take advantage of biotechnology technology that can help crops withstand drought, reduce blight, reduce pesticide use, and bring important nutritional advantages. As the great Norman Borlaug would have insisted, to feed the world’s 9 billion mouths, organic farming cannot hope to compete with high-yield agriculture.

Cut CO2, But What About The Environment?

20 Thursday Nov 2014

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Reducing CO2 emissions can carry a high cost to the environment, as explained by The Climate Skeptic.  The tradeoff is all too real because the resources available for mitigating environmental damage are scarce. The simple economics of pollution abatement suggest that small reductions in CO2 are the best that can be achieved even as opportunities for large reductions in more dangerous pollutants are foregone. From The Skeptic:

“Coal plants produce a lot of CO2, but without the aid of modern scrubbers and such, they also produce SOx, NOx, particulates matter and all the other crap you see in the Beijing air. The problem is that the CO2 production from a coal plant takes as much as 10-100x more money to eliminate than it takes to eliminate all the other bad stuff. … Thus the same money needed to make an only incremental change in CO2 output would make an enormous change in the breath-ability of air in Chinese cities.”

In the developing world, the reductions  in CO2 emissions might also mean the sacrifice of gains in the standard of living and public health. To make matters worse, the actual benefits of reducing CO2 emissions are highly questionable: a warmer climate, should it come to pass, is unlikely to be any catastrophe, and in fact it could produce substantial net benefits for humanity.

Along the same lines, President Obama’s recent call for reduced CO2 emissions is described by Alan Caruba as a “Cruel and Costly Climate Hoax“. The climate panic has been inflamed by a community of climate researchers who have perpetrated fraud in the management of temperature data and corrupted their field’s peer review process,  and who continue to rely on climate models with terrible track records. After roughly 25 years of warming temperatures had dispelled fears of a new ice age, these researchers have recognized the latest 18-year pause in that trend with reluctance, marshaling a variety of excuses for the poor performance of their models: the ocean has acted as a heat sink (false), a series of small volcanic eruptions have caused solar energy to be reflected back into space (speculative at best, and without data prior to the year 2000 to back up the claim), or my favorite… that Chinese carbon emissions have limited solar radiation! How ironic is that?

Reductions in carbon emissions are resource intensive. Those resources have alternative uses that are too valuable to make a cavalier sacrifice. Opportunities for other kinds of environmental enhancements, improvements in public health, and better living standards should carry the day, not carbon reductions.

Negative Net Taxes For Most Is Not A Good Sign

18 Tuesday Nov 2014

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Carpe Diem (Mark Perry) reports on a new CBO study showing that nearly all net federal taxes (taxes net of transfer payments received) are paid by households in the highest income quintile. The fourth quintile pays a small, positive amount of net taxes, but the lowest 60% of  households pay negative net taxes, with average tax rates on market income plus transfers ranging from -13.7% for the middle income quintile to -35% for the lowest quintile. From Perry:

“The second-highest income quintile basically just barely covers its transfer payments, so it’s really the top 20% of “net payer” households that are financing transfer payments to the entire bottom 60% AND financing the non-financed operations of the entire federal government.”

A heavy concentration of taxes at one end of the income distribution is not a healthy development for a democracy when it comes to fiscal responsibility.

In a second post, Perry uses the same study to show that adjusting market income for net taxes reduces income inequality by almost 50%. Advocates for greater income equality always focus on market income alone because it tends to show a more dramatic gap between rich and poor. This distortion understates the extent to which policies already in place reduce income inequality and amplifies the unabating contention that more must be done. In addition, standard measures of income inequality tend to distort trends, as SCC has noted in the past.

At the same time, OECD data reveal that the U.S. has the most progressive tax system in the industrialized world. The author of the OECD post cited the data in testifying before the Senate Budget Committee:

“This prompted one Senator to point out that if the richest 10% of taxpayers earn the most of any OECD country, shouldn’t it make sense that they bear the largest tax burden of any country?”

The Senator’s premise was false, as there are countries with higher or similar income shares earned by the top decile, but the tax burden on that decile in the U.S. is the highest. In addition, the U.S. has the highest corporate tax rate in the industrialized world, a point on which SCC has posted before.

The ongoing debate over inequality is counterproductive. Calls for higher taxes will certainly do nothing to encourage economic growth and job creation. Quite the opposite. And inequality, in principle, is not in any way synonymous with decreasing standards of living. However, I certainly agree that inequality can be harmful when it is induced by rent-seeking activity and cronyism, which become a way of life with growth in the public sector.