Rejecting Fossil Fuels at Our Great Peril

18 Wednesday May 2022

Posted by pnoetx in Central Planning, Energy, Risk, Technology

Tags

Bartley J. Madden, Biden Administration, Dan Ervin, Don Boudreaux, Electric Vehicles, Energy Mandates, Energy subsidies, EV Adoption, External Benefits, External Costs, Fossil fuels, Grid Stability, Intermittancy, Kevin Williamson, Markets, Power Outages, Price Controls, regressivity, Renewable energy, Russia Sanctions, SEC Carbon Mandate, Sustainability

The frantic rush to force transition to a zero-carbon future is unnecessary and destructive to both economic well-being and the global environment. I do not subscribe to the view that a zero-carbon goal is an eventual necessity, but even if we stipulate that it is, a rational transition would eschew the immediate abandonment of fossil fuels and adopt a gradual approach relying heavily on market signals rather than a mad dash via coercion.

I’ve written about exaggerated predictions of temperature trends and catastrophes on a number of occasions (and see here for a similar view from a surprising source). What might be less obvious is the waste inherent in forcing the abandonment of mature and economic technologies in favor of, as yet, under-developed and uneconomic technologies. These failures should be obvious when the grid fails, as it does increasingly. It is often better to leave the development and dispersion of new technologies to voluntary decision-making. In time, advances will make alternative, low- or zero-carbon energy sources cost effective and competitive to users. That will include efficient energy storage at scale, new nuclear technologies, geothermal techniques, and further improvements in the carbon efficiency of fossil fuels themselves. These should be chosen by private industry, not government planners.

Boneheads At the Helm

Production of fossil fuels has been severely hampered by the Biden Administration’s policies. The sanctions on Russian oil that only began to take hold in March have caused an additional surge in the price of oil. Primarily, however, we’ve witnessed an artificial market disruption instigated by Biden’s advisors on environmental policy. After all, neither Russian oil imports nor the more recent entreaties to rogue states as Iraq and Venezuela for oil would have been necessary if not for the Administration’s war on fossil fuels. Take a gander at this White House Executive Order issued in January 2021. It reads like a guidebook on how to kill an industry. In a column this weekend, Kevin Williamson quipped about “the Biden administration’s uncanny ability to get everything everywhere wrong all at once.” That was about policy responses to inflation, but it applies to energy in particular.

Scorning the Miracle

Fossil fuels are the source of cheap and reliable energy that have lifted humanity to an unprecedented level of prosperity. Fossil fuels have given a comfortable existence to billions of people, allowing them to rise out of poverty. This prosperity gives us the luxury of time to develop substitutes, not to mention much greater safety against the kind of weather extremes that have always been a fact of life. The world still gets 80% of its energy from fossil fuels. These fuels are truly a miracle, and we should not discard such valuable technologies prematurely. That forces huge long-term investments in inferior technologies that are likely to be superseded in the future by more economic refinements or even energy sources and methods now wholly unimagined. There are investors who will still wish to pursue those new technologies, perhaps with non pecuniary motives, and there are a few consumers who really want alternatives to fossil fuels.

Biden’s apparent hope that his aggressive climate agenda will be a great legacy of his presidency is at the root of his intransigence toward fossil fuels. His actions in this regard have had a profoundly negative psychological effect on the oil and gas industry. Steps such as cancellations of pipeline projects are immediately impactful in that regard, to say nothing of the supplies that would have ultimately flowed through those pipelines. These cancellations reinforce the message Biden’s been sending to the industry and its investors since his campaign: we mean to shut you down! Who wants to invest in new wells under those circumstances? Other actions have followed: no new federal oil and gas leases, methane restrictions, higher drilling fees on federal land, and a variety of climate change initiatives that bode ill for the industry, such as the SEC’s mandate on carbon disclosures and the Federal Reserve’s proposed role in policing climate impacts.

And now, Democrats are contemplating a move that would make gasoline even more scarce: price controls. As Don Boudreaux says in a recent letter to The Hill:

“Progressives incessantly threaten to tax and regulate carbon fuels into oblivion. These threats cannot but reduce investors’ willingness to fund each of the many steps – from exploration through refining to transporting gasoline to market – that are necessary to keep energy prices low. One reality reflected by today’s high prices at the pump is this hostility to carbon fuels generally and to petroleum especially. And gasoline price controls would only make matters worse by further reducing the attractiveness of investing in the petroleum industry: Why invest in bringing products to market if the prices at which you’re allowed to sell are dictated by grandstanding politicians?”

The kicker is that all these policies are futile in terms of their actual impact on global carbon concentrations, let alone their highly tenuous link to global temperatures. The policies are also severely regressive, inflicting disproportionate harm on the poor, who can least afford such an extravagant transition. Biden wants the country to sacrifice its standard of living in pursuit of these questionable goals, while major carbon-emitting nations like China and India essentially ignore the issue.

Half-Baked Substitution

Market intervention always has downsides to balance against the potential gains of “internalizing externalities”. In this case, the presumed negative externalities are imagined harms of catastrophic climate change from the use of fossil fuels; the presumed external benefits are the avoidance of carbon emissions and climate change via renewables and other “zero-carbon” technologies. With those harms and gains in question, it’s especially important to ask who loses. Taxpayers are certainly on that list. Users of energy produced with fossil fuels end up paying higher prices and are forced to conserve or submit to coerced conversion away from fossil fuels. Then there are the wider impediments to economic growth and, as noted above, the distributional consequences.

Users of immature or inferior energy alternatives might also end up as losers, and there are likely to be external costs associated with those technologies as well. It’s not widely appreciated that today’s so-called clean energy alternatives are plagued by their need to obtain certain minerals that are costly to extract in economic and environmental terms, not to mention highly carbon intensive. And when solar and wind facilities fail or reach the end of their useful lives, disposal creates another set of environmental hazards. In short, the loses imposed through forced internalization of highly uncertain externalities are all too real.

Unfortunately, the energy sources favored by the Administration fail to meet base-load power needs on windless and/or cloudy days. The intermittency of these key renewables means that other power sources, primarily fossil-fuel and nuclear capacity, must remain available to meet demand on an ongoing basis. That means the wind and solar cannot strictly replace fossil fuels and nuclear capacity unless we’re willing to tolerate severe outages. Growth in energy demand met by renewables must be matched by growth in backup capacity.

A call for “energy pragmatism” by Dan Ervin hinges on the use of coal to provide the “bridge to the energy future”, both because there remains a large amount of coal generating capacity and it can stabilize the grid given the intermittency of wind and solar. Ervin also bases his argument for coal on recent increases in the price of natural gas, though a reversal of the Biden EPA’s attacks on gas and coal, which Ervin acknowledges, would argue strongly in favor of natural gas as a pragmatic way forward.

Vehicle Mandates

The Administration has pushed mandates for electric vehicle (EV) production and sales, including subsidized charging stations. Of course, the power used by EVs is primarily generated by fossil fuels. Furthermore, rapid growth in EVs will put a tremendous additional strain on the electric grid, which renewables will not be able to relieve without additional backup capacity from fossil fuels and nuclear. This severely undermines the supposed environmental benefits of EVs.

Once again, mandates and subsidies are necessary because EV technology is not yet economic for most consumers. Those buyers don’t want to spend what’s necessary to purchase an EV, nor do they wish to suffer the inconveniences that re-charging often brings. This is a case in which policy is outrunning the ability of the underlying infrastructure required to support it. And while adoption of EVs is growing, it is still quite low (and see here).

Wising Up

Substitution into new inputs or technologies happens more rationally when prices accurately reflect true benefits and scarcities. The case for public subsidies and mandates in the push for a zero-carbon economy rests on model predictions of catastrophic global warming and a theoretical link between U.S. emissions and temperatures. Both links are weak and highly uncertain. What is certain is the efficiency of fossil fuels to power gains in human welfare.

This Bartley J. Madden quote sums up a philosophy of progress that is commendable for firms, and probably no less for public policymakers:

“Keep in mind that innovation is the key to sustainable progress that jointly delivers on financial performance and taking care of future generations through environmental improvements.”

Madden genuflects to the “sustainability” crowd, who otherwise don’t understand the importance of trusting markets to guide innovation. If we empower those who wish to crush private earnings from existing technologies, we concede the future to central planners, who are likely to choose poorly with respect to technology and timing. Let’s forego the coercive approach in favor of time, development, and voluntary adoption!

Liz Warren Pitches Another Goofball

23 Thursday Aug 2018

Posted by pnoetx in Central Planning, Property Rights, Regulation

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Accountable Capitalism Act, Board Activism, Don Boudreaux, Elizabeth Warren, Fifth Amendment, Kevin Williamson, Matt Yglesias, Richard Epstein, Unconstitutional Conditions

Elizabeth Warren wants to nationalize all private businesses with more than $1 billion in annual revenue. She plans to introduce legislation called the “Accountable Capitalism Act” that would, if enacted, authorize an outright theft of private property from the owners of these companies. Among other things, her plan would require large companies to obtain a federal charter and set aside 40% of their board seats for members to be elected by employees. In addition, henceforth these businesses would be answerable not merely to shareholders, but to employees along with a limitless array of other “stakeholders”. That’s because under their federal charters, firms would have a duty to create a “general public benefit”. The operative assumption here is that merely creating a product or service does not produce adequate value for society, regardless of the benefits to buyers, income to employees and suppliers, taxes paid, and the returns earned by millions of working people who have invested in these companies via pension and 401(k) plans.

In the very first place, Warren’s bill is unconstitutional, as Richard Epstein points out. Owning a business is protected as a property right under several amendments to the U.S. Constitution, but particularly the Fifth Amendment. Warren would place unconstitutional conditions on this right via the requirements for a federal charter and the so-called public benefit. If enacted, her bill would quite likely be ruled unconstitutional by the courts. But if it stood, capital would quickly take flight from the U.S., depressing asset values.

Don Boudreaux notes that absent ownership, vaguely-defined “stakeholders” have risked nothing in the success of the company. Shareholders bear the financial risk that the company will fail to produce adequate earnings, lose value, or fail. Management has a fiduciary duty to protect the funds that shareholders invest in the firm, including a duty to protect the firm’s ability to acquire credit. Warren’s legislation would compromise these duties by elevating the objectives of non-owners to the same or greater status than those who have provided the equity capital. Again, this would happen in at least two ways: required representation of employee-elected board members, and the vague public-benefit mandate under the firm’s federal charter.

Significant employee representation on the board is likely to distort decisions about labor compensation and virtually any decision affecting employment. While 40% is short of a board majority, union pension funds already purchase shares in companies both as investments and as a way of driving labor issues before shareholders and into boardrooms. Those votes, along with the 40% board representation and oversight from federal bureaucrats, would give additional leverage to labor in influencing the firm’s decision-making. To take the simplest case, economic efficiency requires that the rate of labor compensation be the same as the marginal value of labor productivity. Warren’s proposal would surely result in wage payments exceeding this threshold, diminishing the economic value of the firm and its ability to raise capital. And by reducing the efficiency of the production process, it would raise costs to consumers and/or business customers.

There any number of other worker demands that would gain viability. For example, extended break times or extra paid-time-off would certainly raise costs, and such demands from a plurality of the board would be unrestrained by the need to negotiate other terms. Or how about a plant-closing decision? The upshot is that mandated board representation for labor would create instability and lead to a decline in the firm’s performance, competitiveness, and attractiveness to suppliers of capital. Ultimately, the very jobs on which labor depends would be threatened.

Further dilution of business objectives would arise from the requirement under the federal charter to produce a “public benefit”. Serving customers is not enough, but what will satisfy federal overseers that the firm has fulfilled its social obligations? And what are the limits of those social obligations? Again, these amorphous requirements would constitute a theft of resources from the business owners, requiring the payment of alms in order to produce something of value. There is already evidence that board activism in pursuit of non-business, social objectives destroys business value:

“Labor-affiliated pensions regularly file shareholder proposals, usually involving social and political concerns. Those social and political shareholder-proposal campaigns are associated with lower shareholder value. These labor investors also tend to attack companies facing ongoing union-organizing campaigns, as well as companies with political action committees that support Republicans.”

In time, the dilution of objectives undermines a firm’s viability, its health of its suppliers, and its ability to employ workers and hire other resources. Many of the suppliers hurt by Warren’s proposal would be smaller firms. It would ripple through the ranks of consultants, repair shops, electricians, plumbers, accounting firms, janitorial services, and any number of other businesses. But even before that, Warren’s proposal would send capital scrambling overseas.

I share Don Boudreaux’s astonishment that writers such as Matt Yglesias in Vox can assert that the Warren plan would have no costs. It might or might not have an impact on the federal budget, but the cost of destroyed economic value in the business sector would be massive, not to mention the jobs that ultimately would be lost in the process. It’s also astonishing that proponents can pretend that Warren’s bill would “save capitalism” when in fact it would do great harm.

Finally, here is Kevin Williamson expressing his disdain for Warren’s true intent in putting her bill forward:

“Warren’s proposal is dishonestly called the ‘Accountable Capitalism Act.’ Accountable to whom? you might ask. That’s a reasonable question. The answer is — as it always is — accountable to politicians, who desire to put the assets and productivity of private businesses under political discipline for their own selfish ends. It is remarkable that people who are most keenly attuned to the self-interest of CEOs and shareholders and the ways in which that self-interest influences their decisions apparently believe that members of the House, senators, presidents, regulators, Cabinet secretaries, and agency chiefs somehow are liberated from self-interest when they take office through some kind of miracle of transcendence.”

Data and Amplifications On Incels

15 Tuesday May 2018

Posted by pnoetx in Free markets, Prohibition, Redistribution

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Black Markets, Feminism, General Social Survey, Incels, Institute for Family Studies, Involuntary Celibacy, Kevin Williamson, Lyman Stone, Organized Crime, Patriarchy, Prohibition, Promiscuity, Prostitution, Redistribution, Sex Concentration Ratio, Sex Robots, Sex Trafficking, Sexual Revolution, Shiekha Dalmia, South Caucasus, Virginity

Last week I wrote about some promising avenues through which “incels”, so-called “involuntary celibates” unable to find willing sexual partners, might enjoy some semblance of sex lives without infringing on the rights of others. Several postscripts appear below, but first I describe the findings of Lyman Stone’s examination of survey data on sexual frequency for the Institute for Family Studies blog in which he investigates reasons for the increase in male sexlessness.

The Data On Sex and Celibacy

Involuntary sexlessness is not a new phenomenon, but estimates of its frequency have grown over the past ten years. That’s been an operative assumption made by many writers since the van attack by an “incel” in Toronto in April. Stone examines data from several surveys, such as the General Social Survey (GSS), and focuses mainly on the unmarried 22 – 35 age group. He investigates both the dimensions of involuntary celibacy and aspects of the narrative offered by incels themselves.

Incels believe that women have become increasingly promiscuous: No, the GSS data reveal no real trend in female sexual frequency since the year 2000. The share of females reporting no sexual activity within the previous 12 months has not changed much either (~15% on average), about the same as males until more recent years.
Stone finds that the share of never-married males who have been sexless for at least a year has increased over the past 10 years.
Incels believe that a small share of males dominate sexual activity: No, while the distribution of sex is not equal, it is not nearly as skewed as incels claim: the most sexually active 20% of both men and women have 50-60% of the sex. Those shares have been fairly stable over time. Some of the most promiscuous actually pay for sex, which inflates the measured sex-concentration ratio. However, incels believe the top 20% have 80% of the sex, according to Stone‘s own reporting of on-line commentary. If so, incels exaggerate the success of those would-be sexual competitors.
The increase in sexlessness among unmarried men is mostly involuntary. This follows from a decline in the share of never-married, male virgins who abstain from sex for religious reasons and increases in the shares reporting “no suitable partner” and “other” reasons for celibacy.
Stone derives a “hard-core” incel population: “the share of never-married men ages 22-35 who have never had sex, and whose reason for never having had sex isn’t abstention for religious, timing, or health reasons.” This share has risen from 2.7% in 2002 to about 4.4% in 2015.
Most of the increase in the “hard core” incel share can be attributed to declining marriage rates and to an increase in involuntary virginity among the unmarried.
Two factors that covary positively with virginity are the level of education and living with one’s parents, but some of the covariation is due to voluntary celibacy.

Stone concludes that young male sexlessness is:

“… mostly about people spending more years in school and spending more years living at home. But that’s not actually a story about some change in sexual politics; instead, it’s a story about the modern knowledge economy, and to some extent exorbitant housing costs. As such, it’s no surprise that rising sexlessness is being observed in many countries. This, in turn, suggests that finding a solution to help young people pair up may not be as easy.”

Survey data are always suspect, of course, but measuring actual sexual frequency in large populations is difficult if not impossible without surveys. Also, the level of Stone’s analysis does not necessarily align well with particular environments and sub-cultures in which people interact. For example, some argue that the increasing ratio of females to males on college campuses has changed the sexual “terms of trade” between men and women, but Stone didn’t attempt to drill down that far. Finally, Stone doesn’t offer any solutions of his own. My own opinion is that policy should be guided by voluntary choice and adaptation, along with encouraging those who feel overwhelmingly lonely or rejected to get off social media and seek counseling.

Postscripts Re: Last Week’s Article

Sexlessness is not confined to the young-adult population, of course, and there are severely disabled people of all ages who lack a sex life along with others unable to form intimate relationships. In a post last week, I advocated legalized prostitution as a mechanism for effecting a “voluntary redistribution of sex”, allowing those who are unable to find willing partners to enjoy some semblance of a sex life.

Legalized prostitution would remove the business from the grips of organized crime and reduce sex trafficking (which is not the same as voluntary prostitution). It would also improve health and safety, reduce violence, and lead to more humane conditions in an industry that will never be quashed by ham-handed, counterproductive efforts at prohibition. This is a rather mainstream view among economists, most of whom understand the folly of intrusions on private, mutually-beneficial decisions. Here are some thought from an economist in the South Caucasus on the matter. To oppose legal prostitution on moralistic or religious grounds, as comforting and virtuous as it might feel, is to wear blinders to the tragic consequences of a black market in sex.

On a related note, legalization does not in any way imply government-sponsored or taxpayer-subsidized prostitution. That’s something I’d be most unlikely to contemplate. And in that connection, I don’t really care for the term “redistribution” to describe legalization, but following a few others, I used it. A redistribution usually implies a change in the allocation of a fixed quantity across various subgroups or individuals. Perhaps some incels believe in “redistributing” sex, which might suggest a coercive element and certainly not what I have in mind. My use of the qualifier “voluntary” was intended to make that distinction. Unlike forced redistribution, legal access to sexual services does not imply a zero- or negative-sum outcome. I also mentioned sex robots as a possible outlet and a voluntary choice for incels, understood to be unsubsidized by government.

I am sympathetic to the view put forward by Shiekha Dalmia’s in “Incels Are the Product of an Incomplete Sexual Revolution“. She says, “Neither feminists nor social conservatives have the right understanding”, asserting that the problem has to do with the difficulty incels have in navigating the jagged channels between today’s sexual expectations and more traditional gender relations. To that, one might add the negative baggage created by the “anti-patriarchal” sentiment promoted by feminists. That’s worth considering, and it suggests that everyone (including incels) might just be too uptight.

Finally, Kevin Williamson offers some “Advice for Incels: Join a Church“. That’s probably a fine idea for some incels, young and old, who might find a higher purpose from the decision, even if they can’t find a girlfriend there. However, it’s not as if there are no church-going incels to begin with. Furthermore, single women at church are no more likely than anyone to be drawn to men who lack an ability to interact with the opposite sex. And let’s face it: the girls at church are not exactly waiting for the next dashing paraplegic to roll through the doors. Sorry if that sounds cynical or demeaning. The reality is that many disabled individuals lack the relationship opportunities available to most men. The least society can do for them, regarding access to sex services, is to get out of the way.

Corporate Lapdogs of the Left

04 Wednesday Apr 2018

Posted by pnoetx in Central Planning, Identity Politics, Progressivism, rent seeking

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central planning, Corporate Socialism, Corporatism, David Cay Johnston, Identity Politics, Interstate Commerce Commission, Kevin Williamson, Orbiting the Giant Hairball, Political Action Committees, Political Correctness, rent seeking, Technocratic elite, William H. Whyte

ceo

Now don’t get me wrong, I definitely prefer to see private goods and services produced privately, not publicly. Private ownership of the means of production makes the world a better place because ownership and self-interest drive performance and value, to put it all too briefly. But corporate America is now so thoroughly encumbered by ideological distractions that it compromises the mission of creating value, risking shareholder returns and invested capital as well. Having spent the past 31 years employed successively by three gigantic corporate hairballs (with a 2-year stint at the central bank), the following thesis about corporate CEOs, and corporate America by extension, strikes me as wholly accurate:

“CEOs … mostly [reject] the ethos of rugged individualism in favor of a more collectivist view of the world. The capitalists [are] not much interested in defending the culture of capitalism. … the psychological and operational mechanics of large corporations [are] much like those of other large organizations, including government agencies … American CEOs [believe] that expertise deployed through bureaucracy [can] impose rationality on such unruly social entities as free markets, culture, family, and sexuality. The supplanting of spontaneous order with political discipline is the essence of progressivism….“

I changed the tenses used above by Kevin Williamson, who attempts to explain why American corporations became such progressive activists. The beginning of the quote describes interviews conducted by William H. Whyte in the 1950s, but it’s as true now as it was then, and probably much more so. The technocratic view of organizational efficacy may be true up to a point. In fact, there is undoubtedly an optimal size for any organization that is dependent upon it’s mission, the technologies at its disposal, and the range of prices it is likely to face in input and output markets. It’s all too easy for a successful firm to expand beyond that point, however, as many now-defunct businesses have learned the hard way. However, the quote merely highlights the sympathetic view often held by corporate managements toward the notion of a planned society, guided by a class of technocrats. They share this scientistic line of thinking with the statist left, though the corporatist vision is a world in which their private organizations play a critical role, with risks mitigated by “partners” in government.

Private incentives can produce wonderful results, but they are corrupted by the scent of private advantage that can be gained via government intervention in markets. The corporate practice of seeking rents through legislative and administrative action has been going on since at least the 1880s, when railroads sought protection from competition and other shipping interests via federal regulatory action.The symbiosis between government and corporate interests, or corporatism, has been growing ever since. Whether it is lucrative contract awards, subsidies, or favorable regulation, government has lots of goodies at its disposal by virtue of its exclusive ability to exert coercive power. This quote of David Cay Johnston describes the end-product of corporate rent-seeking behavior:

“Corporate socialism is where we socialize losses and privatize gains. Companies that have failed in the marketplace stick the taxpayers with their losses, but when they make money they get to keep it, and secondly, huge amounts of capital are given to companies by taxpayers.”

Risk mitigation is at the heart of a second variety of corporate leftism, and Williamson notes the asymmetry in the political risks faced by most corporations:

“Conservatives may roll their eyes a little bit at promises to build windmills so efficient that we’ll cease needing coal and oil, but progressives (at least a fair portion of them) believe that using fossil fuels may very well end human civilization. The nation’s F-150 drivers are not going to organize a march on Chevron’s headquarters if it puts a billion bucks into biofuels, but the nation’s Subaru drivers might very well do so if it doesn’t. … The same asymmetry characterizes the so-called social issues.“

At this point, Williamson goes on to describe a few social issues on which corporate leaders are frequently harangued by the left. Those leaders may view conservative positions on those issues as aberrant, according to Williamson, because the leaders inhabit an insulated world of elitist, media-driven, politically-correct opinion. They wish to be seen as “progressive” and discount the risk of offending conservatives. While I do not take Williamson’s side on all of the social issues he mentions, I concede that there is some truth to the asymmetry he describes.

An avenue through which corporate America is strongly influenced by the left is identity politics. This is partly an unfortunate side-effect of civil rights legislation and other anti-discrimination law, but in today’s litigious environment, there are excessive legal risks against which corporations must take precautions. This is embedded in human resource policies to the point at which hiring the best individual to fill a role is subject to a series of costly, time-consuming hurdles, and is sometimes impossible. Then, there are the mandatory “Diversity and Inclusion” courses that all employees are required to complete. These overbearing attempts to “educate” the work force consume valuable staff time and are of questionable value in light of the aggravation and resentment they inspire in employees. Finally, I can’t keep count of all the corporate-sponsored activities devoted to celebrating one identity group after another. Can we please get back to work?

Today, as a consumer, it is becoming more difficult to engage in commerce without exposure to a seller’s political positioning. For example, I buy about 90% of my clothing from a particular clothier, but last weekend I learned that the company had taken an objectionable position (to me) in the debate over gun legislation. I am certain that activists badgered the company, and it succumbed, and so I will change my shopping habits. People often find that it’s easier to engage in arms-length transactions when the other party stays off the soapbox. But it goes further than that. Here is Williamson:

“Whereas the ancient corporate practice was to decline to take a public position on anything not related to their businesses, contemporary CEOs feel obliged to act as public intellectuals as well as business managers.“

Well, “ancient” might take it a bit too far, but as a customer, employee, and especially as a shareholder, I would urge any company to steer clear of political posturing. Do not dilute your mission of delivering value to customers, which dovetails with serving the interests of shareholders. You must pursue that mission in a way that you consider responsible and ethical, which just might narrow the scope of the mission. And that’s okay. Just be as neutral as possible on extraneous issues as you reach out to potential customers, and do not respond to politically-motivated threats except in the most diplomatic terms.

Should I bother to say that corporations should eschew public subsidies? That they should respond to competition by improving value, rather than lobbying for advantages and protection from lawmakers or regulators? That they should not badger their employees to give to their company’s Political Action Committee (PAC)?

I must be fantasizing! Corporations would never follow that advice, not as long as they can capture rents through the seductive expedient of big government. If that were the only reason for the hate reserved by leftists for corporate America, I’d be right with them. But in fact, leftist rhetoric condemns the profit motive generally, both in principle and as a method of scapegoating for any social ill. Williamson marvels at the incredible irony of the corporate enterprise-cum-lapdog of the Left, which is especially palpable as the Left beats the dog so unrelentingly.

Insurance Subsidies: Taxes vs. High Premiums

16 Tuesday May 2017

Posted by pnoetx in Health Care, Subsidies, Taxes

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Charity, Guaranteed Issue, Individual Mandate, Kevin Williamson, Managed Health Care, Megan McArdle, monopoly, Pre-Existing Conditions, Right To Health Care, Single-Payer, Voluntary Exchange, Woodrow Wilson

Here’s a question a friend posed: Why do we care whether health care coverage for high-risk individuals is subsidized by taxpayers versus premium payers via common (community) rating in a combined risk pool? For convenience, let’s call those two scenarios T and C. Under C there is no segmentation whatsoever, while T involves a division of individuals into two groups: standard and high risk. Both scenarios involve guaranteed issue, though T assumes that high-risk individuals must purchase their coverage in the appropriate market. I’ll tackle T first because separate treatment of the distinct risk archetypes yields results that are useful as a baseline.

Taxpayers Subsidize Pre-Existing Conditions

Under scenario T, suppose that all standard risks face the same expected outcome in each period. Everyone in that group pays based on their expected health care costs. In the end, some will have greater health care needs than others, but only a few will be truly unlucky, incurring extremely high health care expenses. On balance, the pooling of risk makes the arrangement sustainable. People enter into these contracts voluntarily because they are risk averse. No one forces them; they are capturing value from protection against financial ruin. The paid-in cash can be invested by the plan in the interim between premium and claims payments. The combination of premium payments and investment income must be enough to cover claims and allow the managers of the plan to defray their administrative costs and make a tidy profit. The profit matters because it attracts voluntary resources to bear on the problem of health-expense risk. Therefore, these insurance transactions are mutually beneficial to the insured and the owners of the insurer.

Conceivably, the smaller high-risk group could be handled the same way, as long as their aggregate health care expenses are predictable. Those expenses will be high, however, so the cost of coverage for individuals in such a pool might be prohibitive. One solution is to force taxpayers to subsidize coverage for this group. The transactions in this market are also mutually beneficial to the insureds and the insurers, just as in the market for standard risks. In both cases, the value to purchasers of coverage is no less than the cost of providing it, including compensation for any capital employed in the process.

In the simplified world of scenario T, we have an optimal insurance outcome for both standard and high-risk individuals. The downside is the cost of the subsidies to taxpayers, which distort a variety of incentives, including labor supply, saving and investment. These lead to misallocations, but they are spread across the economy rather than concentrated on the outcomes in a single market. Is this better than simply pooling all risks, as in Scenario C (common rating)?

Common (Community) Rating

Common rating means that all risks are combined into one pool and everyone is charged the same premium. High-risk individuals get to participate just as if they are standard risks. However, because the combined risk pool has greater expected health care costs on average than the standard risk population, the premium must be greater than the one charged to standard risks in Scenario T. Otherwise, the plan could not cover all expenses nor earn a profit. Worse yet, the standard risks now have an incentive to exit the market while high-risk individuals have every reason to leap in. This is called adverse selection, and it leads to the sort of insurance death spiral we’ve witnessed under Obamacare. And not only does the risk pool deteriorate: the incentive to offer coverage is diminished as well. Thus, an entire industry is rendered dysfunctional. Those who wish to pool together voluntarily in order to efficiently hedge their risks are, by law, prohibited from doing so. The next step might well be for government to mandate participation in an attempt to keep the plan afloat.

Those who favor forced redistribution (not my set) might have other reasons to prefer Scenario T, as it creates greater latitude for progressive tax funding of the subsidies. However, the subsidies themselves could be sensitive to income such that the risky but well-heeled pay more.

From a libertarian perspective, Scenario C has obvious drawbacks, starting with the coercion of insurers to provide coverage to the high-risk population at rates that do not compensate for risk. Then, too, the mis-pricing of risk places a burden on individuals of standard risk. With the pooling of all risks, community rating and coverage mandates result in individual and aggregate over-insurance against most types of risk, tying up scarce resources in insurance assets that could be invested more productively in other uses. In addition, resources are absorbed by compliance costs as authorities find it necessary to enforce the many rules made in hopes of proping-up an otherwise unsustainable arrangement.

Then There’s Single-Payer

It’s often argued that going beyond this point in Scenario C to a single-payer system will yield better outcomes at lower costs. Megan McArdle shreds this idea in a recent column: well over 40% of health care spending in the U.S. is paid by government already; the average growth of that share is even higher than private health care spending; the quality of care is often lower in the government health sector, and in any case, single payer systems around the world do not enjoy slower growth in costs. Rather, they started from lower levels of health care costs. Our relatively high level of costs in the U.S. evolved many years ago, before single-payer systems were adopted abroad. We have many more private and semi-private hospital rooms in the U.S., we often have greater availability of advanced technology, and waiting times for care tend to be significantly shorter.

The high standard of living in the U.S., i.e., our level of consumption, explains a lot of the gap in health care spending. Overall, our health care outcomes are good relative to other developed countries. Unfortunately, we’ve also pushed-up costs from the demand side by offering tax subsidies on employer-provided care, and government in the U.S. has had a role in “managing” health care since the time of the Woodrow Wilson Administration, largely to the detriment of cost control. Government control stultifies competition, creating monopoly-like conditions in both insurance and the provision of care. That manifests in higher profits, safer profits, or slovenly performance by organizations and agents that lack accountability to customers and market forces. Costs rise.

Liberty or Coercion

Libertarians will object to the tax in Scenario T, which like all taxation is coerced, but the taxes necessary to pay for adequate coverage for pre-existing conditions is minor relative to the potential costs of distorting the entire health insurance industry, repleat with the costs of government regulation and compliance that entails, and the potential for still more encroachment of government in health care.

Finally, the question posed by my friend about tax subsidies versus common insurance rating was prompted by a presumed “right to health care”. One must ask whether that right is legitimate. Kevin Williamson argues that scarcity interferes with any such claim. More to the point, in a free society, one cannot simply demand health care from another free individual. Our choices for distributing scarce health care fall into one of only two categories: voluntary and coerced. We should always prefer the former, which may take the form of charity or a mechanism under which care is provided via free exchange. The latter works very well when incentives are clear and pricing is efficient. For those who cannot participate in exchange for any reason, including pre-existing conditions that make coverage prohibitive, private charity is an alternative to government subsidies. At a minimum, charity should serve as an important relief valve for the burden on taxpayers. The Left, however, is always quick to condemn private charity as if it is somehow an illegitimate mechanism for solving social problems, but it is often superior to government action.

Trump Versus the Holocaust Trivializers

13 Monday Mar 2017

Posted by pnoetx in anti-Semitism, Identity Politics

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A Tale of Three Cities, Adolf Hitler, Anti-Defamation League, anti-Semitism, Anti-Zionism, City Journal, David Bernstein, Donald Trump, Fake Hate Crime, Fiddler On the Roof, George Mason University, Godwin's Law, Holocaust, Jewish Community Centers, Jewish Journal, Kevin Williamson, Rob Eshman, Shylock, Stefan Kanfer, Steve Bannon, Volokh Conspiracy, Washington Post

trump-tallit

George Mason University Law Professor David Bernstein observed this week that many in the American Jewish community are panicked by Donald Trump’s election because they perceive Trump and his followers as anti-Semitic. That perception was seemingly reinforced by recent anti-Semitic acts, such as bomb threats at Jewish Community Centers and the desecration of graves at Jewish cemeteries in St. Louis, MO and Philadelphia, PA. Bernstein, who is Jewish and not a Trump supporter, wrote a piece entitled “The Great Anti-Semitism Panic of 2017“, which appeared in the Volokh Conspiracy blog sponsored by the Washington Post.

Like Bernstein, I’ve seen a number of indignant posts by Jewish friends connecting Trump and anti-Semitism, complete with comparisons to Adolf Hitler. My quick reaction is that such comparisons are not only irresponsible, they are idiotic. The ghastly implication is that Trump might entertain the idea of exterminating Jews, or any other opposition group, and it is complete nonsense.

Taking a step back, perhaps all this is related to Trump’s nationalism and his views on border security. That includes “extreme vetting” of refugees, deportation of illegal immigrants, and even the dubious argument for a border wall. While that’s not about Jews, those policies appeal to certain fringe, racist elements on the extreme right where anti-Semitism is commonplace. However, those policies also appeal to a much broader and diverse audience of voters who harbor anxieties about economic and national security, and who are neither racists nor anti-Semites.

Bernstein takes progressive Jews to task for tying any of this to anti-Semitism on the part of Trump, his Administration, or his broader base of support:

“… the origins of the fear bear only a tangential relationship to the actual Trump campaign. For example, I’ve lost track of how many times Jewish friends and acquaintances in my Facebook feed have asserted, as a matter of settled fact, that Bannon’s website Breitbart News is a white-supremacist, anti-Semitic site. I took the liberty of searching for every article published at Breitbart that has the words Jew, Jewish, Israel or anti-Semitism in it, and can vouch for the fact that the website is not only not anti-Semitic, but often criticizes anti-Semitism (though it is quite ideologically selective in which types of anti-Semitism it chooses to focus on). I’ve invited Bannon’s Facebook critics to actually look at Breitbart and do a similar search on the site, and each has declined, generally suggesting that it would be beneath them to look at such a site, when they already know it’s anti-Semitic.

There is .. a general sense among Jews, at least liberal Jews, that Trump’s supporters are significantly more anti-Semitic than the public at large. I have many times asked for empirical evidence that supports this proposition, and have so far come up empty. I don’t rule out the possibility that it’s true, but there doesn’t seem to be any survey or other evidence supporting it. Given that American subgroups with the highest proportions of anti-Semites — African Americans, first-generation Hispanic immigrants, Muslims and high school dropouts — are strong Democratic constituencies (though the latter group appears to have gone narrowly for Trump this time), one certainly can’t simply presume that Trump has a disproportionate number of anti-Semitic supporters.“

Bernstein goes on to discuss the hostility to Trump from groups like the Anti-Defamation League (ADL), hostility which he characterizes as essentially opportunistic:

“The ADL’s reticent donors are no longer reticent in the age of Trump, with the media reporting that donations have been pouring in since Trump’s victory. It’s therefore hardly in the ADL’s interest to objectively assess the threat from Trump and his supporters. Indeed, I’m almost impressed that an ADL official managed just the other day to link the JCC bomb threats to emboldened white supremacists, even though the only suspect caught so far is an African American leftist.“

He also notes the irony that progressive Jews have been shunned by many leftists, who almost uniformly condemn Zionism. Now, progressive Jews hope to renew common cause with those whose political purposes are defined by membership in groups with a history of marginalized treatment, and who now believe they are threatened by Trump. Will they be happy together? Bernstein attests that many Jews privately acknowledge the danger of “changing demographics”:

“… which is a euphemism for a growing population of Arab migrants to the United States. Anti-Semitism is rife in the Arab world, with over 80 percent of the public holding strongly anti-Semitic views in many countries.“

As a non-Jew, some would say I lack the bona fides to comment on how Jews “should” feel about Donald Trump. I was raised Catholic, but I attended a high school at which over 60% of the student population was Jewish. I was a member of a traditionally Jewish fraternity in college, where I witnessed occasional anti-Semitism from certain members of non-Jewish fraternities, and I felt victimized by it to some degree. My late brother married a Jewish woman, and he was buried according to Jewish custom. I was once stunned by a brief anti-Semitic wisecrack I overheard in the restroom at a community theatre production of the great musical Fiddler On the Roof!

So, I am connected and strongly sympathetic to the Jewish community. I am also well acquainted with white Gentiles who have had much less interaction with Jews. Those individuals span the political spectrum, and there is no doubt that racists and anti-Semites reside at both ends. I will state unequivocally that among this population, I have observed as much racism and denigration of Jews from the left as from the right. It partly reflects anti-Zionism, but there have been leftists in my acquaintance who seem to regard Jews as Shylockian, as greedy moneychangers and crooked lawyers, or as “hopelessly bourgeois”. Jews should not be blind to the hatred that still exists for them in certain quarters on the left, even if it’s easier to pretend that right-wing religious nuts are their only enemies.

Bernstein’s column was met with outrage by some Jewish progressives. In the Jewish Journal, Rob Eshman accused Bernstein of making apologies for Trumpian anti-Semitic behavior. Here is Bernstein’s response, in which he castigates Eshman for distorting both his thesis and the reaction of the Jewish community to Trump. He also notes that Eshman assigns guilt for the recent spate of anti-Semitic acts to Trump supporters where no evidence exists. That implication is a constant refrain from certain Jewish friends on my Facebook news feed. But there is ample evidence of “fake” hate crimes by progressives, as documented last week by Kevin Williamson.

Finally, it is hard to square the idea that Trump and his leadership team (which includes his Jewish son-in-law) are anti-Semitic with other evidence, such as the unequivocal support they have pledged to Israel, and their hard stand on vetting refugees from nations that are avowed enemies of the Jewish people. Yes, Bernstein is well aware of the anti-Semitic, fringe-right elements that have supported Trump, but those are not the sentiments of anyone serving in the administration, including Steve Bannon. The left has become quite blithe about observing Godwin’s Law, which states that all political opponents will eventually be called out as Nazis. Progressive Jews have taken the cue without much thought: the frequent comparisons of Donald Trump to Hitler are awful and are not compatible with healthy discourse. As Stefan Kanfer writes in City Journal in his review of the book “A Tale of Three Cities” (my emphasis added):

“… those who persist in comparing Adolf Hitler with any U.S. politician reveal themselves as members of a group just to the side of the Holocaust denier—the Holocaust trivializer. There are no lower categories.“

Words of Weasels

26 Tuesday Apr 2016

Posted by pnoetx in Liberalism, Marketplace of Ideas, statism

≈ 1 Comment

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Access, Daniel Klein, David Harsanyi, Disenfranchisment, Emmitt Rensin, Full Rights, Kevin Williamson, Kyle Smith, Language of the Left, Liberalism, Loophole, Reason, Safe Spaces, Vox

1984 instruction-manual

Take a moment to consider some examples of the horrible misuse of words in political debates. David Harsanyi at Reason provides a few choice examples of the corrupted and misleading language used by Democrats:

the absence of a tax that “should” exist but doesn’t is a “loophole”;
failure to pay that tax is a “fraud”;
denial of “access” occurs when the state doesn’t give something to you for free;
“disenfranchisement” means you have to show an ID or wait in line;
“full rights” means the entire world must be a “safe space” for your actions or views, even if the rights of others are denied in the process.

These are all recent examples of mangled language from the two candidates for the Democrat Party nomination. But here’s a big one that Harsanyi overlooked: the misuse of the term “liberalism” to describe statism. In fact, he misuses the word “liberals” himself! In “Don’t Call Leftists Liberal; They’re Not!” on Sacred Cow Chips, I offered some thoughts on this bit of Newspeak practiced by so-called progressives. I can’t resist reposting the following quote of Daniel Klein quoting Kevin Williamson, which says it all (links are in the original post):

“Williamson [quotes] two leftist authors writing in The Nation, one decrying ‘unbridled individualism,’ the other ‘unfettered capitalism.’ Williamson concludes: ‘A ‘liberalism’ that is chiefly concerned with the many clever uses of bridles and fetters does not deserve the name. It never has.’”

The following quote from Harsanyi gives emphasis to the wrongful appropriation of “liberalism” by the left, though it relates more specifically to the misuse of the term “loophole”:

“Basically, all of life is a giant loophole until Democrats come up with a way to regulate or tax it. In its economic usage, “loophole” … creates the false impression that people are getting away with breaking the law. It’s a way to skip the entire debate portion of the conversation and get right to the accusation.“

Another behavioral characteristic of leftists is a certain self-righteous satisfaction that they hold the moral high ground on any number of issues. “The Smug Style in American Liberalism“by Emmitt Rensin in Vox takes a poke at this presumption. Of course, Rensin misuses “liberalism”. I find this review of the article by Kyle Smith an effective summary, and it’s even better because it skips what comes off as a long catalog of excuses by Rensin as to why leftists might be forgiven for patting themselves on the back. I give Rensin credit, however, for a good analysis of the origins of leftist “smug”, which he attributes to a backlash against defections from the Democrat coalition by working-class voters in the second half of the twentieth century. And I credit Rensin for his ultimate condemnation of undeserved leftist attitudes of superiority. Here are some difficult realities for the left cited by Rensin:

“Nothing is more confounding to the smug style than the fact that the average Republican is better educated and has a higher IQ than the average Democrat. That for every overpowered study finding superior liberal open-mindedness and intellect and knowledge, there is one to suggest that Republicans have the better of these qualities.“

Perhaps inventing new definitions for words in the service of rhetoric comes easy with pomposity. In the end, assertions that the left is more “caring”, “tolerant” or “peaceful” are balderdash. There are honest policy debates to be had about the best way to solve social problems and respect for the rights of others, but having experienced angry reactions in debate with befuddled leftists for myself, I wholly concur with this Kyle Smith observation:

“Ridiculing opponents is easier than arguing with them. Liberals don’t want debate, they want affirmation.“

Don’t Call Leftists “Liberal”; They’re Not!

29 Wednesday Jul 2015

Posted by pnoetx in Liberty

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Collectivism, Daniel Klein, Governmentalization of Social Affairs, Intercollegiate Review, Kevin Williamson, Left wing, Liberalism, Modern Age, N-Gram Viewer, Neoliberalism, New Liberalism, Progressivism, Social Democracy, Socialism, Spontaneous Social Order, statism

Nor are statists, collectivists and socialists, but I repeat myself. The simple plea above is made by Daniel Klein in an essay appearing in the Intercollegiate Review and in Modern Age. He asserts that libertarians (and conservatives) fall into a semantic trap when they use the term as a pejorative for leftists. I have touched on the mangled, modern usage of “liberalism” several times on Sacred Cow Chips, but Klein brings some interesting empiricism into consideration and makes several points worth emphasizing.

First, Klein traces the historical record of appearances of certain words related to liberalism in published literature using the “n-gram viewer” on Google. He shows that the political use of “liberal” began around 1770. For the next 110 years, liberalism referred to a philosophy and policies associated with small government and individual autonomy. In the U.S., however, the term began to be co-opted by the political left in the late 1800s. Around the turn of the twentieth century, references to “New Liberalism” and “Old Liberalism” became more frequent. So the term was subverted in that time frame, a decade or two before the term “left-wing” came into use.

“The literature of the so-called New Liberals declaimed openly against individual liberty and in favor of state collectivism and socialistic reform.“

Today, the association of “liberalism” with the left is confined mostly to the U.S. and Canada:

“…when we step outside North America, we see that, by and large, liberal still means liberal (in the UK, usage is in-between). …

Where liberal still means liberal, such as in Europe and Latin America, leftists have no reluctance in calling their imaginary bogeyman ‘neoliberalism.’“

By way of suggestion, Klein reviews a few alternative labels for the left. In doing so, he notes that in general, the left supports the “governmentalization of social affairs”. For that reason, one of my favorite labels is “statism”. Oddly, Klein never mentions this as a possibility. (Klein concedes that the left supports liberty on a few issues, which happen to be issues upon which most libertarians are in agreement.) He does refer to the old standby “collectivists” in passing.

Klein likes the label “Progressivism” for the left, despite the positive associations some might make with that term. He argues with some merit that progressivism implies activist, goal-directed policy, as opposed to non-intervention and the spontaneous social order favored by true liberals.

“That collectivists should join together for what they imagine to be progress is perfectly fitting. For them the term progressive is suitable. By contrast, conservatives and libertarians look to, not progress, but improvement. …

Another fitting term for leftism is social democracy, which is standard in Europe. Social democracy is a compromise between democratic socialism and a tepid liberalism. The socialistic penchant is foremost, but a vacillating liberalism gnaws at the social democrat’s conscience.”

I fully agree with Klein that we should never refer to leftists as liberals. They are completely undeserving of the description, and doing so concedes a glaringly false premise. Every leftist I know advocates the increasing governmentalization of social affairs and a naive acceptance of an impossible proposition: that government can ever possess the detailed knowledge necessary to successfully regulate individual actors from above. And leftists are foolishly willing to place faith in the benevolence and wisdom of political agents and central controllers. Klein mentions a recent editorial by Kevin Williamson in National Review:

“Williamson ends the piece by quoting two leftist authors writing in The Nation, one decrying ‘unbridled individualism,’ the other ‘unfettered capitalism.’ Williamson concludes: ‘A ‘liberalism’ that is chiefly concerned with the many clever uses of bridles and fetters does not deserve the name. It never has.’”

Progressives Identify Twin Evils: Progress and People

20 Monday Apr 2015

Posted by pnoetx in Human Welfare

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Big Coffee Table Book of Doom, Depopulation, Dismal Science, Don Beaudreaux, Fixed Supply, Free Markets, Infinite Resource, Kevin Williamson, Overdevelopment, Overpopulation, Overshoot, Ramez Naam, Reason, Ron Bailey, Scarcity, Thomas Malthus

“The Big Coffee Table Book of Doom” is an entertaining review of an actual coffee table book entitled “Overdevelopment Overpopulation Overshoot“, which appeals to the progressive Left’s neo-Malthusian mindset. I am almost tempted to buy this book for my coffee table as fodder for my own amusement, sort of like the board game “Class Struggle” I bought for laughs when I was in grad school. The review, written by Ron Bailey in Reason, pokes fun at the selection of photos in the book, which are chosen to reinforce such fables as over-population, climate change and the supposed evils of capitalism. Of course, this sort of nonsense will never die, primarily because people love a good scare story and because it aligns with the privileged Left’s sense of righteousness and noblesse oblige. Bailey highlights several actual trends that contradict the doomsday narrative:

“Agricultural productivity per acre is improving faster than the demand for food; as a result, fewer acres are needed to grow crops. These trends suggest that as much as 400 million hectares could be restored to nature by 2060, an area nearly double the size of the United States east of the Mississippi River.“

“… the total global fertility rate has fallen from over 5 children per woman in 1970 to 2.45 today, rapidly approaching the 2.1 rate that is the threshold of population stability.“

And on the “perils” of urbanization:

“Urban dwellers have greater access to education, market opportunities, and medicine, and they have fewer kids.“

As Kevin Williamson has pointed out, an egregious distortion of the neo-Malthusian perspective is an attitude that human beings are liabilities rather than assets. This is underscored by the recent comments of a UN official calling for depopulation as a serious objective. One wonders how she might propose to attain that objective. Can the eliminationists be far behind? In rebuttal to such thinking, Bailey quotes Ramez Naam, author of “Infinite Resource“:

“‘Would your life be better off if only half as many people had lived before you?’ In this thought experiment, you don’t get to pick which people are never born. Perhaps there would have been no Newton, Edison, or Pasteur, no Socrates, Shakespeare, or Jefferson. ‘Each additional idea is a gift to the future,’ Naam writes. ‘Each additional idea producer is a source of wealth for future generations.’ Fewer people means fewer new ideas about how to improve humanity’s lot and to further decouple our endeavors from the natural world. ‘If we fix our economic system and invest in the human capital of the poor,’ Naam writes, ‘then we should welcome every new person born as a source of betterment for our world and all of us on it.'”

Population growth has traditionally been a source of economic growth and enhanced welfare, and that is likely to remain the case. I do not claim that population growth will always be an imperative. Rather, fertility decisions are properly the business of families and individuals, not central authorities or public policy, which should take a neutral stance with respect to these decisions.

Malthusian doom is related to the economic law of scarcity, but it is not a direct implication of that law: scarcity means that resource availability is limited relative to potentially limitless demand. The law of scarcity does not assert that there are absolute limits to raw materials or production in the long run, only that human wants, if unrestrained, will always exceed available supplies. There are many ways in which supplies of resources increase over time. Exploration reveals new supplies and technology makes new supplies accessible at lower cost. More fundamentally, growth in the productivity of utilized resources causes effective economic supplies to grow. This is illustrated in Don Beaudreaux’s recent essay on the productivity of land (and see a follow-ups on the topic here):

“The economic supply of land, like that of any other resources you can name, is not a physical phenomenon. As long as people are free and inspired to innovate – and as long as input and output prices are free to adjust to changes in supply and demand – the economic supplies of even the most ‘fixed’ and ‘nonrenewable’ resources will expand.“

Prognostications of doom for humanity appeal to the ignorance of those with no perspective on the mechanisms by which well-being has improved in the developed world over the past few centuries. This has occurred largely by virtue of human ingenuity and free markets. The growth has also enabled greatly improved environmental conditions. The developing world will share in the prosperity only when those governments embrace real market liberalization.

The Zero-Sum “Progressive” Left

25 Friday Apr 2014

Posted by pnoetx in Uncategorized

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Capitalism, Kevin Williamson, Progressivism

Welcome to the Paradise of the Real, by Kevin Williamson, offers a few simple thought experiments to demonstrate some economic fallacies to which progressives desperately cling. Putting such fallacies into action as policies often inures to the detriment of the presumed beneficiaries. Williamson does a nice job of covering the huge contributions of capitalism to human well-being. He also contrasts the “money” and the physical economies, and while I agree with many of his points, he seems confused about how to use the parlance of economics in this context. And he emphasizes differences in the economic philosophies of conservatives and progressives without recognizing that the intellectual development of noninterventionist governing philosophy owes a great deal to libertarians and very little to conservatives. Nevertheless, I enjoyed this essay. Here is a brief excerpt:

“Measured by practically any physical metric, from the quality of the food we eat to the health care we receive to the cars we drive and the houses we live in, Americans are not only wildly rich, but radically richer than we were 30 years ago, to say nothing of 50 or 75 years ago. And so is much of the rest of the world. That such progress is largely invisible to us is part of the genius of capitalism….”