Relevant and even prescient commentary on news, politics and the economy.

Libertarianism Simplified: the Three Proper Powers of Government

In your basic Austrian style Libertarianism Government only has three proper functions: External Defense, Internal Policing, and Enforcement of Contracts.

Or we could simplify all that as: Protection of Private Property, Protection of Private Property, and Protection of Private Property.

It really is that simple, at least once you define private beliefs and personal freedom as property. And property does mean “pertaining to me, my own”. A neat circle.

“Middle English propre proper, own, from Anglo-French, from Latin proprius own”

“Amour propre” French for “love of self”

Tags: , Comments (41) | |

Radley Balko: Optimist, not Libertarian?

Manufacturing evidence is apparently legal for prosecutors who then prosecute the case. This, at least, is the argument a couple of crooked prosecutors are making.

Radley Balko is more optimistic than I am about prosecutors:

If the Supreme Court…would essentially overturn Buckley and give prosecutors complete immunity, even when they conspire to convict an innocent person from the earliest stages of an investigation. The vast majority of prosecutors would never engage in such reprehensible conduct, of course. But it’s curious why professional district attorney organizations and government agencies want to protect the lowly few who would.

I hope he’s correct, but, if I believe Robert E. Lucas, Jr., prosecutors are Rational Actors, and therefore get rewarded by what is measured: convictions, conviction ratio, high-profile conviction, convictions for capital crimes, etc.

I didn’t notice a metric for “losing when the client is innocent” on the list. So let us hope I’m wrong and most prosecutors are less than rational. It is, in any event, interesting to see a so-called “libertarian” website arguing that some people do not work in their own self-interest.

Tags: , , , Comments (0) | |

Beware Canada – The Libertarians are Coming! (Louder)

Via a former editor’s Twitter feed, the Simon Fraser Institute decides to segment the costs of Canadian health care. For the good of the people, of course:

It is critically important, however, that Canadians understand the true cost of Medicare. Armed with a more meaningful estimate, Canadians will be able to better assess whether or not they are receiving value for their health care dollars.

And what do they calculate as the direct Canadian cost for everything—not just insurance, but insurance, treatment, drugs, etc.—on average?

– $9,572 for the average 2 adult family

– $9,855 for the average 2 adult and 1 child family

– $10,191 for the average 2 adult and 2 child family

The lowest quote I can find for insurance alone is $950/month, or $11,400/year. And that’s before any visits, or shots, or treatments.

Tell me again why we can’t afford a government option? And why the Simon Fraser Institute is getting to shill fear in the Windsor Star?

There were reasons for moving back to the States, but health care certainly isn’t one of them.

Tags: , , , Comments (0) | |

SF-Politics Tie-In of the Day

Greg Mitchell’s twitter feed reminds us of Upton Sinclair’s 1934 campaign for Governor of California.

Working on Sinclair’s campaign, as noted in an article we ran several years ago in NYRSF, was a former Naval Officer in his mid-20s whose career was cut short by tuberculosis: Robert A. Heinlein.

As Mitchell notes:

The champion of all dirty races in this century, in fact, was that 1934 contest. Like Barack Obama, Sinclair led a “change” campaign with masses of new or re-energized voters leading him to an upset victory for the nomination from the Democrats in dire economic times. Like Obama, he was pictured as mysterious interloper. And like Obama, he was labeled a “Socialist.”

Well, actually, that was mostly true in his case.

It’s always interesting to note that to all the people who say they became “libertarian” because of Heinlein.

Tags: , Comments (0) | |

Elevating the Discourse at the Atlantic.com

Shorter McMegan:

I once heard these terms of art from the electricity industry. No quizzes!

P.S., Al Gore is fat.

——————

Update: Hoisted from comments…

Kolohe:

A quick point for the negative team – the required* additions to the power grid, (i.e. new hv power lines, speficially 765 kV ones) will not really get started, much less be able to come on line in less than 10 years due to the (legitimate) length of the permitting process and (illegitimate) lawsuits brought by NIMBY’ers and uncomprimising environmentalists.

*required because the re-located power generating facilities (e.g. boone’s wind farm) do not currently have the capacity that electrical export regions (applachia, tenn/ohio valleys) currently do. See page 8 of this pdf – recently linked by the daily kos when discussing the 20% wind strategy – for one (industry) revised power distribution plan.

gibbon1:

Pretty much, Al Gore suggests collective action to build the infrastructure needed to handle solar and wind. The Liberations hear ‘collective action’ which is ‘bad’ and decide Al Gore is ‘one of those’ and then proceed to make fun of him.

Me I made it half way through the comments and nary a mention of return on investment.

CoRev:

The issue with his proposal is maintaining a viable baseload. Wind and solar do not produce at any near peak capacity for days on end and when that happens where you gonna get your power? Who is going to maintain investment in that level of backup? maintain that level at peak? Actually test that level? And on and on.

So for the new sources to work we need nearly 100% of the old to back it up.

ilsm:

If only it were as hard for the US to waste a trillion in warfare state waste securing China’s oil flow as to fight the NIMBY world order.

CoRev would do well to read the detailed post by Jerome a Paris at The Oil Drum on a program to meet a substantial fraction of the Gore challenge via wind. The key distinction is substitution of generation vs. generating capacity — a distinction also seemingly lost on McArdle. Intermittent renewables provide the latter, which is what primarily matters for decarbonization, quite well. That does require a fair amount of grid reinforcement, which will be a challenge for current opponents of long-distance transmission projects (who on the environmentalist side are often motivated by concern that they’re being asked to foot bills to import power from dirty-coal plants).

As for cost, I’ve been living the cost decreases for wind generation. At the beginning of the year, the green-power premium we’d been paying dropped from 2.7 cents/kWh to 1 cent. Net of an increase in the base dirty-power rates, we still saw a price decrease of more than 1 cent/kWh on our electric bill. So the green electricity is not ruinously expensive by any means, and the premium plus the production tax credit comes to about $30/ton of CO2 reduction.

Tags: , Comments (0) | |

McArdle vs. Warren, Round 1: Are We Saving Enough?

Megan McArdle’s taken up the task of trying to prove that the middle class actually isn’t stressed to the breaking point, apparently as part of a project to teach Elizabeth Warren a lesson in good reserach practices or something. Part the first claims that observed low savings rates are, contra Warren et al., nothing to worry about:

But Warren, like many commentators, implies that this is because families are too strapped to save. In fact, it’s because of the two successive bubbles in the stock and housing markets. Families responded to the run up in their net worth by saving less.

Now, you could argue that this was foolish, and I in fact agree with you… The asset model is a standard explanation that pretty much any economist in the country could give you… Even if you think this explanation is wrong, I think you need to explain why your model is a better fit.

I’m a little surprised that she even admitted that the behavior was “foolish.” She might have pulled out this [pdf] paper (*) from the JPE which claims to predict optimal wealth targets and concludes most of us are doing quite well, if anything tending to oversave. (If you believe that, then please allow me to sell you this optimally structured debt-backed security!)

The gut-check on the notion that we’re saving superoptimally, as I see it, is this: what middle-aged person among us wakes up, slaps self on the forehead, and exclaims, “Dang, if only I drank another beer back in college, I could have $10 less in my savings today!”

In fact, a CBO study McArdle links in the post already has some mixed news for her in the details. Even the studies that are generally sanguine about retirement savings adequacy find that savings inadequacy is not independent of class considerations. Shockingly, factors including lower income and lower education have systematic relationships with savings inadequacy. Savings inadequacy tends towards the norm for the lower-middle class and below.

The story that savings rates have rationally declined in response to asset price growth also begs some features of the savings rate data. Specifically, the story ought to be reversible: if everyone was happily booking their home equity inflation in lieu of savings and not overly stressed, financially, then the lower returns on the household portfolios ought to spark a round of catch-up savings. Look at the recent history of the NIPA savings rate, though:

The savings rate collapses to zero, and basically has stayed there, even as the collapse of the RE bubble has been vigorously marking down the value of the middle-class family’s biggest asset. For that matter, the savings rate is no higher in 2002 (after the gyrations of the last recession and late-2001), with the stock market busted and the real estate bubble well under way but a fair amount of kool-aid not yet drunk than it was in early 2000 (and 1999, not shown) when housing and the stock market should have both contributed positively to household balance sheets.

So with the housing market now long past peak, and the stock market lackluster, where’s the pop in savings? Either people rationally want to be poorer in the future (doubtful!) or they ain’t got the money.

Other affiliated observations, like the substitution of credit cards for decreasingly available home-equity loans and increasing credit card delinquency, don’t help McArdle’s case. The sociologists — they study class for a living, the the wacko elitist liberals (**) — have plenty to say on the subject, and that picture isn’t pretty either.

This points to our next installment: are our debt loads really so bad? Stay tuned!

(*) John Karl Scholz, Ananth Seshadri and Surachai Khitatrakun, “Are Americans Saving ‘Optimally’ for Retirement?” Journal of Political Economy, 114(4), August 2006, 607-643.

(**) Kidding about the wacko elitist part.

BTW, my dismissal of models that purport to compare observed savings behavior with results from intertemporally optimal behavior isn’t just that I think the results are obviously at variance with reality. I have a theory for why they’re wrong (and, in a way, a “neoclassical” theory of why paternalistic policy interventions of the sort coming out of the behavioral economics programs can work). The gut check bit isn’t entirely an attempted joke: as I like to think of it, our future selves can’t freely “contract” with our current selves not to do things that we’ll regret ex post. What would you expect our current selves, other than maybe to the extent we try to be H. economicus, to do with that “market power”? The unwary rationalist could confuse the results with a high rate of time preference. So we might be made better off by mechanisms that effectively force us to take the longer view now.

Tags: , Comments (0) | |