Monthly Archives: January 2014

Risky Business

When Nancy Pelosi said “we have to pass the bill so that you can find out what’s in it” she wasn’t kidding! Four years later the adventure into this 906-page behemoth continues. Apparently taxpayer funded bailouts of insurer losses is one little tidbit they tried to sweep under the rug. This provision is part of the innocuous sounding “Section 1342. Risk Adjustment.” This section of the bill is intended to insure the insurers against their own bad decisions. This is achieved by compelling all insurers to participate in the “risk corridor” program. This program requires them to fork over progressively larger portions of what the government deems to be “excess profits” to offset any “excess losses” by their competitors. The idea is that robbing Peter to pay Paul will keep the program revenue neutral. This neutrality rests on the dubious assumption that the distribution of excess funds from company A will always offset the deficit from company B. Even if that assumption were true, the goal here is flawed. This program will engender a government run cartel of insurance carriers with zero incentive to reduce costs. Too efficient? Make too much? Sorry, we’re gonna’ give it to your competitor. The insurance industry essentially becomes a single federalized fascist monopoly; administered by the federal government but held by private entities. The veneer of private ownership in name only is maintained only to fool the “useful idiots” into believing we still have a “free” market.

Even if one is a proponent of Obamacare, it should be recognized that this provision will do more harm than good in terms of reducing cost. In fact it will have the opposite effect: it will drive the best insurers out of business while subsidizing the worst, thus ensuring ever-increasing costs. Only free competition can have the correct effect: drive the worst out while rewarding the best. Any well-run business maintains capital reserves from flush years to offset potential future losses in lean years. In other words a well-run business will take care of itself. Forcing such a business to hand over its reserves to its more profligate competitors and expecting those prodigal siblings to change their ways is naïve at best, willfully ignorant at worst. But wait, there’s more!

As is typical for such bills there is an underlying assumption that nothing could ever go wrong, therefore it lacks any provision to cap how much the feds may have to dole out under this program. In other words the American taxpayer will be obligated to write an unlimited blank check to cover health insurance industry losses (the program is slated to only run from 2014-2016, but you can be certain industry lobbyists will ensure it is renewed in perpetuity). The moral hazard arising from this program will incentivize insurers to steal business away from their competitors by undercutting them on premium. The better-run insurers won’t cut as far and will lose customers; the more poorly run insurers will cut deeper (counting on a bailout if they go too far) and gain customers. Eventually, once the more prudent insurers are all out of business, all that will remain will be the insurers counting on their annual bailout. There is no free lunch. Premiums may decrease on the front end, but when April 15 rolls around or your inflation riddled dollar buys you less, you’ll be paying it on the back end (I leave it to the reader to decide if that metaphor is figurative or literal).

Cookie Jar Policy

President Obama recently gave a speech (January 17) at the Justice Department outlining a variety of procedural changes to some of the NSA spying programs. Why the changes? The government got caught with their hand in the cookie jar when Edward Snowden revealed that these programs not only spy on potential security threats, they also “unwittingly” can and do spy on Americans. And not simply a little here or there by accident; they vacuum up petabytes of phone and Internet data every day about you and me. Oddly enough most Americans don’t take too kindly to this invasion of privacy and so after months of soul searching Obama has decided to placate the natives by establishing a new cookie retrieval procedure. Ah! We have a procedure now; that will definitely prevent abuse.

In order to justify these spying programs Mr. Obama cites historical precedent for the benefits derived from such spying during wartime. The rather troubling message here is that if wartime practices (spying) are permissible upon your own citizens during peacetime, what other wartime practices might also be justified in order to advance the cause of protecting the homeland? Kidnapping? Murder? Would the justifications used today for spying be that different from the justifications for drone strikes on US soil to “take out” a suspected terrorist (along with any unfortunate innocents in the vicinity)? Make no mistake; we are “at peace” now, we are not “at war.” A mere pronouncement by blowhards of us being at war on a concept (terror) does not magically justify the use of wartime methods.

We are told terrorism changes the rules of the game. In the past it was easy to define our enemy. “They” were on that side of that line, and “we” were on this side of the line. But today, with terrorism, the enemy hides among us in plain site, like a melanoma masquerading as a freckle. If the enemy can be anywhere or anyone among us, then that necessarily means from an enforcement or prevention standpoint we are all presumed to be the enemy, that is, we are guilty until proven innocent. Listening to your phone conversations or reading your emails is the only way to exonerate you dear reader!

Our leaders would have us believe the infiltrative-sniper-like threat of the terrorist is something new, a 21st century phenomena that requires a 21st century response. But this enemy-among-us mindset is no different than the McCarthyism of the 1950’s – where a fever of paranoia gripped the nation into thinking the “commies” were everywhere, ready to unleash their fury at a moments notice. During this cold war we were indeed infiltrated by enemies (spies) in exactly the same manner we are infiltrated by terrorists today. The difference was back then the technology was so limited it necessitated that we do actual work to identify the actual individual threat in order to devote our limited and scarce resources to monitoring that threat. However advances in technology have facilitated laziness. Why devote energy to identifying specific threats when you can just monitor EVERYONE instead. Today’s technology allows spies to achieve what their predecessors only dreamt of: the complete and wholesale monitoring of the movement, actions and communications of every digitally connected human being on the planet. Unfortunately this information overload has ironically led to less effective results. This vacuuming of data has not resulted in a single instance of attack prevention.

Before Edward Snowden’s revelations we didn’t know what we didn’t know. The “people” can’t act as a check on government abuse if we aren’t even aware of the abuse. Thankfully Edward Snowden made us aware. Absent that revelation you can be sure Obama would not have been laying out these “reforms.” But make no mistake; these proposed changes mean nothing. If the US Constitution can be ignored by the majority of Congress, why should we have any hope that a few policy guidelines or oversight committees will have any impact on how government governs it own actions. Quis custodiet ipsos custodies

Energy Independence (Autarky) Makes Us All Poor

If you enjoy the soft warm glow of an incandescent light bulb then you might want to head over to your local hardware store and stock up. As of January 1, the manufacture or importation of 40- and 60- watt light bulbs has been outlawed (100-watt bulbs were banned in 2012 and 75-watt in 2013).  This ban was mandated by the Energy Independence and Security Act of 2007 – a monstrosity of a bill passed with bipartisan and industry support and signed into law by a Republican president (so much for the “Republicans are for small government” myth). It is, like all such bills, predicated on irrational fears and willful ignorance of human nature. The very title betrays adherence to an economically self-destructive goal: market independence. Such independence not only makes us poorer (paying more for less) it actually encourages belligerent behavior. Withdrawing ourselves as a country from the global market (becoming “market isolationists”) by striving for independence or erecting trade barriers makes us more, not less, likely to go to war. Equating energy independence with security is 21st century doublespeak that permits the political class to con the country into following their lead. A country that depends on acquiring its goods through a global network of trade is unlikely to foul that network by killing its participants. But a country that is “independent” has free reign to attack its neighbors if it in fact relies on those neighbors for nothing.

If market independence enhanced one’s security then the state should hold the hermit in highest regard. The hermit produces all for himself and thus relies on no one. But such independence has a cost. It is not money that enhances our standard of living; it is other humans interacting freely with one another. Money is merely a ledger entry, simple bookkeeping to measure the balance of subjective value between such voluntary exchanges if we so choose (e.g. friendship is valuable, but we don’t track that valuable exchange in terms of money). If human interactions add value to our lives, then it follows that limiting those interactions will suppress such value. Government intervention in the market arbitrarily limits these potential interactions by limiting choice. Selecting only from the approved options is no choice at all. So, if government intervention always limits choice, it follows that this will always leaves us all with less value in our lives – even those that appear to benefit from such interventions are harmed, for they too exist in a world with fewer goods because of their legally permitted decreased output.

Now one might have imagined that this “bulb ban” was vociferously objected to by the evil bulb manufacturers (who just wanted to keep foisting cheap bulbs on America in order to preserve their profits at the expense of our “energy independence”). The exact opposite was the case. Industry had been trying for years to entice consumers into switching to the higher margin CFL bulbs with promises of bulb longevity (that never materialized in practice) to offset the exorbitantly higher cost (20-fold in some cases). Once industry realized they could get government to do what the free-market would not (compel consumers to buy their product by leaving them no other choice), they quickly formed a coalition with environmental groups and pushed for crony-capitalist legislation under the cloak of eco-friendliness.

What are the results so far? The consumer has less money, the bulb manufactures have more, and the public, having been sold on the idea of greater bulb efficiency, now leave their bulbs on longer, thus entirely negating one of the primary goals of the bill. That greater efficiency would lead to greater usage should have been easily predicted by anyone who has observed the human penchant to double up on a low calorie meal. Try as they might, Congress cannot legislate away human nature.

The Rule of Men

This past Thursday regulators overseeing the US school lunch program graciously decided to “permanently” ease restrictions added to the school lunch program only 4 years ago. The changes initiated in 2010 were a part of the Healthy Hunger-Free Kids Act, which was crafted with the laudable goal of solving childhood obesity. Fat and salt were cut, fruits and vegetables increased, portion sizes and overall calories reduced. Clearly this singular approach from a singular agency imposed upon an entire nation was destined to succeed because if history has taught us anything, it is that humans always solve a problem upon the first attempt and that monopolistic one-size-fits-all solutions are an ideal mechanism for societal improvement.

But our wise overlords were thwarted in their attempts at showing us peons how to feed our kids. Rebellious local school systems bristled at the new rules; they were vociferous in their objections but ultimately powerless to ignore the rules. Failure to obey would have resulted in a loss of all of their school lunch funding. Federalization of our local school systems via monetary assistance has transformed these systems into the dependent servants of the federal state we see today. Federalization was meant to help, but just as a young bird who is “helped” in its hatching process will be weaker, so too have the school systems grown weak and dependent. Once one accepts the help of the state it is all too easy to become dependent upon it. Once dependency weakens you, it is difficult to find the strength to object to the hand that feeds you. The lion tamer subdues his charge not with the stick but with the carrot of dependency (notice how quickly the lion is fed after each trick). Fortunately our overlords at the U.S. Department of Agriculture deigned to listen to the peasants and in their sole discretion (which could change at any moment) have decided to let a little slack upon the reigns… for now.

However what is interesting here is not so much this federalized flailing over the school lunch program but rather the fact that the federal government can’t even implement this one simple program (feed children a healthy diet) without controversy.  Yet we are supposed to accept credulously that this same federal government can manage something an order of magnitude more complicated (healthcare) and all will be fine. Move along, nothing to see here.

The failure of these new school lunch mandates is a visceral metaphor for the failure of Obamacare. The pattern is the same. Both Obamacare and the HHFKA are predicated upon a naive understanding of a problem which results in misdiagnosis and an ineffective solution. The putative goal of the changes to the school lunch program was to “cure” childhood obesity.  Because, you know, if kids are known for anything it is for their love of the school lunch! Clearly overeating at schools is the proximate cause for childhood obesity. Likewise those foisting Obamacare upon this country labor under the delusion that health care costs are high not because of decades of government interference in the health care market, but rather because the uninsured are unfairly driving costs up by not paying premiums and then getting “free” care at emergency rooms (which I must point out, this latter scenario has been shown to add only 2% to total health care spending in this country (as reported by the left leaning Urban Institute in a 2008 study)).

 

When the top down approach of these mandates is foisted upon an unwilling public how do those in charge respond when the serfs don’t take too kindly to it? The same in both cases: a temporary and discretionary choice to ignore the law (at least while it is politically expedient to do so). With such actions we slide invariably toward a country run by the rule of men, not the rule of law, where it is the individual in charge that decides upon whim how we may live our lives. If the law is bad then repeal it, but these half-hearted “temporary” suspensions of enforcement are the acts of a cowardly and tyrannical government.

Facebook debate: does the state reduce violence?

Recent crazy Facebook debate (don’t you love those), here is the original link. Basically the debate had nothing to do with the original post, it devolved into a debate by one participant claiming that there is evidence showing how the establishment of a strong state over time has led to decreasing violence over time.

I and others called BS on this and then it got interesting. Since this is my blog I’m just posting my responses 😉 I’ve invited others to continue here if they wish. Enjoy.

 

Response 1: Violent death was an order of magnitude higher in non-state societies before the imposition of the state. This is fact.” – This may be fact but it is meaningless in terms of justifying the supposed violence minimizing effects of the state because all things are not equal. Violence is simply a tool that is a means to an end and it has an associated cost. Mankind’s ever improving level of technology (tools) makes our tools more efficient and less costly to implement, however violence always carries with it the same potential cost (ones own potential death or injury). In other words non-violent means to achieve our ends have been getting cheaper and cheaper over time when compared to violent means. So a couple of hundred years ago one could spend months farming 12 hours days or one could pick up a rock and bonk the local farmers over the head with it. Which one has a lower cost in terms of labor expended? 

Today initiating violence against someone for food would be absurd considering our efficient ability to create it means food is just about dirt cheap in comparison to what it was even a hundred years ago. Violence still occurs today but it is much more rare because it only occurs around those things that have a very high cost… so violent means are still “cheaper” means to achieve those ends. But the overriding fact is that as the standard of living goes up violence goes down irrespective of whether the society is state based or non-state based.

Response 2: @Jeff Cav – Why do keep bringing up Somalia? I didn’t bring it up at all… but if you must, Somalia is not at all an example of a stateless society nor is it even a good comparison if we were to accept that it is stateless. First you do have states there, that’s why there is so much chaos and disorder, because the nascent states within that region are all fighting with each other for dominance/control of the entire region. That is, the essence of what a state is is alive and well there – a group of self-appointed thugs that want to control and dominate the lives of others and skim their cut off the top from the populace in the form of “taxes”. There are just many of them all fighting within the borders leaving behind the chaotic landscape we see. Secondly, Somalia was poor and undeveloped when it had a state, it is still poor and undeveloped when so many now say it has no state… so how can you compare a poor undeveloped region to say the US and say “see clearly the US has a strong government and that’s why we are prosperous and Somalia now has no strong central government and they are poor and violence ridden because of the lack of that government” There is no ceteris paribus comparison here at all.

Moving on….although I will grant that it is at least theoretically plausible that a strong centralized authority (the state) could decrease incidence of violence within its borders (due to the “one gang to rule them all” effect), this is kind of pointless – it’s like saying we can eliminate all health care costs by simply killing all the sick people. As with Somalia, all organized violence stems from proto-states warring with each other… so yes, if one big proto-state comes along and crushes and kills them all (their leaders anyway) then that type of violence will disappear from within its borders. But to any extent where this is true it is completely more than offset by the enormous rise in violence made possible by larger organized states when they go to war against each other. ALL wars are only possible because of the existence of states, such organized killing on such a mass scale could simply never happen in a purely free and stateless society (what’s the point -it’s bad for business to kill your customer). So to the extent intrastate violence decreased, extra-state violence shot up orders of magnitude beyond that.

So what’s the solution? A stateless voluntary society. This solution does not assume everyone will be angels and there will be no violence, in fact it works just fine under the assumption there will continue to be bad people that will try to control others through violence. The response to such people is that everyone will have VOLUNTARILY joined insurance or protection agencies to keep them safe from those that would aggress against them (the precedent for this actually existed in Somalia and ancient Ireland: the clan system kept people in line VOLUNTARILY). These associations would not need to be held along geographic boundaries (just as people are members of disparate religions today all around the world side by side). Kind of hard to have a war if your members are mixed in with those you supposedly want to fight. The stateless society would of course not be perfect, it’s composed of imperfect humans… but it is far better than the state based society from an ethical standpoint and a consequentialist standpoint. The stateless society would eliminate war from this planet IF the entire planet adopted this system. I’m not saying this will happen today or even in a hundred years, merely that it should, that it is the ideal… and isn’t that the point, to strive for the ideal, to strive for the goal, even if unattainable today, we should always continue on that path until someday we get there, otherwise, what’s the point, we might as well just accept we are slaves and get back to picking the cotton for our master (the state).

Response 3: @Bruce – I don’t see where anyone in this thread said or implied that adherence to the ideal libertarian philosophy of a stateless voluntary society would _always_ bring about the ideal outcome and that a state-centered society will _always_ bring about the worst possible outcome. The argument for the libertarian ideal is from an ethical standpoint, not a consequentialist one. Theft is wrong – but it is also entirely possible a thief could steal and use those stolen funds for a better purpose than the original owner, perhaps to save a life, perhaps to start a new business that improves peoples lives – all of these things could and sometimes do happen. So in the same way as the blind hen sometimes find corn, sometimes the state manages to improve things on net. But that doesn’t make it right. That doesn’t make it ok. That’s all that is being said. However the state does get things wrong or screwed up way more frequently than it ever gets things right so it is very very easy to poke holes in arguments in support of it. Even those things you cite as being obvious benefits of the state (codified property rights, stable courts, etc) that libertarians should be thankful for can easily be shown to also be provided just as well not by a monopoly but a range of suppliers of those goods. To deny that more one entity can provide those things is to deny the possibility of anything other than a single global government. If 250 countries can provide these things, then why not 2500, or 25,000? There is no non-arbitrary method to determine the “ideal” number of competing political units providing their own unique take on property rights or courts. Saying we should be thankful to the state for these things is like saying slaves should be thankful to their master… I mean the master after all provides his slaves with food, clothing and shelter, right? Without masters, how will the slaves feed, clothe and shelter themselves? Without the state, how will people solve their own interpersonal disputes. The statist answers: they can’t, it would never ever occur to any humans to peacefully solve disputes through a court based system… we need special super intelligent humans to show us these things and force us to engage in them, these wise overlords know better and will show us how to run our lives, for without the state we are as but children.

Response 4: @Bruce  Sorry, if your response was more tongue in cheek I guess I missed that… tone is one of those things very hard to discern sometimes in forums such as these (and even email as well!) As far as your response… I didn’t think nor did I intend to accuse you of an sort of absolutism (e.g. “always” do this or that)… my comments were meant to be more generic in nature (i.e. when some people say such things, this is my response).

I’m not questioning your or anybody’s right to voice their opinion and say they think Jeff’s comment have some merit… I’m just saying I disagree with anyone that would say the idea has merit… maybe I’m wrong, who knows, I don’t think so of course or I wouldn’t open my mouth, I’m just saying I don’t agree and it is because of X, Y and Z. Simply because a bunch of us all do the same thing is not evidence of some grand conspiracy by libertarians to denounce and keep out all dissenting opinions – it is exactly the same response you would see from any opinionated group about any topic they hold strong opinions on when someone proposes a dissenting opinion. Try going over to a paleo group and discuss the merits of non-paleo diet… you’ll see the same kind of fervor in the response. In other words this is not a unique libertarian trait – it’s a human trait. If actual good logic or data is used to support the dissenting view some will just ignore it and some will incorporate that information and change their view.. but in this case it is my view there is no such good data as the data presented is easily debunked via an alternate analysis that is much simpler (Occam’s razor approach here)
The parallel of fundamentalism you bring in is an interesting one and I think it helps me make my point here. I see that those that we libertarians (anarchists?) would label as statist as being the political functional equivalent of a religious fundamentalist. Those apodictic beliefs are based on faith alone, they believe X to be true because they believe it to be true. For that kind of knowledge nothing can ever prove it to be wrong (i.e. I love my children, no one can prove that is not true, science can’t prove God is not real, it may not require a God, but that is not the same thing as actually proving one does not exist). Unfortunately the statists hold this type of faith based belief over subjects that are subject to falsification through inductive or deductive reasoning. When confronted with proof of their errors they squawk and hurl epithets and ad hominem attacks while slinging supposed “studies” that prove their case with cherry picked data in order to bolster their faith.
Most of what the libertarian “believes” in is based on inductive logic (economics) or a logically coherent philosophy (self-ownership) and should not be up for debate at all but sadly is due to religious fervor of the statists of the Keynesian denomination who attempt to use empiricism to falsify inductive logical truths. In other words if someone could logically prove some of what we libertarians adhere to is incorrect, we would (as scientists) change our views (well the intellectually honest would anyway). But the statist is unswayed no matter how much who show them to be wrong or misguided.
So when people question someone who makes a claim that here is an example where the state has actually done good and thus this is justifiable reason for a state we have to call them on it because based on our knowledge of these things we know this interpretation can’t be correct – this is not “faith” it’s call understanding of the knowledge framework. It’s like if you understand the theory of evolution and a creationist says “oh we found this thing and it disproves all of evolution therefore our view must be correct” not only does one have a duty to point out to them that (a) no, that data fits in with the theory like so and (b) even if that data were inconsistent with the theory it means we modify the theory as needed to fit the data, we don’t just dispose of the whole thing. Statists do the same thing, they want to say “oh, see the state did this one good thing that we don’t think would occur under your system, therefore your entire framework is wrong and the whole thing must be discarded” We libertarians can’t even get away with that approach – we can point out hundreds of things the state system gets wrong and yet somehow that doesn’t seem to invalidate it at all in the mind of the statist… so it’s odd that the statist seems to think they just need to find one example where they believe the consequences of a state based outcome are superior to the perceived possible outcomes of a non-state based system and that will then disprove all of libertarianism.
Now you then said “You’re tacitly agreeing that Jeff was right in his assertions while decrying that outcome as irrelevant because it did not conform to the libertarian ethos. I.e., that may have been the outcome but the outcome is bad because it’s not libertarian.”
No, that’s not what I said, but maybe I wasn’t clear enough. I said his interpretation was not absolutely impossible, just that it was less likely to be the principal cause relative to the cause I outlined. But even on his own terms he’s wrong. Even if we said the state is responsible for 100% of all decrease in violence in whatever time frame is being discussed, the decrease in intra-state violence is completely overwhelmed by the increase in inter-state violence (tens of millions dead in the 20th century alone from wars). War being completely a function of the state we can then ascribe all those deaths to the existence of the state. But my secondary point was not as you say the “outcome is bad because it’s not libertarian” – I said the outcome could even be good – (the ends) – but the means are still invalid.
Maybe that is the the core of the matter, libertarians are very focused on the morality of the means, whereas the statist is totally focused on the ends. Some might say the moral statist tries to balance the two (the individual rights vs the collective good), but I’m sorry, I just have to call bullshit on that. No one is wise enough to balance those things, and no one has a right to choose how they are balanced. Maybe my organs will save 10 lives… does anyone except me have the right to “balance” my right keep to my organs and live against the greater good of saving 10 lives?