scrivener

Democratic Socialism

Bernie Sanders is not the first person who believed that democracy could produce a kinder and gentler socialism.

Love, as much as it may guide us to greatness, can also blind us to the perilous paths we have chosen. And the perils of democracy are more bountiful than that of any femme fatale. Unfortunately, because democracy flatters the vast majority of the human race with the allure of its siren’s song—its chorus constantly promising “the people” that they are naturally fit to rule—many people today are still quite smitten despite the red flags.

These are not flaws of a know-nothing reactionary movement but features of democracy itself.

Yet, this may mean we are simply overdue for a massive heartbreak. As unpleasant facts would have it, 2016 appears destined to go down in history as the year when democracy’s scorned lovers finally call her a harsh mistress. Word is, democracy has found a new paramour, one Donald J. Trump, and much to her former lovers’ dismay, she insists on parading around with him in public.

Orwell understood the tendency of socialism to lead to tyranny, but he was an open avowed socialist. He thought democracy could lead to a less murderous form of socialism.

But democracy is turning its back on the Progressives who previously ran things: elites who control academia, the legacy media and certain parts of the US government (State yes, Pentagon no, Presidency sometimes, SCOTUS half and half). Academics get to use the tremendous prestige of “SCIENCE” to influence the public, the press gets to use distortions, omissions, and emotional visuals to influence the public, USG organs use their mantle of authority and expertise to forward their shared agenda.

The Progressive State has been winning all contests, taking over industry after industry with regulation (finance, health care, now, the internet).

[As an aside it is interesting that Progressives previously took over shipping, railroads, airlines and trucking through tariff regulation until it became clear that the USG was about to destroy all four industries. The Department of Transportation and Interstate Commerce Commission deregulated airlines and trucking to save the industries, and competition supplied undreamed of inexpensive fares. US flag shipping is probably still moribund.]

The elite loved democracy as long as they could panic and guide the public to the results they desired. They loved democracy because they believed it would be a source of power for themselves. We got more and more democracy, direct election of Senators (reducing State power in the Federal government), arguments to replace the electoral college with popular vote, etc.

Unfortunately for the elite, several developments now undermine their influence on voters. The Internet gives every citizen the equivalent of a newspaper and a broadcast studio at trivial cost. Donald Trump can do an end run around the spin and filters of the legacy media with his twitter account. Academia is earning black eyes daily which undermines its authority. USG organs are having trouble keeping the public’s trust.

Why College Costs so Much

The US Government (USG) has decided that it is its job to help everyone purchase health care, houses, and higher education. It is not a coincidence that health care, houses and higher education costs are climbing out of control.

I’d like to go beyond generic “USG involvement” to examine some of the mechanisms causing higher education inflation.

A big one is the accepted legal theory of disparate impact. Disparate impact basically holds that if (i) some gateway results in fewer people from a protected class (certain races, certain colors, women, people over 40 years old, disabled, non-citizens etc.) than their share of the population passes the gateway, than (ii) it is presumed to be illegitimately discriminatory. This applies even if the gateway is neutral by any other examination. Once a disparate impact on a protected class is shown, the only defense to a civil rights lawsuit is business necessity. Not only does it have to be proven that the gateway has a demonstrable relationship to the job. Even more, the user of the gateway has to prove that there is no less discriminatory standard that would do as well as that particular gateway in selecting appropriate candidates for the job.

Needless to say, with such amorphous concepts the party with the burden of proof loses. Just being sued is a sort of loss because if the burden of proof is against you the suit goes on until you affirmatively prove something in court.

In practicality, disparate impact made it impossible for any employer to give an IQ test to applicants. If you give an IQ test to any population we can predict with certainly some racial groups will come out with higher scores than their share of the population. It has even undermined giving a knowledge test such as the fireman promotion test. The results are always skewed to not reflect the portions of the population each race enjoys. Even if the test is about which saw blade will cut through a metal door to rescue the people inside, if there is disparate impact the poor municipality has to go spend more money in creating another test which will yield more acceptable results, while still weeding out unqualified fire chiefs. How do you prove no other gateway would be more fair unless you try every other possible gateway?

So disparate impact made the employers throw in the towel on any objective test of applicants. How to get smart people, who after all do better then dumb people at most or all tasks? Simple, require a college degree. You can be pretty sure that the people who graduated from Stanford, Yale or Harvard have a higher IQ than the high school grad submitting an application. Middling college grads are probably smarter than non-grads. People with a few years of college are probably smarter than people who never went. Imperfect but better than nothing.

So the poor kids have to spend $70,000 a year for four years of borrowed money to be able to legally show prospective employers that they have brains. It is the only legal way for them to show their IQ.

Second on the walk of shame is the federal money loaned freely to college students and the bankruptcy exception for student loans. Non Dischargeable loans mean more loans can be made to questionable credits, unleashing a flood of [borrowed] money. And federal subsidies and policies make even more lending to students possible.

What a golden age for students. Wait, if the USG subsidized car loans, would it mostly benefit drivers or car manufacturers? Drivers still have to pay off the inflated price of the cars sold. Car manufacturers would have more customers with money in their pocket that could only be used to purchase cars. Car manufacturers get the money, subsidised customers get the loan. Sudent loan largess has mostly benefited institutions of higher education to the detriment of student borrowers. The local university often has the nicest buildings, the best jobs, the finest grounds, the most events and parties, in the whole town.

The last thing I have time to write about is the ability to price discriminate. Imagine if before you purchased an airline ticket, the airline could demand to see your tax returns, income statement, expenses and net worth? Then imagine the airline could legally set a different price for you based on the information it learned. Student financial aid is a thinly disguised price discrimination scheme. The price is set so high that they expect nearly no domestic student to pay list price. Then they offer a discount designed to extract the highest portion of your disposable income that you can part with and your graduate’s disposable income over the next ten years. All for the coffers of the institution. Arn’t they nice benevolent institutions?

These are college material students and college educated parents they are fooling. Wow a $10,000 grant and $50,000 loan. Lucky me.

Federalism

Everyone says The Civil War decided once and for all that the individual States could do nothing against an overreaching Federal Government. Whatever the Feds want, I’m good with it, says the States.

Does anyone think that in today’s emotional environment the Federal government is going to wage domestic war? As a culture, we can’t hurt the feelings of a delusional male who thinks he is a female. States that openly allow pot sales against Federal law suffer no repercussions. No one is going to fight a war against the citizens of a State because they don’t follow the Federal line.

What they would do is stop some Fed swag. No highway money. Companies would withdraw business. Entertainers would refuse to concert there.

Perhaps the states would assert what pressure they could against the Feds. Stop local banks from remitting income tax collections until the Feds honor their legal obligations. Stop cooperating with Federal law enforcement. Execute no Federal warrants, particularly for Federal tax issues. Stop all cooperation with Federal police authorities. Require the Federal government to explicitly authorize with a statute anything it wants to impose on the States (the supremacy clause provides that Federal law superceeds State law but says nothing about Federal regulations or administrative dictates). EPA directives, not Federal law, IRS regulations, not Federal law, etc.

Here’s the key. I have learned that the best way forward is often to not ask permission and then litigate afterwards. The best way is often to do and let the other party litigate if it thinks you are prohibited. Many of these questions are unclear. If you ask, “May
I,” it might take years. If the States do several of these things, and the Feds have to exert force or litigate , the entire State / Federal balance of power would shift rapidly.

The Trade Deficit is a Non-Issue

Look, if you have the world’s reserve currency, other countries will need to accumulate your currency. Every country needs dollars in their bank account (could be treasury securities or anything else priced and convertible to dollars).

You can’t conduct trade in dollars when your checking account has zero dollars.

So, to get dollars they sell us stuff. They need to sell us more stuff than they buy from us to get the dollars they need. Or they could buy the dollars on the foreign exchange market which just means other countries would have to sell us more stuff then they buy from us to get the dollars to sell on the foreign exchange markets.

Having the reserve currency means the really great thing that lots of people have to hold your currency, giving you real value to get it, and the difficult thing that domestic producers have to see more goods come in than go out. The goods have to come in so other countries have dollars to fill their checking account

Trump and Friedman on Free Trade

Takeaway line from what Milton was referring to: “Free trade consists simply in letting people buy and sell as they want to buy and sell. It is protection that requires force, for it consists in preventing people from doing what they want to do. Protective tariffs are as much applications of force as are blockading squadrons, and their object is the same—to prevent trade. The difference between the two is that blockading squadrons are a means whereby nations seek to prevent their enemies from trading; protective tariffs are a means whereby nations attempt to prevent their own people from trading. What protection teaches us, is to do to ourselves in time of peace what enemies seek to do to us in time of war..”

Why are “sanctions” (preventing them from engaging in international trade) punishment for Iran and Russia, but a “good thing” for America?

If Russia were in our position, with the world’s reserve currency and control of the SWIFT bank transfer system, etc., and we pissed them off, say, by making Cuba the 51st state, they would punish us by preventing us from importing Ford trucks from Mexico, and we would suffer from that.. It is just as we are trying to punish Russia for Crimea by restricting their ability to import and export. Trump is talking about self inflicted punishment.

Determinism

Determinism is au courant. It’s stylish. It’s fashionable. It’s up to date.

Why so much interest today in an obscure and ancient philosophical question?

Of course the negation of free will is vaguely part of Marxism. The collapse of capitalism is predetermined no matter what the participants want. It’s “You didn’t build that.” It’s “the root cause of crime”.

But the best part of the pro determinism frame for leftists is the attack on objective reality and knowledge of objective reality.

They say that what you believe about objective reality is simply an adaptive evolutionary fiction that increases your chances of survival. You know nothing about reality; you know only representations that are useful to you.

If you claim that even if you are on the wrong side of history, you are nonetheless on the right side of reality. They can respond that there is no knowing reality. If you claim that men and women are different and you can support that by the number of hours worked or choice of occupations. They respond that your evidence is only belief in a manufactured “reality” that forwards your survival prospects.

Of course, since people do have beliefs they are quick to attribute beliefs to social influence. All beliefs are malleable, the ones you subscribe to now are a reflection of a certain societal power structure. If women had more power their choice of occupations would mirror men and their hours worked would be statistically identical to those of men.

The one belief that is not doubted is the belief in their theory of beliefs. There, they are correct. It is not a group of leftists seeking to influence fellow citizens and policy for their own self preservation. It is observation and reason proving that observation and reason cannot prove anything. Science proves that science is meaningless.

Wishful thinking finally is the final determinant of what we should do.

Businesses Do Not Exist to Provide Jobs

If you listen to any politician, the reason we have businesses is to provide good, stable, well paying jobs for the voters.

Absolute nonsense. A business exists for one reason and one reason alone. It exists to add value to the world. A business takes value out of the world. It uses real estate, spending on rent. It consumes people’s time, paying for labor, and creative and administrative services. It uses up energy. It uses or borrows capital (money). Then, if it is an ongoing concern, it adds value to the world. It places a product or service on sale for the voluntary purchase by anyone. Each purchase is a provisional addition to the value the business is adding, until the magic day that the incoming revenue from purchases exceeds the outgoing revenue and the business shows a profit. At that moment the business has added value to the world. Its customers who could have purchased everything it purchased at the same price it paid, or anything else with their money that they desired more, were willing to pay for what it produced more than its costs of producing it. A total net gain of value.

Businesses exist to make us all richer, to offer us more ways to satisfy our needs and wants, to promote innovation (because it requires effort and creativity to produce a profit), and to make the dollars we earn so valuable that countless people think day and night about how to convince us to part with a fraction of one of them. And we are never required to do so unless we are sure what we get is more valuable than the dollars we give up.

Another way of looking at it is, businesses exist to meet people’s needs and wants. There is no revenue if you do not meet people’s needs and wants. Under capitalism, the buyer is king; the producer is a poor naive bowing and scraping. Just look at how powerful companies bow and scrape in America for customers.

Now you may want businesses to provide “good jobs”. What that translates into is you want someone else to identify a need or desire of other people, to devise a thing or service that meets it, to risk capital, effort, and time in setting up an enterprise, to manage expenses so that the good or service produced is something people will buy, to pay the taxes, take responsibility for regulations and laws, etc.

You are not entitled to any of that. If you want to earn money that allows you to buy things you need and want, you need to somehow give value to other people so they will give you their money. A job is simply a way to join someone else’s team in that project. As Peter Shiff says, nobody wants a job, everyone wants money. A job is a avenue to money, but the way to get money from others voluntarily is to do something for them. Do it yourself or join a team but the essence of the project is serve others so that others will serve you.

In the former Soviet Union, businesses existed to provide jobs. There, they used to say “we pretend to work, they pretend to pay us.” Because the businesses had no concern about the customer, after you were paid your money would have little power. In America, when you get your pay in your wallet, countless people court and flatter you.

In Latin American socialist countries, businesses exist to provide jobs. The Mexican state owned oil monopoly was used to give high paying jobs to friends of the elite, and lesser jobs to the public to quell unrest and poverty. The state run oil companies are poorly run (as you would expect) and the state is appropriating the value of the natural resource wealth and dissipating it. If Mexico simply sold the rights to drill oil, the state would get great revenue and private enterprise would manage it for a profit, a net value gain to the world.

Shaming

Scott Adams of Dilbert fame is on a roll over at Scott Adams Blog. His recent post Shame Shaming just plain annoyed me so much I have to respond here. I would respond in comments to his post but he gathers 1,000 comments per post so my comment would be lost. Also you have to register to comment there and that is a pain.

Basically, his thesis [in my interpretation] is that people are moist robots and free will is an illusion. Nothing should be shamed because everything about people is determined.

He starts with fat-shaming. You should not shame fat people because a person’s appearance is outside of their control. I question that assumption. I have always contended that anyone could lose a pound of weight if some super NSA or CIA agent arrived at their home in the middle of the night and put a gun to their head and said, “There is nothing you can do to stop me from coming back for you in one year wherever you go, and when I do, if you do not weigh one pound less than you do now I will kill you.”

Many fat people who later shape up report that they were just not willing to do something about being fat before and later became motivated and could take the fat off. Scott claims that most civilized people reject fat-shaming, yet my daughter goes to school with many international students and she reports that the Japanese engage in merciless fat-shaming of other Japanese. She thinks it is terrible because the Japanese students are afraid of putting on pounds. She likes the American non-judgmental attitude. Still, the shamed Japanese have less obesity with fewer health problems cause by it. And their women look much easier on the eye to men, in general.

Mr. Adams says nothing is worthy of shame because no one is actually choosing anything. Even if that is true, in their non-choices people are influenced by incentives. You do not need free will to draw your hand away from a flame. If you are a Japanese student in an American University and you eat french fries to your hearts desire and your friends start to avoid calling you to study together and having a supportive social network is important to you, you might be “determined” to avoid french fries and loose some pounds. You might not actually be choosing of your free will, you might be responding to conditions as a wet robot. In this case shaming is promoting a health and aesthetic good.

More importantly, there is an epistological problem in asserting, as Mr. Adams does, that all your thoughts are determined. If all your thoughts are determined, it is not relevant if your thoughts comport with reality. If it seems to you that certain thoughts are more logical and align more with evidence, that is merely a determined phenomenon. If I believe that I have free will and judge ideas on their merits, that is just something I have to believe. If Mr. Adams believes he has no free will, it is a conclusion he has to draw. Moreover there is no reason to try to resolve the apparent conflict. The concept “truth” becomes something like “authenticity”. If I am reporting my beliefs accurately that is the best it is possible for me to do. Mr. Adams makes mountains of arguments why Donald Trump is a better persuader than average. Why bother, if what everyone believes they have to believe. As Pangloss believes, it is the best of all possible worlds.

Perhaps I am missing a subtly of the position. Perhaps the actions of other people on your beliefs are part of what determines what you believe? Of course that is true, I can see it every day. Wait a minute, what I think I see is just a belief I am determined to have. Reality may be that the actions of other people have no effect on my beliefs, or have the opposite effect that I believe I see. Why do I believe in causality? My belief in causality may be determined regardless of the evidence for or against it. Contra-causality may be the rule of the world, but I just can’t see it. Everything that I believe, I should know is suspect.

Most importantly, why believe the belief in determinism, or in evolution, or that living organisms die, or that certain beliefs have a survival value? The whole theory states that theories have no validity, but, take this on faith, they help organisms survive, and, more faith, organisms need to survive, and, more faith, some beliefs are better at forwarding survival than others, und so weiter.

Government is also Unaccountable

Not only do governmental organizations favor the rich and connected over the middle class and the insignificant, but they are also unaccountable.

In Flint, MI apparently the entire city was poisoned by lead in the water supply. City officials were allegedly aware of the situation for a considerable period of time while their citizens were being damaged. Yet no one can identify a person who is responsible for keeping the water safe, or even revealing the problem to the public.

In today’s (3/20/16) Sunday New York Times there is an editorial titled “Poisoned Water in Newark Schools”. The school system acknowledged it was aware of high levels of lead in the schools for years. Is the Times calling for criminal charges against administrators and employees? Lets let the Times speak for itself:

This is shocking but, sadly, not surprising given the neglect of public schools, especially those in poor communities, by Congress and state governments.

This morning I was watching “Due Process,” a Rutgers law school produced TV program. The show reminded me of the $100 million dollar gift Mark Zukerberg made to the Newark Schools about five years ago. With the matching funds the Newark Public Schools received a nearly $200 million windfall. Use of the money was determined by the local politicians: the NJ Commissioner of Education, the Legislature and the teacher’s union. If only the Newark Schools haven’t been neglected these last five years.

Over the last four years capital expenditures for the schools averaged about $12 million, so the $200 million gift could certainly have made a difference to the school infastructure.

I’m sure Mr. Zukerberg preferred that his money go to innovative changes in the organization of the Newark schools, and a significant amount was spent on charter schools. However, politicians determined the final spending, and $89 million went to contract and labor costs and $21 million went to consultants (each amount more than the entire capital budget for a year).

Protectionism

Some debates keep going on forever. Does the minimum wage hurt, or help, poorly skilled workers? Do gun control laws reduce “gun violence,” or do permissive carry laws reduce violent crime? Is free trade a good or an evil?

Surprisingly, there is a lot of empirical evidence to help us evaluate these claims. As Thomas Sowell keeps pointing out, before minimum wage laws unemployment among black youth was lower than unemployment among white youth. After minimum wage laws, the opposite was true: black youth unemployment is higher than white youth unemployment. States that changed to a shall issue gun control scheme often had a reduction in violent crime.

A huge experiment in protectionism versus free trade has already taken place.

Many of the United States States have economies the size of European nation states. The US Constitution through the Commerce Clause gives exclusive jurisdiction over interstate commerce to our Federal Government. The Federal Government has never permitted States to impose tariffs against the goods of other States, but it could. Consider it a huge experiment in free trade.

At one time the US economy probably had half the World GDP, and there was a huge free trade zone comprising all of it.

What do the advocates of trade restrictions claim as benefits? They say well paying US manufacturing jobs are “exported” to low paying Mexico or China or Vietnam. Isn’t the same true of Michigan and South Carolina?

Just think, if New York put up a $ 100,000 tariff on cars imported from any other State, the automobile industry in New York would flourish. The Corzone-Trablant factory would have many high paying jobs. Only New York residents could not buy a Telsa, or a Porsche, or a BMW, or a Ford Focus.

Of course other States might, or would, impose a tariff on New York jewelry and paintings.

Could you imagine having to buy everything you buy from producers in your home State? Why limit your choice to products from producers in your home country?

The United States free trade zone has sometimes hurt individual States when they had to complete with more productive higher capital people from other States, but, all in all, it has been a blessing in capitalistic competition and productivity. Allowing the citizens of each state to produce and specialize in what they excel at has made all of us richer.

The largest experiment in free trade of all time has proved itself. No politician even advocates intrastate domestic trade barriers. Yet every claimed benefit of international trade protectionism is available on the State level. All the unheralded detriments are there also.