Max Borders

Destroying Wealth: One Special Interest Group at a Time

This is an awesome lesson bout the political economy of lobbying.         

  

 

If you want even more excruciating detail about the vortex that is Washington, DC, check out Jonathan Rauch's book Government's End. When you think about the fact that lobbyists are non-productively bidding for one competitor to put another competitor out of business (by distorting the market through legislation), your understanding of the true magnitude of the waste just piles up like one steaming turd atop another. You'll never think about the right to redress grievances the same way again. (See also classics of Public Choice Theory.)

Shirky's New Book: Here Comes Everybody

Remember Coase's The Nature of the Firm? In it, Coase asks a really important question: why do people organize into firms? In other words, why isn't there a totally "free" market in labor? Why do organizations take on scales that result in higher costs? Coase's answer is "transaction costs". It costs more to coordinate actions among people who have disparate skill sets, live in different locations, have various levels of abilities, need to contract with each other and hammer out details of these agreements, etc.... then get them all together to accomplish something profitable. Simply said, it becomes worth it for people to give and take orders. So up to a certain point, organizations with major components of hierarchy are simply less costly to organize. But this cost structure is changing rapidly due to Web 2.Whatever.

Check out Here Comes Everybody. Yes, Shirky's is another "look how new media are revolutionizing everything" book. But among other things - I'm only on Chapter Three - Shirky has been able to articulate the revolutionary change in the structure of transaction costs when it comes to organizing. If you can organize without organizations at increasingly lower costs, the world is a very different place. The nature of the firm is going to change--perhaps not utterly, but considerably. I take away from this a kind of techno-optimism not only about seismic shifts in the nature of human organization, but in the nature of government and our ability to rein it in. For example, if new media are changing things for firms and orgs, will it also change the logic of collective action a la public choice theory?

Ironically, I've been asked to write a review of Here Comes Everybody for a print journal.

Limiting Government Through Incentives

Okay. I’m no economist. Nor am I an accountant. But the economist or accountant who comes up with the way to integrate the following concept might do wonders for reining in an ever-expanding Leviathan in Washington (and 50 little Leviathans, nation wide).

Here’s the basic idea: give government employees incentives at every level and in every department to reduce the amount of money they spend by giving them a percentage of the money they save in their paychecks. This, theoretically, would shrink government and allow government employees to get bonuses for being better stewards of our tax dollars—rather than simply looking for ways to keep growing. Sounds simple, right? 

Of course, real life is always more complicated. One problem with this idea is that you can always get your masters to raise the baseline. For example: if you told bureaucrats in The Department of Deadweight Loss that they would get 1 percent of the savings in the annual budget – distributed quarterly – then these folks would have an incentive to lobby the appropriate budget writers and legislators to raise the baseline for the following fiscal year. This would allow everyone to grow government while supposedly “saving money” from year to year – i.e. missing the point (and gaming the system). Therefore, you’d have to peg the baseline to something besides percentage savings in the annual budget. 

But to what? There may be an obvious answer. And this is where a bean counter or economist might be able to help. In any case, the basic idea is to incentivize those internal beneficiaries of government largesse to consume fewer resources. Hopefully, this post will spark something that smarter people can run with. 

(Note: Another problem is that budgets are determined by legislators. Might they also get an incentive to save/shrink?)

Fire Ants

Sid and I were out walking today. We often come across the fairly large fire ant mounds. I showed my age once when I mentioned that I don't remember seeing them as a child. That's because they weren't here in North Carolina as I was growing up. But they're here now - having come from South America. And they're wicked little beasties (Sid's already had them swarm his foot twice and he's only 2.) So today, Sid and I threw rocks on them for the sake of a crude experiment.

These ants are examples of evolutionary perfection. To those who fully understand evolution, "evolutionary perfection" is a bit oxymoronic. To be alive on this planet here and now is evidence of Darwinian success. But what I mean is: to see these quick, vicious, constructive and highly cooperative ants in action? It sure is a sight to behold. I am simultaneously repulsed by them, of course. Admiration and revulsion all at once is a strange feeling. But at least now I understand E. O. Wilson's lifelong preoccupation. 

Ant colonies are complex systems. That remarkable level of coordination is carried out by chemical signals firing among them rapidly. The chemicals and pheromones are like code and they are like distributed hardware nodes in a network of constructive or destructive behavior--as it benefits their colony. I see lots of good analogies with human organization, but important differences, too (agency). 

In any case, I thought I'd share my reverence for these nasty little creatures with my handful of readers. 

The Metaphors Talk

The Locke foundation has my socio-economic metaphors talk up here. If you prefer to read the whole paper, find that here. 

Youtopia Part II

Part II is up at Let a Thousand Nations Bloom. Thanks for reading.

Guest Blogging at "Let a Thousand Nations Bloom"

I love this site, which makes it an honor to guest blog over there. Part II is coming soon...

Politics and the "Transmutation of Means to Ends"

Here's an interesting post by Arnold Kling, who's commenting on a paper by Dan Klein. Basically these guys are thinking about why Progressives, Libertarians and Conservatives are disposed the way they are. Both make some really interesting points. First, because human beings are meaning-seeking creatures, progressives find meaning in the state, which symbolizes their aspirations for a kind of collective good. This is no less a cognitive shortcut than the conservatives' inclination to contract with a "spirit-lord," a term that made me chuckle. A quick, dirty and probably unfair characterization might be: leftists worship Government and conservatives worship God. 

When it comes to progressives, I'd want to include some discussion about an excessively pronounced inborn guilt/envy/indignation disposition, which I call the Stone Age Trinity and that I elaborate on here. (I'll return to this in a moment...)

But Kling's post (as well as this NY Times Magazine piece by Steven Pinker) reminds me of that little bit of meta-ethics philosopher W.V.O. Quine did when he was alive. Quine said that ethics was basically a "transmutation of means to ends" and had little else to say on matters of right and wrong. He was a philosophical naturalist to be sure. And Quine thought ethical dispositions usually amounted to cultural mores that had been transmitted, via nature or nurture, from a time when the means were critical to a people's survival or flourishing. For example, the natural consequences of sex with a sibling was increased likelihood of birth defects and harm to the clan. While that taboo exists today, we can imagine scenarios in which that risk would be close to zero (birth control, prophylactics, etc.) The basic idea is that the moral value, the taboo, (or whatever) is what gets turned into the object of moral reverence or of tabooization after running the gauntlet of life and the world--often in very different contexts. They are epiphenomena of learning how to survive in the real world. But the world changes and sometimes the moralisms hang around anyway.

Back to my point about the Stone Age Trinity: On the paleolithic steppe, it made much more economic sense - i.e. was "rational" - for members of a clan to engage in reciprocal altruism, which is a fancy way of saying to share and share alike. But this only works as a rule when a group is pretty small (less than about 150) and food stuffs rot in a couple of days. As populations grew, our market economies evolved and gains from trade could be realized across greater distances, share and share alike became a rule that worked less and less well. Trade generated more prosperity. But both the evolved instinct and the cultural moralisms of sharing have hung around. None of this is to say that sharing is BAD. But government bureaucracies engaged in forced "sharing" over a population of millions just doesn't work very well for a whole host of reasons--from the government failure a la public choice theory to concerns about competing values like individual liberty. While the instinct of sharing may be satisfied by sanctimony in the opinion pages or voting booth, it works better closer to home and community. Knowledge is local. And so, frankly, are the folks tethered to one's heart. But the means of surviving on the paleolithic steppe have been "transmuted" into a political end. That's why politics will not be without struggle for a very long time. And that's why I find it interesting that "social justice" is little more than cave man instincts with fancy verbiage woven around it.

In any case, these are just a couple points of confusion I'd toss into the mix as we try to unpack why people think the way they do politically.

(Addendum: Not to be too harsh, but one of the less interesting (but popular) theories about political disposition - from a couple of leftists - is summed up here. Weiler and Hetherington purport to measure and aggregate the degree to which people are "authoritarian"--which is an unfortunate and inapt term for one's propensity to be stark, simple-minded and Manichean (i.e. seeing the world in black and white or good and evil). They then compare the authoritarian scores to party affiliations and conclude that a) the country is more stratified today than it was a couple of decades ago and b) Republicans are way more "authoritarian". I'll leave this mostly for the reader to consider. But I'd say there are much richer theories out there about political dispositions than one that views the political landscape through such a monochrome filter as relative "authoritarian-ness". For two guys who claim to be on the Blue Team of Nuance, they seem pretty darned reductionist to me. (Social science as scientism rears its head again.))

Climate Alarmism or Pascal's Wager?

Blaise Pascal, the 17^th Century religious philosopher and mathematician, asks us to consider his “Wager,” which says faith is a good bet:

1. The consequences of non-belief in God are hell and damnation.
2. The costs of believing in God are low by comparison, though still costly. (You can’t live any way you like, for example.)
3. If you believe – even if there’s no hell and damnation – you won’t lose everything.
4. But if there is a hell, you lose everything.
5. So, if you’re going to make a safe bet, believe in God.

Of course, a religious person might argue with Pascal that faith isn’t about placing bets. But we can agree, perhaps, that global warming alarmism takes on a strikingly similar form. 

1. The consequences of skepticism about manmade Global Warming are catastrophic.
2. The costs of “green” taxes and regulations are low by comparison, though still costly. (You can’t live anyway you like, for example.)
3. If you’ll just believe man causes global warming – even if there is no catastrophe – you won’t lose everything.
4. But if there is catastrophe, you lose everything.
5. So, if you’re going to make a safe bet, introduce green taxes and regulation.

I’ll leave it to the reader to decide whether the largest tax increase in American history (cap-and-trade or carbon taxes) will be based on faith, a ‘safe bet,’ or something else. But when you consider the broader question – Is environmentalism a religion? – significant indicators point to a green ideology based more in faith and fear than in fact.

The Pragmatism of Principle

It’s clumsy. Perhaps it’s a little rough around the edges. But it’s happening. People are coming back to principles. 

By contrast, when I hear the President’s rhetoric, I’m reminded of the Chicago school of pragmatism. Obama sprang from this tradition whether he knows it or not. You can see pragmatist strains at work in Obama’s decision-making, in his careful vacillations and, increasingly, hear it in his overplayed oratory. Except for Dennis Kucinich or Ron Paul, most politicians are whisked along by calculations of political expediency. Living by such calculations means that bumper-sticker image of progressivism from the campaign is fading fast. A pragmatist acts, looking for what will work. The people grow disillusioned. Any wooly-headed ideas Obama came in with are now but echoes of ‘08. 

Whatever you think about Progressivism intellectually, it has the ability to nourish a certain kind of spirit (i.e. for those who value social equality and paternalism). But there has never been anything in pragmatism to nourish the spirit. Leadership is mostly tone-setting. And that’s what makes pragmatism, well, impractical for a leader. Turns out that to unite people and to keep them united, you have to offer them an organizing framework—one grounded in people’s emotions, or better, cornerstones cut from their sense of right and wrong. What “works” for this policy or that isn’t enough. That’s why the Center-Right has some reasons to be optimistic—despite a decade of unprincipled Republican power and a poorly-spoken executive who managed to coast on fumes of fear.

People are turning back to our Founding Principles not just because said principles are carved from core American instincts like suspicion of authority and a do-it-yourself outlook. People are also turning to principles again because they work. Our founding institutions work. Markets work. Giving freely works. As it happens, real American pragmatism isn’t technocratic, which makes Tocqueville more American than Dewey. 

Most people don’t have time to get into policy minutiae. They can, however, see what tracks with their principles. Ten come to mind for me:

1. The Rule of Law means that laws should not privilege certain persons or groups. 

2. Legislation should rarely, if ever, make us less free. 

3. The Government shouldn’t use my family’s resources to fix problems it helped create.

4. The Government shouldn’t use our grandchildren’s resources for short term political gain or band-aid policies.

5. The Government should not subsidize personal irresponsibility, profligacy or dependence.

6. The power of Government should be checked. 

7. Markets – exchange between consenting adults – should be free.

8. We Americans can get on with it. We don’t need nannying or nudging.

9. Problems are better dealt through local community than central authority.

10. Big government solutions cause terrible unintended consequences.

Intellectually, principles give people a kind of ready measuring stick for policy. Spiritually, they offer a seat for the political soul. It also happens that, since liberty works better than big government, pragmatism gets to be a welcome side-effect of people pursuing their happiness—whether through entrepreneurship, charity or living their lives without interference from political elites. These principles and these dispositions define America--or at least they ought to.