Obama hitting the road to sell his economic plan

He’s now taking his pitch directly to the public—and trying to sell the sweeping package to lawmakers’ constituents.

I won’t bother going through usual lecture on prices, opportunity and the inevitable failure of these grandiose government plans. What is more important is that Obama will derive his political power from the unwashed constituency; just as FDR did. Like FDR, Obama takes office during an economic depression. Both ride a wave of popular support. Who knows we might even get fireside chats out of this debacle, won’t that be a treat for the children!

FDR was continually elected, despite being in the midst and the cause of America’s Great Depression. How will Obama fair? My guess is that he is already attempting to build up the plebeian support for this very reason. Expect one economic catastrophe after another.

The eye recognizes the sharp angles and patterns of carved stone amongst a field of flowers; the stone is not of the field. The casual observer recognizes the slums neighboring the prosperous commercial block; the slums are not of the city. Often people wonder why a city looks as it does, why cities can look so differently, why anomalies – like the slums – seem so out of place. To answer these fine questions, I believe one must understand how a city is formed, the rest follows simply.

Spontaneous order is perhaps the simplest and most misunderstood concept in economics. Spontaneous order is a coincidence of wants; acting upon this is called trade. I want a store’s ginger ale, the store wants my two dollars; I prefer to have the ginger ale instead of two dollars, and the store prefers to have two dollars rather than the ginger ale. We then physically trade the goods and an ordering has occurred. This simple example holds for all voluntary transactions; even those of land and buildings. This may seem a bit like a lecture to an economic tenderfoot but keep in mind, this escapes even those who hold a Nobel Prize in economics. The importance of this lesson cannot be underestimated.

Cities are nothing more than a large collection of the above sorts of trade. The reasons people seek cities are as sundry as the people. It is only important to know that they desire to cohabit or work within the city. This desire or want lends itself to a coincidence of wants and therefore to trade. The aging city dweller may want to leave the city for more open spaces; the young entrepreneur believes the population of the city will boom and there will be an urgent need for housing. The two parties trade and the city now has a slightly different ordering. In this respect cities are no different than a community of distant farm houses or the largest metropolis.

Cities and rural towns seem to be treated differently as if there are two sets of economic laws governing them. However, no logical line can be drawn, both are simply people engaging in trade. It is because of this that case studies into specific cities are worthless. One need not know how Budapest fairs under government intervention to make a conclusion on how New York or St. Louis will do under the same sort of intervention. Failing to realize this will lead an otherwise capable human being into tremendous displays of buffoonery. Consider the following from Paul Krugman, this year’s Nobel prize winner in economics:

At least New York’s transit system allows those who can’t afford to live in the glamorous parts of the city to commute to jobs. Imagine being poor in a sprawling heartland city with no rapid transit and a poor quality bus system. Central New Jersey is part of the Zoned Zone, but less expensive than the city; still, manual workers can’t afford to live anywhere closer than Trenton, and I can’t imagine how they get to their jobs.

The emotion that Krugman expressed is typical of many economists, even amongst those without such a strong sense of social justice. If government had not intervened in New York, what would have happened?

Since cities emerge from a coincidence of wants and a vast matrix of trade, one can reason that any interference in this process will by necessity distort otherwise voluntary transactions. Trade is voluntary; both parties benefit from the action. Think of a pond disturbed by a boulder falling into it, crest and troughs now exist instead of a tranquil surface. Government intervention within a city is no different. By forcing one man to engage in an action he otherwise would not have, one party benefits at the expense of the other party; a true zero sum scheme. Consider the case of Times Square. Once Times Square was mall of pornography, now it is as kid friendly and colorful as the oddly placed Disney store that represents this transformation. On the surface, it appears better in it’s newer state. However, what is forgotten is the cost to the people who were forced out, the shop owners and customers. If Disney or anyone else wanted to transform Times Square, why didn’t they purchase it from the pornography shops? The answer to this question is precisely the reason why the transformation of Times Square is so onerous. People wanted porn in Times Square more than they wanted a Disney shop. By government’s forceful action a group of people benefited, but only at the expense of another, more economically vested group of people. New York city is poorer because of it.

This applies to all types of government intervention, not just zoning laws. Subsidies function in much the same way by forcing people to make choices at the margin out of the market. It is perhaps this reason that so many urban cities are experiencing a mass exodus for the sprawling suburban wilds which are less regulated. It is also for this reason that those who believe one can plan a perfectly ordered city are the same that would denounce these “sprawlers” as demon kin and attempt to force them back into the city.

Urban revitalization or new-urbanism is one of these ways. Proponents of these seek to order an urban environment by what they feel it should look like. These utopian ne’er-do-wells dazzle the masses with charts, graphs and numbers supposedly showing the optimum amount of population density, coffee shops, stoops, automobiles, distances from work and pretty much any other facet of a person’s visible life. It shouldn’t come as a surprise this movement is a grand failure; for all the same reasons explained above.

Cities are natural and organic things arising from an ordering that is never planned, but ordered nevertheless. Government intervention, in whatever flavor, only disturbs this process. If you look upon your city and find something that just doesn’t seem to fit, chances are it doesn’t and some city planner, rent-seeker, or new urbanist zealot is behind it.

Lehigh Valley group eyes a local alternative to money

A group interested in forming a local currency will meet at 4 p.m. Sunday at The Caring Place, 931 W. Hamilton St., Allentown, to discuss how to make, market and distribute it. The meeting is open to the public.

They seem to be modeling this after the Ithaca Hour, a local New York currency that is more egalitarian masturbation than legitimate money. It’s not to say I don’t support a free-market in money, it’s that I have doubts if this particular product will be any good.

The article claims that making your own money is not illegal. In their case, it might be legal because their care and share currency is a joke. However, serious attempts at competing with the government’s monopoly on money will be met with federal raids and confiscation of your gold and silver.

Another major American industry is asking for assistance as the global financial crisis continues: Hustler publisher Larry Flynt and Girls Gone Wild CEO Joe Francis said Wednesday they will request that Congress allocate $5 billion for a bailout of the adult entertainment industry.

But the industry leaders said the issue is a nation in need. “People are too depressed to be sexually active,” Flynt said in the statement. “This is very unhealthy as a nation. Americans can do without cars and such but they cannot do without sex.”

The ridiculousness of bail-outs is attested to when Nancy Pelosi is being charged with the sexual rejuvenation of America.

…pretty ridiculous

He makes several good points but what I found most interesting was the insider slant of the going-on’s in congress.

Parents who smoke often open a window or turn on a fan to clear the air for their children, but experts now have identified a related threat to children’s health that isn’t as easy to get rid of: third-hand smoke.

Sorry sir, this is a non-second-hand smoking restaurant.

I’m not sure where the this ludicrousness will end but outright prohibition of smoking doesn’t seem impossible. Not by the states of course, their settlements with the cigarette companies are much too lucrative. However, I don’t see why the federal government wouldn’t do it should popular opinion become strong enough. Already smokers are demonized by smokers and non-smokers to the point where one can’t publicly smoke without being accosted by a righteous person who just must let the smoker know that they disapprove. As I sit and watch this spectacle on a daily basis I can’t help but think those are the same people that led America’s previous prohibition movement. These indigents of class are not only a tacky nuisance but a serious danger to a person’s health.

Relatives of those who died aboard United Airlines Flight 93 want the Bush Administration to seize the land needed for a memorial where the plane crashed in Shanksville, Pa., in the 9/11 terrorist attacks.

They hate us for our freed…

A thousand 9/11’s wouldn’t destroy America as a prosperous nation where one has an inalienable right to his life, liberty and property. The same cannot be said of a thousand confiscations of said liberty and property; life as well, should you resist.

Study: Wrecks increase at red-light cameras sites

The number of crashes at Houston intersections with red-light cameras doubled in the first year after their installation, according to a city-financed study released Monday.

Traffic etiquette is emergent, unplanned, spontaneous. Traffic edicts like speed limits, complete stops at stop signs and other nonsense interferes with the traffic etiquette that has evolved over the past decades.

It shouldn’t come as a surprise but the safest roads tend to be the least restrictive.

The study shows the safest period on Montana’s Interstate highways was when there were no daytime speed limits or enforceable speed laws…The doubling of fatal accidents occurred after Montana implemented its new safety program; complete with federal funding, artificially low speed limits and full enforcement.

A federal court in Northern California has awarded $33.15 million to Verizon Communications in what the company is calling the largest cybersquatting judgment ever.

Verizon, which announced the judgment Wednesday, had filed the case against OnlineNIC, a San Francisco-based Internet domain registration company. Verizon had claimed that OnlineNIC used Internet names–663 to be exact–that were chosen to be easily confused with legitimate Verizon names, according to Verizon…Verizon said.”This case should send a clear message and serve to deter cybersquatters who continue to run businesses for the primary purpose of misleading consumers,”

Of course the usual ‘protecting the consumer’ line is bandied about. Verizon isn’t happy they just won 33 million by fiat… they are just happy to see the consumer protected.

Like most all cases of rent seeking, a dedicated group of idiots labors to protect some imaginary ‘public’ concern while the people who just happen to benefit off this use of force against the alleged evil-doers are happy to go along. In this case, Verizon would be more than thrilled to control the naming schemes of websites and the oblivious do-gooders like CADNA are happy to provide the moral support.

It is obvious that no consumers are harmed by making a mistaken visit to verizone.com and should they receive some damage, can seek restitution on their own; just like in any other instance of one’s property being damaged by another. The “consumer” doesn’t benefit from this ruling, verizon does. Just as consumers never benefit from arbitrary or nefarious transfer of property from one party to another. The crusade against cybersquatting is a mere cryptogram for cybermonopoly.

The Recording Industry Association of America (RIAA) says it has abandoned mass lawsuits against internet users who steal music, and instead would work with internet service providers (ISPs) to discourage piracy.

Other measures will be taken against internet users who ignore their first warning notice to stop illegally downloading music, and if those users continue they could find their internet connections disconnected, the RIAA said.

I’m not sure if this is a bad or a good thing. Of course, intellectual property is not property at all but rather a government granted monopoly over an arrangement of words, notes and ideas. So any punitive action taken is wrong.

What worries me is that the RIAA is changing strategy because courts and trials did not have the desired efficacy. Trails and courts offer a certain transparency and even a possibility for restitution. (for the people being persecuted under these silly laws that is) The RIAA obviously did not like this and now seeks to enforce it’s monopoly power through much less transparent means.

U.S. Pledges Top $7.7 Trillion to Ease Frozen Credit

Federal Reserve lending last week was 1,900 times the weekly average for the three years before the crisis.

I can’t stomach watching the news but from my cursory glance it seems no one is worried about high inflation. It might be because people are under the assumption that this money is being taxed. For example, Congressman Scott Garrett decided to swing his heavy intellectual club and enter the fray:

Whether it’s lending or spending, it’s tax dollars that are going out the window and we end up holding collateral we don’t know anything about

I’m conflicted, Garrett is right, but not for the right reason. This money isn’t coming from “taxes” that Garett or anyone else is thinking. There simply isn’t enough money to tax. However, if one considers that inflation is a stealth tax for those holding onto dollar assets, he actually might be right.

I’ve been saying this for the past year or two but ever since the fed got rid of the M3 and said something to the effect of, “it didn’t measure anything anyways” I was positive that the fed would blowup the dollar. Of course, the M3 did measure something, just not something the fed wanted to be measured. It’s clear now that the fed (with the aide of congress) will attempt to print it’s way out of this. The Amount of dollars available in the market is going to go through the roof and drop the purchasing power of the dollar even lower. Knowing that all the money in your savings account and 401k can buy you a gallon of milk isn’t a pleasant thought.

Thomas S. Szasz is to psychiatry as Ludwig Von Mises is to political economy. Szasz is most noted for his opposition to classifying behavior as an illness; that so-called “mental-illness” is a myth. This is as close one can get to “swimming up stream” without touching water. In a similar manner, Von Mises was writing about the idea that less government intervention was the answer to prosperity in the time of the new deal and the coming of the Third Reich.

What makes these two men and a handful of other intellectuals rise above the mediocrity of popular opinion and demagoguery? Szasz once wrote, “Clear thinking requires courage rather than intelligence.” Szasz, having a gift for writing, has provided the answer to my question in seven words. The eloquence of the statement is obvious, the power of the statement comes from observation.

Much is spoken of courage, medals are given for it and if your parents had no taste you might even be named after it. Courage seems to be the exclusive realm of the physical. Soldiers are courageous, firefighters are courageous, intellectuals are stodgy. Although this is to be expected. We live in a time when reading a book written by a television pundit qualifies you as a thinking man. However, true intellectualism requires something more than reading rubbish authored by the common man’s “thinker du jour”. Being a thinker requires the sacrifice of your happiness. Possessing knowledge is like coming upon a chasm; on one side lay what is, on the other lay what should be, in the middle an abyss. The common man my never see the such a chasm, the common thinking man will only wonder along the shore of what is. Clear thinking, unrestricted thinking, is coming to the end of the cliff and stepping into the abyss. In the case of Szasz he stood upon the “shore of mental health” and did not meander or look back, he pressed forward. His conclusions implied the illegitimacy of institutions, laws, and social structures. In a similar fashion, Von Mises not knowing the result of examining Austria’s housing crisis pressed forward and in the process came upon knowledge that the single most influential actor in our economy acts only to harm us.

Szasz’s eloquent statement becomes more powerful every time I hear a trite lecture or read an uninspired article. People that posses the mental faculty to undo their own lecturing and writings do not. It is a sudden seizure in thought, a pang steaming from accepting a harsher world, a world that becomes more and more foreign with each consecutive blow of logic. Because of this, Szasz is right. Clear thinking isn’t the domain of the intelligent, most of us posses the intelligence required to understand that behavior cannot be classified as an illness or that intervention between consenting parties results in less prosperity. Clear thinking requires courage because as one steps farther into the abyss, the shore of what is disappears until you are deposited upon a foreign shore bearing little resemblance to the one you knew.

How can be defense be privatized? I cannot answer that more than I can answer how watches and delicious miniature pickles could be provided for privately.

Usually the question is asked by people with a modicum of economic understanding or sometimes by people with much greater insight. It’s these people and not the women and effeminate males goaded into outbursts of “WELL WHAT ABOUT” with the necessary follow up of “environment, homeless, community” and any other sundry non-existent plebeian prattle who attend the same social functions as me. I descend further into a stupor of belligerency and the only substance that makes other people tolerable. As the crowd gathers, a clever and observant bystander might see me slurring my words and unleash four years of state education, blurting out “WELL WHAT ABOUT DEFENSE”, which is unfortunate for us both because I suddenly break out into a fit of laughter as I imagine Daniel Day-Lewis shouting,

“draiiiiiiiinnnaaageeeee”.

But going back to people that matter a little bit more, these are the people that understand defense in an efficiency framework. In other words, they would understand that defense must be provided for by an external third party because of “free riders” or external beneficiaries. Because there exists a group of people that do not pay for the service of defense yet gain from it. The optimal amount (that’s where your lines cross or your equal sign is happy)is now achieved. In this case, the economist would say there is not enough defense provided. Ergo, the super humans that comprise what we call government will intervene. This is commonly called taxation. Productive people have money taken from them and that money, without a doubt, goes to pay for defensive things like spreading democracy.

Actually, that’s how I imagine almost every paid economist’s day occurs. They slide open their drawer and pull out their TI-89E (Economist’s Edition). Their eyes glaze over as they take off the plastic casing reveling Ben Bernanke’s autograph on the back panel. Then they plug in a couple numbers, make their equal signs happy with a couple assumptions or a larger margin of error and call it a day.

“draiiiiiiiiiiinnnaaageeeee”

Now that we understand how real world economics work we can proceed.

The problem comes in the “ergo” (that’s a fancy word for therefore). It is true, defense of a nation will benefit people who do not pay for it. If I live on the southern boarder and pay to defend it with a wall, then the person living directly north of me might benefit without paying for it. The problem is the common argument leaps from saying external benefit to intervention. It does this because underneath the sleek exterior of contemporary economics lies a monster of JJ Abrams’ proportions; also equally as corny. It is the assumption of pareto efficiency. To put it simply, pareto efficiency is the movement of resources to make someone happier without making anyone sadder. Thats right, the nation that brought us parmigiano reggiano, prosciutto di Parma, and Monica Bellucci also spawned Mr. Pareto. Its why we in economics draw the belly button where the two lines intersect.

“Hey look Pa, my economy is pareto optimal”

So using our fancy new words let’s rephrase the argument. Privately provided defense will not be pareto optimal because of externalities. Therefore, to achieve pareto optimality, government intervention is required. The problem is that this argument assumes a framework of both parties. When discussing with economists subjects like defense it becomes difficult when they don’t have the same normative judgments. I don’t want pareto optimality. I would rather be pareto un-optimal and remain untaxed. Now the clever TI-89E wielding economist would retort, “but without defense you couldn’t have your utopian free-love libertarding society.” This thinking represents the most common flaw in economics, the failure to see the unseen costs.

It is likely that within a system of private defense you would not see billion dollar stealth bombers or giant bases occupied by 19-21 year olds with bad taste in music. Is this a bad thing? The unseen cost is how much better would my life be if the money that was stolen from me to support this system was instead used to expand my collection of pretentious German expressionist film? Although this doesn’t fully answer the retort. It cannot be answered in any quantifiable sense because it requires us to know things that will never be. For example, for the last one hundred years government was the sole producer of cars, and I come before you and make the claim, “government should stop producing cars”. After the gasp of horror has subsided and you ask if I am serious and I nod my head to suggest I am actually, the retort might be something similar to the one of defense. We very well might not have the tools of what is considered modern war but that is irrelevant because it assumes that what exists now is the best possibility. Going back to the car analogy, it would be similar to expounding on the beauty and performance of a Zaporozhet because it is the only thing that can be seen, ignoring that something like a Maserati would emerge.

The fundamental problem with thinking that defense could not be privately provided is to ignore another possibility. It is failure to understand the opportunity cost of government intervention. What would emerge if government was to stop providing defense? I cannot say for sure. What I do know is that a system would emerge and in years’ past has emerged.

“It is more a subject of joy that we have so few of the desperate characters which compose modern regular armies. But it proves more forcibly the necessity of obliging every citizen to be a soldier; this was the case with the Greeks and Romans, and must be that of every free State. Where there is no oppression there can be no pauper hirelings.”

- Thomas Jefferson to James Monroe, 1813.