[W]hile the art of “single-entry bookkeeping” may indeed be “occult” in the sense that it entails a kind of magic trick — namely that of making the costs of a particular policy vanish for political purposes — the art is widely practiced, has a long pedigree, and is viciously effective.
Most progressive policies you can think of — going back to the agriculture and labor laws of the New Deal — are sold to the public only by reference to the benefits for beneficiaries, and never by reference to the far greater costs for society as a whole. Progressive policies are virtually never sold to the public on the basis of an honest cost-benefit analysis. Instead, proponents systematically deny that there are any such costs, and supporters earnestly believe it. This is strange magic indeed, because progressive policies virtually always cause net losses for society as a whole. That’s because they virtually always consist of interventions in the market in the form of limitations on the freedom of exchange. The immediate effect is systematic mis-allocation of resources, hence reduced output and higher prices for everyone — in other words, dead-weight economic loss, as with monopoly pricing.
So how do these policies continue to enjoy so much support? That’s where the artifice of “single-entry bookkeeping” comes into play. If all those poor working families throughout America don’t know that they’re paying far more for milk and sugar than they would in a competitive market — that in essence they’re being defrauded by a conspiracy of government and special interests — then you can get their votes as well as the support of the dairy farmers and sugar producers whose interests you actually serve.
Another Obamacare fiasco? Guess what? We’ll rationalize that disaster into something awesome, tout de suite. You can’t keep your insurance if you like it? Consider yourself lucky. Obamacare disincentivizes work. Be grateful! The Affordable Healthcare Act will cost three times as much as initial estimates? Spending creates jobs. The exchanges have been a disaster? Stop rooting for the president to fail, for God’s sake.
The Treasury Department just announced it will delay a coverage mandate for companies with 50 to 99 employees for a year. And liberals who grouse about the anarchic tendencies of grassroots conservatives will be prepared to rationalize why this news is not only unavoidable but great for Americans. It always is.
According to the Congressional Research Service, the Obama administration has probably missed half of the deadlines of the Affordable Care Act. Here’s a list of 13 executive alterations Now, if all this haphazard implementation were only a matter of improving what are onerous and poorly written facets of Obamacare, that would be one thing. A bad thing, yes. But what makes this free-for-all an especially blatant abuse of power is that the delays are enacted almost exclusively for political reasons.
So, question: when was the last time policy was executed as chaotically and with such little regard for the law? I don’t want to sound like a troglodyte, but the president, as head of the executive branch of the federal government is constitutionally obligated to “take care that the laws be faithfully executed,” not implement laws in an expedient manner, or a more prudent manner, or even in a way that he believes is more moral or a helpful for people struggling to find affordable health care. This is why we write bills down and debate them prior to passage. Or, at least, it used to be.
Responding to a CBO report that suggested the law would encourage more than 2 million people either to seek less work or to leave the labor market completely, progressives picked up their tricornered hats and their muskets, and started to shout incoherently about “freedom.” In a lovely illustration of the truism that progressives really haven’t the slightest clue what it is that conservatives believe, the Huffington Post’s Senior Congressional Reporter, Michael McAuliff, spoke for the cabal, suggesting ludicrously that,
There’s an irony in the GOP complaining that ACA lets people quit jobs. I mean, what’s wrong with freedom?
To answer a remarkably misguided rhetorical question, there is nothing at all “wrong with freedom.” As Patrick Henry rightly argued, above all other things “liberty ought to be the direct end” of government, for, after that, everything else is mere indulgence. But there is an awful lot “wrong” with using the word “freedom” where it does not apply. After all, it is one thing for a person to choose not to work and to accept the natural consequences of that decision, but quite another indeed for a person to choose not to work because others are being forced to subsidize his well-being. One can reasonably attest that redistributing wealth to underwrite preferred social outcomes is “necessary” or “virtuous” or “kind” or “practical” — or even, more cynically, that it is the inexorable end product of a democratic system in which one man can vote himself the contents of another’s wallet. But one cannot claim that it makes either man “free” — at least not without twisting the word and the concept that it represents beyond all meaningful recognition.
Does the Obama administration really plan to make the case that negative liberty is but a mirage and that, the state of nature’s “forcing” one to work being akin to actual compulsion, the state must step in everywhere to liberate the citizenry from reality’s harsh claims? One suspects not.
At the very same time as the White House and its friends were taking credit for having emancipated the American people from the indignities of having to keep down a career, others seemed to be insisting that the labor market and the government are wholly discrete entities. This isn’t about Obamacare “killing” jobs, the Washington Post’s Glenn Kessler wrote, “it’s about workers — and the choices they make.” “Look at it this way,” he explained. “If someone says they decided to leave their job for personal reasons, most people would not say they ‘lost’ their jobs. They simply decided not to work.” To an extent, this distinction is a fair one, although there is a great deal of truth in The Economist’s observation that “a job is an economic transaction between a seller and a buyer of labour, and can be ‘destroyed’ if either seller or buyer walks away.”
Either way, it fails to address the material question, which is, “Why, in this case, will those people ‘decide not to work’?” The answer, of course, is that the intrusive federal action that one party supports and the other opposes has changed the calculation for them. It really is this simple: Before Obamacare, there was a status quo. With Obamacare, the government changed that status quo. As a result of that change, people are making different decisions. One can claim that the change will help to diminish youth unemployment or allow the elderly to enjoy more leisure time or do wonders for the gardening industry. But one can’t pretend that the state doesn’t have full culpability for those different decisions being made. That is a step too far.
Changing the agricultural game is what Monsanto does. The company whose name is synonymous with Big Ag has revolutionized the way we grow food—for better or worse. Activists revile it for such mustache-twirling practices as suing farmers who regrow licensed seeds or filling the world with Roundup-resistant superweeds. Then there’s Monsanto’s reputation—scorned by some, celebrated by others—as the foremost purveyor of genetically modified commodity crops like corn and soybeans with DNA edited in from elsewhere, designed to have qualities nature didn’t quite think of.
So it’s not particularly surprising that the company is introducing novel strains of familiar food crops, invented at Monsanto and endowed by their creators with powers and abilities far beyond what you usually see in the produce section. The lettuce is sweeter and crunchier than romaine and has the stay-fresh quality of iceberg. The peppers come in miniature, single-serving sizes to reduce leftovers. The broccoli has three times the usual amount of glucoraphanin, a compound that helps boost antioxidant levels. Stark’s department, the global trade division, came up with all of them.
“Grocery stores are looking in the produce aisle for something that pops, that feels different,” Avery says. “And consumers are looking for the same thing.” If the team is right, they’ll know soon enough. Frescada lettuce, BellaFina peppers, and Beneforté broccoli—cheery brand names trademarked to an all-but-anonymous Monsanto subsidiary called Seminis—are rolling out at supermarkets across the US.
But here’s the twist: The lettuce, peppers, and broccoli—plus a melon and an onion, with a watermelon soon to follow—aren’t genetically modified at all. Monsanto created all these veggies using good old-fashioned crossbreeding, the same technology that farmers have been using to optimize crops for millennia. That doesn’t mean they are low tech, exactly. Stark’s division is drawing on Monsanto’s accumulated scientific know-how to create vegetables that have all the advantages of genetically modified organisms without any of the Frankenfoods ick factor….
[G]enetically modifying consumer crops proved to be inefficient and expensive. Stark estimates that adding a new gene takes roughly 10 years and $100 million to go from a product concept to regulatory approval. And inserting genes one at a time doesn’t necessarily produce the kinds of traits that rely on the interactions of several genes. Well before their veggie business went kaput, Monsanto knew it couldn’t just genetically modify its way to better produce; it had to breed great vegetables to begin with. As Stark phrases a company mantra: “The best gene in the world doesn’t fix dogshit germplasm.”
What does? Crossbreeding. Stark had an advantage here: In the process of learning how to engineer chemical and pest resistance into corn, researchers at Monsanto had learned to read and understand plant genomes—to tell the difference between the dogshit germplasm and the gold. And they had some nifty technology that allowed them to predict whether a given cross would yield the traits they wanted.
The key was a technique called genetic marking. It maps the parts of a genome that might be associated with a given trait, even if that trait arises from multiple genes working in concert. Researchers identify and cross plants with traits they like and then run millions of samples from the hybrid—just bits of leaf, really—through a machine that can read more than 200,000 samples per week and map all the genes in a particular region of the plant’s chromosomes.
They had more toys too. In 2006, Monsanto developed a machine called a seed chipper that quickly sorts and shaves off widely varying samples of soybean germplasm from seeds. The seed chipper lets researchers scan tiny genetic variations, just a single nucleotide, to figure out if they’ll result in plants with the traits they want—without having to take the time to let a seed grow into a plant. Monsanto computer models can actually predict inheritance patterns, meaning they can tell which desired traits will successfully be passed on. It’s breeding without breeding, plant sex in silico. In the real world, the odds of stacking 20 different characteristics into a single plant are one in 2 trillion. In nature, it can take a millennium. Monsanto can do it in just a few years.
And this all happens without any genetic engineering. Nobody inserts a single gene into a single genome.
The latest government labor report indicates that job growth has slowed once again. It is now at a three-year low, with only an estimated 74,000 new jobs added this past month. To be sure, the nominal unemployment rate dropped to 6.7 percent, but as experts on both the left and the right have noted, the only reason for this “improvement” is the decline of labor force participation, which is at the lowest level since 1978, with little prospect of any short-term improvement….
One might think that these figures would be taken as evidence that a radical change in course is needed to boost labor market participation. The grounds for that revision rest on a straightforward application of the fundamental economic law of demand: As the cost of labor increases, the demand for labor will decrease. There are, of course, empirical disputes as to just how rapidly wage increases will reduce that demand for labor.
The federal government has apparently (and foolishly) assumed that these effects will be small, and that the unemployed can somehow be better helped by government interventions into the labor markets. However, only a free market in labor is able to balance changes in both supply and demand, so as to reduce the incidence of unemployment. Government efforts to impose various minimum wages will, happily, have little adverse effect if the market wage is greater than the government mandate. But the same form of increase could have devastating effects on labor markets when the required wage is set too high relative to market wages. The number of workers eager to take jobs at these higher levels will be great, but the number of jobs available at that wage level will shrink. Unemployment levels will increase, and working off the books could increase.
The correct policy choice is strong deregulation of labor markets, which will spur higher labor market participation, albeit at somewhat lower wages. But once people get into the labor force, they can hone their skills in ways that will allow them to command higher wages. Government mandates can never lead to sustainable wage increases. Higher levels of labor productivity can. And this critique of minimum wage laws is equally applicable to other labor market interventions, including overtime rules, family leave statutes, mandatory collective bargaining, and mandated healthcare benefits that likewise distort labor markets.
It is therefore disheartening to observe that the dismal failures in the current labor market have led to renewed calls for further government intervention at both the federal and state levels.
World economic freedom has reached record levels, according to the 2014 Index of Economic Freedom, released Tuesday by the Heritage Foundation and The Wall Street Journal. But after seven straight years of decline, the U.S. has dropped out of the top 10 most economically free countries.
For 20 years, the index has measured a nation’s commitment to free enterprise on a scale of 0 to 100 by evaluating 10 categories, including fiscal soundness, government size and property rights. These commitments have powerful effects: Countries achieving higher levels of economic freedom consistently and measurably outperform others in economic growth, long-term prosperity and social progress. Botswana, for example, has made gains through low tax rates and political stability.
Those losing freedom, on the other hand, risk economic stagnation, high unemployment and deteriorating social conditions. For instance, heavy-handed government intervention in Brazil’s economy continues to limit mobility and fuel a sense of injustice.
It’s not hard to see why the U.S. is losing ground. Even marginal tax rates exceeding 43% cannot finance runaway government spending, which has caused the national debt to skyrocket. The Obama administration continues to shackle entire sectors of the economy with regulation, including health care, finance and energy. The intervention impedes both personal freedom and national prosperity.
In addition to being an advocate for an ideology directly responsible for tens of millions of non-war deaths and untold human misery, Myerson has revealed himself as something of an ignoramus concerning communism’s shocking record on environmental issues. Not only a blight on the human condition, communism’s impact on the planet’s ecology has proven consistently ghastly.
When the Berlin Wall came down and the Iron Curtain was finally lifted to expose the inner workings of communism to Western eyes, one of the more shocking discoveries was the nightmarish scale of environmental destruction. The statistics for East Germany alone tell a horrific tale: at the time of its reunification with West Germany an estimated 42 percent of moving water and 24 percent of still waters were so polluted that they could not be used to process drinking water, almost half of the country’s lakes were considered dead or dying and unable to sustain fish or other forms of life, and only one-third of industrial sewage along with half of domestic sewage received treatment.
An estimated 44 percent of East German forests were damaged by acid rain — little surprise given that the country produced proportionally more sulphur dioxide, carbon dioxide, and coal dust than any other in the world. In some areas of East Germany the level of air pollution was between eight and twelve times greater than that found in West Germany, and 40 percent of East Germany’s population lived in conditions that would have justified a smog warning across the border. Only one power station in East Germany had the necessary equipment to clean sulphur from emissions.
Sten Nilsson, a Swedish forest ecologist who was kicked out of East Germany in 1986 for his efforts at collecting data on the health of its forests, said in April 1990 that many forests were “dead, completely” and described the country as “on the verge of total ecological collapse.” The environmental policy of the communist government, according to then Environment Minister Karl-Hermann Steinberg in 1990, “was not only badly designed but didn’t exist.”
… East Germany was hardly the exception to the rule, with environmental degradation being the norm throughout the communist countries of Eastern Europe and the Soviet Union.
The environmental destruction associated with communism is no coincidence or accident of history, but rather a perfectly logical outcome for at least three reasons. Perhaps most obviously, communism invariably means authoritarianism (how else would a New Soviet Man emerge to work towards the bright, shiny future prophesied by Marx and Engels without re-education camps and control over the levers of societal machinery?), with little tolerance for dissent or concerns about hazardous waste in the worker’s paradise. To voice the opinion that perhaps not quite all was well, or that the air smelled funny, was to invite suspicions being a saboteur, kulak or harboring bourgeois tendencies.
Second, communism means an absence of property rights, having all been surrendered to “the people,” which is to say the state. As that which belongs to everyone in fact belongs to no one, who is to be confronted over the factory sending toxic plumes into the sky which then descends on the cornfield, or the dumping of waste into the river plied by tourists on cruise boats? And who really owns the cornfield or the boats?
Lastly, communism also simply cannot compete with capitalism in the production of wealth and technology, both of which greatly assist in addressing environmental problems. Why should anyone be surprised that only one East German power station had the necessary equipment to scrub sulphur from its emissions? This, after all, was a country whose answer to Western automobiles — the Trabant launched in the late 1950s — did not even include a fuel gauge in its early versions, something first introduced decades prior (unsurprisingly the Trabant was also bad for the environment, emitting nine times the hydrocarbons and five times the carbon monoxide emissions of the average European car of 2007).
There is no society, nor has one ever existed, which featured zero pollution or harm to the environment. The only question is how best to manage it, and which system is best positioned to accomplish this. On that question the answer is surely capitalism, home to the world’s richest countries and cleanest environments. It isn’t even close.
There are lots of diversions in the Big White Ghetto, the vast moribund matrix of Wonder Bread–hued Appalachian towns and villages stretching from northern Mississippi to southern New York, a slowly dissipating nebula of poverty and misery with its heart in eastern Kentucky, the last redoubt of the Scots-Irish working class that picked up where African slave labor left off, mining and cropping and sawing the raw materials for a modern American economy that would soon run out of profitable uses for the class of people who 500 years ago would have been known, without any derogation, as peasants. Thinking about the future here and its bleak prospects is not much fun at all, so instead of too much black-minded introspection you have the pills and the dope, the morning beers, the endless scratch-off lotto cards, healing meetings up on the hill, the federally funded ritual of trading cases of food-stamp Pepsi for packs of Kentucky’s Best cigarettes and good old hard currency, tall piles of gas-station nachos, the occasional blast of meth, Narcotics Anonymous meetings, petty crime, the draw, the recreational making and surgical unmaking of teenaged mothers, and death: Life expectancies are short — the typical man here dies well over a decade earlier than does a man in Fairfax County, Va. — and they are getting shorter, women’s life expectancy having declined by nearly 1.1 percent from 1987 to 2007….
There is not much novelty in Booneville, Ky., the seat of Owsley County, but it does receive a steady trickle of visitors: Its public figures suffer politely through a perverse brand of tourism from journalists and do-gooders every time the U.S. Census data are recalculated and it defends its dubious title as poorest county in these United States…. There used to be two movie theaters here — a regular cinema and a drive-in. Both are long gone. The nearest Walmart is nearly an hour away. There’s no bookstore, the nearest Barnes & Noble being 55 miles away and the main source of reading matter being the horrifying/hilarious crime blotter in the local weekly newspaper. Within living memory, this town had three grocery stores, a Western Auto and a Napa Auto Parts, a feed store, a lumber store, a clothing shop, a Chrysler dealership, a used-car dealership, a skating rink — even a discotheque, back in the 1970s. Today there is one grocery store, and the rest is as dead as disco. If you want a newsstand or a dinner at Applebee’s, gas up the car. Amazon may help, but delivery can be tricky — the nearest UPS drop-box is 17 miles away, the nearest FedEx office 34 miles away.
If you go looking for the catastrophe that laid this area low, you’ll eventually discover a terrifying story: Nothing happened. It’s not like this was a company town in which the business around which life was organized went toes-up. Booneville and Owsley County were never economic powerhouses. They were sustained for a time in part by a nearby Midsouth plant, which manufactured consumer electronics such as steam irons and toaster ovens, as well as industrial supplies such as refrigerator parts. A former employee estimates that a majority of Owsley County households owed part of their income to Midsouth at one time or another, until a mishap in the sanding room put an end to that: “Those shavings are just like coal dust,” he says. “It will go right up if it gets a spark.” Operations were consolidated in a different facility, a familiar refrain here — a local branch of the health department consolidated operations in a different town, along with the energy company and others. But Owsley County was poor before, during, and after that period. Coal mining was for years a bulwark against utter economic ruination, but regulation, a lengthy permitting process, and other factors both economic and geological pushed what remains of the region’s coal business away toward other communities. After they spend a winter or two driving an hour or two each way over icy twists of unforgiving mountain asphalt, many locals working in the coal business decide it is easier to move to where the work is, leaving Owsley County, where unemployment already is 150 percent of the national average, a little more desperate and collectively jobless than before. It’s possible that a coal worker’s moving from Booneville to Pikeville would lower the median income of both towns….
A few locals drive two hours — on a good day, more on others — to report for work in the Toyota factory at Georgetown, Ky., which means driving all the way through the Daniel Boone National Forest and through the city of Lexington to reach the suburbs on the far side. As with the coal miners traveling past Hazard or even farther, eventually many of those Toyota workers decide that the suburbs of Lexington are about as far as they want to go. The employed and upwardly mobile leave, taking their children, their capital, and their habits with them, clean clear of the Big White Ghetto, while the unemployed, the dependent, and the addicted are once again left behind….
* * *
“Well, you try paying that much for a case of pop,” says the irritated proprietor of a nearby café, who is curt with whoever is on the other end of the telephone but greets customers with the perfect manners that small-town restaurateurs reliably develop. I don’t think much of that overheard remark at the time, but it turns out that the local economy runs on black-market soda the way Baghdad ran on contraband crude during the days of sanctions.
It works like this: Once a month, the debit-card accounts of those receiving what we still call food stamps are credited with a few hundred dollars — about $500 for a family of four, on average — which are immediately converted into a unit of exchange, in this case cases of soda. On the day when accounts are credited, local establishments accepting EBT cards — and all across the Big White Ghetto, “We Accept Food Stamps” is the new E pluribus unum – are swamped with locals using their public benefits to buy cases and cases — reports put the number at 30 to 40 cases for some buyers — of soda. Those cases of soda then either go on to another retailer, who buys them at 50 cents on the dollar, in effect laundering those $500 in monthly benefits into $250 in cash — a considerably worse rate than your typical organized-crime money launderer offers — or else they go into the local black-market economy, where they can be used as currency in such ventures as the dealing of unauthorized prescription painkillers — by “pillbillies,” as they are known at the sympathetic establishments in Florida that do so much business with Kentucky and West Virginia that the relevant interstate bus service is nicknamed the “OxyContin Express.” A woman who is intimately familiar with the local drug economy suggests that the exchange rate between sexual favors and cases of pop — some dealers will accept either — is about 1:1, meaning that the value of a woman in the local prescription-drug economy is about $12.99 at Walmart prices….
He then gives me a half-joking — but only half — list of people not to talk to: Not the shiftless fellows milling about in the hallways on various government-related errands, not the guy circling the block on a moped. Instead, there’s the lifelong banker whose brother is the head of the school board. There’s the mayor, a sharp nonagenarian who has been in office since the Eisenhower administration. And that, too, is part of the problem with adverse selection in the Big White Ghetto: For the smart and enterprising people left behind, life can be very comfortable, with family close, a low cost of living, beautiful scenery, and a very short climb to the top of the social pecking order. The relative ease of life for the well-off and connected here makes it easy to overlook the real unpleasant facts of economic life, which helps explain why Booneville has a lovely new golf course, of all things, but so little in the way of everyday necessities….
“The draw,” the monthly welfare checks that supplement dependents’ earnings in the black-market Pepsi economy, is poison. It’s a potent enough poison to catch the attention even of such people as those who write for the New York Times. Nicholas Kristof, visiting nearby Jackson, Ky., last year, was shocked by parents who were taking their children out of literacy classes because the possibility of improved academic performance would threaten $700-a-month Social Security disability benefits, which increasingly are paid out for nebulous afflictions such as loosely defined learning disorders. “This is painful for a liberal to admit,” Kristof wrote, “but conservatives have a point when they suggest that America’s safety net can sometimes entangle people in a soul-crushing dependency.” … In effect, welfare has made Appalachia into a big and sparsely populated housing project — too backward to thrive, but just comfortable enough to keep the underclass in place. There is no cure for poverty, because there is no cause of poverty — poverty is the natural condition of the human animal. It is not as though labor and enterprise are unknown here: Digging coal is hard work, farming is hard work, timbering is hard work — so hard that the best and brightest long ago packed up for Cincinnati or Pittsburgh or Memphis or Houston. There is to this day an Appalachian bar in Detroit and ex-Appalachian enclaves around the country. The lesson of the Big White Ghetto is the same as the lessons we learned about the urban housing projects in the late 20th century: The best public-policy treatment we have for poverty is dilution. But like the old project towers, the Appalachian draw culture produces concentration, a socioeconomic Salton Sea that becomes more toxic every year.
… Speaking in the Rose Garden in March of 1965, Lyndon Johnson had high hopes for his Appalachia Bill. “This legislation marks the end of an era of partisan cynicism towards human want and misery. The dole is dead. The pork barrel is gone. Federal and state, liberal and conservative, Democrat and Republican, Americans of these times are concerned with the outcome of the next generation, not the next election… . The bill that I will now sign will work no miracles overnight. Whether it works at all depends not upon the federal government alone but the states and the local governments as well.” The dole, as it turns out, is deathless, and the pork barrel has merely been reincarnated as a case of Pepsi. President Johnson left out of his calculations the factor that is almost always overlooked by populists: the people.
If you are an American male younger than 66, you should take a moment and give thanks to economist Walter Oi. Walter died on Christmas Eve 2013. Even though you probably haven’t heard of him, he has had a profound effect on your life. He helped end military conscription in the United States.
Between 1948 and 1973, if you were a healthy young male in the United States, here’s what you knew: the government could pluck you out of almost any activity you were pursuing, cut your hair, and send you anywhere in the world. If the United States was at war, you might have to kill people, and you might return home in a body bag.
Walter did not think that was right, and it wasn’t because of his own age or health. He was born in 1929. When he started writing about the draft in the mid-1960s, he was well beyond the draft-eligible age range of 18 to 26. (The draft-eligible age for doctors and dentists was even higher.) Moreover, he was blind, having gradually lost all his eyesight in the 1960s. Nor did he choose his position against the draft because he had sons who were at risk. Walter had two daughters, and when he was writing on the issue, almost no one was advocating the conscription of women.
No. Walter thought the draft was wrong because he thought that people should be able to make such an important choice—whether to join the military or not—for themselves.
His passion for free labor markets was what motivated his work on the draft. His contribution was to point out—and estimate—two costs. First, there was the hidden cost imposed on draftees and “draft-induced” or “reluctant” volunteers. The fact that this cost didn’t show up in the U.S. government budget was irrelevant. Walter pointed out that the correct way to measure the cost to the draftees and the reluctant volunteers was to take the difference between the low wages they were paid and the minimum amount they would need to be paid to get them to volunteer. He estimated this cost at between $826 million and $1.134 billion. While this number might seem low today, Oi was working with mid-1960s dollars. Inflation-adjusted to 2013, the losses would range from $6.1 billion to $8.4 billion. The second cost Oi estimated was the increased annual budget outlay needed to eliminate the draft.
Walter presented his results at the Conference on the Draft, held between December 4 and 7, 1966 at the University of Chicago…. Writing some 30 years later, Friedman noted that the 74 invited participants “included essentially everyone who had written or spoken at all extensively on either side of the controversy about the draft, as well as a number of students.” Friedman’s other comment about the event is worth citing:
I have attended many conferences. I have never attended any other that had so dramatic effect on the participants. A straw poll taken at the outset of the conference recorded two-thirds of the participants in favor of the draft; a similar poll at the end, two-thirds opposed. I believe that this conference was the key event that started the ball rolling decisively toward ending the draft.
Admirers of the orangutan should note that as of 2014 Nutella will be made exclusively with palm oil that is “100 percent segregated,” whatever that means, and certified as a-okay by the Roundtable on Sustainable Palm Oil, because of course there is a Roundtable on Sustainable Palm Oil. Palm-oil cultivation is hard on orangutans, and it is natural that we should feel some sympathy for them: We have 97 percent of our DNA in common with the gentle, solitary creature.
We have 99 percent in common with the fierce chimpanzee, which explains much of the history of the 20th century. Russians and Poles historically have not cooperated on very much other than killing each other — the Soviets were the worst brutes of their time, but the Poles dished it out pretty rough, too, for instance in the Polish–Muscovite War — but Russians and Poles cooperate in the production of Nutella (and much else). The French may have mixed feelings about bringing Turkey into the European Union, but they are happy to bring their hazelnuts. The Italians and the Turks within recent memory fought a war (creating Libya in the process), but they can work together peacefully through trade and specialization. There are still living veterans of the most recent war that saw Canada and the United States on one side with Germany and Italy on the other — 25,000 Canadians died in the Italian campaign alone — but Nutella transcends history.
Nutella is a product of a truly global economy, and as a model of human cooperation, it is beautiful. But it is not without its costs. Such spontaneous orders are by their nature unpredictable; they create opportunities and crises at the same time. In business, entrenched market incumbents are the firms with the most to gain and the most to lose from unforeseen developments. When he was running Microsoft, Bill Gates used to say that he wasn’t afraid of Oracle or Apple but lost sleep over the prospect of a kid beavering away in his garage with the next out-of-left-field thing, which could (and, eventually, would) knock the crown off Microsoft’s head. In fact, Microsoft got knocked around by both ends of the market — from the upstart Google, which as of the close of the third quarter was bigger than Chevron, and from Apple, the most valuable company in the world. Google and Apple both took advantage of new forms of commerce developing online, and Microsoft’s once dominating position was substantially diminished.
In the nation-state market, the United States and its middle class were in roughly the same position as Microsoft at the turn of the century. We were not yet really hurting, but the new developments that would change our economic trajectory already were in place. We would lose some market share to polished boutique firms such as Canada, to low-price startups such as China, and to longstanding majors such as Germany. We were the ultimate market incumbent.
When it comes to income polarization, the explanation we usually hear is a story about politics. But it’s a story about Nutella. Incomes are going up at the top and stagnating or declining at the middle and lower end of the spectrum, but — and this is critical to understanding our challenge — the high incomes at the top do not cause the lower incomes at the bottom, nor vice versa. There is no such thing as “national income” or “income distribution.” There is no bucket labeled income the contents of which are ladled out by the government or by the statistical aggregation we call “the economy.” If people at the top made less money, that would not free up money for everybody else. Nor is income polarization mainly the result of our tax system or other public policies.
“We’ve got, for example, 16 different agencies that have some responsibility to help businesses, large and small, in all kinds of ways, whether it’s helping to finance them, helping them to export. . . . So, we’ve proposed, let’s consolidate a bunch of that stuff. The challenge we’ve got is that that requires a law to pass. And, frankly, there are a lot of members of Congress who are chairmen of a particular committee. And they don’t want necessarily consolidations where they would lose jurisdiction over certain aspects of certain policies.”
The dawn is coming up like thunder as Obama notices the sociology of government. He shows no sign, however, of drawing appropriate lessons from it.
Big government is indeed big, and like another big creature, the sauropod dinosaur, government has a primitive nervous system: The fact of an injury to the tail could take nearly a minute to be communicated to the sauropod brain.
Obama, of whose vast erudition we have been assured, seems unfamiliar with Mancur Olson ’s seminal “The Rise and Decline of Nations,” which explains how free societies become sclerotic. Their governments become encrusted with interest groups that preserve, like a fly in amber, an increasingly stultifying status quo. This impedes dynamism by protecting arrangements that have worked well for those powerful enough to put the arrangements in place. This blocks upward mobility for those less wired to power.
Obama, startled that components of government behave as interest groups, seems utterly unfamiliar with public choice theory. It demystifies and de-romanticizes politics by applying economic analysis — how incentives influence behavior — to government. It shows how elected officials and bureaucrats pursue personal aggrandizement as much as people do in the private sector. In the public sector’s profit motive, profit is measured by power rather than money.
Obama’s tardy epiphanies do not temper his enthusiasm for giving sauropod government ever-deeper penetration into society. He thinks this serves equality. Actually, big government inevitably drives an upward distribution of wealth to those whose wealth, confidence and sophistication enable them to manipulate government.
The day before Obama shared with MSNBC his conclusion that big government defends its irrationalities but is insufficiently big, his speech du jour deplored today’s increasing inequality and distrust of government. He seems oblivious to the mutual causations at work.
Of course Americans distrust one another more as more and more factions fight one another for preferential treatment by government. Of course government becomes drained of dignity, and becomes corrosive of social cohesion, as it becomes a bigger dispenser of inequality through benefits to those sufficiently clever and connected to work its levers.
Obama correctly says that not only do we “tend to trust our institutions less,” we also “tend to trust each other less.” Of course there are parallel increases in distrust: Government’s dignity diminishes as government grows to serve factions of those sophisticated at manipulating its allocation of preferences. Social solidarity is a casualty of government grown big because it recognizes no limits to its dispensing of favors.
… Suppose there were not 16 government agencies “to help businesses, large and small, in all kinds of ways.” Suppose there were none. Such barnacles on big government institutionalize the scramble for government favors; these agencies are a standing incitement to bend public power for private advantage. Hence they increase distrust of government, diminish social solidarity and aggravate the most indefensible inequality — that driven by government dispensations.
Obama’s solution to the problem of the 16 is to “consolidate” them, replacing 16 small subtractions from good governance with one big one. Progressives consider this progress.