The Emperor Has No Brains

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One of the greatest things in this universe is discovering that there are other people — lots of other people — who are just as smart as you are, or even (if you can believe it) smarter.

As a teacher, I’ve often been inspired by what I’ve seen other people doing in the classroom. “How did they think of that?” I ask myself, futilely. As a writer, I’ve spent many of the best moments of my life marveling at the accomplishments of people who were much more intelligent than I. Emily Dickinson, are you listening? J.F. Powers, can you hear me? Even writers who, I think, were not particularly bright (in my way of being bright) have earned my admiration by being smart enough (in their way) to do things I could never dream of doing. Hemingway and Whitman, I salute you.

But it’s not just in my own work that I rejoice to lose the competition. The cleverness of a good carpenter, the strategic intellect of a good cook — such things astonish me. I have a friend who has mastered virtually all the skills of the construction trade. That’s real intelligence, of a kind that I don’t have. When I’m disgusted with the world, I’m consoled by the knowledge that I’m surrounded by so many people who can do things so much better than I.

The cleverness of a good carpenter, the strategic intellect of a good cook — such things astonish me.

An economist would say I was recognizing the importance of the division of labor. I prefer to call it the division of intelligence. According to James Madison, writing in the tenth Federalist paper, this is what our system of government is all about. It’s about protecting the division of intelligence, and the superior degrees of intelligence:

The diversity in the faculties of men, from which the rights of property originate, is . . . an insuperable obstacle to a uniformity of interests. The protection of these faculties is the first object of government.

It is not only the rights of property that derive from the division of intelligence; it’s property itself in any significant form. If everyone had one form and degree of intelligence, everyone would be a teacher, with no one to teach; everyone would be a writer of the same kind of stuff; everyone would be a mediocre cook, with no one to produce the food or pay for it.

Recently I bought a new heating and air conditioning unit. At the moment when the superbly intelligent and adroit technician finished installing it and presented me with the bill, social hierarchy did not exist; I was happy to reward the superior intelligence he showed in his craft, and he was happy to receive some of the money that I had been paid for exercising an appropriate degree of intelligence in mine. The best thing is that such moments are constantly occurring. They are the real story of human life.

But there is a class of people — let’s call it the governing class — that does not think in this way, that apparently lacks the capacity to think in this way. Members of this class assume that they are smarter, simply smarter, than everyone else and that they are therefore commanded by nature to tell everyone else what to do. Alexander Pope remarked that

Each might his sev’ral province well command,
Would all but stoop to what they understand.

The meaning of such comments is lost on the hierarchs of the governing class. They don’t command a province of human endeavor; they command human beings. They will not stoop; there is never any reason for them to stoop. They were born with an understanding of existence and their superior role in it, and if they weren’t, they soon learned it from their four years at Harvard, Brown, or Wellesley. They’re smarter than all the rest of us, which gives them the right to push us all around.

Members of this class assume that they are smarter, simply smarter, than everyone else and that they are therefore commanded by nature to tell everyone else what to do.

In the early republic, such people were rare, and scorned. If you wanted to be esteemed for your intelligence, you had to show that you actually were smart at doing something. It might be reading good literature, understanding its meaning, and using it in effective argument, especially on questions of political principle and fundamental law. This is the substantial intelligence that until the 20th century gained the highest rewards in America’s political life. But no one thought there was only one way to demonstrate intelligence. You might do it by showing your grasp of military affairs, or financial investments. You might construct great works of engineering or great industrial combinations. You might invent the electric light. You might build houses that people really wanted to live in or operate a hotel that would really make them comfortable. But you had to do something to show you were smart.

This obligation has been superseded by the modern, all-encompassing state, which inculcates far different, and far narrower, ideas of merit. It rewards people who have no skills except an ability to write memos, endure meetings, and serve on committees, teams, and task forces — most of them useless or harmful, but that’s all right: the state is made to command and not to please. The state grants prestige even to people whose sole job is to spin — that is, to lie to other people, using methods that are openly discussed and admired among the governing class but are presumed to operate unnoticed by those targeted for bamboozlement. In other words, the state gives special rewards to people who lack sufficient intelligence to respect the intelligence of others.

Civilized people — and our society is still, in most ways, civilized — are trained, and properly so, to respect other people’s intelligence and the achievements that are a sign of intelligence. But here’s the problem. They are trained to respect even the appearance of achievement. When I call a plumber and a man shows up with TONY on his chest and a set of plumber’s tools in his hand, I assume that he’s a plumber, and probably a decent one, or he wouldn’t still be in business. I’m inclined to respect him as such. Who am I to say that he’s not a real plumber? I’m not smart enough to judge that.

The modern, all-encompassing state inculcates far different, and far narrower, ideas of merit. It rewards people who have no skills except an ability to write memos, endure meetings, and serve on committees.

But in the same way, when a gang of people stride into a room in $2,000 suits, step to the microphone, and make statements about the welfare of the nation or some other governing-class topic, their air of assurance tempts otherwise intelligent men and women to wonder whether these impressive figures could possibly have attained their power unless they were, in fact, more intelligent than anyone else in the room. So large, and so important, is our respect for accomplishment that we imagine that anyone who has attained some distinguished position must have the mental qualities that merit it — must be, in a word, smart.

We are slow to realize that dumb people are drawn to dumb jobs. Imagine asking a good carpenter whether he would like a more prestigious job. “Doing what?” he says. “Oh,” you say, “going to meetings to decide which of the proposed revisions to the current memorandum regarding the department’s recommendation to the undersecretary should be revisited. You’ll look very impressive doing that.” The plumber would say, in franker words than these, that he wouldn’t consider it. But some people do more than consider it. They make it their life’s work. They often say that they didn’t even wonder about whether it was. They recognized it, right away, as their mission in life. And that’s true. They were just dumb enough to want it. Go read the parable of the trees in Judges 9:8–15.

This brings us at last (but you could see where we were going) to James Comey, late director of the Federal Bureau of Investigation. Comey has published a book about how much he hates President Trump, who fired him from his job. Comey has apparently governed his life in accordance with the idea that he is smarter than everyone else. He has tried to demonstrate the truth of that idea by snooping on other people and sending them to jail, even when their only crime was lying about something that wasn’t a crime. This is the man who imprisoned Martha Stewart, host of a television cooking show, for committing lèse majesté against Comey’s government agency.

We are slow to realize that dumb people are drawn to dumb jobs.

You might wonder how anyone could have led such a dumb life as Comey, and I suppose the answer is simply that dumb people do dumb things. Puffing his book in an interview with George Stephanopoulos, a fellow member of the governing class, Comey was asked one of those dumb questions that dumb people think are so clever when they’re conducting a job interview: “What is your worst quality?” Stephanopoulos put it in an even dumber way: “What’s James Comey’s rap on James Comey?” The answer was:

Yeah. My rap on myself is that — is that ego focus. That I — since I was a kid, I've had a sense of confidence. That I know I'm good at certain things. And there's a danger that that will bleed over into pride.

Few people will dispute this answer: Comey strikes nearly everyone as an insufferable egotist. But notice the idea that Comey thinks is not in dispute — the assumption that he is “good at certain things.” We have his own word for it: “I know I’m good.” It does not occur to him that an egotist will always imagine that he’s good at something, and that this may be evidence that, after all, he’s not good at anything. What is it, exactly, that Comey is good at?

He’s certainly not good at speaking like an adult. If the fractured syntax of the “rap on myself” answer isn’t enough to convince you, consider his childish answer to another childish question from Stephanopoulos, who wanted to know “what did it feel like to be James Comey” during the last ten days of the presidential campaign of 2016. That’s the period when Comey blunderingly announced that he was reinvestigating the “matter” of Hillary Clinton’s emails, and then blunderingly announced that he’d stopped investigating them. Comey replied:

It sucked. Yeah, it was — it was a very painful period. Again, my whole life has been dedicated to institutions that work not to have an involvement in an election. I walked around vaguely sick to my stomach, feeling beaten down. I felt, when I went to the White House — I don't want to spoil it for people, but there's a movie called The Sixth Sense that I talk about in the book where Bruce Willis doesn't realize he's dead.

That's the way I felt. I felt like I was totally alone, that everybody hated me. And that there wasn't a way out because it really was the right thing to do. And that — that, in a way, I'm ruined. But that's what I have to do. I had to do it the way [sic].

Ah, the reflections of a sage and statesman! The penetrating self-analysis of a man who understands that most mysterious of all things, the human heart! The battle-wrought wisdom of a Churchillian leader!

It does not occur to Comey that an egotist will always imagine that he’s good at something, and that this may be evidence that, after all, he’s not good at anything.

Leader and leadership — Comey mentioned those words 47 times during his wee interview with Georgie. The subtitle of Comey’s book is “Truth, Lies, and Leadership.” Explaining to Stephanopoulos why he wrote a spiteful volume about how he was always telling the truth and President Trump was always telling lies, and that’s why Trump fired him from his leadership role, Comey cited young people’s need for education in leadership:

It occurred to me maybe I can be useful by offering a view to people, especially to young people, of what leadership should look like and how it should be centered on values.

I can’t tell how many young people (or any people) will actually read his book, but Comey is not a very challenging teacher. He’s the kind of teacher who is dumb enough to pander to his students. Kids say “it sucked,” so Comey says “it sucked.” (Lofty phrase! Especially when you remember what it literally means.) Kids feel emotions that make them lose all perspective, so Comey describes his bad day at the office by saying that it made him feel vaguely sick to his stomach, beaten down, totally alone. Kids have a desperate desire to be part of a group, so Comey tells them that when some people didn’t want him on their team anymore, he felt that everybody hated him. This is leadership!

When someone at this intellectual level strives for a literary or artistic allusion, he reaches out to . . . Washington? Lincoln? Dante? Nope. It’s Bruce Willis who’s on his mind. But he can’t fix his thoughts on Bruce. He’s got to keep coming back to . . . James Comey. “I’m ruined,” he thinks. And he keeps thinking that, and he has to tell other people that he’s thinking that. As is natural for a traumatized kid of 57.

Comey’s absence of intelligence, and his inability to conceive that his audience might have some, are painfully displayed when Stephanopoulos takes him through the absurd scene in which Comey informed Trump that he had a secret to tell him. The secret had to do with a dossier (that’s a foreign word, but I think you may be old enough to hear it) purporting to show that several years before, Trump had hired Russian prostitutes to piss on a bed that had once been occupied by President Obama. Master sleuth that he is, Comey is still unable, by his account, to determine whether to believe Trump’s outraged denial of this ridiculous and unsupported allegation.

I don't — I don't know. I don't — the nature of an investigator is you don't believe or disbelieve. [Really? That’s not what they taught me in Investigator School.] You ask, "What's my evidence? What is the evidence that establishes me [Huh? Is this English?] whether someone's telling me the truth or not. And ask this allegation—" I honestly never thought this words would come out of my mouth, but I don't know whether the — the — current president of the United States was with prostitutes peeing on each other in Moscow in 2013. It's possible, but I don't know.

As any person of normal intelligence can see, Comey has to keep asserting that he doesn’t know whether any of this is true, because otherwise he wouldn’t have any reason to talk about it. But, one might ask, what does he know? He knows how he feels about things. He knows that in great detail.

GEORGE STEPHANOPOULOS: How weird was that briefing?

JAMES COMEY: Really weird. I mean, I don't know whether it was weird for President-elect Trump, but I — it was almost an out-of-body experience for me. I was floating above myself, looking down, saying, "You're sitting here, briefing the incoming president of the United States about prostitutes in Moscow." And of course, Jeh Johnson's voice is banging around in my head. President Obama's eyebrow raise is banging around in my head. I just wanted to get it done and get out of there.

What teenager could have said it better? “How weird was that briefing, Jimmy?” “Like, it was really weird.” Just thinking about icky things sent Comey’s brain rushing to the Pop Psych ward, where selves see themselves floating above themselves, and the voices (and eyebrows) of authority figures keep banging around in your head. Dude! How grody was that!

Comey has to keep asserting that he doesn’t know whether any of this is true, because otherwise he wouldn’t have any reason to talk about it.

Please remember that it was Comey who started this weirdness. And why? Because he felt it was his duty to tell Trump that somebody had written something that claimed that Trump had done something bad. Not bad, as in illegal, but bad, as in embarrassing. And embarrassing, to a teenager, is worse than illegal. It was so embarrassing — to Comey! — that he couldn’t tell the president precisely what it was. He preferred to leave some things to Trump’s imagination (which, we have reason to believe, is much more fertile than Comey’s).

GEORGE STEPHANOPOULOS: How graphic did you get?

JAMES COMEY: I think as graphic as I needed to be. I did not go into the business about — people peeing on each other, I just thought it was a weird enough experience for me to be talking to the incoming president of the United States about prostitutes in a hotel in Moscow. And so I left that part out. I thought I'd given enough to put him on notice as to what the essence of the material was.

It was all too weird — for Comey, who was apparently so weirded out that he couldn’t bring himself to mention where the gossip came from.

GEORGE STEPHANOPOULOS: Did you tell him that the Steele Dossier had been financed by his political opponents?

JAMES COMEY: No. I didn't — I didn't think I used the term "Steele Dossier," I just talked about additional material.

GEORGE STEPHANOPOULOS: Did he — but did he have a right to know that?

JAMES COMEY: That it'd been financed by his political opponents? I don't know the answer to that. I — it wasn't necessary for my goal, which was to alert him that we had this information. Again, I was clear on whether it's true or not, it's important that you know, both because of the counterintelligence reason and so you know that this maybe going to hit the media.

Well, well. What shall we make of this? Suppose somebody wants to meet with you and tell you something bad about you. Suppose that person is a cop. Or an employee. Or, as in this case, both. The guy could make a lot of trouble for you, because he’s a collector of secret information. And in this case, he happens to be a person who is trying to keep you from firing him. The information he wants to share with you is this: there is a secret dossier, alleging that you went to a foreign country, which is claimed to be an enemy country, and spent a night having dirty fun with prostitutes. He tells you that, without mentioning that the dossier was sponsored and financed by your political opponents. He just tells you that he has this thing. This secret thing. “I got this information, see, an’ I jus’ wanted youse to know it, see? That I had it, see? Me, I jus’ don’ know what to think of it. But spose it gits out. We don’t want that to happen. Do we . . . boss?” Even if, as the rightwing media theorize, Comey’s goal was to use his chat with Trump as a convoluted means of leaking the dossier, the obvious effect would be to make Trump wonder, “What else does this guy think he has on me?”

But suppose my impression of Comey’s intent is wrong. What type of mind would fail to recognize that it is the impression other minds would form? How stupid do you have to be to think that everybody else is just that stupid?

The old-time political boss, the old-time candidate for office — those people were smart enough to lie in colorful, sometimes fascinating ways.

This is not the only mess that Comey has gotten himself into while expecting that no one would notice, and perhaps not even noticing himself. Here, have some links. And, as you’ll see, Comey has not acted alone. The nice thing about his present, tremendous mess is that few members of the governing class are emerging from it with their reputations intact. Since those reputations were largely created by a constant merry-go-round of praise from the governing class itself, it’s only fair that they should all get off the ride together.

As a literary critic, I keep wondering how anyone could read or listen to these people without realizing how dumb they are. The old-time political boss, the old-time candidate for office — those people were smart enough to lie in colorful, sometimes fascinating ways. Often they were very smart, and needed to be; their class privilege, if any, wasn’t strong enough to keep them going by itself. The contrast with the current political class appears to be lost on even some of its foes. They persist in saying such things as Laura Ingraham said of Comey on April 19: “He’s a very smart guy. University of Chicago Law School. He’s a smart guy.”

Laura, can’t you read anything besides your teleprompter?




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Plus Ça Change

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Leland Yeager, R.I.P.

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Leland B. Yeager, a distinguished economist and proponent of liberty, died on April 23, in Auburn, Alabama. He was 93 years old.

In public accounts of his life you will see it noted that he was Professor Emeritus at Auburn University and the University of Virginia and that he was a monetarist economist who believed that government should keep its hands off the money supply, except by defining a “unit of account.” He was the author of many books, including International Monetary Relations: Theory, History and Policy (1976), Experiences with Stopping Inflation (1981), The Fluttering Veil: Essays on Monetary Disequilibrium (1997), and Ethics As Social Science: The Moral Philosophy of Social Cooperation (2001).

When you read his work, you will find that his interests were as wide as the world.

Many of Leland Yeager’s shorter publications, as well as his fascinating collection of essays, Is the Market a Test of Truth and Beauty? (2011), can be found on the website of the Ludwig von Mises Institute. When you read his work, you will find that his interests were as wide as the world. Unlike other polymaths and original thinkers, however, he was always careful to stipulate where his own knowledge stopped. He believed in limited government; he believed also in responsible self-limitation. As a result, he was never a pedant, and he was never a bore.

But now I’ve started to talk about Leland Yeager the person, and as I do, I feel a sense of overwhelming loss. For three decades, Leland honored Liberty with his contributions, and I had the privilege of working with him as editor on most of them. He was a fine writer and a gracious fellow citizen of the republic of letters. His friendship inspired me. He cannot be replaced in my esteem.

Leland had many intellectual involvements, and in his last years his health was failing, so I knew I was doubly fortunate to maintain a literary relationship with him. Not that he ever indicated, as academics are wont to do, that he was tired of all the demands on his time. Oh no. There was no falsity about Leland Yeager. He did what he could, and he was interested in doing what he could.

He was a fine writer and a gracious fellow citizen of the republic of letters. His friendship inspired me. He cannot be replaced in my esteem.

If I could have published his essays, reviews, and comments every month, or every week, I would have. But I tried to be respectful of his time. Every few months I asked him whether he might be thinking about something that would be good for Liberty. Usually he’d mention some interests; I’d say that I shared them, and I was sure our readers would also; and soon his crisp, clear copy would appear in my inbox. I’d make a few editorial suggestions, of which he accepted maybe half; but whether he did or he didn’t, he would discuss the logic behind his final choice of words or syntax. I always looked forward to that.

Many authors aren’t interested in discussing words. They’re more interested in what they have to say than in how they actually say it. But Leland was in love with the way language works and with the reasoning behind our syntax, diction, and even punctuation. To an editor, he was the ideal author, a person with whom one could freely discuss the craft of writing and editing, a person from whom one could learn, even when one disagreed with him.

Leland sometimes joshed me about my “flattering” him into writing his next article for Liberty, but there was no flattery involved. I told him exactly how good he was. I looked forward to discovering what his next subject would be. Economics? Government? History? Words themselves? Leland was better at explaining economics than anyone else I ever encountered, with the possible exception of Murray Rothbard (and that’s saying something); but the same enthusiasm and authorial integrity he showed in discussing economics appeared in his treatment of ethics, linguistics, history, and every other subject. A careless word, a willful exaggeration, an improbable “fact,” a cheap piece of abuse — those were things he would never permit himself. Leland never thought that good intentions could excuse bad writing.

Leland was in love with the way language works and with the reasoning behind our syntax, diction, and even punctuation. To an editor, he was the ideal author.

Rereading Leland’s works for Liberty, I found everything as fresh as the day he wrote it — and how much journal writing can you say that about? I’ll mention a few examples:

  • Leland’s essay on alternative histories, the histories of things that never happened (Liberty, September 2009);
  • his essay on free will and determinism (February 2017);
  • his introduction to the “auxiliary language” Interlingua (February 2008);
  • his essay on national and occupational cultures (April 2011);
  • his review of “Reaganomics,” with an exposition of the reasons for separating economy and state (January 1989); and
  • his magisterial consideration of government debt (December 2000).

In 2007 I persuaded him to debate the existence of God with me. He took the unbeliever’s side, but his essay remains a favorite of mine: “Is There a God? And Does It Matter?” (October 2007).

Leland’s last contribution to Liberty was an incisive analysis of Bitcoin. The essay, which I assume to be the final publication in a long career of authorship, appeared on April 4 of this year.

But I mean the final publication during his life. Last November 20, Leland wrote me a message in his characteristic manner. He noted that he was “93 and in poor health.” “Still,” he said, “I can’t and don’t complain.” Then he filled me in on his current literary project:

For years I have been working on a book on capital and interest. It is substantially complete, although still in rough form. Now, I think, I have a coauthor, an eminent economist, who will finish the book after my death and try to get it published.

I am looking for news on this project, and as I get it, I will report it here. Meanwhile, his published work remains — large and rich and thoughtful, and ready at all times to encourage people who delight in true works of the mind.




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Making It Work

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Libertarian policy proposals are often ridiculed for being too impractical and naively idealistic. This article will put forward practical solutions for implementing libertarian policies in ways that can, and will, work in the real world. Privatization and healthcare, two areas in which libertarian policy is hotly contested, are the focus.

I’ll start with a summary of two objections to freedom and follow with a solution for overcoming that objection. I will then add details.

First Objection: infrastructure — such as roads and train lines — and utilities cannot be privatized because they are natural monopolies: two operators cannot compete along the same line at the same time.

Most people are aware that public monopolies are often mismanaged by operators who have no accountability to the public.

First Solution: if the right to operate the space, be it the road, or train line, or power line, were auctioned off for very short periods, at open competitive bidding, it stands to reason that the efficient privatization company would make enough money to place the highest bid at the next round, and would have operated in the best way possible to maximize profits and consumers (if consumers cared to listen to reason). In other words, private operators would compete along the vector of time, not space, with the most efficient one winning the highest profit and likely making the highest bid for the next slot of time.

Second Objection: under the present system, which evolved under capitalism, health insurers pay for the healthcare of the people who pay healthcare premiums, the premiums bearing no direct relation to the healthcare actually received. The system would have to work this way, because the whole idea of insurance is that you pay for the risk that you may one day need insurance, not for the actual healthcare you receive thereafter. This system causes a disconnect between the healthcare buyers and the healthcare sellers, enabling the sellers to jack up their prices. Only big government and a bunch of crusty, arrogant, elitist bureaucrats have the power to step in and force prices down to affordable levels by setting or capping prices by law.

Second Solution: to the extent that health insurance as such poses a structural tendency to sever payment from delivery of service, the problem can be solved not by leaning toward big government but by moving toward greater freedom in free-market competition. Require doctors to publish schedules of what services they offer and at what costs, as would be reasonable in any capitalist system in which sellers must be honest about what they are selling. Then drastically deregulate health insurers so that any entrepreneur can start a health insurance company and compete in any state, across state lines. In this ideal world, health insurers would compete in a marketplace — not a fake Obamacare exchange but a real capitalist free market.

What this natural monopoly thought process ignores is that there are many ways for companies to compete, if you think outside the box.

What will naturally evolve from this is a situation in which, to pass along as much cost saving to customers as possible, in order to get as much business as possible, some health insurers will develop a system for the insureds to prepay for the price services they want, from specific doctors at specific prices. Then, if they get sick and need those services, they will get what they shopped and paid for. The actual payment mechanism would still be the insurer pooling all payments and then paying after the fact for the people who got sick, but price competition would force doctors to lower their prices to competitive levels to get buyers, and this same pricing pressure would force health insurers to pass along the best deal to the buyer. Premiums would be applied after the fact, pro rata, to the healthcare that people chose to buy before the fact. A buyer will compare prices and choose a seller, and buyers and sellers will naturally converge at the equilibrium price point between supply and demand — which as (smart, sane, rational, libertarian) economists know, is the right antidote for monopolistic price gouging.

Details:

Examples of so-called natural monopolies include transit routes, bandwidth, electric utilities and power lines, cable service, garbage collection, and air space for planes or drones.

“Natural monopoly” public infrastructure can be privatized. And they should be privatized. Most people are aware that public monopolies are often mismanaged by operators who have no accountability to the public.

But it is assumed that there can be no competing alternatives, since the land or space simply isn’t there. So let there be a monopoly, but have the government regulate it so it will be forced it to sell at price points below the monopoly price. What this natural monopoly thought process ignores is that there are many ways for companies to compete, if you think outside the box.

Competition in running natural monopoly infrastructure can take place along the dimension of time, not of space, such that, when the natural monopolies are privatized, what is sold is a lease, essentially, to last two or three years, but no longer. The buyer would have every right to do whatever he likes with the land or infrastructure and monetize and run it as he pleases, but only for the term of the lease, at which point the right to buy the next period of time would be up for open bidding and awarded to the highest bidder. Economic efficiency and capitalist theory dictate that the company that can make the most money from such an enterprise will tend to be both the highest bidder and the company that can continue to run it the best. If a transit route is run badly, sales will flag, profits will drop, and the opportunity will arise for someone better to place a higher bid in the next round. Thus, even with only one owner, there will be competition in the economic sense.

If you believe instead, as smart people do, that money is made in a free society by creating high quality at an affordable price where supply meets demand, then the objection collapses.

Additions to the scheme may need to be made, such as requiring a pro rata portion of an operator’s profits to be paid back to previous owners who invested in long-term durable equipment or improvements from which the current owner benefits. But such additions are not difficult to design. As a bonus, if any contractor commits massive fraud against the consumer, this will be easy to see, because if a competing operator wins the next lease bid, when he looks at the infrastructure he will see what the previous operator did to it, and consumers will be protected better than we would be under heavy regulator scrutiny.

Today’s economy already proves that this will work. There are hundreds of huge corporations that buy some downstream service from only one seller, for the term of a lease; and there is ample price competition, even though only one seller can get the deal to be a supplier at one time. The companies that sell “back end” human resources services (outsourced services such as paychecks and benefits management) to Fortune 500 corporations are an example: a buyer can sensibly go with only one seller at a time, but there is a ton of competition. Another example: places exist where various owners own the rights to different heights above the ground of a single plot of land, so that two companies can compete by owning different floors of the same building, competing along the dimension of height, not of length.

The person who made the original objection to privatization will object again, saying that the rich will bid big to get ownership of the monopoly, charge high prices while offering crappy service, and run away after their lease ends — taking profits derived from forcing people to pay a lot for a service with no alternatives. The operators’ costs would have been low, since they didn’t give a damn about infrastructure investments. But this objection reduces merely to the general argument against free market capitalism. The Marxists and socialists think that rich people get rich by fleecing their victims. If you believe instead, as smart people do, that money is made in a free society by creating high quality at an affordable price where supply meets demand, then the objection collapses. Specifically it is wrong because an operator who does a good job will always make more, net, long term, than a con artist, hence the good operator will have more money and more motivation to outbid the crooks.

New York City as subway operator does not, and cannot, spend the money it should to maintain the subway service as it deserves and needs.

This is not to say that the system can never be abused. No system is perfect. Privatization is certainly not less perfect that a regulated natural monopoly, and it would ultimately be far better. Just ask anyone who rides the subway in New York City: in addition to being a vital means of transportation for millions of New Yorkers, it is also the location that the wonderfully brainless liberal politicians of New York have chosen as the de facto living space for the mentally ill homeless people, just to get them off the streets. The bigger picture is that the economic demand for the subway would justify a rise in fares that is politically unpopular and therefore impossible. So New York City as subway operator does not, and cannot, spend the money it should to maintain the subway service as it deserves and needs. The New York Times even ran a crusade to get more spending for the subways, noting how horrible they are and how many people use them, which crusade did not succeed, and could not succeed. The free market would do better.

I have suggested two or three years as the basic contract period for the operation of natural monopolies. It needs to be short enough to enable consumers to hold bad operators accountable so that better ones can step in. Employees may not want two- or three-year contracts, and somewhat more may need to be paid them on this account. Nevertheless, we need to get away from the labor union mentality, according to which the labor pool only works if employees are chained to their jobs and employers are chained to long-term labor contracts. The United States is becoming "the gig economy," as they say, led by the Uber and Lyft drivers. A lot of industries are moving toward hiring employees for a temporary, shorter duration and away from hiring them for permanent, full-time jobs. Employees with strong professional skills are so valuable that no one who purchased a short-term lease on a natural monopoly would want to get rid of them.

As far as planning goes, there are examples in today's economy of businesses drawing up plans for long-term operations, because that is how they can best succeed, but if their basic contracts are not renewed, they just tear up the plans. In business you need long-term plans, but you also need to face the risk that these plans may fail dramatically, at any time. If you don't get investors in your second year of operation, you just eat the third, fourth and fifth years of your business plan, no matter how great those years might have been.

Thousands of small businesses will pop up to become micro-health insurers and facilitate the trade, between doctor and patient, of treatment for money.

Now to some details about healthcare. Free market economics doesn’t work if there is a disconnect between the person who pays the money for a benefit and the person who receives the benefit. The disconnect causes prices and costs to skyrocket, because the buyer cannot force the seller down. Many libertarians already know this: one of our objections to government spending is that the government will overspend because there is a disconnect between the taxpayer and the beneficiary. Healthcare, where the health insurer pays but the patient receives the treatment, and does not directly pay the doctor, and the doctors don’t compete for each individual patient on price, is a great example of a buy-sell disconnect.

The problem with health insurance is that, originally, it was in fact insurance that a person bought to mitigate the risk of getting sick, but it has become a behemoth that pays for all medical expenses and then collects exorbitant and arbitrary amounts from the public, with no connection between payments and collections in an individual patient’s case. The problem arises because, by the time people become sick, their medical costs are typically too great for them to pay, so they must have already had insurance to get treatment, and the insurance will then end up paying all costs.

To reform healthcare, first, require doctors, as a condition of receiving their license to practice medicine, or merely by means of laws mandating truth in advertising, to create a schedule of fees and prices for each of their services, and publish it, and let individual patients receive that care if they pay that fee from the schedule of rates. Second, break up the regulations of health insurance companies so that anyone can start one and can compete in every state with a minimum of red tape. Third, require that each health insurer publish the actuarial tables that each insurer is using, showing what portion of your payment will pay for what medical treatment in the future from what doctor’s schedule of fees. Fourth, allow the consumer to “buy” his future medical treatment by choosing what portion of his premium he chooses to allocate to the doctors’ services that he could potentially get, from the competing doctors’ fee schedules, “through” his health insurance company.

The doctors who succeeded would be those who proved they could deliver successful, effective treatments, but at cheaper prices.

The health insurer would pool the buyers’ payment to make the actual payment to the doctors for the insureds who become sick, but each buyer could take the income that he has allotted for health insurance and “spend” it by choosing the slate of healthcare services he would pay for at that price, selecting his doctor from among the competitors. Doctors would compete on the price to be chosen by each buyer when he decides how to allot his healthcare premium spend.

This would combine two novel approaches: “shopping” for treatment from the doctor, not the insurer, and expanding competition among health insurers by allowing small startup health insurers, akin to what was done for poor businesses in Asia by the “micro-credit” revolution that enabled any poor woman or man to open a business on a small loan. Thousands of small businesses will pop up to become micro-health insurers and facilitate the trade, between doctor and patient, of treatment for money. This would connect the buyer to the seller and enable massive price competition among doctors, so costs would plummet, because many doctors would seek patients by offering cheaper prices at affordable levels of quality. Obviously this would not lower the quality of healthcare, because the doctors who succeeded would be those who proved they could deliver successful, effective treatments, but at cheaper prices. In today’s world, where everyone finds ratings and reviews online, the doctors with the best value propositions, defined as higher quality at cheaper price, would be readily apparent.

The micro-health insurer could also prepay, locking the buyer and seller in at that price while taking profit up front and not when the healthcare is delivered. This would keep healthcare costs locked down at the competitive price the buyer chose to pay, and complete the sale for the buyer at the time of purchase, not after the fact when the patient-buyer becomes sick and his very life depends on paying for healthcare. Right now there are maybe a handful of insurers and 20 health insurance plans that compete in any given state Obamacare Exchange, but the initiative I have outlined would open the door to thousands of health insurers, and potentially hundreds of thousands of healthcare “menus” and “menu items” available to buyers pre-paying doctors a pro rata share of the healthcare premium cost of treatments received.

A free-market system could work for the benefit of all Americans by introducing price competition into the healthcare industry.

The analogy of healthcare options to a menu at a restaurant is apropos. People need food. If you don’t have it, you die, just as a sick person who needs medical treatment gets it or dies. This does not enable the farms to jack up the price of food until it is out of sight, as doctors, hospitals, and pharmaceutical makers are doing. Instead, thousands of restaurants and grocery stores compete, buying food from farms and selling it as a selection of options on a menu. People buy what they want, within the limits of their budget. Consumers win, and have tasty meals and full bellies. Yes, poor people may have to eat at cheap fast food stores, but they don’t starve to death (and the food at Dunkin Donuts is not that bad!). If you are willing to make do with less, such as by purchasing vegetables and cooking your food at home, you can eat quite nicely. So, too, could a free-market system work for the benefit of all Americans by introducing price competition into the healthcare industry, which would create affordable options across a range of price points.

The conclusion to infer from this article is that, while the statists object that libertarian policy cannot be implemented in a practical manner, this is simply not true. Thinking outside the box, and being creative and innovative about policy solutions, will meet the challenge of making liberty work for America.




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Big Book, Big Insights

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Gary Jason is continuing his Thoughts books: Dangerous Thoughts: Provocative Writings on Contemporary Issues; Philosophic Thoughts: Essays on Logic and Philosophy; Disturbing Thoughts: Unorthodox Writings on Timely Issues. Now we have Devious Thoughts: Unconventional Thoughts on Contemporary Issues. It is an excellent complement to the others in the series.

Jason is Liberty’s esteemed senior editor, and some of the essays in Devious Thoughts have appeared in Liberty. So my regard for this book may not be free from all possible or conceivable bias — but then again, Jason is senior editor because he is an exceptional writer and an exceptional reasoner, so it is natural to find that he writes exceptional books. Such as this one.

At more than 400 pages, it is also a big book, willing to take up a wide range of issues. There are essays on education, immigration, energy policy, labor unions, and politics and economics more generally. An especially interesting section highlights one of Jason’s major developing interests, the history of propaganda.

I have long considered Jason one of this country’s leading experts on that most familiar and most misguided of America’s obsessions, energy and the environment. In a world in which public assertions about the environment are seldom supported by relevant or even existent facts, Jason always has facts to spare. For such nonspecialists as I, the 22 essays in the Energy and Environmentalism section of Devious Thoughts are a thorough education in the crucial events of the past five years, the age of fracking. Summarizing this section of his book, Jason refers to “the good news of the fracking revolution and America’s resurrection as an energy superpower.” He also mentions “the continuing follies of the environmentalist movement, a movement as rich in emotion as it is impoverished in rationality.”

Clearly, Jason’s thoughts are not “devious” in the sense of being tricky or slyly suggestive or cunningly insinuated. They are clear and straightforward, devious only in the ironic sense that to people who view them from a conventional perspective they will look like Mephistophelian underminings of Right Thinking. Of course, Right Thinking includes unconditional support for government schools, uncritical sympathy for monopolistic labor unions, abject worship at the shrines of the environmentalist cult, and other strange mental exercises now required of all who wish to be regarded as good citizens.

One of my favorite essays in this volume is Jason’s hilarious account of the migration of Toyota’s national headquarters from California to Texas, and the stunned or hubristic reactions of local politicians to the fact that companies prefer to operate where governments don’t make business too hard to carry on. Too numerous to mention are Jason’s droll commentaries on the afflictions of the big labor unions, which are losing all but their chutzpah. Near the top of my list is his series of essays on the means by which a totalitarian state (Nazi Germany) manipulated its population. Jason’s knowledge of fact, always impressive, is especially so in these works, in which one continually finds facts one didn’t know — facts about so many things: Nazi financial schemes, Nazi children’s books, the Nazi Ministry of Public Enlightenment and Propaganda (what a name!), with its staff of 2,000 and its budget of almost 200 million Reichsmarks. . . . So many things.

Jason has an unusual ability to provide a dense array of facts and data while preserving liveliness and accessibility. In this book there is no unexplained jargon, no haughtily opaque references. The relatively short length of most essays allows them to be conveniently devoured and digested. And it’s a fine meal.


Editor's Note: Review of "Devious Thoughts: Unconventional Thoughts on Contemporary Issues," by Gary James Jason. CreateSpace, 2018, 406 pages.



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Android Paranoid

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The Enduring Mojo of “Roseanne”

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I have always loved Roseanne. It binds me pleasantly to a very important time in my life: my last year of college and the years immediately thereafter. Long before I knew there would be a reboot — something practically unheard-of in prime-time television — I liked to go to YouTube and revisit my favorite scenes from the original, nine-season run of the program. When I needed a lift, I’d watch Roseanne, her husband Dan, and sister Jackie stoned out of their minds on an old stash of weed they’d discovered, or daughter Becky’s humiliating episode of flatulence at a school assembly (she actually got a sympathy card for this), or — my personal favorite — Roseanne accepting a dare to do a topless flash of her husband in the backyard, not realizing that at that moment he happened to be welcoming a new neighbor. This was a genuinely funny show, full of spirit and heart and brutally honest, and when it went off the air, I missed it.

Nothing even remotely like it ever came along, until it came back. I would have eagerly greeted the reboot, regardless of how the real Roseanne Barr felt about President Trump. Discovering that its reincarnation is every bit as funny and thought-provoking as the original has been an added bonus. The popularity of its return is well earned. Although it probably won’t last another nine seasons (even the kids from the original series are looking slightly long in the tooth), I hope it stays around a good, long while.

This was a genuinely funny show, full of spirit and heart and brutally honest, and when it went off the air, I missed it.

The brouhaha in the media about the program’s political implications is something I choose to ignore. There is no reason to politicize absolutely everything — except for people who want to control absolutely everything. Those of us who do not believe that every aspect of our lives should be regulated by our self-appointed betters still appreciate quality entertainment for its own sake. We know it doesn’t need to justify itself by making some politically-relevant statement.

All the same, I can’t help but appreciate that Roseanne Barr has taken a stand. Her program could not possibly be honest if it didn’t deal frankly with the ways people have struggled during the past 20 years, under a plutocracy that no longer even bothers to pretend it cares about us. If the people who are so viciously attacking the program actually liked it, I probably wouldn’t. They would be telling me that I’d been reading it wrong.

Those of us who do not believe that every aspect of our lives should be regulated by our self-appointed betters still appreciate quality entertainment for its own sake.

But I haven’t. The characters in this program endure in their love for each other. They mourn those who have passed on and lovingly embrace the new arrivals. They deal with everyday life in a way the show’s viewers recognize as authentic. They call us back to life lived simply as human beings, totally apart from membership in any political tribe or any allegiance in a political war. The anti-Republicrat libertarian in me loves this.

The mojo of Roseanne is back, and in however trivial a sense, America is better off for it. If we, as a nation, ever get to the point where we can no longer accept honest and humane entertainment, we really will be finished. That the Roseanne reboot has been enormously popular is a sign that — however it may sputter — the pulse of this country keeps pumping on.




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Horror — and More

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In the opening minutes of A Quiet Place, a small group of people tiptoes silently through an apparently abandoned grocery store, loading supplies into a backpack. Are they stealing? Hiding? Both? A small figure darts down a shadowy aisle, running so fast that we can’t see who, or even what, it is. Is it after them? With them? A woman reaches for a prescription bottle with the intense concentration of a person playing pick-up-sticks; her fingers tremble as she lifts the bottle without touching the bottles around it. Perhaps these are druggies looking for a fix? No — a young boy lies on the ground beside the woman, bundled in a blanket and leaning lethargically against the wall. This is a family, we realize, utterly silent, and utterly afraid. Within minutes we understand why: an alien species is terrorizing the neighborhood, and it hunts by sound rather than sight or smell. The people must remain silent in order to survive.

This is a family, we realize, utterly silent, and utterly afraid.

A Quiet Place is the best kind of horror film, relying on tension, foreshadowing, and misdirection rather than blood and gore to create panic in the audience. The family members communicate through sign language, walk barefoot, identify creaky floorboards with paint, cover hard surfaces with cloth to muffle their noise, and widen their eyes in terror with every misplaced movement that might elicit a sound. Shadowy lighting, a suspenseful musical score by Michael Beltrami, sudden noises, incomplete information, and brief sightings of the monsters are enough to make us curl our toes and grab the hand beside us.

But this is more than a horror movie. It’s a movie about how to exist as a family when everything around you has turned upside down, when silence is essential to survival, and when each family member has the potential to put all the others at risk through something as simple as a sneeze, a cough, or a slip of the fingers. A newspaper headline about the invasion warns inhabitants, “They Can Hear You.” Another advises, “Stay Silent, Stay Alive.” I couldn’t help but compare these monsters that hunt their victims through sounds made in the privacy of their own homes to an Orwellian government that spies on its citizens, devours them, and turns children against their parents.

But this is more than a horror movie. It’s a movie about how to exist as a family when everything around you has turned upside down.

How do you create a sense of normalcy for your children in the face of such unrelenting surveillance? Mother Evelyn (Emily Blunt) provides schooling for her children, even though they can’t speak out loud. Children Regan (Millicent Simonds), Marcus (Noah Jupe), and Beau (Cade Woodward) learn self-reliance and accountability as they work, play, and tussle together. Father Lee (John Krasinski) feels a particular burden to provide for his family, protect them from this danger, and teach them how to survive it. He’s a true libertarian hero, relying on wit, courage, and innovation to take care of his own. There are many tender acts of love in this film that raise it above the level of a merely scary movie, as well as poignant moments of misunderstanding that need to be resolved, before the thrilling climax.

When Krasinski was offered the role of the father, he liked it so much that he revised the script by Bryan Woods and Scott Beck, signed on as director, hired his wife Emily Blunt to play the mother, and insisted on hiring deaf actress Millicent Simmonds (who was so good in last year’s Wonderstruck) to play the deaf daughter. He ended up with an executive producer credit as well. The result is one of those perfect labors of love that unite terrific storytelling with terrific character development and a terrific ending that keeps you thinking about it long after the credits roll. I will probably see this one a second time.


Editor's Note: Review of "A Quiet Place," directed by John Krasinski. Platinum Dunes, 2018, 90 minutes.



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The Movie of the Multipliers

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The multipliers. These are some of the most dangerous elements of political life.

Intelligence, knowledge, persuasiveness, experience in political affairs — all these good things may add much to a politician’s ability to succeed. The lack of such qualities may subtract from it. But you can be possessed of all of them and still be only half as likely to win public office as a person who lacks them completely, but has real money, or one-quarter as likely as a person whose father happened to be a noted politician, or one-tenth as likely as a person who happens to possess the right age, color, or creed. Wealth, unearned prestige, the accidents of demographics — these are multipliers, and there are many others.

The first President Bush, a man of normal abilities, achieved high political office by means of multipliers unrelated to political ideas or performance. He was rich, his father had been socially and politically important, and his contrast with Ronald Reagan endeared him to journalists who, for their own reasons, valued that contrast. The second President Bush, a man of no ability at all, was a nice guy, which added something to his political appeal. But the multiplier was the fact that his father had been president and had been surrounded by a gang of hacks who wanted to get back in power.

Wealth, unearned prestige, the accidents of demographics — these are multipliers, and there are many others.

Political multipliers can be mildly amusing, innocently useful, morally disgusting, or existentially disturbing. In the case of the Kennedy family, they are terrifying. One of the Kennedys — John — had intelligence, courage, and a personality that was attractive in many ways. On its own, this ensemble of good attributes would probably have gotten him nowhere important in the political life of his time. His success depended on multipliers — a large fortune; an ambitious, politically manipulative father, good at surrounding young John with media toadies; a family ethic that sanctioned and demanded constant, conscienceless lying; a support base of fanatical Irish Catholics prepared to vote for anyone who shared their ethnic and religious identification, no matter what that person did; and an unbroken phalanx of media writers and performers for whom “Jack” embodied fantasies of male potency and sophisticated “culture.” His assassination provided another mighty multiplier, so mighty that sane people should thank God every morning that his brother, Edward (“Teddy,” then “Ted”) Kennedy, the inheritor of John’s manufactured charisma, never realized his life’s purpose of attaining the presidency.

Few readers of this journal need to be reminded of the fact that Edward Kennedy had no good qualities whatever, political or otherwise. Yet he might have become president; and after he died, he continued to be celebrated by crazed or cynical followers who would have hounded any person without his multipliers out of politics, if not out of the country.

Finally, a mere five decades after the event, a serious film has been made about the great divider of Kennedy’s political prospects, the incident of July 18, 1969, in which a drunken Kennedy drove a car off a bridge on Chappaquiddick Island, Massachusetts, drowning the young woman, Mary Jo Kopechne, who was with him. Kennedy left her to die, trapped in the car. Then he tried, in various ridiculous ways, to conceal his involvement. This proving impossible, he admitted some vague form of responsibility, retreated to his Irish Catholic base, which, I repeat, would swallow any kind of explanation from a Kennedy, and, with the aid of friendly media and the accustomed throng of social and intellectual gofers, rebuilt his political career.

Political multipliers can be mildly amusing, innocently useful, morally disgusting, or existentially disturbing. In the case of the Kennedy family, they are terrifying.

Jason Clarke, who plays Kennedy in this film, and director John Curran, both apparently modern liberals, seem to think that Kennedy rebuilt not only a career but a self; they seem to believe that he became a genuinely great political figure. The idea is absurd, and the film does nothing to support it. It shows Kennedy deciding to recover from the incident at Chappaquiddick by founding his life on ever more aggressive lies — which is exactly what he did.

The film is, indeed, closer to fact than any historical movie I have ever seen. By the time it’s done, you have encountered all the relevant evidence, evidence that gains power by being introduced slowly, by frequent revisits to the scene of the crime. The scenes, both indoor and outdoor, are impeccably authentic and meaningful as further evidence. To select a small detail: the camera notices that when Kennedy is to make a particularly “authentic” television broadcast, he is seated at a serious looking desk behind a case full of important looking books, but the legs of the desk are propped by haphazard piles of the same kind of books — a good indication of the importance of knowledge in the life of Ted Kennedy.

As for acting — at the start of the movie, Clarke doesn’t look or talk much like the Kennedy we saw all too frequently, but as he develops the character’s psychology he actually convinces you that the two are exactly the same, right down to the shape of the face. The other well-known people who are impersonated do the same (a sign of great direction). One of them is Bruce Dern, playing Kennedy’s father. Dern is the most recognizable of actors, but I didn’t discover who he was until I read the credits. Kate Mara has a hard job playing Mary Jo Kopechne, and her performance is not memorable, but she had a difficult task, given the fact that Kopechne was not allowed to achieve distinctness in real life. Clancy Brown does a magnificent Robert McNamara; Taylor Nichols presents an interesting view of the psychology of Ted Sorensen (perhaps the most respected of the Kennedy hacks), though without aspiring to the height of Sorensen’s towering arrogance; and Ed Helms does an excellent job in the difficult role of the one good guy, Kennedy sidekick Joe Gargan.

Ted Kennedy left Mary Jo Kopechne to die, trapped in the car. Then he tried, in various ridiculous ways, to conceal his involvement.

Real artists often exceed their conscious ideological programs simply by taking seriously their jobs as artists, so that in their hands a representation of human life takes on a life of its own, which is simultaneously our own real life, seen more deeply and rendered more self-explanatory. Artistic insight becomes analysis, and fact becomes a more suggestive truth. This is what Chappaquiddick does. Particularly revealing are the serious but irresistibly comic scenes in which all the hacks that money can buy are assembled to advise Teddy Kennedy about how to get out of the mess he has made. Here, viewed without overt explanation, analysis, or moralization, are a horde of important men, operating on the assumption that (A) the politician they serve is a destructive fool; (B) this politician must be elected president; and (C) his supporters must create all the lies and corruption necessary to make him so. The childishness is funny; the absolute lack of conscience is, in these true images of the powerful, terrifying. Add to that the movie’s evocation of the stolen prestige of John Kennedy’s presidency, and the Mafia-like adulation of “family” that has always characterized the Kennedys and their followers, and you have all the multipliers you need. The picture is complete.

I consider Chappaquiddick the third-best film about American politics, after Advise & Consent and The Manchurian Candidate. That’s quite an achievement.


Editor's Note: Review of "Chappaquiddick," directed by John Curran. Apex Entertainment, 2017, 101 minutes.



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Bitcoin Blues

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Enthusiasts expect bitcoin to become a new privatized money, perhaps even replacing government money. The system will keep track of cash balances and transactions in such a way as to prevent fraudulent double-spending of the same units. Operating without any centralized recordkeeping (as by a bank or government), it will enhance financial privacy. It will employ an advanced technology called blockchain. As the Federal Reserve Bank of St. Louis Review (first quarter 2018) said, to really understand bitcoin and its many imitators requires combined knowledge of cryptography, computer science, and economics.

I lack this knowledge. Some points, though, are clear enough. A workable monetary system requires a unit of account and a medium of exchange. Prices, values, debts, claims, and cash balances are expressed, and accounting is conducted in the unit. The medium is something routinely used for receiving and making payments; in the United States it is currency and bank accounts denominated in dollars. Each transactor needs to hold some of the medium of exchange because receipts and expenditures are uncertain in exact timing and amount and are not closely synchronized.

The bitcoin unit goes undefined by anything and lacks redeemablity.

A suitable unit of account has an at least roughly stable value, which may be achieved in either of two ways. First, the unit may be defined by a quantity of some good or basket of goods, with the definition kept operational by two-way convertibility between money and the defining good or basket. Under the gold standard the US dollar was defined as the value of 1.5046 grams of pure gold. Under such a system the money supply adjusts almost automatically to the defined value. Alternatively, the value of the unit may be managed by central control of the money supply. The price level then adjusts to rough proportionality with the money supply, as explained by the quantity theory of money.

The bitcoin unit goes undefined by anything and lacks redeemablity. Its quantity grows in a strange way called “mining.” As a reward for taking part in the system’s decentralized record-keeping and especially for solving increasingly difficult mathematical problems, miners obtain new bitcoins. Their final amount is limited to 21 million. Who knows what happens then? Meanwhile, bitcoin-mining destroys real wealth by consuming vast amounts of electricity to operate huge computers.

Wild fluctuations in bitcoin’s undefined value rule out its use as unit of account and so, almost completely, as medium of exchange. Who wants to hold amounts of such an unstable asset for receiving and making payments? The occasional business firm “accepting” bitcoin promptly sells it for standard money rather than adding it to its transactions cash balance. A video by a Wall Street Journal reporter shows the great effort and extra costs of buying a pizza with bitcoin in New York City.

The final amount of bitcoins is limited to 21 million. Who knows what happens then?

Why, then, does anyone hold bitcoin? Some libertarians hold it to express disgust with government money and a hope for some kind of private and privacy-preserving alternative. (But other and academically respectable proposals for privatized money are available.) Some enthusiasts buy it as an investment or speculation. (Saying so in no way denies that speculation generally serves sound economic functions and that the distinction between it and investment is fuzzy.)

Prudence recommends that anyone considering an investment should ask how the desired gain might come as a share of real wealth — desired goods and services — created by his own and others’ investment. Even a gambling casino creates wealth in the perhaps questionable form of hopes, excitement, and entertainment. Gain on an investment or speculation with no prospect of creating wealth must come as a transfer from losers.

Meanwhile, bitcoin-mining destroys real wealth by consuming vast amounts of electricity to operate huge computers.

How, then, might promoting bitcoin create wealth? The advantages of a sound nongovernmental monetary system could count as wealth, but as a “public good” in the technical sense of something whose benefits cannot be withheld from people not paying for it — such as national defense or policing. Furthermore, competition from bitcoin’s surviving imitators would dilute any profits. More optimistically, experience with bitcoin might spur profitable improvements in its blockchain technology, which is already being extended beyond monetary uses.

Bitcoin might even evolve, after all, into a workable privatized money, quite in contrast with our current system. But how? Ayn Rand would dismissively reply: “Somehow.”

A final comment may be unfair, but I cannot resist making it. Excitement over bitcoin reminds me of the dotcom boom of the 1990s and even more so of the British South Seas bubble of 1720. For little more reason than that stocks kept going up, speculators drove prices still higher — until the crash came. Meanwhile, stock in dubious new enterprises sold readily. Charles Mackay (Extraordinary Popular Delusions and the Madness of Crowds, 1848) writes of one promoter who disappeared with the proceeds of successfully issuing stock in something described as “A company for carrying on an undertaking of great advantage, but nobody to know what it is.”




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