Homes for Green Jobs

 | 

It's difficult finding good green jobs today, even after $110 billion in stimulus money has been spent to help create them. Newly formed green energy companies such as Solyndra, Evergreen Solar, and Green Vehicles are going out of business and newly converted green energy companies such as General Electric are outsourcing manufacturing jobs to cheap-labor countries.

Nevertheless, many in government, especially the White House and the EPA and DOE, believe there will be plenty of future green jobs to go around — 5 million high-paying jobs, according to President Obama. The reason for their optimism may lie in the expectation that millions of Americans will soon make a transition to energy efficient homes. Although the parts and materials may be manufactured in other countries, the houses must be built and maintained here.

This optimism has, no doubt, been buoyed by the 2011 DOE-sponsored Solar Decathlon, a competition among collegiate architectural teams "to design, build, and operate solar-powered houses that are cost-effective, energy-efficient, and attractive." The picture belowshows the excitement surrounding the program (all pictures: USDOE). To be fair, the Decathlon got off to a rainy start — good neither for attendance nor electricity generation. However, the inclement weather obviously failed to detract from the beauty of these earth-friendly, sustainable homes. A government source, who wishes to remain anonymous, exclaimed that he "envisioned entire communities of these cost-effective, energy-efficient, and attractive dwellings sprouting up throughout the land. The demand may exceed that of wind farms."

Such innovative designs underscore the wisdom of government programs spending hundreds of millions of dollars to train people for the coming green economy. Clearly, existing builders are not able to construct such ecological marvels, as advanced as they are beautiful. Indeed, to non-green tradespeople, even the new building codes will be incomprehensible. And remodeling companies and do-it-yourselfers will be sorely unqualified to handle renovations and repairs. But, a government source, who wishes to remain anonymous, predicted that "when millions of Americans begin to abandon their inefficient and wasteful homes for these cost-effective, energy-efficient, and attractive dwellings, a highly paid green energy workforce will be at the ready."

The offering in the forefront is from the California Institute of Technology, one of our most prestigious engineering schools. As can be seen in the enlarged, twilight view below, its parka-esque look (siding from LL Bean?) exudes warmth. And if the house becomes too warm (retains too much captured solar radiation), there's no better way to cool off than to luxuriate in the crisp (and now cleaner) sunset air whisking across your spacious deck. There, you can sink into an eco-friendly folding chair and ponder your energy savings while enjoying a panoramic view of our planet healing.

The Cal Tech house and the other contenders will seem diminutive and trifling to people with that antiquated "a man's home is his castle" attitude. But, as a government source, who wishes to remain anonymous,hastened to recall, "the goal of the competition is to demonstrate cost-effectiveness, energy-efficiency, and attractiveness." Consumers desiring bigger homes could simply purchase an enlarged version of their favorite design or integrate multiple units into a structure of the required size.

This latter option is more easily implemented with rectilinear structures such as the City College of New York design below. The CCNY offering is 750 square feet. A young couple seeking a starter home need only purchase two units and have them contiguously integrated into a 1500 square foot home, much like bolting together two double-wide mobile homes. The inherent flexibility of this modular approach permits end-to-end or side-to-side bolting. And, as the family grows, additional units can be readily attached. According to a government source, who wishes to remain anonymous, "this should be performed by properly trained, authorized and qualified green energy technicians."

There is no question that all the teams have done a great job improving energy efficiency. For example, the CCNY house is able to create up to eight kilowatts of free energy on sunny days. Purchasers of these homes will reduce their electricity bill by hundreds of dollars annually, thereby shrinking the time needed to recoup their solar investment.

The CCNY house costs $500,000 for materials. A conservative estimate of labor cost would be $125,000 (25% of the materials cost). With green labor, $200,000 (40%) is more realistic. Throwing in another $100,000 for the building lot and other expenses brings the total to $800,000. In this scenario, the young couple's 1500 square foot starter home would cost only $1,500,000.

Let's assume the couple comes up with the $300,000 (20%) down payment and can afford the monthly mortgage payments (perhaps by the time they are ready to buy, they will have high-paying green jobs). Further assume that their resulting energy savings are $2,000 a year. Their investment recovery time would therefore be only 150 years (for the down payment, of course). Imagine the recovery times of the designs from teams that failed to qualify for the Solar Decathlon.

Such calculations can be misleading because they fail to account for green goodwill, an intangible but saleable asset representing the value your investment contributes to saving the planet. It is saleable in that you can add it to the future selling price of your home. A government source, who wishes to remain anonymous, explained, "It is an additional amount that a prospective buyer, equally ignorant and gullible, would be willing to pay for your cost-effective, energy-efficient, and attractive solar home."




Share This


How Green Were My Cronies

 | 

One of the signature issues of the Obama administration has been “green energy.” From its first day in office, the Green Regime has attempted to get America to convert to the so-called “renewable” sources of energy: biofuels (especially corn ethanol), geothermal power, wind power, and solar power.

Behind its ideological commitment to green energy, however, is a solid core of self-interest. It gets a huge amount of financial support from environmental organizations, and a large number of wealthy environmentalists. It is using its funding and regulatory power to reward these donors, giving them not only psychic benefits but also material ones.

In short, it is green for the green.

This crony green capitalism has two sides: a regulatory side (negative) and a subsidization side (positive). Both sides are needed, because “renewable energy” sources are seldom even remotely price competitive with fossil fuels. Not only must they be subsidized by government, because private investors are reluctant to put up their own money for them, but they can become saleable only if the government drives up the cost of fossil fuels by piling up regulations on fossil fuel production.

The regulatory side of crony green capitalism is the administration's jihad against all fossil fuel industries. It has locked away vast parts of the continent from oil and gas drilling, and has fought the new fracking technology tooth and nail. It has set loose the EPA with the goal of ending the use of coal, and has severely restricted drilling in the Gulf of Mexico. And it is opposing even the exploration of the US continental shelf.

The flip side is the lavish subsidization of so-called green energy sources, especially wind and solar. It is here that the play for pay game gets frisky. A flurry of recent reports about who has gotten these taxpayer subsidies dramatically increases the stench of corruption that emanates from the Regime.

It is hard to know just where to begin, but we can start with Solyndra, that striking piece of rentseeking dreck Obama boasted would create tons of jobs. We first learned that the billionaire who backed the company, George Kaiser, was a big donor to and “bundler” (i.e., a collector of donations ostensibly from others) for the Obama campaign. Kaiser’s company Solyndra was given a half-billion dollar loan guarantee by the Green Regime’s Department of Energy (DOE), structured in such a way that if the company hit the wall, the American taxpayer (as opposed to the billionaire bundler) would be liable for the loan. And hit the wall it did.

The regulatory side of crony green capitalism is the administration's jihad against all fossil fuel industries.

Well, now we learn that the entrepreneurial genius, Kaiser, this bien-pensant billionaire who wants so very much to help his country — paid zero income taxes for years. He did this by buying companies that had unrealized losses that he could then use to wipe away his personal income taxes. Kaiser is an interesting pal for a president who has shown deep fondness for bashing “millionaires and billionaires” for not paying “their fair share” in taxes.

It also turns out that an advisor for the loan program that shoveled the cash at Solyndra was — by an astonishing coincidence — a huge Obama fundraiser. This fellow, Steve Spinner, raised over a half-million dollars for Obama. And he is also — by an even more astonishing coincidence — the husband of a lawyer whose firm represented the company during its application for the loan. Moreover, despite the fact that Spinner agreed in writing to stay out of the loan process, emails show that he was involved up to his eyebrows.

It has also come to light that RockPort Capital, one of Solyndra’s biggest investors (and a board member) used its seat on a Pentagon panel that exists to help the Armed Forces identify useful new technologies to push Solyndra on the military. While RockPort disclosed that it had an investment in Solyndra, it never mentioned that the latter was a financial basket-case.

We now also learn that at least four other solar energy firms that received massive loan guarantees had executives and board members who were big donors to major Democratic politicians. These companies include Abengoa SA, First Solar, SolarReserve, and SunPower Corporation.

Start with Abengoa, a Spanish company. (Spain, remember, embraced wind and solar as the key to a jobs renaissance a decade ago. But green energy proved a veritable economic Black Plague for a country that has massive state-induced financial problems.) It turns out that Abengoa has worked with Sen. Dianne Feinstein (D-CA) to get nearly $3 billion in loan guarantees from the Regime to finance Arizona solar farms.

First Solar, upon which the Regime has lavished over $2 billion in taxpayer-backed loan guarantees, is likewise a supporter of the self-same Regime. Its founder and CEO Michael Ahearn donated nearly $125,000 to Democrats in the last election. He cleared nearly $69 million by selling some of his stock last month, even though the company cannot qualify for another loan from the DOE. Ahearn is clearly using the guarantees to keep a shaky company afloat, even as he sells his personal stock. His $125k investment in crony green capitalism has paid off big time — $69 million — while the taxpayer faces a $2.1 billion hosing. No, no corruption there!

SolarReserve is even more choice. The aforementioned billionaire bundler Kaiser (the Solyndra genius) also owns a majority of this rotten company, which got a tidy $737 million taxpayer-backed loan guarantee from the DOE. His company, Argonaut, has a voting share on the SolarReserve board of directors. Another member of the SolarReserve board of directors is one James McDermott, who just happens to have given over $60,000 to various Democrats since 2008, with about half going to Obama’s campaign. McDermott’s company, US Renewable Energy Group, has also donated heavily to Sen. Harry Reid (D-NV), who needs no introduction.

Moreover, another SolarReserve board member, Lee Bailey, is a lavish campaign donor to Regime members and other prominent Democrats. Not to mention the fact that yet another board member, Jasandra Nyker, is partners with the brother-in-law of Nancy Pelosi (D-CA) in an investment company (Pacific Corporate Asset Management). And SolarReserve paid $100K in fees to a lobbying firm headed by Obama’s transitional team leader John Podesta, to push its loan and other interests.

Then there is SunPower, whose stock price has recently plummeted with its projection of losses for this year and next. It received a $1.2 billion taxpayer-backed loan guarantee, even after it announced that it would be building its solar panels in a new plant — in Mexico! So much for the idea that “green jobs,” paid for by Americans, would go to Americans.

SunPower gave $14,650 to Congressional Democrats in 2010 (and $500 to one Republican), with about a fourth of the money going to Reid. Oh, and the company paid nearly $300K to a lobbying firm headed by Reid’s close associate Patrick Murphy. Another major SunPower lobbyist just happens to be the son of Rep. George Miller (D-CA), who touted for the company in Congress, and publicity-toured its plant with the Regime’s interior secretary, Ken Salazar. The right honorable Rep. Miller also received funds for his own campaign war chest from the company in question.

SunPower, by the way, now has a market capitalization of only $800 million, not much in the face of corporate debt of $820 million, and is facing a mass of investor lawsuits. No doubt it will, like Solyndra before it, eventually hit the wall and hose the taxpayers.

In general, the solar energy boom is going bust, because it was solely a function of political, not market, forces. Taxpayer money was shoveled to economic losers, to enrich the crony capitalists who shoveled money at the Regime.

Let’s turn next to the latest news on electric cars (EVs). Start with the frisky Frisker fiasco.

Frisker Automotive is a Finnish company that makes pricey EVs — cars in the $100K range, sticker price, making them attractive to movie stars such as Leonardo DiCaprio, but few others. Fisker was given — yes, you guessed it! — a $529 million dollar taxpayer loan guarantee from the Energy Department. No doubt pushing the idea was Reverend Al Gore, the Green Giant who is also a major investor in — Fisker! (Gore, by the way, has already earned tens of millions from preaching the environmentalist religion, making him eerily similar to a corrupt televangelist.) Also on the list of investors in Fisker Automotive are several big donors to the Obama regime, and also John Doerr, one of Obama’s advisors.

So much for the idea that “green jobs,” paid for by Americans, would go to Americans.

The Regime justified the loan on the usual lying basis, i.e., that it would bring jobs to Americans. Vice President and Chief Buffoon Joe Biden bragged that the Fisker loan would create “thousands” of American manufacturing jobs. But Fisker has just announced that because it couldn’t find any facility in America suitable for building its cars, it will build them in Finland. Again, so much for the idea that American tax dollars are bringing jobs to America. Oh, and Fisker's electric motor and batteries are made in China! All of these cars will get a $7,500 tax credit, meaning that the few rich buyers of the Finnish-made cars with Chinese-made innards will have part of the tab covered by average-income American taxpayers. Comedy writers must have scripted this.

The kicker is that the Fiskers that were recently showcased in DC are not pure EVs, but hybrids, whose gas mileage is about that of an older model Ford Explorer.

By the bye, also receiving a similar-size taxpayer loan guarantee is Tesla Motors. Tesla’s main investors include Larry Paige and Sergey Brin, both Google-billionaires who lavishly supported Obama. So much for their corporate motto, “Don’t be evil.”

Then there is EnerDel, a maker of lithium-ion car batteries. Back in 2009, Obama doled out $2.4 billion in grants to battery makers to support EVs, including $118 million to EnerDel. Again, the insufferably dense Joe Biden saucily minced around two EnerDel plants in Indiana, boasting before cameras that the administration wasn’t only creating jobs “but sparking whole new industries.”

EnerDel, which has never turned a profit since its founding nearly a decade ago, closed the last fiscal year with a whopping $165 million loss, a mindboggling $100 million more in losses than it had reported previously. Its shares have plummeted 95% in the last years, down to a risible 27 cents a share. Nasdaq looks like it will delist the stock, and Ener1 — the parent company — has notified the SEC that it “is in the process of determining whether the company has sufficient liquidity to fund its operations.”

In short, it’s a goner, and when it goes, the taxpayer will again eat a big loss. This company was dicey all along, but the Regime still threw money at it — because it is only taxpayer money.

EnerDel also got huge support from the state of Indiana, promising 1,700 new jobs by next year and 3,000 in four years. Unfortunately, it only employs 380 people, and they look like goners, too.

The problem is obvious, at least to everyone but the cretins and corrupt clowns who populate the Regime: the market for EVs is and will remain tiny, given their inherent limitations.

Now, let’s look at wind power. First is the news that Obama went out this month to raise money with a “businessman,” a supporter of long standing, named Tom Carnahan. They chummed it up at a $25,000 a plate fundraising dinner for the Obama reelection campaign. (That has a sickening ring, doesn’t it?) Carnahan is another bundler, having garnered between $100,000 and $200,000 for Obama in 2008.

Al Gore has already earned tens of millions from preaching the environmentalist religion, making him eerily similar to a corrupt televangelist.

Yet by amazing coincidence, Carnahan is the head of a wind power company, Wind Capital Group, which just happened to receive $107 million in federal tax credits from the Regime. By the same kind of coincidence, Carnahan is part of the Democratic family that has long dominated the state’s political scene, and a brother of Congressman Russ Carnahan (D-MO).

Even more egregious is the case of the Shepherds Flat project in Oregon.

Shepherds Flat is an 845-megawatt wind farm that will cost $1.9 billion. Of this, astoundingly, the DOE will pay the developers $490 million in an outright cash grant, and give them another $1.06 billion in loans. The developers are putting up only about 11% of the total cost, and — according to Carol Browner (the Regime’s own “energy czar”) and Larry Summers (its economic advisor) — they will reap a staggering 30% return on their investment. This compares very favorably with the average 7.1% that most utility companies receive on their projects.

And just who might these lucky “entrepreneurs” be? The biggest player is — wait, let the suspense build! — GE!, which is being joined by Google and a couple of other partners. Google, as I mentioned earlier, was a big donor to Obama’s campaign. And GE? It is headed by Jeffrey Immelt, whom Obama appointed head of the President’s Council on Jobs and Competitiveness. And he was a big donor to Obama as well, natch.

This is the same GE that has a market cap of $170 billion, earned $5.1 billion in profit last year, and paid no taxes at all. Did it really need the money?

The project is questionable on other grounds as well. It is being built in a region that is already experiencing electricity congestion (the region of the massive Bonneville Dam). CNNMoney reports that it will create only 35 permanent jobs, which works out to around $16 million per job. Not that GE really cares much about American jobs — it is shipping its medical devices division to China.

No, no corruption here. None at all.

By the way, geothermal is looking pretty putrid, too. Two large geothermal companies, Raser Technologies and Nevada Geothermal Power, both received massive taxpayer backing, and are both sucking wind — the same wind that the solar and the (literal) wind companies are sucking.

Raser Technologies received a $33 million grant from the DOE. After pissing away all that taxpayer cash, along with a couple of hundred million bucks in private investor cash, the company has now filed for bankruptcy.

And Nevada Geothermal — a favorite pet of Harry Reid — received $66 million in grants from the Department of Energy, as well as a nearly $99 million taxpayer-backed loan guarantee. But it has just revealed that it has never operated at a profit for even one lousy day, and that it, too, is facing oblivion.

Still another geothermal company, US Geothermal, received a $97 million loan from the Department in February of this year, even though its financial filing with the SEC shows it hasn’t made a profit — in four years. And the stocks of two other geothermal companies that also got DOE loans are down 60% to 80%. These are just some of the tidbits of recent news from the taxpayer-supported green energy front.

Now, every time I report on the green "capitalism" that has been shoved down the throat of the American taxpayer by this corrupt Regime, I get wails of tearful anger from its supporters. The wails are of two types.

1. I am told that Republicans (especially the Evil Bush) have also supported various green energy projects. So, for example, the aforementioned Raser Technologies was backed by Sen. Orrin Hatch (R-UT). I am aware of that, and I criticized Bush in these very pages for doing the same thing.

But please spare me the simple-minded faux equation of the past administration with this one. There are massive differences in scale and focus. Bush did fund some green energy projects, but never on this massive scale. And his administration allowed oil, coal, and natural gas to flourish, and took the heat for it. He was pilloried for being too fond of fossil fuels. He was portrayed in the mainstream press as a creature of the oil industry; and Cheney and Halliburton — God, we never heard the end of that. Bush at least tried to push everything. . . . I certainly would have much preferred that he had pushed, or freed up, only what works (fossil fuels and nuclear power), but his approach was certainly better than the present crusade against fossil fuels, inaction on nuclear energy, and a massive splurge in technologies that are proven losers, yet owned by supporters.

The problem is obvious, at least to everyone but the cretins and corrupt clowns who populate the Regime: the market for electric vehicles is and will remain tiny.

You have to be blind to all recent history not to comprehend that since Carter at least, the Democrats have been by far more focused than Republicans on pushing inefficient green energies. Granted, Public Choice Theory posits that all politicians (Democrat, Republican, Communist, or Libertarian) are self-interested, so will be prone to spend public resources to advance their careers. But the point here is that precisely because green energies are absolutely commercially unviable without subsidies, while fossil fuels are extremely viable, a fossil fuels based energy program won’t need much subsidization, so will leave less scope for paying off supporters.

Really, if Obama dropped hydrogen bombs on every major red state in America, these same apologists would squeal, “But Bush bombed Iraq!”

2. I am told that I am being “hyperbolic.” In no way, these Regime apologists yelp, can the Green Regime be compared to, say, that of Putin.

My response is to ask the reader, with all we now know of the crony car capitalism, the crony green energy capitalism, and the numerous other crony dealings between the Regime and its supporters over the last three years, whether the comparison isn’t just. You decide: am I really being hyperbolic, or are the supporters of the Regime being merely obtuse?

While entertaining that question, you might consider this point. What has come to light so far has come out basically from the investigations of the alternative media. The mainstream media have done very little to look into any of the Regime’s scandals (contrast the unremitting, endless investigations of Bush). The Republican-controlled House of Representatives held some feckless hearings on the Solyndra farce, and only saw Solyndra’s executives smirk and plead the Fifth. If there were — as there ought to be — Watergate-style hearings into the whole green energy boondoggle, as well as the whole Government Motors scam, just imagine (if your stomach can bear it) what would come to light.




Share This


The Sarah Palin of the Wild-eyed Left

 | 

Right now, our ineffectual President is not the highest-profile among those who would make slaves of free citizens; his incompetence as an executive has reduced him to a cynical, groveling faux populism. The highest-profile slaver is not a significant writer or intellectual of the Left; those who might be significant waste their time performing on cable television minstrel shows. It’s not an internet or New Media big-shot; they’re more interested in feuding than influence.

Right now, the highest-profile collectivist in America is a woman named Elizabeth Warren. A Harvard Law School professor and aspirant to elected office in Massachusetts, she combines the President’s cynicism with the intellectual Left’s focus on cable TV performance and a strong internet presence. Her writing indicates a trivial, though eminently credentialed, mind; her body of work reads more like Suze Orman than Richard Posner or Lawrence Tribe.

If you follow the news or scan left-leaning media outlets, you’ve heard Warren’s name. If you live in Massachusetts, you know that she’s seeking Teddy Kennedy’s old U.S. Senate seat, presently occupied by Scott Brown. But the chances are that you, like most Americans who aren’t wild-eyed Maoists, have a vague impression of the woman.

But it’s important to clarify that vagueness. This woman reflects several current trends in American culture — most of which are not good.

She was born Elizabeth Herring in Oklahoma City in the late 1940s. It was the front end of the Baby Boom, but her childhood wasn’t Happy Days. When Elizabeth was a young teenager, her father had a heart attack and related health issues. These led to severe financial problems for the Herring family. They lost a car to the repo man . . . and fell out of what they considered the middle class. Her mother went to work as a telephone operator. Later, Elizabeth waited tables to help support the family.

She was bright. Did well in school. Got a debate scholarship to George Washington University in the nation’s capitol — and left Oklahoma. Quick as she could.

GW isn’t an intellectual mecca. The biggest part of its student body is made of underachieving kids from affluent families who pay full freight, leavened with some smart kids from hinterlands there on scholarship.

While still an undergraduate, Elizabeth married a classmate named Jim Warren. In 1970, she graduated with a degree in speech pathology. Jim pursued a career and established himself as a middle-class breadwinner; Elizabeth used her degree to get work helping children who were recovering from head traumas and brain injuries.

Various left-wing media outlets were entranced by the soft totalitarianism of Warren’s schoolmarm demeanor.

But that wasn’t satisfying. The collegiate debater felt drawn to something more ambitious. Law school. While having two children with Jim, Elizabeth cobbled together a law degree — starting out at the University of Houston and eventually finishing at the Newark campus of Rutgers. Along the way, she interned at a white-shoe Wall Street firm and was an editor of the Rutgers Law Review.

She got her law degree in 1976 and ran a solo practice in the New Jersey suburbs, focusing on wills and real estate closings. She taught Sunday school, reading and telling kids about Methodist founder John Wesley. She still cites Wesley as an inspiration.

In 1978, she and Jim divorced. That seems to have changed many things.

Elizabeth moved from practicing law to teaching it. She started at Rutgers and moved through short-term gigs at the University of Houston, Texas, and Michigan before getting a tenured position at the University of Pennsylvania. And, as she explains it, she began to change from a free-market advocate to a full-blown statist.

While her academic research wasn’t exceptional (more on that in a bit), she was a dynamic classroom instructor and popular with students. While Reagan and the elder Bush occupied the White House, she refined an approach that worked well in the university setting. The actual content of her writing and speaking is usually unexceptional; but she conveys — by demeanor and implication — sentiments that click with campus radicals. She signals progressive pieties that flatter students and colleagues, making them feel they aren’t just careerist clerks but Deep Thinkers interested in Profound Issues.

She moved from UPenn to Harvard in 1992.Today, she is the Leo Gottlieb Professor of Law, teaching commercial law and bankruptcy. She is or has been a member or officer of: the American Academy of Arts and Sciences; the American Law Institute; the Executive Council of the National Bankruptcy Conference; the Federal Depository Insurance Corp.'s Committee on Economic Inclusion; the National Bankruptcy Review Commission. As I’ve noted, she’s eminently credentialed.

She signals progressive pieties that flatter students and colleagues, making them feel they aren’t just careerist clerks but Deep Thinkers interested in Profound Issues.

Most university professors are expected to produce a steady stream of peer-reviewed academic articles and research papers related to their fields. Generally, law professors have some relief from this severity; because law schools are usually profit centers for their universities, law school teachers can focus on classroom teaching rather than driven academic publication. Still, a law professor is expected to produce — or at least contribute to — the occasional academic paper.

Here, Warren has had some trouble.

In 2005, she and several colleagues published a study in the academic journal Health Affairs on the relationship between medical bills and individual bankruptcy. They concluded that half of all families filing for bankruptcy did so in the aftermath of a serious medical problem and that 75 percent of those families had some form of medical insurance. This gave a lot of rhetorical ammunition to people vilifying “evil insurance companies” and calling for “health care reform.”

Some readers questioned the study’s methods. As a surprisingly good analysis from ABC News noted:

The Harvard report claims to measure the extent to which medical costs are “the cause” of bankruptcies. In reality its survey asked if these costs were “a reason” — potentially one of many — for such bankruptcies.

Beyond those who gave medical costs as “a reason,” the Harvard researchers chose to add in any bankruptcy filers who had at least $1,000 in unreimbursed medical expenses in the previous two years. Given deductibles and copays, that’s a heck of a lot of people.

Moreover, Harvard’s definition of “medical” expenses includes situations that aren’t necessarily medical in common parlance, e.g., a gambling problem, or the death of a family member. If your main wage-earning spouse gets hit by a bus and dies, and you have to file, that’s included as a “medical bankruptcy.”

So, the study was marred by the hacky left-wing politics that pass for “consensus” in many of the social sciences. (The University of East Anglia’s Climate Research Unit caused a similar controversy when it filled its reports on global warming with comparable manipulations.)

While academic research isn’t her forte, Warren has shown greater enthusiasm for more popular fare. She has co-authored (with her daughter, Amelia Tyagi) two consumer books on personal finance, All Your Worth: The Ultimate Lifetime Money Plan and The Two-Income Trap: Why Middle-Class Mothers and Fathers Are Going Broke. The books offer useful, if basic, financial advice. They read like personal-finance versions of celebrity cookbooks — people who come to the books because they like Warren probably find them worth the price; others probably don’t. In its review of The Two Income Trap, Time magazine wrote: “For families looking for ways to cope, Warren and Tyagi mainly offer palliatives. . . . Readers who are already committed to a house and parenthood will find little to mitigate the deflating sense that they have nowhere to go but down.” Like most of the establishment media, Time has been generally favorable to Warren in other contexts.

In the mid-2000s, Warren and some of her Harvard law students wrote a column called Warren Reports for the popular left-wing internet news site TalkingPointMemo.com. Warren Reports purported to be a deep-think collaboration like the libertarian-leaning opinion site Volokh Conspiracy; it ended up being less deep analysis and more hacky partisan spin.

But Warren’s hacky politics found an audience. On November 14, 2008 — days after Barack Obama had been elected president — she was appointed by Senate Majority Leader Harry Reid to chair the five-member Congressional Oversight Panel created to oversee the implementation of the Emergency Economic Stabilization Act and its main product, the Troubled Assets Relief Program (TARP).

In other words, Warren oversaw the Wall Street bailout.

Through her term as chair, the Congressional Oversight Panel released monthly reports that evaluated the bailout and related programs. These reports — and videos that accompanied them — served as bully pulpit for Warren. She focused her regulatory enthusiasms on topics including: bank stress tests, commercial real estate, consumer and small business lending, farm loans, financial regulatory reform, foreclosure mitigation, government guarantees, the automobile industry, and the impact of TARP on financial markets. She also testified frequently before House and Senate committees.

From these unlikely venues, a star was born. Various left-wing internet news sites and new media outlets linked to her videos and reported on her congressional testimony. Like the campus radicals at UPenn and Harvard, they were entranced by the soft totalitarianism of her schoolmarm demeanor.

Throughout her various congressional testimonies and internet videos, Warren advocated for the creation of a new Consumer Financial Protection Bureau. In a December 2009 interview with Newsweek magazine, Warren said:

To restore some basic sanity to the financial system, we need two central changes: fix broken consumer-credit markets and end guarantees for the big players that threaten our entire economic system. If we get those two key parts right, we can still dial the rest of the regulation up and down as needed. But if we don't get those two right, I think the game is over. I hate to sound alarmist, but that's how I feel about this.

(Reread that last sentence, keeping in mind the famous negotiating aphorism: “Everything before the ‘but’ is a lie.”)

This quote embodies two essential traits of Warren’s political persona.

First, she identifies important issues but comes to illogical conclusions about them. She’s right that moral hazard had dulled the capital markets; government guarantees for banks that are too big to fail inexorably leads to more failure. But she doesn’t seem to understand her own point. She wants more well-intentioned regulation to cure the problems caused by previous well-intentioned regulation.

Second, she leads with her heart — which is good in love letters but not so great in governance. Most of her public policy statements are full of prefaces, parentheticals and sidebars about how she feels about things.

One challenge for a politician who has lots of stupid people cheering for her everywhere she goes is to avoid losing any connection to reality.

In time, Warren got her new (and additional) consumer protection agency. The Frank-Dodd Wall Street Reform and Consumer Protection Act, signed into law in July 2010, created the United States Consumer Financial Protection Bureau — which some in the Obama administration hoped would grow as large and powerful as the FBI.

Warren’s growing legions of collectivist supporters wanted her to be named head of the new bureau. She wasn’t. Some collectivists saw this as apostasy on Obama’s part — he’d caved to the Wall Street establishment by not appointing the woman who’d supervised the bailout of the Wall Street establishment. Others collectivists blamed “the Republican congress” for blocking her ascent.

Warren settled instead for the consultative position of “Special Advisor” to the Bureau. Which she kept for less than a year, when she quit to launch her U.S. Senate campaign. On her way out, she issued a farewell statement (surely one of the few Special Advisors to a non-cabinet-level agency ever to do so) that read, in part:

Four years ago, I submitted an article to Democracy Journal that argued for a new government agency called the Financial Product Safety Commission. I felt strongly that a new consumer agency would make the credit markets work better for American families and strengthen the economic security of the middle class. I leave this agency, but not this fight . . . the issues we deal with — a middle class that has been squeezed and business models built on tricks and traps — are deeply personal to me, and they always will be.

Again, rich subject matter and a jabberwocky conclusion. A “new government agency” will make credit markets “work better for American families”? Not likely. The lesson of the subprime mortgage collapse and the current recession is that statist abominations like the Community Redevelopment Act, TARP (the Wall Street bailout which, it bears repeating, Warren administered) and Fannie Mae/Freddie Mac create moral hazard and obstruct market efficiency.

And, again, the pabulum about her “deeply personal” feelings. Warren’s feelings are a big part of her public persona — as big as policy details or the effects they have on objective reality. This is an unexpected focus for a law professor. But Tip O’Neill would understand. Feelings work well at the retail political level. Paste-eating collectivists put maximum importance on “personal narratives”; they care less about logic or objective reality.

Warren has peddled her emotions with some success in the popular media. She appeared several times on the Dr. Phil TV show. She’s been a recurring guest on The Daily Show. She talked about Wall Street greed in Michael Moore’s documentary Capitalism: A Love Story. And she’s a staple on less popular TV talk shows hosted by the likes of Charlie Rose, Bill Maher, and Rachel Maddow.

Her focus on “personal narrative” also plays into some au courant gender-studies topics. But in a way that doesn’t play out well for gender equality. In short, some on the American Left believe that women prefer narratives to facts . . . and these types applaud Warren’s constant drumbeat of “feelings” that are “deeply personal” to her. But lost in all this postmodernism and academic jargon is the ugly and ancient assumption that women aren’t up to analysis of objective reality.

When Warren jabbers on about deeply personal feelings, she’s not so much different than the notorious talking Barbie doll who complained, “Math is hard!”

For those who are inclined to like Warren, these things don’t matter. They don’t even register. A quick survey of the reader comment sections of left-leaning internet news sites finds the following:

  • I'm 'blown-away' by Elizabeth: she's like a breath of fresh air. I watch this video every morning: its my Doxology!!
  • I love her!!!!!!!!!!!!!!!!!!!!!!
  • I love Elizabeth Warren! Such a breath of fresh air. I only wish I could vote for her. But, unfortunately, I'm in Ohio. We need more crusaders like her. You go girl.
  • If the Dems are smart they will highlight E Warren for the next 14 months and then give her a high profile role in the Senate because she IS 2016 staring them right in the face and challenging them to step up.
  • Love her. And I wish she were running for President now. But, she'll be no more experienced in 2016 than Obama was in 2008.
  • I love Elizabeth Warren. She saw the whole mess coming and did something about it. Her campaign now is the most valuable thing I can imagine for the Democrats over the next year.
  • Warren's courage has been contagious so far. Her clarion call to justice for the next generation of Americans can provide Democrats and progressives with an opportunity to reclaim the narrative about how to make America work again for everyone.

(from the Huffington Post)

  • I'm so JEALOUS... I live in Missouri and wish we had someone like Elizabeth Warren to run here. She is AMAZING and she's gonna kick Scott Brown's ass.
  • Getting rid of Scott Brown AND having a MA senator in the ranks of Bernie, Al, and Sherrod?!? Be still my beating heart...Elizabeth Warren will be a wonderful successor to Sen Kennedy.
  • a massive showing for the person who is probably one of the most effective leaders we have seen in a long time.

(from the Daily Kos)

In many ways, these comments are typical of political commentary of all political stripes on the internet. Personality-driven. Egocentric (note how many of the comments start with and focus on the “I” of the commenter). Infantile. At their best, such sentiments can be charming; at their worst, they’re moronic.

And, when Warren is observed in this light, she begins to resemble someone her fans at the Huffington Post and Daily Kos ritually hate: Sarah Palin.

On the surface, Warren is a sort of anti-Palin. Dowdy. Scolding. Harvard professor. Twice-married (the second time to a deferential fellow Harvard professor). Credentialed. Elitist.

But dig a little deeper. Oklahoma native. Scholarship student at a third-tier college. Married at 19. Less-than-gilded law school at University of Houston and Rutgers-Newark.

She’s like Palin in significant ways. They both have built bases of popular support on checkered histories in public service; they both welcome the biases and preconceptions of their supporters.

Here’s an illustrative anecdote: When I told one lefty acquaintance that I was surprised an academic of such modest background had advanced so far, my acquaintance replied indignantly: “What are you talking about? Elizabeth Warren went to Harvard.”

Warren fairly cried out for libertarian scrutiny with one recent quote. A supporter filmed some video of the candidate speaking at a fundraising event. Asked about the president’s ineffective attempts to raise taxes on the wealthy, Warren said:

I hear all this, “You know, well, this is class warfare. This is whatever.” No! There is nobody in this country who got rich on his own. Nobody! You built a factory out there? Good for you! But I want to be clear: You moved your goods to market on the roads the rest of us paid for. You hired workers the rest of us paid to educate. You, uh, were safe in your factory because of police forces and fire forces that the rest of us paid for. You didn’t have to worry that marauding bands would come and seize everything at your factory and hire someone to protect against this because of the work the rest of us did.

Now, look: You built a factory and it turned into something terrific or a great idea, God bless! Keep a big hunk of it. But part of the underlying social contract is you take a hunk of that and pay forward for the next kid who comes along.

The video became a sensation on the internet. Collectivists cheered Warren’s “full-throated” arguments for wealth redistribution.

But reread the quote — it’s not quite that. It’s a poorly-made argument about externalities.

Like a debater who knows she’s making a weak argument, Warren picks the easiest points to support her case for a social contract. Only the most rigid anarchist would deny legitimate externalities like roads and reasonable law enforcement. Those aren’t the things that are bankrupting America. Welfare programs, subsidized mortgages, “free” public services and defined-benefit pensions are the problems.

The promiscuous enthusiasms of Warren’s fans lead them to some genuinely bizarre conclusions.

As far as her talk of workers that the collective has paid to educate, Warren needs to talk to some actual employers. The failure of the American elementary and secondary education system is driving some firms to look abroad and in some cases relocate for competent employees.

Lastly, the notion of “pay it forward” as part of a social contract is dubious. A social contract should more modest than her ambitions for investment in future outcomes. Support of externalities and infrastructure aren’t about paying it forward — a phrase that has developed a popular connotation of karmic debt that people today owe people in the future — they are about paying for external goods in the here and now.

Warren’s fans aren’t likely to hear any of this, of course. In fact, their promiscuous enthusiasms lead them to some genuinely bizarre conclusions. Here’s what one halfwit fan wrote about Warren’s “pay it forward” quote:

She's wonderful, and dead on with her comments about public investments enabling private success. But she's wrong about "debt" and the national "credit card". Money is a public monopoly. The primary way it comes about is thru federal deficit spending. And US dollars precede US Treasury debt. So there is nothing for children or granchildren to pay back, and there is no "hole" in the budget.

A challenge for a politician who has lots of stupid people cheering for her everywhere she goes is to avoid losing any connection to reality. Life in an echo chamber can lead to bad choices.

Recently, the Daily Kos ran an adoring article on Warren that included a picture of a room full of lumpenprole women and pear-shaped men, cheering on their majestic crusader. To that crowd, and later to several media outlets, Warren bragged that she was the spiritual founder of the Occupy Wall Street protesters. “I created much of the intellectual foundation for what they do.” And:

. . . no one understands better what the frustration is right now. The people on Wall Street broke this country. And they did it one lousy mortgage at a time. It happened more than three years ago, and there has still been no basic accountability, and there has been no real effort to fix it. That’s why I want to run for the United States Senate. That’s what I want to do to change the system.

The National Republican Senatorial Committee jumped on that, issuing a quick press release noting that some of “her Occupy acolytes in Boston” had fought with the police. And ended up in chains.

At the same time, some wild-eyed Occupy Wall Street protesters have demanded that Warren “repudiate” — a totalitarian word — Obama’s bailout of big investment banks (which, again, she oversaw) before they will support her bid for the U.S. Senate. Doesn’t seem like a nice way to treat the lady who created much of their intellectual foundation.

Warren invites this lunacy. By throwing in with the Maoist protesters, she’s likely to have marginalized herself.

There’s a whole year in which candidate Warren’s signals to campus radicals will come back to haunt her. At the Daily Kos, people who “love” Warren are begging her to run for president, in 2016 if not sooner.

A rational person can only hope their love for Warren will be fleeting, just as their love for Obama was. In the mean time, the woman who oversaw the Wall Street bailouts will have talked a lot about her deeply-held feelings. And inched free people who build factories or have great ideas a little closer to slavery.




Share This


99 to 1

 | 

I am sick of hearing about the “99%.” I am in the 99%, but you won't see me marching on Wall Street and making signs about my worthless college education. That’s because I’m working my ass off trying to get into the 1%.

My husband and I have a small business. We do software testing. We have some employees, and we use a lot of temps. We've probably created or saved as many jobs as President Obama has. Probably more.

Nevertheless, almost all the people we hire are in their early twenties, just out of college, with a useless "Game Design degree." Just the kind of people you see marching on Wall Street.

I just heard that one of our workers was complaining about some other company "being cheap" because they didn't want to pay for someone's health insurance.

Damn.

Why can't companies not be "cheap"? Why can't they just pay you more?

First of all, why can't you pay more? Well, why don't you pay $300 for a videogame? Because it’s not worth it to you. But if you paid that much, then maybe videogame testers would make more money. But you won't pay $300 for a game, and neither will anyone else. So companies who make games need to control their costs.

Testers do not make a ton of money. It's true. But the companies that employ you don't make much off of you. We charge our clients your hourly rate plus $X. And X ain't a big number. Believe me, we would like to charge more per hour for your services, but we can't. If we charged a reasonable markup on your rate, then the companies that hire us might just decide to take their business elsewhere, like Bangalore or Hyderabad. We need to keep our profit margin mighty slim, or we'll be paying you zero — because you won't have a job.

So, yes. We are all "cheap.” But you have a job.

By the way, the competition has testers in foreign lands. Their daily take-home pay is a little bit more than what you make for one hour. And they aren't complaining.

But even so, you think, we must charge our clients some kind of markup on your hourly rate, don't you? Where does all of that money go?

Well, it goes all over the place. We have to pay the rent for the offices you are sitting in. We have to buy power strips, chairs, desks, lamps, cabinets, tape dispensers, paper, pens, pencils, notebooks, toner for the printer, and paper for the toner to go on. It adds up.

We also have to pay for the people who clean up after you when you spill coffee on the carpet or you use the bathroom and leave a mess.

Believe it or not, we have to pay the electric bill. We have to pay for the water, the coffee, the cream and sugar, the Red Vines, the occasional well-deserved doughnut feast.

We have to pay for the very fast internet connection that we need to do business. We have to pay for the phones. We have to buy computers and the hardware that you are testing on. Even if we only use it for three weeks, we have to buy every Microsoft test kit, every Sony test kit, every Nintendo test kit, etc., etc. They aren't cheap. And we have to buy a lot of them.

We have to buy software so you can do your work — bug tracking software, operating systems, secure instant messaging systems, general office software. We have to pay to have the network installed at the office, so that we can do our jobs.

But to return to you yourself. We have to buy workers' comp insurance, because one day, you may get a hangnail and sue us. Who cares, you think, it's the insurance company that’s going to pay for it. Yes. And we pay for the insurance. And if there’s a hangnail lawsuit, we’ll have to pay more and more for that insurance.

Lawsuits have made it more expensive to do business. If we have a client with deep pockets, and you’re trying to be crafty and so sneaky, you'll sue the client for that hangnail, too. But our clients are crafty and sneaky, too, so they require that we have certain supplementary insurance as well. Meanwhile, we need lawyers to read, write, and review our contracts so we don't get sued by you or by our clients. Lawyers are not cheap.

In addition, we have to pay for alarm systems, just in case you've told your ne'er-do-well brother-in-law who just got out of jail that you work at this cool company that has a bunch of computers.

We have to pay for those silly little taxes that cities decide to place on businesses, just for the pleasure of existing in them, and employing their citizens.

Naturally, we need to pay interest on the large amount of money we borrowed to pay for all of the above.

Oh, yeah. I almost forgot. We need to eat, too.

One day, we will finally pay off our debt — if we manage to stay in business, despite the lackadaisical, whining employees who do poor work because they are lazy, or maybe no work at all because they really couldn’t care less about their low-paying jobs.

At the end of it all, after years of stress and lack of sleep and no vacations and strained family life, we just might end up wealthy.

On that day, I will happily tell the rest of you 99%-ers to screw off.




Share This


What Is a Job?

 | 

The usual chatter has begun following President Obama’s Sept. 8 call for a $417 billion government spending package designed to stimulate economic growth and create jobs. As always, the commentary, both pro and con, focuses on speculation about the results of the program. Will this latest stimulus money actually reach “shovel-ready projects,” or will it disappear down the black hole of state subsidies for Medicaid and education? How many jobs will the program actually create, and what happens to those jobs when the program is over?

There is never any clear winner in debates of this nature. While the future is still unknown, Republicans will predict failure while Democrats will predict success. Once the program is over, Republicans will pronounce failure while Democrats will declare victory. The retrospective debate about the results of the program will continue until the media move on to something else. The debate will be resurrected at election time when Republicans will characterize the program as another “bridge to nowhere” and the Democrats will claim that it saved the economy.

Even after the fact, there is rarely a definitive answer to questions about the results of government action, as compared to government inaction. This may be one reason why most government programs never really end. The answers are much less ambiguous and elusive when the discussion is shifted from results to rights. But before exploring how Obama’s program affects the rights of the various parties involved, we must answer a previous question.

What is a job?

One might assume that everyone knows the answer to this apparently simple question, but I doubt that’s true. In fact, judging by what politicians, media, and even friends and neighbors have to say about jobs and unemployment, I’m convinced that almost no one in America today understands what a job really is.

As I’ve said before, a job is a transaction between a buyer and a seller. The employer is the buyer and the employee the seller, selling his services to the employer for a mutually agreed upon price. This is a voluntary transaction for both parties, just like the buying and selling of lawn mowers or breakfast cereal. The buyer offers to purchase services at the price he can afford, and the seller decides whether to accept those terms or not. Both parties are free to decide not to go through with the sale. Unless a specific term of employment has been agreed to, both parties are also free to cease doing business at any time. The employee can quit the job (refuse to continue selling the service) and the employer can terminate employment (refuse to continue purchasing the service).

There is only one way in which a purchaser of services can continue to employ people on an ongoing basis. The services provided by the sellers must produce some product that makes a profit. If the firm loses money, then the employer must increase his sales or lower his operating costs. The latter solution most often means purchasing fewer services (layoffs).

The voluntary association between the buyer and the seller of services (the employment contract) depends upon another voluntary association between the firm and its customers. The firm’s customers must choose to pay more for the firm’s products than the cost of producing them, including labor, material, rent, administration, and all other costs of production. It is that choice by customers that creates a market value for the products, for the market value is merely the amount of money the highest bidder will voluntarily pay. If no one was willing to buy the firm’s products at any price, then those products would have a market value of zero.

When the opportunity exists to sell products at a higher price than the cost of producing them, it typically attracts more than one firm, and those firms compete with each other for the customers willing to buy their products. Thus, employment opportunities become abundant in that particular industry, as more and more firms enter the market to take advantage of the opportunity.

Before the first product of any of these firms is created, the owners must purchase the labor, materials, production facilities, equipment, and other capital goods necessary to make its products. The owners purchase these capital goods and labor with savings — which are the result of consuming less than they (or their lenders) produced over a period of time in the past. The only reason they choose to invest these savings is the opportunity for profits. Without that opportunity, they would consume their savings in the present or hold them for security against future misfortune instead of risking losing them by starting a new firm.

Almost no one in America today understands what a job really is.

As long as there are customers willing to buy the products the firm produces, the model is self-sustaining and productive. From a societal view, the owners, employees, and customers are adding more goods and services to society. Remember that the customers are only able to buy the firm’s products because of the products they’ve produced and sold to their customers, including their employers. Just like the firm, they must produce products that other people are willing to buy voluntarily. This is what gives them their purchasing power.

There is one word that sums up the entire process of economic growth and job creation: choice. The market price of products, the wage levels that can be sustained in the production of those products, the number of people who can be employed, and the quantity of products that can be produced — these all depend on the ability of economic agents to make rational choices in their own self-interest. Without freedom of choice, there can be no market, no division of labor, no prices, and ultimately no jobs. It is the degree to which all economic agents are free to make the best choices they can that determines how productive, efficient, and prosperous an economy will be.

All of this goes out the window the minute that one begins talking about the government’s “creating jobs.” By definition, nothing the government does allows any individual freedom of choice. This is where most people get confused, because they imagine the government to be a wealthy benefactor with money of its own. This misconception is reinforced whenever President Obama (and neither he nor the Democrats are by any means alone on this) refers to government spending programs as “investments.” It all sounds very prudent and morally sound, until one considers what is really going on.

Whenever the government “invests” in a particular industry, whether it is producing “green” cars, bridges, buildings or roads, it is overriding the choices made by customers. I refer to the choices made by taxpayers not to purchase that car, bridge, building or road, but to purchase something else, something they actually want and are willing to pay for. As we’ve seen, when there are people willing to buy products at a price higher than the cost of producing them, there are entrepreneurs ready to take advantage of that opportunity, and the products get produced. Customers do not choose to do this to help society, but to help themselves; nevertheless, they do help society by producing the needed or wanted products and employing the people necessary for that production.

Government-created jobs actually make society poorer, because they result in products that are worth less than the cost of producing them.

When government intervenes, not only are taxpayers forced to purchase products that they have previously chosen not to buy, but the entire nature of the employment contract is fundamentally changed. No longer does an employer purchase services from an employee for the sole purpose of realizing a return on his capital investment. Now, the taxpayer is forced to purchase the services of the employee, with no hope of the return he desired for his money. The best he can hope for is that somewhere a bridge, building, or road that he had previously chosen not to pay for gets built, or some service is rendered at a higher price than anyone had been prepared to pay. Employers who happen to be the beneficiaries of government intervention are able to make profits that would otherwise be unavailable to them, but only because the government has forced taxpayers to pay at least part of the operating costs.

While society does get a new car, bridge, building, or road, and some people get government services, the value of those products is lower than the cost of producing them. This is why government-created jobs end as soon as the government stimulus money is removed. If the products produced and the jobs related to producing them were economically viable, entrepreneurs would already be creating them. Government-created jobs actually make society poorer, because they result in products that are worth less than the cost of producing them. Ironically, politicians often boast that they created more jobs than their opponents — which actually means that they created more poverty than their opponents.

By definition, all government spending comes from savings, because it is wealth produced by economic agents but not consumed. Therefore, government-created jobs actually destroy capital, as no self-sustaining production or profits result from that capital investment. Not only is that capital wasted and destroyed on the unproductive temporary jobs, but it is no longer available to create other jobs producing products that people would voluntarily buy. But in terms of the economic harm caused by government stimulus, this is only the tip of the iceberg. For more, read Peter Schiff’s testimony to Congress on this subject as well as one of his primary sources, Frédéric Bastiat’s That Which is Seen and That Which is Not Seen.

Once you understand what a job really is, a lot of what you hear about jobs from politicians and the media sounds completely outlandish. You may hear it stated that everyone has a right to a job, but that can’t be true. How can anyone have a right to force other people to buy his products? If such a right existed, then no company need ever go bankrupt. Whenever it began losing money, it would simply appeal to the government to protect its right to force people to buy from it; the government would oblige; and the economy would support every one of the otherwise bankrupt businesses.

More often you will hear that everyone has a right to “a living wage,” but this makes no more sense. The price of any product in a free society is the result of mutual agreement between the buyer and the seller. Either party has the right not to make an exchange if he is not satisfied with the price. Government interventions, such as minimum wages, obviously interfere with this right. In fact, it is the seller of services (the employee) whose rights are most infringed by minimum-wage laws, which prevent him from selling his services below a certain price even if he wishes to, thereby enabling employers who otherwise could not afford him to offer him a job. That anyone believes that the government has a legitimate authority to set an arbitrary price level and then forcibly prohibit people from selling their services at a lower price speaks volumes about how little we value freedom in the land of the free.

No, the supposed right to a job or the right to forcibly fix the price of a job are not real rights. They both involve initiating the use of force against other people, and no one has a right to do that. In fact, the true rights that are at issue with this program are the rights of the unwilling buyers, the taxpayers. They have a right not to be forced to buy goods or services against their will. Yet violating this right is the only way in which any government can ever create a single job. The fact that the debate between either major party is over how the government could create jobs, rather than whether the government should attempt to create jobs, reinforces the fact that liberty is not even a consideration in the formulation of federal government policy.

It is the government’s thousandfold trampling of liberty that has created the economic malaise that the government is now trying to end. If we ever want to see the unemployed people get back to work, we have to understand what a job is and how and why jobs are created. Then the government's part in the solution will become clear: Start securing our rights instead of violating them. Stop wasting our money, and our opportunities, in the misguided attempt to “create jobs.”



Share This


Why Obama is Losing the Latino Vote

 | 

The recent news regarding President Obama’s support in the Latino community is quite amazing. In the 2008 election, Obama won 67% of their votes. But his support among Latinos has now slipped below 50% — 49%, to be exact, in a recent Gallup Poll. Why the slippage, and what does it mean for coming elections?

One suspects that (in part) Obama’s remarkable loss of Latino support is of a piece with his loss of support among independent white voters. It has to do with broken promises, specifically, and a failure to deliver economic health, generally.

Consider independent white blue-collar voters. Running for office, Obama played the role of Post-Racial Man. He insinuated that he understood white workers' anger at racial preferences in college admissions, hiring, and promotions. When it was discovered that he was a long-standing member of a “black liberation theology” church, he feigned ignorance and dropped out of church.

But in office, he has pushed race preferences with a vengeance, appointing two unabashed Quota Queens to the Supreme Court. And Obama's attorney general, Eric Holder, has seemed to many to be racially biased in the way he has handled several issues, such as the case against the Black Panthers who were charged with voter intimidation in a lawsuit filed in 2009 by the Justice Department.

The point here is that when someone has little record in office and a mainstream media completely supportive of — nay, sycophantic toward — him, he can portray himself as anything he cares to look like. But once in office, he will have to make choices, and those choices will then define him.

In his campaign for Latino votes, Obama cleverly played the part of the Universal Minority Man, a victim-just-like-you kind of guy, promising to listen to Latinos in a way that the hate-filled nativists on talk radio could never do. He would solve the seemingly intractable problem of immigration, and open the doors to everybody who wanted to come in.

In doing so, he deliberately obscured some issues that would have troubled Latinos, had he spoken openly about them.

For one thing, he never revealed to Latino audiences that as senator he did virtually nothing to help Bush and McCain get their compromise comprehensive immigration reform bill through Congress. It came close to passing but died under a firestorm of populist anger, fanned by the “talkerati,” the conservative talk-show hosts. In fact, Obama voted for an amendment to strip the legislation of its temporary worker visa program, thus helping to scuttle the bill. It isn’t clear why he did that. Part of the reason had to be an attempt to curry favor with those in organized labor and in his own ethnic community who are fearful of more workers coming in.

This last point touches another topic Obama sidestepped during his campaign: African-American antipathy toward Latinos. In many segments of the African-American community, there is a deep resentment of Latinos. Latinos are seen as competing for many of the same jobs that African-Americans want to get, as well as for the same space in the same neighborhoods. Even more galling, Latino activists are viewed as pushing their own “victimhood” narrative, which dilutes the spoils of the victim status that African-American activists have taken for granted for decades.

After all, affirmative action — usually a euphemism for hiring a less qualified “minority” over a white or Asian male — is obviously more beneficial to African-Americans if “minority” means only “African-American” than if it means “African-American, Latino, Pacific Islander, Native American, Asian woman, white woman, or GLBT.”

In office, Obama has given Latinos more reasons to become disenchanted with him.

For example, Obama — who, to be fair, had signaled during his campaign that he held NAFTA to blame for costing American jobs (a stance that cost him the primary election in Texas against Hillary Clinton, whose husband had signed NAFTA into law) — started a trade war with Mexico the minute he got into office.

Yes, the newly elected Obama decided to throw a bone to the Teamsters union (which had supported him lavishly in his campaign) by denying even a small number of Mexican truckers the right to drive American routes, on a trial basis — a right given to them by NAFTA. The president didn’t just stiff the truckers; his supporters spread the nasty story that Mexican truckers are inferior drivers and that Mexican trucks are all unsafe, even though under the earlier agreement, those trucks would be constantly monitored.

Mexico was rightly furious and retaliated by slapping massive tariffs on a wide range of American products, especially agricultural ones. These tariffs cost upwards of 25,000 American jobs, many of them held by Latinos. So an act intended to hurt Mexican workers wound up hurting Mexican-American ones far more.

Then there was Obama’s conspicuous failure to deliver on comprehensive immigration reform. For two years his party completely controlled Congress, and could easily have passed — probably with bipartisan support — a reasonable reform bill. But Obama showed no particular interest in the topic; much less did he push any such bill through Congress, in the way he rammed through Obamacare. In fact, he didn’t even push the Dream Act through Congress when he controlled it. This, unlike his earlier, covertly obstructive actions regarding the Bush-McCain legislation, Latinos noticed, because now he was president.

While Bush tried his best to get an immigration reform bill through a Congress he couldn’t control, Obama never tried to do the same when he virtually owned Congress.

Of course, when the Republicans won back the House of Representatives last year, Obama tried floating the narrative that he desperately wanted comprehensive immigration reform, but the Rascally Racist Republicans were in the way. He taunted the Republicans in a speech before a primarily Latino audience in El Paso in May of this year, saying that when the Republicans were urging him to protect the border, they were being disingenuous and silly: “Maybe they’ll need a moat. . . . Maybe they’ll want alligators in the moat.” But the stark reality facing Latinos is that while Bush tried his best to get a deal through a Congress he couldn’t control, Obama never tried to do the same when he virtually owned Congress.

Other major reasons for Obama’s loss of Latino support are his two major policy changes on the handling of undocumented workers, both of which have produced large unintended, and unfavorable, consequences.

The first concerns companies that employ illegal aliens. In 2009, Obama’s Immigration and Customs Enforcement (ICE) department started aggressively auditing companies to see if they hired undocumented workers, and severely punishing companies that did. That is, Obama had his myrmidons deliberately transfer to business the burden of securing the border. If ICE catches a company employing illegal aliens, the company is subject to heavy fines and sanctions, while the workers go free.

This essentially reversed the policy of prior presidents, which had been to deport illegal aliens when caught, but not necessarily punish the companies employing them (unless there was specific evidence of intent to employ illegals). No doubt Obama’s decision grew out of his instinctive, visceral animosity toward business, as well as his desire to regulate and control it.

However, this policy has bitten deep, as ICE has hammered employers it considers “magnets” for illegal workers.  Companies like American Apparel (in 2009) and Chipotle Grill (in 2010) got hit hard, with ICE looking especially closely at companies in the agricultural, construction, food processing, and restaurant sectors. And there are a lot of these companies — nearly 2,400 were targeted last year alone.

The fines have often been brutal. One company, Yamato Engine Specialists, had to pay a $100,000 fine — for employing a couple of dozen undocumented workers. American Apparel had to pay $35,000, not to mention losing one fourth of its work force.

In this policy as in most of his others, Obama sought a dramatic increase in the regulation and control of private industry. Immigration activists — who are typically ardent leftists with a deep-seated aversion to business — originally supported it. But they quickly learned a lesson in the law of unintended consequences. Employers dumped a lot of illegal aliens who, yes, weren’t deported. However, that in turn meant that while those workers by and large remained in America, they also that they had to take worse jobs or remain unemployed — displeasing both the undocumented workers and the pro-immigration activists. And the businesses targeted now have a powerful reason to avoid hiring any Latinos, which has got to displease Latinos generally.

No doubt Obama’s decision grew out of his instinctive, visceral animosity toward business, as well as his desire to regulate and control it.

The other policy change regarding the treatment of illegals is one that Obama's Homeland Security Department has been implementing since 2008. It's the Secure Communities Program, “S-Comm” for short. When local or state police arrest anyone, they run the suspect’s fingerprints through the FBI criminal database to see if he has a criminal history. Under S-Comm, the cases in which an illegal alien has been arrested and looks as if he may have a criminal background are sent to the DHS so ICE can determine whether this person should be deported. In the past, states could choose to participate in the program if they wished, but now it is becoming mandatory for all states. The idea of S-Comm is to prioritize deportations, so that convicted criminals are deported first.

ICE head John Morton has said that 90% of those deported over the last two years — nearly 400,000 per year — have been either criminals or people who had earlier been ordered to leave the country.

But there have been a number of bad unintended consequences. Start with the fact that 28% of those deported under S-Comm actually had no criminal records. Some had just gotten traffic tickets.  S-Comm has clogged the immigration courts, as people wrongly nabbed fight to keep from being deported, which often means a breakup of a family. Worse, many of the non-criminals were picked up on the database check not because they themselves had criminal histories but because they had worked with the police in a criminal investigation (as witnesses or informants). Thus S-Comm discourages cooperation with police in solving serious crimes.

Yet another major reason Latinos are abandoning Obama is the high unemployment rate among their population (which typically has lower than average unemployment rates), because of Obama’s baleful economic policies. Nationally, while the general unemployment rate is about 9%, Latino unemployment is at 11% — or about a fourth again higher than the country as a whole. It has not escaped the notice of Latinos that Mexico now has a much lower unemployment rate (at 4.9%) and a much higher economic growth rate (at 4–5% annually) than the United States. It is almost insufferably rich that California has lost about 300,000 illegal immigrants since Obama took office, with many of them moving back to Mexico, where they report that it is easier to buy a home and send their kids to college.

One last reason for the drop in Obama’s support among Latinos should be noted. This one is harder to quantify precisely, but in my view is still immensely important. Latinos culturally are extremely enterprising and entrepreneurial. While they attend college at lower rates than Asians and whites, they run small businesses at a disproportionately higher rate than the population as a whole.

But Obamanomics has been especially pernicious when it comes to the formation and flourishing of small businesses. Regulations that are merely onerous to big businesses (with their large accounting departments and access to legal power) are death to small ones, because they find it harder to absorb or pass along the costs. And the essence of Obamanomics is the dramatic increasing of regulations of every sort.

The news of the collapse of support among Latinos has obviously rocked the White House. It has recently taken steps to reverse or mitigate its earlier policies, obviously wishing to recover that support.

First there was Obama’s complete capitulation, two months ago, in the trade war he started with Mexico. Bluntly put, the great American-Mexican trade war ended not with a bang but with an Obama whimper. Under a deal signed in July, Mexican truckers will be allowed to drive American routes. As soon as the first Mexican truck is allowed entry, Mexico will end its tariffs completely.

Obama must have calculated that the labor support he would lose by throwing the Teamsters under the bus — or more exactly, the truck — was a sacrifice he would have to make to help regain his standing in a crucial ethnic group.

Second, and seemingly out of the blue, the White House recently announced that it is changing its policies on handling illegal immigrants. It now will review the cases of 300,000 illegal aliens awaiting deportation and allow those who are not criminals or threats to public safety to remain here. While the administration portrayed this as a way for federal agencies to better their focus on real security threats, the claim was clearly a rationalization.

Obama’s difficulties with Hispanic voters offer the Republican Party an extremely rare and important opportunity to reshape American electoral politics for generations to come. It is clear that there is a demographic shift under way, with the percentage of Latinos in the population rising. If the GOP can start to split that vote more evenly with the Democrats, or perhaps to win the majority of it, the GOP will be well served.

Obama must have calculated that the labor support he would lose by throwing the Teamsters under the bus was a sacrifice he would have to make to help regain his standing in a crucial ethnic group.

This requires two things at least. For one, the Republican Party needs to learn to play ethnic politics better. It needs to actively groom and advance lots of conservative Latino political leaders. It has made a modest start, offering a number of impressive politicians, including Susana Martinez of New Mexico, Ted Cruz of Texas, Brian Sandoval of Nevada, and most prominently Marco Rubio of Florida. But the Republicans are going to need many dozens of such leaders at all political levels.

Parenthetically, knowing that Obama has now got to fight for the Latino vote, Marco Rubio is more compelling than ever as a choice for Vice President by whomever wins the Republican nomination for President next year.

But even more importantly, the Republican Party has to come to some kind of reasonable agreement on immigration reform. Put together a compromise solution of wide appeal, and build it into the party platform. The GOP needs to get this incubus off of itself for good. If that displeases some of the more nativist talkerati, so be it. One such host — who ran parodies such as “Jose, Can You See” and talked about “another stupid Mexican coming across the border” — without doubt cost the GOP enormously in several states where those comments were played in Democratic campaign ads. That is not the sort of person to whom the GOP needs to cater.

The talkerati are after higher ratings, and will try to get them by spewing whatever populist clap-trap they think will appeal to their listeners. But the GOP needs to position itself for the future, and can do so if it can finally get real about ethnic politics and immigration policy.




Share This


Getting Ready for October 21

 | 

For a long time,  I’ve been reporting on the apocalyptic prophecies of Family Radio, the group that identified May 21, 2011, as the date for the manifestation of Christ and the rapture of God's elect. When that date passed without either the Rapture or the great earthquake that Family Radio’s founder and chief, Harold Camping, had predicted, it was a big news story. It got enormous attention around the world. As I’ve been saying, this was actually a significant event, not just a media event, because it provided the best chance we’ll probably ever have of seeing what occurs when prophecy conclusively fails for a large group of people.

What followed May 21 was a process familiar to students of apocalyptic history — the spiritualization of the failed prophecy. Camping, who at first seemed stunned by the complete normality of May 21, soon decided that the earthquake had actually occurred, but it had been a spiritual earthquake, signaling an invisible and wholly spiritual Last Judgment. According to him, the enrollment of the elect had been completed; all that remained was the final elimination of the non-elect, which would take place, as he had previously prophesied, on October 21, 2011, when the physical universe would be totally destroyed. God's activity would thus be visible on October 21 as it should have been on May 21. Camping suggested that the remaining months of Family Radio’s existence would be devoted to quiet cultivation of the spiritual lives of the elect, not the attempted conversion of persons irrevocably condemned.

Already, however, there was strong evidence that many, if not most, of the people at Family Radio's headquarters in Oakland, California were dissenters from the official message. Most broadcasts on the worldwide radio network had ignored Camping's distinctive doctrines and predictions. Many broadcasts were devoted to presentations that contradicted his doomsday prophecies — discussions of health maintenance, provision for old age, long-term strategies for child rearing, care for the environment, and so forth.

Camping’s new emphasis appeared to satisfy both the believers and the nonbelievers within the organization. The former could continue to believe whatever he said; the latter could go about their normal business, unworried about the need to convert anyone to his unusual ideas. Family Radio’s website withdrew all direct mention of Camping's endtime books and pamphlets, although it continued, and continues, to run a link to his quaint answer to the question, “What Happened on May 21?

Yes, we got a few details wrong about the second coming, or the total collapse of the financial system, or the destruction of the middle class, or the coming of global warming (which used to be global cooling), but thank the Maker that the Message still got out.

Then, on June 9, Camping, age 89, suffered a stroke. He was hospitalized, and his Monday through Friday live broadcasts ceased. Virtually the only Campingite voice on Family Radio was that of an epigone, one Chris McCann, who kept preaching the party line about May 21 and October 21, though without Camping’s goofy panache. In a recorded talk that FR broadcast on August 12 (one of a series of talks that is still going on), McCann said of the apocalypse of May 21, “In some small degree it didn’t happen.”

In August, Family Radio’s monthly direct-mail fundraising letter quoted listeners who thanked FR for its message, even though May 21 didn’t turn out to be exactly what they had been led to anticipate. “I am not disappointed with anyone at Family Radio," one listener said. "I believe all intentions were good.” The letter betrayed no visible embarrassment on FR's part. But the September letter didn't mention May 21, or October 21, either. It contented itself with an understated request for support. So the stage was set for a full, though gradual, withdrawal from predictions and disconfirmations.

On September 20 came the news, delivered by website, that Camping had returned to his home, followed on September 27 by a recording of Camping’s own voice — firm and clear, only a little slurred, and precisely the same in reasoning and intention as his pre-stroke explanations of what had occurred and will occur in 2011.

In this new message, Camping reasserted the idea that October 21 will see the end of the physical universe. The elect will survive; the non-elect (everyone not saved by May 21) will perish eternally. His one addition came in response to a question of urgent concern among his remaining followers: what will happen to the unsaved members of our families?

Camping had already established the doctrine that only 200,000,000 people, out of the billions who have ever inhabited this planet, are among the elect. Now he offered consolation to people about to be deprived of their families and friends. He said it is likely that there will be no violence on October 21: “Probably there will be no pain. . . . They will quietly die and that will be the end of their stories.”

“The end," he went on, "is going to come very, very quietly, probably during the next month, probably by October 21.” Lest you mistake “probably” as a concession to uncertainty, he also said, “I am very convinced that all the elect will go to be with the Lord in a very few weeks.” Regrettably, however, from the point of view of his own credibility, he recurred to an idea that he had been preaching before his stroke — his explanation of why God had let him go so wrong about May 21. There were a lot of things, he said, that “we” didn’t understand, but it was good that God had withheld the full truth; it was good that God had let Camping declare, in the most dogmatic terms, that there would be a literal cataclysm on May 21 — because if he hadn't, the rest of his message wouldn't have aroused much interest.

Here is the unconscious cynicism that religious and secular prophets so often display. Yes, we got a few details wrong about the second coming, or the total collapse of the financial system, or the destruction of the middle class, or the coming of global warming (which used to be global cooling), but thank the Maker that the Message still got out. So please keep trusting and respecting us, the people uniquely qualified to convey such Messages.

I will continue to report on events at Family Radio. My current, highly fallible prediction is that within a few months after October 21, Mr. McCann will vanish from the broadcast schedule, the greatness of Mr. Camping will be institutionally recalled, but not his teachings, and Family Radio will return to a more or less typical Christianity — unrepentant, unconfessed, and unwilling to remember the great events of 2011. Such is the way of this sinful world.




Share This


Thoughts on “Hayekian Insights for Trying Economic Times”

 | 

Following a recent panel at the Cato Institute commemorating the publication of a new edition of F.A. Hayek’s The Constitution of Liberty, Arnold Kling brought to my attention a recent essay on Hayek by Bruce Caldwell. On the panel, Caldwell provided a thorough and concise refutation of George Soros’s blatant misreading of Hayek. Naturally, I sought Caldwell's essay out.

In this work, “Ten (Mostly) Hayekian Insights for Trying Economic Times,” Caldwell seeks to “identify 10 key themes to be found in the writings of Hayek and others in the tradition to which he belonged that may provide some insights into how we might respond to the current dilemmas that we face.” The essay is thought-provoking, and several points are worthy of further discussion.

Theme #1: The business cycle is a necessary and unavoidable concomitant of a free-market money-using economy.

Caldwell cites Austrian business cycle theory to proffer an explanation of the recent financial crisis:

Hayek’s theory offers a pretty good description of at least part of what happened in the latest meltdown, especially in terms of the Federal Reserve’s interest rate policy and its effects on the housing sector. In Hayek’s theory, problems start when the market rate of interest is held too low for too long. This always politically popular policy leads to malinvestment — too many investment projects get started that cannot ultimately be sustained. When people realize what has happened, investment spending collapses and a recession begins. The dangers of a prolonged low-interest-rate regime in distorting how the various factors of production in the economy are allocated — what the Austrians call the structure of production — is something to take away from the theory, especially given the political popularity of such a policy.

My understanding of the Austrian business cycle theory is the same as Caldwell’s, but I characterize it a bit differently. As I understand it, a fiat monetary system creates money and then disperses it via banks — in the U.S., the 12 regional Fed banks — to selected customers and then out to the rest of the economy. When the flow waxes or wanes, the wave crests, and troughs move over various segments of the public, leading to higher or lower investment and consumption.

These monetary phenomena may not accord with the underlying realities of consumer demands. That mismatch can beget over- or underinvestment, thus creating a bubble and then the inevitable collapse. Commodity markets have evolved many mechanisms to reduce the severity of such fluctuations — including hedging, stockpiling, and alternative technologies.

Would a competitive money supply reduce the business cycle problem in a similar fashion? I recognize that the idea may be viewed as radical, but then many classical liberal concepts are seen as radical in our illiberal political environment.

Theme #2: The 1970s show why Keynesian economics was rejected.

In the late 1960s and 1970s, Keynesian policies created their own backlash — a consequence of the economic calamities they begat.

When inflation began to appear in the late 1960s due to LBJ’s deficits, a precisely calibrated income tax surcharge designed to tamp down demand was imposed. Yet because it was viewed as temporary, it had no effect, and inflation continued to rise. This was the first signal that the machine metaphor might have been the wrong one.

Things got much worse in the 1970s as inflation turned into stagflation. The main lesson of the 1970s was that once inflation gets started, it is very difficult to get rid of it. To fight it, the government has to tighten up the economy. This in turn induces unemployment, and because the effect on inflation is not immediate, for a time both the unemployment rate and the inflation rate go up together.

Sadly, Keynesian economics was not rejected for long. We’re all Keynesians again — falling prey to government “stimulus” and scientistic fallacies. Government doesn’t need to “prime the pump.” Rather, we need a deregulatory stimulus to free the nation’s creative economic forces. As Wayne Crews, CEI’s vice president for policy, puts it:You don’t need to teach the grass to grow; simply move the rocks off of it!

Theme #3: Some regulation is necessary . . .

The comment by Caldwell that I most enjoyed at the Cato forum was his citing of Hayek’s response to Wassily Leontief’s furious attack on him, which essentially boiled down to, “How dare you criticize planning!” Hayek’s answer was that the question was not whether to plan or not, but rather, Who should plan for whom.

In his essay, Caldwell defines this distinction: “The sort of planning that Hayek favored was a general system of rules, one that would best enable individuals to carry out their own plans.” He adds, “For markets to work effectively, they must be embedded in a set of complementary social institutions.” Indeed, the regulatory disciplines of a competitive marketplace are generally far more effective than the regulatory disciplines of a politicized bureaucracy.

Theme #4: . . . but a lot of regulation is fraught with problems and will make matters worse.

Caldwell makes an important point about the speed and wisdom of bureaucrats:

The basic Austrian insight here is that entrepreneurs (including those who realize there is money to be made from devising ways of getting around regulations) are always forward-looking, while regulators and legislators are almost of necessity backward-looking.

While there might be a handful of individuals knowledgeable in the complexities of financial engineering, the likelihood that such individuals will find employment in a federal regulatory agency satisfying is nil.

And even if such wise individuals existed and were willing to toil away in government planning offices, their actions would still be hampered by the fact that no one else would know what they’re up to at any one time, and how long it would be before they would change course.

Regulation also inserts uncertainty. As Hayek put it, “the more the state ‘plans,’ the more difficult planning becomes for the individual.” There was plentiful evidence of this in the recent downturn. In the fall of 2008, each announcement by the Fed and the Department of the Treasury, while meant to reassure the markets, produced more and more panic. It also froze people into inaction. One could imagine the decision-making process that took place in many people’s minds: “Should I hold onto my house that is underwater, in the hopes of a government bailout? Should I buy a car now that the prices are low or wait for some government program that will cause them to fall even lower? A stimulus plan is coming, and I don’t know what it will look like; probably best to delay all decision-making for now, to wait and see.”

Over and over again, we encounter examples of people basing their decisions on trying to guess what the government is going to do. Contrast this with what happens in well-functioning markets, where people make their decisions principally by looking at changes in market prices, prices that reflect underlying scarcities.

Indeed, government bureaucrats have no means to convey information as effectively as prices can.

Theme #5: The economy is an essentially complex phenomenon for which precise forecasting — on which the construction of rational policy depends — is ruled out.

Exactly — and when we put all our eggs in the same basket, the results of errors are magnified. “[T]he things that we actually do know all concern limitations on our knowledge and on our ability to formulate and carry out rational policy,” Caldwell notes; and continues:

This does not mean that policymakers cannot get things right when it comes to managing the economy as a whole. It is just that sometimes stabilization policy stabilizes the economy, and sometimes it destabilizes it, and we usually can’t tell in advance — and sometimes not even in retrospect — which scenario is unfolding or has unfolded.

Theme #6: In any complex social order, any action may have both good and bad unintended consequences.

One reason for optimism is the fact that the term “unintended consequences” has entered the public policy debate. Perhaps the fallacies of central planning are becoming clearer?

The bad side of unintended consequences is that many attempts to impose our will on the complex adaptive system that is the economy cause things to happen that were not part of our original intention. For example, as everyone recognizes, a market system does not satisfy our longings for “social justice.” In response, well-intentioned people — or those with interests who can play on the sentiments of the well-intentioned — naturally seek to make adjustments in a market system so as to produce more desirable results. Unfortunately, time and again, history has demonstrated that . . . all sorts of pernicious effects will occur that were not part of the original intention.

As I’ve argued before, during the Great Depression, people wisely distrusted big business, so they turned to big government — which had never been tried in peacetime — as a more attractive option. Today neither is trusted, which improves the odds for a more realistic comparative assessment of markets vs. government.

Theme #7: Basic economic reasoning captures what we can know and say about the essentially complex phenomenon that we call the economy.

Following Hayek, Caldwell describes the market economy as a mechanism for the efficient allocation of scarce goods. He is pleased that "basic insights about the workings" of the market are now built into economic education:

These tools allow us to talk about the fundamental fact of scarcity, the choices that scarcity makes necessary, the costs of choice, and the ways to push back against scarcity, at which point the notions of the division of labor, specialization, comparative advantage, the productivity of capital, and the gains from trade are introduced. If one adds to these the concepts of elasticity of demand and supply, and some basic intuitions about market structures, one can explain a lot about the world, as anyone who has ever taught an introductory economics course knows.

Here I have some major disagreements. I find the view of economics as a system for efficiently allocating scarce goods, a view that Caldwell seems to favor, overly static. I prefer the Coasian view of the market as a set of institutions for lowering the transaction costs of voluntary exchanges. In this regard, I’m influenced by Joseph Schumpeter, who noted:

A system — any system, economic or other — that at every given point of time fully utilizes its possibilities to the best advantage may yet in the long run be inferior to a system that does so at no given point of time, because the latter’s failure to do so may be a condition for the level or speed of long-run performance.

I recall my own undergraduate one-year course in economics. When presented with the positive-sum nature of exchange driven only by self-interest, I asked, “Why wouldn’t the party that held both items in a given transfer just stop the transaction at that moment?" Most transfers involve a period when one party holds both items and at that (possibly brief) moment, short-term self-interest would entice that party to not complete the transaction and singularly benefit. My professor didn’t understand my concern, and only years later did I come to understand that markets “work” because both parties hope to engage in future transactions. If they default once, they will face either cultural or legal sanctions and will at least find it hard to identify future transaction partners. That is, before a world of voluntary exchanges can occur, institutions (cultural or legal sanctions, an expectation of future exchanges) must exist — institutions that discipline transfers. (In a priori probabilistic terms introduced by Ronald Coase, the transaction costs must have been reduced earlier to make such transfers mutually advantageous.

Of course, when I asked my question, economics professors had no interest in or understanding of the role of institutions in lowering transaction costs, of making markets possible. And often they still don't have that interest or understanding. Most people trying to understand why markets exist are unaware of the evolution of the institutions that make voluntary exchange viable. Naiveté about “markets” has led to “market socialism” and “market mechanisms” and other collectivist beliefs that markets can be created from whole cloth by means of top-down political planning. Consider, for example, the various emission trading systems that are now being proposed. The late Warren Nutter aptly noted: “Markets without property rights are a grand illusion.” He was discussing the mechanical attempts in Russia after the fall of the Iron Curtain to replicate markets, but the principle is true elsewhere.

Unfortunately, modern economics is often based on static equilibrium models designed to be solved rather than to resemble reality. Coase became a nonperson in the economics profession (as did most Austrians), in large part because he kept asking embarrassing questions of this sort.

Theme #8: Demands for social justice can be satisfied.

I believe that this was Hayek’s biggest mistake.

Somewhat controversially in the eyes of certain Austrians and libertarians, Hayek argued that in a society that had reached the general level of wealth that Britain or the US had achieved, “there can be no doubt that some minimum of food, shelter, and clothing, sufficient to preserve health and the capacity to work, can be assured to everybody,” and also that the state should “assist the individuals in providing for those common hazards of life against which, because of their uncertainty, few individuals can make adequate provision.”

Granted, Hayek’s concept of a “safety net” was quite minimal in comparison to that of our modern welfare state, but to argue for it in the first place leads inevitably to unsustainable middle-class entitlements. We may not be able to avoid such policies altogether, but to endorse them is to endorse the instability of the welfare-regulatory state. Hayek struggled with this dilemma; I do not think he ever resolved it. (This may be the reason that, in a previous Cato panel, Richard Epstein argued that Hayek never overcame his social democratic roots.)

Theme #9: Freely adjusting market prices helps solve the knowledge problem and allow social coordination (the basic Hayekian insight).

Here I agree completely. I consider Hayek's “The Use of Knowledge in Society” the most important essay in economics. The idea embodied in that work was the essence of the market calculus debate between von Mises and Hayek on one side and Lerner, Lange, and Kornai on the other. Caldwell offers a good summation of Hayek’s view.

The question that must be solved in constructing a rational economic order in such a world is: How can we use the knowledge that is dispersed among millions of fallible market agents so as to achieve some level of social coordination and cooperation?

Hayek’s answer was that a market system with freely adjusting market-determined prices is, when embedded within an appropriate institutional structure, a marvelous mechanism for coordinating human action.

Unfortunately, many modern economists — including some self-avowed “free market” economists — have ignored Hayek’s view on this topic, as the vogue for Pigouvian taxes and quotas illustrates.

Theme #10: The basic "public choice" idea is true: more often than not, government cures are not only worse than the disease, but lead to further disease.

I largely agree with Caldwell’s valuation of public choice economics in helping to explain why government grows and rarely recedes.

Public choice theorists believe that politicians, like everyone else, act in their own self-interest. If consumers maximize utility, firms maximize profits, and politicians maximize votes, what do bureaucrats maximize? The answer is troubling: Bureaucrats have an incentive to maximize the size of the bureaucracy under their control.

However, I find that public choice focuses too heavily on economic motivations, without taking other factors into account. Public policy is a two-tier process that includes both economic and ideological interest groups. Public choice thinkers tend to ignore the motivations of the latter, even though their influence is often much greater than that of business people or other economically motivated groups.

Bruce Yandle’s “Baptists and bootleggers” paradigm illustrates how economic and ideological groups often interact to pursue shared agendas. One group — the Baptists — advocates prohibition on moral grounds, while another unrelated group — the bootleggers — profits from the extralegal opportunities created by policies resulting from the former’s moral crusade. There has, however, been too little attention paid to the ideological groups.

Much of publicpolicy is driven by ideological groups crafting narratives that effectively link their favorite policies with core social values. Aaron Wildavsky and Mary Douglas argued that people respond to a policy by a quick decision as to whether that policy advances or threatens their core values. That decision will be influenced by the narratives communicated about policy.

Today’s “Baptists” are often environmental, labor, “consumer,” “human rights” groups advocating government intervention in the economy to advance some feel-good cause. To date, free market advocates have been far less effective than the left in crafting narratives that persuade a majority of people that classical liberal policies advance core values — whether these be equality, fairness, order, or security — better than do statist ones.

In conclusion, I should note two questions that I believe Hayek neglected to explore adequately. The first is: why do so many bad policies evolve and survive? (Granted, Hayek's “The Atavism of Socialism” essay deals with that theme to some extent.) The other question is: how could Hayek's own ideas be implemented? His focus on “What do we know and how do we know it?” was crucial, but more attention to “How do we change it?” would have been valuable.

Hayek did have a change agenda — one I agree with — but he did not clarify sufficiently what we could do to bring that about. His recommendation to fight the war of ideas is necessary, but not sufficient. Still, few others have done as much as Hayek, whose work I consider critical in the battle for the future of civilization.




Share This


All-American Johnny and the Educators

 | 

The debate over Johnny and the American educators goes on. Who’s more to blame for the problems in our public schools? The star maverick educator Michelle Rhee said the other night on a talk show she could see students getting paid for a good performance. The conservative education professionals simply say that “Johnny,” meaning most of the public school students, has to do better, to make our schools better. Parents say that educators will have to teach him better to make our schools better. Educators are beating up Johnny in the press to make their accusation strong. He needs to get real (which is as strong as their language gets). Ordinary lay folk know things aren’t right in America’s public schools. Some powerful politicians are demanding our schools be the best in the world.

We don’t need to be in an international contest. We have a lot to do here at home. “High schools are the downfall of American school reform,” said Jack Jennings, President of the D.C. Center on Education Policy. This disclosure pointed the finger. Educators knew the problem was this deep. They kept the scandal this buried. The public high schools in America number 27,000, and they have on their rolls millions of students; and 7,000 drop out every day. Administrators don’t know what to do about the high schools.

Powerful politicians are also making us accept over 100,000-plus foreign students from Latin America and Asia in our schools, who depress the test scores. They have trouble with the tests in English, and sometimes with discipline. Johnny is in a classroom of noisy students from many cultures and can’t get serious about paying attention when the teacher is busy keeping order in the class. Johnny doesn’t get rigorous tutoring at home and study discipline. He doesn’t score well on tests, which is not totally his fault.

Our high schools can’t do better when they’re like this, forced to be politically correct. Is this why Johnny doesn’t like being taught with “them”? Donal O’Shea, Dean of Faculty, Mount Holyoke College, and author of The Poincare Conjecture (referring to the formidable topological theorem the western world has been trying to prove for 100 years) dropped another bomb on American education in his March 2007 Forbes essay, saying that in 1985, of the million students who received bachelor’s degrees that year, only 16,000 majored in math or statistics. More disturbing, of the 1.4 million who received bachelor’s degrees in 2004, only 13,300 majored in math or statistics. More and more of our high schools are letting their students graduate with little or no science and math and serious humanities education. Graduates who go to college anyway mostly are woefully weak.

The public high schools in have on their rolls millions of students; and 7,000 drop out every day.

Secretary of Education Arne Duncan said recently that Johnny should read more. Although no one of his stature should have to say that reading is serious, it's clear that Johnny has to do much more reading to improve his articulation and language crafts — the kind of reading that doesn't always register on standardized tests. Harvard educated actor Matt Damon recently told a reporter, “We’re tying teacher salaries to how well kids are performing on tests; that kind of mechanized thinking has nothing to do with higher order [thinking].” He may be right, not only about tests in English but also about tests in math-based subjects. President Obama and his advisers put education on their plate the first thing in 2008, recognizing that the high schools were shockingly unhealthy, especially in the math and science departments. His team selected STEM subjects — science, technology, engineering, mathematics — to do the job. The team promised high school students who go for these subjects that they would be richly rewarded upon graduation from college as a STEM major. They’ll enjoy the good life, a professional career, prestige, and security all their lives. The team was romantic. Yet mathematics is the most important subject — and not just for STEM subjects, but for all the other disciplines too. Mathematics is the yeast in all of them. No subject can grow, get strong, become precise without it. Every subject has to establish its foundation on sturdy logic to survive. Mathematics is logic in its supreme form.

Johnny doesn’t know this about math. He is taught math in school as a set of mechanical exercises, found in a “manual,” a textbook, filled with them. The textbook is dully and poorly written. The author isn’t well-read, and doesn’t have to be. The book is written to sell to the state’s textbook adoption committee. Publishers fight hard to win the contract, which is quite big if the state is big and buys one math textbook to be used by all its high school algebra students. Johnny can’t comprehend this “adopted” textbook; the “whizzes” in class don’t read it either, but understand what the math formulas and the “mechanical writings” are saying. The mechanical math geeks are educators’ darlings. They test brilliantly and are “inventive” and become gadgeteers.

Johnny is taught math in school as a set of mechanical exercises, found in a “manual,” a textbook that is dully and poorly written.

Test-driven educators need to see students less than as machines, but more, particularly teens, as fragile souls always in need of constant anchoring. The horrors they can commit! Think of the 1999 Columbine High (Colorado) massacre of 12 students and a teacher by two male seniors (a front page story), and even the 2005 brouhaha at Monta Vista High (Culpertino, California) of Asian and white students over who’s best in math. Some whites at the school moved out of town. (Front page story, “The New White Flight”!) Teens easily crack under pressure. If only they were disciplined to channel their energy to better use, they would make high school a healthier world and also ensure that our pride and joy — the 18 of the 20 best universities in the world that are American — retain their strength. Joseph Nye of the Harvard Kennedy School said there are 750,000 foreign college students in American colleges. But then he said, “We have to do something about our secondary education.”

Remember that the 750,000 foreign students don’t have the cultural wherewithal to create brilliant American writing. That task belongs to Johnny, and he shouldn’t be thrown away. If he's not a math geek, Johnny still may learn how to contribute to American letters, which aren't brilliant enough.

The annual State Regents Exams for New York high school seniors reveal why educators should get real. The exams demand that to be college-ready each senior score at least 80 in math (last year many failed to solve the simplest of quadratic equations) and 75 in English Language Arts (two essays have to be written). The high school graduating rate for 2009 was 77%, but only 41% of the class was prepared for college. The two-year college was the only hope of many of the graduates not prepared for four-year college. Poor inner-city Johnny has it the worst — nothing, nobody to help him hope for a good score on the impossible tests; and no hope that the education system will take an interest in him.

Miracles do happen. A New York inner-city Johnny was picked to star in a Walmart ad that takes place in a school library. Johnny glows as he’s helped with his reading by a retired, lawyerly, grandfatherly looking gentleman smiling like one with the patience of Job. The ad runs twice nightly on the PBS “Tavis Smiley Show.” Thanks to Walmart for telling inner-city Johnny across America that “a mind is a terrible thing to waste.” The ’hood does have rich soil worth cultivating. Will other big businesses come in and help other overwhelmed students? Remember that the great English novelist Charles Dickens was born dirt-poor.

By the way, no one at our 18 most hallowed universities proved the Poincare Conjecture. Last year, a reclusive Russian mathematician, Gregori Perelman, proved it but refused the Clay Institute’s $1,000,000 prize. This caliber of confident mathematician tends to be shy, and to have other baggage, such as being incomprehensible at points in his lectures. One can’t expect the high school geek math teacher to be less handicapped. He mumbles at the blackboard. So Johnny’s best shot is to do a lot of good reading with a dictionary to get verbal competence and confidence in writing. That would be quite an achievement — more of an achievement than a brilliant score on a math test.




Share This


The Anti-Drug Argument for Legalization

 | 

In an early 2011 episode of the libertarian TV show “Stossel,” John Stossel debated Ann Coulter about ending the War on Drugs. At one point Coulter exclaimed in a tone of shocked outrage that Stossel could not possibly be serious in saying that legalization would lead to a decrease in drug abuse. Here I want to argue precisely that point.

It is possible for someone to believe that nobody should ever do drugs but also to support the libertarian proposal for ending the Drug War and legalizing all recreational drugs. The two positions are fully consistent, because both legalization and the end to widespread drug addiction will flow naturally from a psychological and philosophical shift toward a culture of more personal responsibility and away from a culture of irresponsibility. The cause of most drug addiction can be traced to irresponsibility, and irresponsibility is the psychological precondition of the welfare state. This explains why the drug subculture is dominated by the Left. We libertarians can silence some of our most vocal opponents if we undermine the alliance between the anti-drugs movement and the statist War on Drugs. This essay is one step toward achieving that goal.

I hate “recreational” drugs, and I do not think that anyone should use them. But I firmly believe that recreational drugs of every type should be legalized. I could argue that drug use is a victimless crime, or that human beings own their own bodies and have the right to do to themselves whatever they wish. I could argue that the War on Drugs is racist because it targets substances commonly used by members of racial minorities. But such arguments have been made many times before. Libertarian thinktanks such as the Cato Institute have already produced ample empirical evidence showing that legalization does not correlate with drug abuse. I have no need to repeat this evidence. My argument is different. I am going to argue that legalization, if accompanied by a psychological and philosophical shift towards a culture of personal responsibility, would lead to a long-term widespread decrease in drug abuse.

If the foes of drug use are so sure that it is an evil, then why are they so afraid of their inability to persuade consenting adults to abstain from drugs?

Legalization might cause a temporary spike in drug use, as curious Americans would be tempted to experiment. Then again, there might not be a major spike, because despite the War on Drugs, most Americans have already experimented. But even if there were a spike it would not last long. The rational, intelligent American public would soon learn, or reaffirm its current conviction, that drug use is self-destructive and stupid. Indeed, if the foes of drug use are so sure that it is an evil, then why are they so afraid of their inability to persuade consenting adults to abstain from drugs? The truth, of course, is that their arguments are too obvious to be necessary for rational people. Human goodness and happiness depend upon reasoning and reason’s ability to perceive reality accurately; mind-altering drugs impede this process.

I have seen firsthand how drugs can ruin lives and how difficult it can be to quit once someone becomes addicted. I will proudly state that within the past two years I have been able to quit drinking alcohol and smoking cigarettes. Without providing any detailed horror-story anecdotes, I think that it is widely known that alcohol makes people stupid and aggressive, that cigarettes are a deadly, lung-destroying poison, that drugs cause people to lose their grip on reality, and that hard drugs are physically self-destructive and can ruin lives in any number of ways. There can be some debate about whether or not moderate, infrequent recreational drug use is a bad thing (although I think that it is), but there is no question that habitual drug abuse, in other words drug addiction, is both physically and psychologically poisonous. Drugs are a mess, and every sane person knows it.

The question, for me and other drug-haters, is: how to get people to stop using drugs? One possible approach is to outlaw them. This policy has undeniably failed, as drug use of every kind is rampant, despite the government’s best efforts to eliminate it. But if you can’t force people not to do drugs, then what can you do?

A more sophisticated and refined approach would look at the reasons why people choose to do drugs, and would fight the choice to use drugs at its source. People become drug addicts because they make a choice to be weak-willed, lazy, and irresponsible. A drug, after all, is a substance that functions by going between you and reality, so that your experience of reality becomes more pleasant than it would have been sober. The drug does not change reality; it merely changes the chemicals in your brain. It is undeniable that sober reality is the reality that objectively exists in the physical world, and drug-experienced reality is a fictional reality which does not actually exist. Therefore, in a sense, drugs are the ultimate subjectivism and solipsism, in which you choose to cope with the problems in your life not by facing reality soberly and seeking to improve it, but by choosing to change your brain so that you will not feel the pain of your problems any more, so that you won’t have to be aware of what is really going on. The tremendous appeal of drugs is their usefulness for escapism.

I suspect that addiction is usually more psychological than physical, because every human being has the power to quit doing drugs at any time if he makes a genuine choice to do so. Although there are many drugs that have withdrawal symptoms of sickness and agony, rare indeed is the drug that will actually kill you if you stop abusing it, and sobriety is beneficial to one’s health. Addiction comes from the mind, not from the body. What, then, is the nature of an addiction?

The cause of most drug addiction is pain and suffering. A drug addiction is merely a manifestation of the sadness inherent in the condition of being human. Pleasure, wealth, friendship, love, romance, and happiness are not given to humans; we have to work for them. When we make mistakes we lose what we want. The fight to be happy is difficult and messy and full of misery and horror. A person can, however, cope with the human condition responsibly by choosing to face and try to improve reality. This means that he assumes responsibility for both success and failure; he accepts the rewards for good choices and the punishments for bad ones. Alternatively a person can choose the irresponsible choice of abandoning reality, not trying to make things better, and trying to hide from or escape from sorrow.

The essence of irresponsibility is seeking to break the causal connection between the choices you make and what happens in your life. Drugs are addictive because they are uniquely useful for living life irresponsibly. They kill your awareness of your life and blind you to the punishments for your choices. Drugs are as popular as they are because everyone experiences the pain of the problems in life. But this pain evolved as nature’s way of motivating people to solve their problems.

The problem with addiction is not merely that you use the drug constantly and it damages your physical health. It is that a human being becomes ethical by thinking and making choices, and drugs make the drug user’s choices for him or her. The essence of personal responsibility is taking responsibility for your choices and not easy shortcuts around doing the work that is necessary in order to be happy. Drug addiction is fundamentally irresponsible, not merely because it is a lazy way to cope with problems, and not merely because it impairs the ability to choose, but because it is easy and tempting for drug users to blame their actions on the drug, shifting causation away from themselves. That is the core of irresponsibility.

Government acts upon the body politic like a drug, blinding the people to reality.

The issue of whether a person chooses to live responsibly or irresponsibly is at the heart not only of the issue of drug addiction, but also the issue of which form of government to choose. Drug use is a personal manifestation of irresponsibility, but a political manifestation of irresponsibility is socialism. An irresponsible government will hide from society’s problems and use any quick-fix snake oil it can imagine to make people think that it is doing the right thing, without ever actually addressing the causes of society’s problems and trying to fix them. The irresponsible person blames his problems on something else and looks to external saviors to solve his problems instead of taking responsibility and solving his problems himself. The modern-liberal voter looks to government to make his choices for him and give him wealth instead of creating wealth for himself. Government, in short, acts upon the body politic like a drug, blinding the people to reality. The more we rely upon government to live our lives for us, the more we lose control and the farther we fall from the condition of being able to solve our own problems.

Because drug abuse and big government are two manifestations of the same irresponsible attitude towards life, it is no coincidence that the drug culture is permeated by the modern-liberal or socialist Left. On the other hand, a culture of personal responsibility, such as is embodied by the libertarian political philosophy, would militate against the problem of drug addiction.

Personal responsibility is inconsistent with using government to force people to behave ethically regarding activity that does no violence to others. We libertarians must make a stand for legalization, but we should fight this battle not for the sake of drug addicts, but for freedom as a matter of principle, supported by rational arguments for individual responsibility.

Many drug foes seems incapable of grasping the notion that you can persuade a reasoning mind to choose sobriety freely. Perhaps this is because the anti-drug interest groups have shown not one iota of understanding of how to talk to people about drugs. Instead of running anti-drug ad campaigns that treat people like rational adults, the anti-drug groups (usually in conjunction with government agencies) ads designed to scare or guilt-trip people into quitting drugs. People who have chosen to use drugs as a way to cope with reality are already more afraid of facing reality than they are of death, and they have chosen to be irresponsible. So appealing to the fear of death and the guilt of letting down your loved ones is a silly strategy. A manipulative emotional trick never has the same impact as persuasive reasoning. The proper anti-drugs approach is to convince people rationally.

Happy people are far more difficult to rule than sad, depressed, miserable people with drug-addled brains.

It is notable that when a special interest group wants people to behave in a certain way, but lacks any well-reasoned arguments, it petitions government to pass a law to coercive obedience. Some fools actually may believe that people know better than to do drugs but are too weak to resist temptation and therefore need the government to force them to choose sobriety. Only weaklings and cowards would buy this argument. The government has no special knowledge of the dangers of drugs, no knowledge that the American people lack, nor does it possess a magic wand to make drugs any less appealing. The most effective anti-drug strategy is rational persuasion in a free, legalized society.

When the government forces you to do something that you aren’t persuaded you should do, it is treating you like a child — and the condition of being a child is precisely the condition of not assuming responsibility for yourself, the very condition that leads to drug addiction in the first place. Legalization would send a message that we as a people need to take responsibility for our own choices. It is the best thing the government could do to combat drugs. Rampant drug abuse and the War on Drugs would both be killed by a cultural shift towards personal responsibility. Happy people are far more difficult to rule than sad, depressed, miserable people with drug-addled brains. If society changes so that people are happier and more satisfied with their lives, the power of the government will be vastly curtailed.

If the socialists and the anti-drug warriors actually wanted to solve the drug problem, marijuana would be legal today. Marijuana is far less dangerous than alcohol. It is the opposite of a gateway drug; it is merely a convenient means of experimentation for curious people making the transition from child to adult. Over the long term, legalized pot would decrease hard drug use. Unfortunately, we cannot depend on the state to do the rational thing and legalize marijuana.

At this juncture, the libertarian movement should try to have it both ways: we have already gained significant popularity by appealing to drug users who want drugs to be legalized, but we could also gain a loyal following among drug haters. We should preach that our path of social and political self-responsibility is the way best suited to sober, clear-headed, rational adults. We can thereby attract to our ranks many of the people whose lives have been ruined by drugs and who are looking desperately for an escape from the drug-induced carnage. But because responsible adults are more likely to support free market capitalism than people who are irresponsible and immature, I think that libertarianism can only triumph with the support of sober voters. One might wonder why the many voters who abuse illegal drugs do not swarm the polls and vote libertarian politicians into elected office. My explanation is simple: voters with drug-addled brains are too lazy and irresponsible to become political activists, even though they stand to gain the most from legalization.

Right now the anti-drug, anti-legalization lobby is a powerful foe of libertarianism. The anti-drug activists are passionate and fanatical because they understand the evil of drugs and take inspiration from the virtue of sobriety. But so do I, and my hatred of drug abuse does not make me think that the horrors of the Drug War are in any way justified. If we could chip away at the link between the anti-drug movement and the anti-legalization movement, libertarianism would lose some of its most zealous opponents (perhaps including Ann Coulter and conservatives like her). We should try to persuade some of the anti-drug advocates to abandon the prohibitionists and back legalization as the clever solution to America’s drug addiction problem.




Share This
Syndicate content

© Copyright 2013 Liberty Foundation. All rights reserved.



Opinions expressed in Liberty are those of the authors and not necessarily those of the Liberty Foundation.

All letters to the editor are assumed to be for publication unless otherwise indicated.