February 2008

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I believe there are more instances of the abridgment of freedoms of the people by gradual and silent encroachment of those in power than by violent and sudden usurpations. (attributed)

-James Madison

February 17, 2008

Subprime Primer

Via Barry L. Ritholtz at The Big Picture, allow me to share a slideshow that explains the subprime situation. The language may offend but the stickfigure cartoons are very work safe. Click the cartoon below to launch the slideshow.

Whether it's funny or sad may depend on how much money you have lost in the housing market. The same was true of this post from a couple of weeks ago, which highlights exactly what bothers me about this "housing crisis". It's a correction in a market that has long known to be overvalued, and it is not an issue of children sleeping on the streets, as far as I can tell.

Language frames public opinion, which determines legislative action, so calling it a "housing crisis" will attract more government action (and sell more newspapers) than admitting that it's just investors trying to mitigate financial losses by walking out on mortgages and into apartments. Repeat the phrase at your own peril.

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August 3, 2007

Who Owns the Treasures of the Sea?

An interesting piece in The Economist regarding the rights of deep-sea treasure hunters…

[Odyssey Marine Exploration]’s business is based on the notion that the ocean floor is littered with valuable old stuff that, thanks to new deep-sea technology, can now be recovered…

Step forward the lawyers for Spain... “The owners of sunken ships have rights. Spain has not abandoned its sunken property and it does not permit unauthorised salvage.” If Odyssey is forced to hand over a large part of its Black Swan haul a cloud will fall over all commercial treasure-hunting. Who, after all, wants to invest large amounts of money looking for something only to see a government then claim full ownership?

My initial reaction is to be torn. On the one hand, the claims of Spain seem plainly to be lame. But as usual, I want to know exactly where the line is drawn.

If the crew has to abandon ship, but it doesn’t sink, the owners don't automatically give up legal rights to the ship or the cargo. To just take it because it is in international waters would be piracy. Even if the ship is left bobbing and unmanned for days, weeks, years – at what point would it not be piracy just to take it?

Wulf: So you are going to take the ship and its cargo?

Phaedrus: Yeah.

Wulf: That's not yours?

Phaedrus: Well it becomes ours.

Wulf: How is that not stealing?

And I also don’t see how the morality or legality of the situation suddenly changes when the ship goes under water. Now I’m no expert on international salvage law, and I’ve only ever perused the Law of the Sea Treaty. I’m not sure it would apply. But I’m hoping somebody reading this knows a thing or two about how this all works, and could try to explain it.

I agree with the conclusions laid out in the Economist article:

If private treasure-hunters do not seek out wrecks, nobody else will. Governments rarely take any initiative. One alternative may be to adopt a British model. The British government has just signed a deal with Odyssey to recover treasure, and then to split the proceeds, from HMS Sussex, which went down off Gibraltar in 1693, carrying a million pounds in coins. The deal also provides archaeological guarantees…

Until treasure-hunters and governments start working together, every find is liable to be followed by complex legal wrangling, in which the only certain winners will be the lawyers.

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July 31, 2007

Socialism: So Pretty!

The Daily Texan is the student newspaper of UT Austin. It’s one of the largest student newspapers in the country. And yesterday, it ran an opinion piece advocating that Westerners re-evaluate the wonders of socialism. Under normal circumstances, I don’t pay much attention to student newspapers and their opinion pieces, as they just aren’t that well written. But this piece is an exception, and it therefore deserves to be highlighted.

The author is history student Colin Pace, who writes:

Socialism is not a monolithic ideology and it is not a terrible, fear-driven beast that threatens the U.S. masses. In fact, it is quite the opposite. To understand this, one need not look further than Michael Moore's recent movie, "Sicko." Though gimmicky and biased, like his other movies, the film raises an important question about why universal health care systems rank so high above the United States' privatized system in a global comparison.

But Wulf! Michael Moore is a dirty propagandist and his movie is full of lies! We’ve debunked “Sicko”!

But Wulf! The US health care system isn’t actually private, it’s half government funded already!

Come on, Wulf! We have the best health care in the world! People come here from Canada for our health care! The metrics are not fair!

Oh, Wulf! It’s just an undergrad in social sciences, spouting off his dirty collectivist delusions!

Yes, yes, I know all of that. And I also know that every year there a few million kids turning 18 and getting the right to vote. And they don’t read your blog. And most of them don’t know what is inherently unjust about socialism. Rolling your eyes and dismissing them may make you feel better about yourself, but it doesn’t actually advance the cause of liberty. So let’s take a closer look.

Colin Pace represents an articulate voice pointing out that “[i]nstitutions ranging from news stations to school systems teach that socialist and nationalized programs are doomed to collapse under the weight of bureaucracy and corruption.” I would love for this to be the case, but I simply don’t agree that the prevailing theme taught to our youth is that nationalized programs are too big to succeed. Privatized education, health care, public transit, and other government services? No, that’s certainly not the predominant agenda being pushed to our youth by the sources I know of. But to an audience lacking an articulate source to the contrary, Mr. Pace can play the role of the guy who questions authority, and that gives his point the ironic advantage of being anti-authority. “Rebel against convention and think for yourself about the benefits of letting bureaucrats make more decisions for you!”

Pace then makes another appeal guaranteed to garner attention on any college campus: class warfare and rich white guilt. “Factory workers thousands of miles away are harshly exploited so consumer goods such as clothing and TVs can be sold at low prices to American consumers.” For Pace, it’s not a matter of comparing the standard of living for the workers today vs. 40 years ago. It’s a matter of comparing their standard of living to mine, or better yet to Dick Cheney’s. And again, rolling your eyes and dismissing him is not the same as refuting him - or socialism.

But the real reason I chose to highlight this article is not because it’s easy to cherry pick a couple of weak points and mock him. It’s because Mr. Pace really does make an excellent point that we should all consider:

People should not judge the word "socialism" solely by what they know of "socialist" leaders. Leaders like Joseph Stalin and Fidel Castro may have upheld socialist aspects of their administrations, but they were not actually "socialists"…

Spot on. The more distant Stalin and Castro become, the easier it will be to note that they did not actually uphold socialist ideals… and therefore they do not provide an honest example of what is wrong about socialism. Those who wish to refute socialism should beware not to let their argument stop with Stalin and Castro, because it (rightly) won’t sway a collectivist who recognizes that these men were not socialists. There is a difference between oppression by a tyrant and oppression by a democracy. One is appealing to the tyrant and his cult of personality, while the other is appealing to 51% of the population. If we only know how to refute the ills of the former, we will eventually suffer the latter.

In other words, Colin Pace’s final paragraph is one that should be considered by every thinking person the world over:

Even those who are staunchly opposed to the nationalization of industry, believing that the free market is the only means for progress, should question the objectivity of the Western view of socialism. The word is loaded with connotations, but that should not stop people from asking what the system is really about.

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July 25, 2007

For Future Reference

WaPo:

President Bush this month is giving an obscure White House office new powers over regulations affecting health, worker safety and the environment. Calling it a power grab, Democrats running Congress are intent on stopping him.

This is great news. First, it’s an attempt to block the executive branch from acting without oversight, and instead gives the power to act without oversight to legislators and their aides, which is where that power ought to be, dammit. Secondly, and more seriously, I’ll be able to refer to this post the next time a Democrat is in the White House (cough-544 days-cough) and the shoe is on the other foot. That’s always fun.

As to the details, WaPo reports that the House voted to prohibit the Office of Information and Regulatory Affairs (OIRA) from spending federal money on Executive Order 13422. Cutting federal spending, I suppose – so far, so good. But what is Executive Order 13422? It amends an executive order from 1993… let’s check the text:

Each agency shall identify in writing the specific market failure (such as externalities, market power, lack of information) or other specific problem that it intends to address (including, where applicable, the failures of public institutions) that warrant new agency action, as well as assess the significance of that problem, to enable assessment of whether any new regulation is warranted.

That gives me the creeps just reading it. But… I can imagine the argument that it is a damn good thing that each federal agency should have to identify in writing the specific problem it intends to address. So far, I don’t see what the Dems object to.

Unless specifically authorized by the head of the agency, no rulemaking shall commence nor be included on the Plan without the approval of the agency's Regulatory Policy Office…

The Post summarizes this as “No rulemaking can go forward without the approval of an agency's Regulatory Policy Office, to be headed by a presidential appointee.” Is it a big deal to drop the first clause? But the point about the presidential appointee is a good one. Please read “presidential appointee” as “partisan political hack”. The Right Wing would do well to imagine what their reaction to this would have been under Bill Clinton… or what it will be someday under Hillary. Why do we continually have to point this out? In fact, that’s really the bottom line regarding each and every action the Bush administration has taken to gather and centralize power. While it may be fun for some of you to cheer as Bush, Cheney, et alii thumb their noses at the Democrats, it’s going to come back to bite you in the ass.

PS - I am not sympathetic to the desire that some federally employed scientists have for everybody to shut up and let them do what they feel they need to do. When you fund your own research initiative, I’ll support your desire for the government to back off.

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July 17, 2007

Economic Growth

Afghanistan's poppy crop set another record this growing season. I mean, it won't be official until the folks from Guinness verify it of course. But unofficially, we're talking a record crop.

That's a lot of cash flowing into Afghanistan. I hope most of it is going towards infrastructure and education.

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A Challenge to Captain Capitalism

Captain Capitalism is a man who loves three things in life: Soap, Shampoo, and Graphs. Since I'm not quite the graphophile as he, I would like to extend the following challenge to Captain Capitalism:

What would a graph look like whose x-axis was the years 1776 through 2007 and y-axis was GDP (adjusted for inflation) divided by population? I am really curious to see what that looks like. My prediction is that it’d be a steady slope upwards with spikes during the industrial and information revolution. But I’m interested to see if any sort of correlation can be made with the “value” per capita and the expansion of the government, or if there are any other trends that can be culled.

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May 9, 2007

One Day at a Time

Nancy Pelosi might be on to something with this idea of funding the war a couple of months at a time.

In fact, I propose we move to this kind of funding plan for other government policies whose “success” is in doubt or ill-defined. We can pony up a couple months of funding, attach some strings, and put it all under the microscope this summer with a budget axe at the ready. Not just the Iraq war. The War on Drugs, too. Health and Human Services. Campaign money, salaries and amenities for elected officials. Anything you consider pork.

Finally, a Democratic proposal I can really get behind. I’m even willing to suggest that federal education money comes up near the top of the list. It's friggin genius.

But why stop at two months? How about one month at a time, like most of my household expenses? Or even more frequently? We can go daily, like my junk food budget. Hey, I’ve studied Riemann sums. I’ve learned about compound interest. You let the time intervals shrink and the whole thing goes a lot smoother. And isn't that what we want in Iraq? Smoother! Again, it's friggin genius.

I’m on board, Ms. Speaker.

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May 8, 2007

What Limited Government?

Allow me to link BK Marcus on a point worth repeating... libertarians just might not be justified in their fond memories of that "small government conservative" Ronald Reagan. Was he better than the guys who have followed him? Sure. And is that really the point? I'm not sure. Markus links a Jeffrey Tucker article at Mises.Org that makes some points you really should remember when the 2008 GOP candidates embrace Reagan's legacy in their ads and debates.

Saul Friedman quotes Reagan himself, speaking at Oxford in 1992:

Let me tell you of another dream I have…a dream I have long had…Just as the world’s democracies banded together to advance the cause of freedom in the face of totalitarianism, might we not now unite to impose civilized standards of behavior on those who flout every measure of human decency? Are we not nearing a point in world history where civilized nations can in unison stand up to the most immoral and deadly excesses against humanity, such as those now defacing Somalia and Bosnia?

And later in that speech,

As long as military power remains a necessary fact of modern existence, then we should use it as a humanitarian tool…

What exactly did Reagan stand for, again?

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April 28, 2007

Hippocrates Shrugged

I don’t read the Volokh Conspiracy, mostly because I find his format unwieldy and distasteful. And that’s a shame, because my understanding is that Mr Volokh puts out some good content. But I sometimes run across his work by proxy, as was the case today. Inspired by one of Mr Volokh’s posts, Coyote Blog ponders, Does the Hippocratic Oath Make Doctors Our Slaves?

(The text of the Hippocratic Oath can be found here, if you’re the type to do research from the primary source.)

Coyote’s post is one that explains well the general libertarian philosophy as it applies to a specific situation. Libertarians (as he notes) are often written off in policy debates, because our positions come across to the average person as extreme and unworkable. And in our society, in the short term, maybe they are. But these aren’t knee-jerk, anti-social obstructionist positions. They are principled positions, stemming directly from classical liberalism. Most of our opponents are not willfully authoritarian, e.g. monarchists or the like. They are simply ignorant of how to draw political conclusions from philosophical values. They don’t recognize their own inconsistencies. And occasionally, when confronted with the issue in the simplest of terms and with the underlying philosophies and values, they recognize what’s going on.

So here it is: Just because a person has something that you want, or even something that you legitimately need, does not mean that you have a right to it. The only way to deny this fact is to reject egalitarianism* at its core – and who is willing to do that, explicitly? Most people – even those who support government medicine – will not. The failure of the collectivist philosophy that is so popular among intellectuals is not a failure to recognize that all men are created equal, but a failure to understand that they are endowed by their Creator with certain unalienable Rights, and that your right to life is not to come at the expense of my right to liberty.

Often, I feel like I am preaching to the choir here at AtlasBlogged. Occasionally, I figure there is little value in doing so. But sometimes people are able to break down an issue so clearly that it is of great value to share it. Does the Hippocratic Oath make doctors our slaves? I know people who have taken that oath and believe in government health care – a “right” to medical treatment. They would never advocate their own slavery, if they recognized it for what it was. But they don’t see the issue in those terms, and they don’t fear for their own liberty. They just feel overwhelmed by hospital administrators and insurance companies. They feel badly for sick people. They know there is a better way than the current way, and they want to bulldoze everything that impedes their ability to give the absolute best treatment to everyone. What better bulldozer than the federal government?

My father would never count himself a libertarian. But he understands this issue very clearly. He took the Hippocratic Oath, and he took it seriously. And when the hospital administration asked too much of him, and he felt that the insurance companies limited him, he faced a serious clash of values. He is a man who gives of himself relentlessly. He has literally given the shirt off his back – to strangers. But he will not be enslaved, and he knew his slaver when he saw him. He quit medicine several years ago. He wasn’t eligible for retirement, but he stood by his principles and shrugged the expectations (and chains) right off. I’ve been proud of him my entire life, but never more than on this issue.

* I use the term “egalitarianism” to mean a belief in human equality especially with respect to social, political, and economic rights and privileges, definition 1 at Merriam Webster. The term is sometimes ignorantly hijacked to mean equality in results – redistribution of wealth or something even more reminiscent of the short story Harrison Bergeron. People who do so are jackasses.

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January 21, 2007

Regulating Payday Loans

Doug Mataconis tackles an issue at the Liberty Papers that I've been meaning to write about all week. The Virginia General Assembly is considering a repeal of the Payday Loan Act of 2002, which legalized the short-term, high-interest loans commonly known as Payday Loans.

Last November, the University of Virginia School of Law hosted a panel on the topic (sponsored by Family Resource Clinic, the American Constitution Society for Law and Policy, and the Federalist Society). An article in the newspaper UVA Today explains the loans as well as any other source:

Payday loans are generally governed by the states, explained moderator Prof. Daniel Nagin, director of the Law School’s Family Resource Clinic. But the federal government recently got involved when Congress passed legislation placing a 36-percent cap on the annual interest rate of loans taken out by active-duty military personnel.

Obtaining a payday loan in Virginia is as simple as writing a check, Nagin said. Anyone who has a checking account is qualified to take out a loan. The payday lender will charge the borrower $15 for every $100 that is loaned. At the end of the loan period, which can be as short as seven or up to 30 days, the borrower must return to the store to repay the loan, or the company can cash the check that was written at the beginning of the transaction. The maximum a borrower can take out under Virginia law is $500...

The payday loan industry in Virginia has grown from a $165 million business in 2002 to more than $1 billion worth of transactions in 2005, Nagin explained. There are approximately 750 authorized payday loan outlets throughout the state.

750? That sounds like there is quite a demand for these places. But Delegate Jennifer L. McClellan, D-Richmond, has a different take on that number:

There are over two payday lending stores for every McDonalds in Virginia and three for every Starbucks. This is ridiculous.

I am horrified to learn that this is the standard my lawmakers will use to judge the situation. [shudder] And that's clearly become a talking point. I have no idea where it started, but it's constantly repeated on the Richmond radio and in most news articles. My question: why have we allowed this disparity between the number of McDonalds and the number of Starbucks in the first place? What ever happened to equality in this country? And what is the ratio of payday lenders to Taco Bells? I demand an answer!

As Mataconis points out in the post at The Liberty Papers, we can question the wisdom of borrowers to enter into a payday loan, but what right does the state have to prevent it? Not that legislators give a damn about what they have the right to do, of course.

Since we're here, let's take a look at what proposals are on the table. Again from UVA Today,

The Virginia General Assembly is currently reviewing two bills that would affect the Payday Loan Act of 2002, which authorized payday lending companies to set up shop in Virginia and exempted the industry from the prior 36-percent interest rate cap. The first bill repeals the Act; the second bill introduces an amendment calling for a real-time database that would force payday lenders to report the identity of the borrower and the terms of the loan to the state. Lenders would be able to search the database when a prospective borrower wants to take out a loan. The lender would be prohibited from lending money to patrons who had three or more outstanding loans. Finally, lenders could not loan money to anyone who had terminated a loan contract within the previous 48 hours.

(emphasis mine)

I love the comments by Michele Satterlund, an attorney who represented the payday lending industry at the UVA panel:

There are no viable alternatives being presented and there is a market need. We are a product that serves that market.

When I hear [panel member Jay Speer, executive director of the Virginia Poverty Law Center] talk, it’s as if he’s saying people who find themselves in financial hardship are not very smart, that’s the message I get. They’re not very smart, they can’t control their money, let’s control their money for them.

Opponents of Payday lenders point to a lot of alternative sources, but when it comes down to it, they are trying to legislate away one of my options because they think they know what's best for me, and I don't. Doesn't that sound familiar?

For those who think the high interest rates warrant government action, consider a point illustrated in Wikipedia:

Payday loan makers also argue that the interest on a payday loan is less than the costs associated with bounced checks or late credit card payments. For example, bouncing a $100 check may inccur an NSF fee from the bank of $28 and a returned check fee of $25 from the merchant.

In comparison, when expressed as APRs for two-week terms:

$100 pawn loan with 20% service fee= 240% APR;
$100 payday advance with $15 fee= 391% APR;
$100 bounced check with $48 NSF/merchant fees = 1,251% APR;
$100 credit card balance with $26 late fee = 678% APR;
$100 utility bill with $50 late/reconnect fees = 1,304% APR.

I await the logical conclusion - a bipartisan proposal to outlaw usury. For the children.

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January 8, 2007

Metrics of Employment (updated)

I just read an article at autoDogmatic that I don't quite get. I wrote out what I thought was a very nice reply, but when I previewed the comment I got an error. The site is giving me a hard time about the links I tried to include. I figure it's easier to post my thoughts here, where I at least know how to make links happen.

Aaron, either I am missing your overall point, or you’ve gotten yourself sidetracked. Why do we keep and report an unemployment rate? It is not a figure for its own sake. There is a good reason the figure does not count prisoners – or the retired, or children, or stay-at-home spouses/parents, or the disabled.

The Bureau of Labor Statistics does keep track of the "Labor Participation Rate", which is more what you are really talking about. This past July, the Washington Post ran an article on the Labor Participation Rate, and it included this excellent graphic. Even though the graph starts with 1948, the article notes that the male labor force participation rate reached an all-time peak in 1949 (at more than 87 percent). But the rise in female participation has been greater than the decrease in male participation – we are at historic levels of absolute employment in this country, and it’s been pretty steady and predictable. The article even addresses reasons why the male rate has dropped, like greater numbers of men staying out of the workforce for education reasons – consider the fact that the leftmost column of this BLS chart is the only one to have a significant drop over the last quarter century.

Now, the Post article doesn’t address the fact that there are more men in prison today than ever before, but the BLS covers only the “noninstitutional population” aged 16 and over. But my point is that I don’t understand why you would want to count them. I agree completely that the US prison rate is an outrage – especially the nonviolent drug offenders. But what useful information do we get by counting them as “unemployed” or “underemployed” or having the BLS include them in the Labor Participation Rate?

Scott Lamb seems to be on the same track I am.

I think I might also have some issues when Aaron says the half with the "short end" of the stick doesn't have such bright employment prospects. The average time of unemployment is down, wages are up, non-wage compensation is up, and education is “free”. Why does the half with the “short end” of the stick lack?

Update at 10:43 ET, the links are now fixed and no longer go to Microsoft.com. Thank you Neal for pointing that out.

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