Tracing consequences both seen and unseen.
Eric D. DixonA Robust Food Truck Culture Breeds Innovation
Posted at 1:37 am on May 17, 2014, by Eric D. Dixon

Alexandria City Councillor Justin Wilson (no, unfortunately not that Justin Wilson) invited me to provide testimony for a food truck regulatory hearing, so here’s what I sent to him:

Although I live just outside the city proper, in Fairfax County, Alexandria city is in many ways still my community. I shop at Giant, Whole Foods, and Trader Joe’s; I eat at Old Town restaurants and play trivia in Old Town bars; I watch plays at the Little Theater and watch movies at AMC Hoffman. Perhaps even more importantly, in two weeks my employer’s offices are moving from the Watergate to Duke Street, right at the edge of Old Town. I already spend a tremendous amount of time in Alexandria city, and I’ll soon be spending nearly all my days working here as well.

There are a great many reasons to love Alexandria, but one thing this city is sorely lacking is a robust food truck culture. I have little doubt that existing brick-and-mortar restaurants aren’t excited at the prospect of competing with a horde of nimble upstarts who have lower overhead and fresh ideas. But competition breeds innovation, and food trucks both create and expand niche and otherwise underserved markets.

An example close to my own heart can be found in my hometown: Portland, Ore. Only two years ago, a couple of paleo diet enthusiasts launched a modest Kickstarter for $5,000 to fund a food truck they planned to call Cultured Caveman. Now, regardless of what you think about paleo, there’s no question that this is a niche market. Dedicated paleo restaurants simply don’t exist — at least, they didn’t in 2012. But the Cultured Caveman folks found a groundswell of community support, easily surpassing their fundraising goal and expanding from one cart to three, spaced throughout town, in less than two years. Just this past March, they successfully exceeded a $30,000 Kickstarter campaign to open their first brick-and-mortar restaurant.

There’s no way this couple of young, 20-something entrepreneurs could have gambled on a full restaurant right out of the gate, with no real capital, no experience as restaurant owners, and no idea whether they’d be able to attract a clientele with a menu so strictly limited in concept. But with a small level of overhead and a big dream, they parlayed a few thousand dollars into a citywide franchise that has made many thousands of Portlandians happy. People with celiac disease or lactose intolerance, people avoiding processed sugar and chemical additives, people who simply care about organic produce and grass-fed meat — they all now have a set of prepared-food options where they know that literally everything on the menu will meet their unique dietary restrictions.

I don’t know whether Alexandria could be home to a success story of exactly this type, but my real point here is that nobody knows. We can’t know unless the political process steps out of the way of entrepreneurs who want to put their money at risk in order to bring the people of Alexandria new options. Let consumer preference reveal itself by lifting food truck restrictions and letting innovation flourish. Let us all find out which great untried ideas are out there that we’ll someday wonder how we ever lived without.

[Cross-posted at The Shrubbloggers.]

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Vroman53 Hours With Kafka in St. Louis
Posted at 7:05 pm on March 4, 2014, by Vroman

UPDATE: I discussed this incident as a podcast guest, starting at 1:04:00.

I spent the two worst nights of my life in the St. Louis City Justice Center. I did not experience nor witness any physical violence, not even credible threats. What I got was plenty of apathetic incompetence, banal sadism, and agonizing obtuseness. The vast majority of people dragged through this institution are poor and black, though plenty were educated. Their complaints are evidently easily and frequently ignored. I hope to convince people outside that demographic the City Jail really is run absurdly poorly.

I run a small real estate business specializing in North St. Louis City. This winter ravaged my bottom line. Repair costs are running five times over this time last year. I was quickly reduced to a 24 hour cash cycle, so when I got two traffic tickets in the city, and summons for unpaid vacancy code fine in Florissant, I was forced to choose between paying arbitrary fees to the government, or keeping my tenants homes operational. Many of these people are behind on their rent, yet when its 5 degrees out, I still fixed water heaters and roofs every time, with no breathing room left over for my own problems. Thats the decision I made, wise or not, which got me multiple warrants. I was finally pulled over noon Tuesday 2-18-14, at Grand and Shaw for expired plates.

I was politely cooperative, immediately informed cop I have CCW and a pistol. My permission is not asked, but my vehicle is searched. He finds a google route map of every Bank of America in the city. I collect rent in cash in places like Fairground Park. I need to know the closest bank wherever I happen to be. A sergeant arrives and uses this very flimsy evidence to charge me as an “armed fugitive”. This seems pretty farfetched, so I am still mainly concerned about a wasted evening. My passenger was also arrested with no charges or warrants.

An FBI agent arrives to interrogate me at 2nd District station, about what he has been told is a possible bank robbery conspiracy. I talk about my business 10 minutes and he leaves, and person riding with me is released. I hope the sergeant who felt it necessary to bring this matter to the Federal government’s attention is at least embarrassed. I wait in the 2nd Dist holding cell for several hours, with Lovelle Robinson, 26yo Benton Park resident, who by the end of this ordeal, I’d consider a friend. He’s trapped in a vicious cycle of fines he can’t afford which cost his license, and inevitable jail time, which costs his job, six times, and half his demographic is in this snare. What good is providing a transportation network for your citizens, but enforcing rules so draconian –allegedly for their safety– that they are pauperized out of using the system at all?

The sergeant informs me he has graciously dropped the weapons charges and I am being shipped downtown for the traffic warrants. My gun is mailed to Jeff City for a ballistics tests. Allegedly I get it back in 4-6 weeks, assuming I haven’t shot anyone.

4p, we are handcuffed together en route to the Justice Center. We arrive on the loading dock of this monolithic cube, with 15′ ceilings, and are detail searched. Routine processing questions are answered. And now I am expecting some kind of briefing of what are my options and how long until the next step. Instead my questions are deferred to “later” and I am uncuffed and placed in one of four 10’x20’ cells, standing room only, with 25 other prisoners. The door is plexiglass, naturally lots of shouting, very difficult to hear guards.

And the hours begin to pass.

I am hearing from several different repeat visitors that we are waiting to go up “upstairs”, presumably to smaller cells. I am not hearing how and when you can pay money to get out of here. At 6pm we are given a dinner of single slice of bologna on two slices of bread and six very stale tortilla chips.

By 8pm I was eager to make a deal. The atmosphere in the cell was convivial, but grumpy to the say the least. And yet still absolutely no communication of substance from anyone in authority. The blue shirts refer you to the burgundy shirts, who refer you to the white shirts, who say they don’t have your file. And you get one sentence in passing every ten minutes.

Around 11pm we are marched en masse upstairs. And placed in an identical cell, on an identical laid out floor. Two hours pass. Its 1am and dawns on us, this is it, there are no bunks coming. The people who designed this system expect 25 adults to sleep shoulder to shoulder on the concrete floor of a 60degree, urine rank cattle car, regardless of what they came in here wearing, or committing. Some percentage of these people will be found not guilty.

I have a leather coat, and resign myself to optimizing for some pathetic local maximum of comfort. I’ve got to choose between a terrible pillow, or a terrible blanket, nuzzled against total strangers stuck here against their will. I’m not fearful of them, but holy hell, doesn’t mean I’d invite them over to snuggle. Every 45-90 minutes prisoners are swapped for unclear reasons. Its impossible to relax, the anticipation of the next door opening, that my existence will be acknowledged, and I will be given a glimmer of an opportunity to bargain for release, or at least some kind of ETA.

Ambient noise is extremely disruptive, even as most prisoners try to fall asleep. I am very hungry. I doze shallowly until about 4a. I sit up, look around at this tight row of poor wretches, and just jawdrop that this is a normal night here. Every single night our city makes 70-90 citizens submit to this, a majority of them for inconsequential violations, and many of them innocent. I thought this was my night. The second was worse.

At 5a Wednesday, I receive another meager snack and people are starting to be called to court. The entire morning goes by no further updates. 11a at last I hear my name again and I am marched to videocourt, a term I never heard before this incident. I am taken to a camera booth with an old man glancing over from a flickery monitor. Well isn’t this charmingly Orwellian. Judge Headroom tells me court date is 3-13-14, I owe $50. “Ok” says me. That is the entirety of information I receive about my case. Back to cells. As lunch arrives we enjoy 2hr window only 10 people in the cell. Spirits are lifted as presumably this is the last stop for us in the Justice Center and we’re being stamped for export, either to free world or another facility.

No. By 2pm, cell has filled back up to the 25 headcount which covered the entire squarefootage of floorspace the night before. Now we are getting antsy. Some are supposed to be cut loose, some people going to various County jails like me, or more serious offenders waiting for the Hall Street workhouse, or Bonne Terre.

But nothing happens. Except more prisoners. They are constantly badgering the guards re: pickups, or even where they are wanted. All inquiries totally rebuffed. After dinner Wednesday, headcount hits 29 and stays there for the night. This forces two people to sleep immediately adjacent to the toilet, and two to sit upright all night; all others 4-6 inches apart on their backs on raw concrete. As the evening wears on, I am again dismayed. I can’t believe this is how this place is run, that I am sleeping like this another night. Ironically I had planned to attend a Lewis Reed fundraiser this evening, and now I really have something to talk to him about.

The slightest change in routine is a minor hope that some crack will form in this surreal wall of silence. A new batch of guards every 8 hours, means someone might let slip what the hell is going on behind the curtain.

I am struck with how sympathetic this crowd is to each other, its about 80:20 black:white, and there’s an effort to accommodate each other as much as possible in the circumstances. I got along fine with every inmate I met, some of them were fascinating conversation subjects.

The stories I am hearing from them over and over drive home what a paralyzing force the police exert in many Northside and state street neighborhoods. The aggressive tactics, and senseless spillover economic consequences, give powerful vibe of an uncaring occupation, not protective servants.

Around 1a Thursday its beyond shadow of a doubt no more pickups for the night, frustrations get more vocal. An Elliot Davis fan demands an investigation and lawsuit. Our collective action is thwarted by mere lack of a contraband pen. No means to record a contact list among a group that will never naturally convene again.

My opinion on the plan is sought, as the token capitalist present at the birth of the movement. I give a quick lecture on how lobbying works. Have your people blow up your alderman’s phone, state rep, mayor, sheriff, stake out their office. Demand meetings, call Town Halls. Don’t waste your time waving a sign in his parking lot. Make sure every elected official directly hears this every day.

I unsettle in under unyielding fluorescents. I go fetal in front corner of cell, and just try to endure semi-consciousness. I smell exactly like you’d expect. Around 9a shuffled around the bowels of this monstrosity, and finally loaded into Florissant’s custody about noon.

The contrast is simple but stark. Florissant has a whiteboard listing everyone locked up here, what they did, what they owe, where they’re going next, and when that pick up is. Wow, that is so easy to give a foothold of peace of mind. When I finally got a lumpy plastic mattress and blanket and more than coffin sized personal space, I was so relieved it was almost as good as being free. Having to openly strip naked to change into jumpsuit didn’t even phase me at this point.

My bizarre episode concludes around 5p Thursday. If you were in the Justice Center with me between 2-18-14 and 2-20-14, I would like to hear from you. If you are responsible for how that place is run, I challenge you to justify yourself.

I am the Missouri Republican 5th District committeeman. I am running for MO 79th State Representative. Please vote August 5th.


Robert Vroman




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Justin M. StoddardSpot all the Fallacies, Part II
Posted at 4:47 pm on October 19, 2013, by Justin M. Stoddard

Yesterday, I critiqued a video that used Pascal’s Wager to implore us to take drastic action in order to fight the threat of global warming.

It occurred to me that my critique might be a bit more forceful if I showed how trying to predict future outcomes using incorrect assumptions leads to unintended, bad consequences. There’s no better way to do this than to explore a few historical events and the way society reacted to them.

Here are a few examples I came up with:

-Nutrition advice in the 1960s
-The fear of race mixing at the beginning of the 20th Century
-The War on Drugs

Each of these events can easily be put into the rubric of Pascal’s Wager using the incorrect assumptions used at the time.

Heart Disease:

In the late 1950s, heart disease was a major concern for health professionals and politicians alike. It was such a major concern, that Congress and various bureaucracies of the Federal Government insisted that drastic action must be taken soon to stave off a major disaster.

Let’s fit it into Pascal’s Wager:

Either saturated fat is a major contributor to heart disease and is responsible for killing thousands of people a year, or it’s not.

If it is a major contributor, and drastic action is not taken: The consequences will be dire. Tens of thousands could die in the coming decades.
If it is a major contributor, and drastic action is taken: The crisis is averted, and tens of thousands of lives will be saved.
If it is not a major contributor, and drastic action is not taken: No harm, no foul.
If it is not a major contributor, and drastic action is taken: People will still have the benefits of living a healthy lifestyle.

Drastic action was taken and the Federal Government came up with nutritional guidelines outlined in the now infamous Food Pyramid. These weren’t just recommendations. School children have been indoctrinated with these guidelines for 40 years. Doctors and nutritionists have followed them religiously. Countless millions (if not billions) of dollars have flowed into programs to ensure these guidelines were followed.

It’s only been within the last ten years or so that we’ve discovered that not only are these guidelines are most likely wrong, they’re probably murderous. We are dealing with health epidemics which could not even begin to be be imagined 40 years ago. Cases of obesity, diabetes, heart disease, auto-immune disorders, etc, have exploded all over the country.

Why? Because it turns out that the original assumptions were wrong. Saturated fats are far more beneficial and far less harmful than originally thought. Complex carbohydrates are just the opposite.

Race Mixing:

Eugenics was all the rage at the beginning of the 20th Century. Progressives were all a flutter about taking drastic action to ensure that not only the white race not be mixed with what they deemed “inferior stock,” but that other deficiencies be culled from the gene pool as well. It was feared that the white race would all but disappear from the face of the earth, or more likely, become so bogged down with genetic imperfections as to destroy it.

The proposition:

Either race mixing and undesirable genetics will destroy the white race, or it won’t.

If it will destroy the white race, and drastic action is taken: The white race will be saved, and civilization will not be destroyed.
If it will destroy the white race, and drastic action is not taken: The white race will be destroyed, and civilization will soon follow.
If it will not destroy the white race, and drastic action is taken: The white race still benefits.
If it will not destroy the white race, and drastic action is not taken: Status Quo.

Drastic action was taken and Federal/State governments, as well as numerous private organizations funded by the leading Progressives of the day, put into motion a system of forced eugenics, forced sterilization, and immigration policies which still live with us today.

The torrid tale spans from Cold Harbor, to tiny Appalachian mountain towns. From the birth control movement to the front door of the White House. From local policy, all the way to Hitler’s gas chambers.

The War on Drugs:

The war on drugs goes back over a century, but for the purposes of this example, we’ll start in 1971 with President Nixon. At that time, drugs were considered to be a problem so monumental and pressing that drastic action was immediately needed.

The proposition:

Illegal drug use is a scourge that has the power to destroy civilization, or it isn’t.

If it is a scourge that has the power to destroy civilization, and drastic action is taken: Civilization is saved.
If it is a scourge that has the power to destroy civilization, and drastic action is not taken: Civilization may be destroyed.
If it is not a scourge that has the power to destroy civilization, and drastic action is taken: Civilization still benefits.
If it is not a scourge that has the power to destroy civilization, and drastic action is not taken: Status Quo.

Drastic action was taken. Billions of dollars have been poured into the War on Drugs over the past 40 years by Federal and State governments.

The result?

Well, the results are too legion to list out individually. Suffice it to say, it has proven to be one of the most colossal failures any modern government has ever been responsible for. In terms of money wasted, lives ruined, rights lost, and people murdered, the War on Drugs has brought this nation to its knees. I challenge anyone who says it’s hyperbole to speculate that short of complete decriminalization and dismantling of the system built up to keep the War on Drugs going, America will never recover from it.


This is my main concern about the video I critiqued yesterday. It’s not so much that the gentleman is attempting to fit and extremely complex problem based on uncertainty into an overly simplistic model. It’s that he’s starting with an unquestioned assumption which you are just supposed to accept, no questions asked.

Why is taxation, regulation, and government control the solution? I have no idea. He doesn’t bother to explain. It’s just an axiom that you’re supposed to accept.

Why will taxation, regulation, and government control work this time, when it has proved to be a disaster in the past? Again, I have no idea. Not only doesn’t he bother to explain, one gets the impression that he’s never even considered it. It goes beyond being axiomatic to being a religious belief. There’s nothing of any substance to his belief other than faith.

But, even with all the historical examples available to us (I’ve only touched on three), we are made to believe that this time, if drastic action is taken, it will avert disaster. And, what’s the worst that can happen if he’s wrong? According to him, the very worst that will happen is a global depression that “makes the depression of the 1930’s look like a cake walk.”

Except, that’s not the worst that could happen. Not even close.

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Justin M. StoddardThe Faith of Human Action
Posted at 11:43 am on October 7, 2013, by Justin M. Stoddard

Sometime back in the beginning of September, several of us decided to form a somewhat losely affiliated book club in order to read and discuss Human Action by Ludwig von Mises. Though some of us have read all or part of it in the past, a chance to collaborate with like-minded people on a work of such importance could not be passed up. So, the date of October 1st was chosen to start our reading. I assure you, the government shutdown that also occurred that day was pure coincidence.

I’ve sped ahead of my co-readers somewhat, so to slow myself down, I’m also reading The God That Failed, which is a collection of essays by 20th Century writers about their disillusionment with Communism. As you might imagine, the subject matter of both books go well together.

I wrote the following on our Facebook wall:

I’m reading The God That Failed by Koestler, et al. The very first line struck me as rather timely and relevant, given our reading of Human Action.

“A faith is not acquired by reasoning. One does not fall in love with a woman, or enter the womb of a church, as a result of logical persuasion. Reason may defend an act of faith – but only after the act has been committed, and the man committed to act.”

Compare this to Mises:

“Human action is necessarily always rational….The ultimate end of action is always the satisfaction of some desires of the acting man.”

The phrase “You cannot reason a person out of a position they did not reason themselves into,” comes to mind.

I’ve hated that phrase for decades now, because it’s so apodictically false.

I suspect Koestler is being poetic, and it does allow him to skip the making of the sausage in order to push his narrative along, but it bothers me, for some reason.

This struck up an interesting back and forth between Brian McCall and myself:

Brian: “I’m not so sure those two quotes are in disagreement. Something may be rational without being reasoned into. Even if the rationality of it is only found at a more meta level. Someone may not reason themselves into faith (actually the word “acquire” I think is wrong; it implies a deliberate process of reason and action). But something deep in their neurology perhaps wants it.”

“Everything is rational provided you’re looking at the right chain of causation.”

Me: “Yes, but faith is acquired by reasoning. Whether the reasoning is good or bad is another question. By Mises’ definition, faith is rational.”

Brian: “I don’t think of faith as something one acquires. Either one has it or they don’t. I consider it to be something more like one of Mises’ ultimate givens. We don’t act to acquire faith. We already possess it, almost perhaps as an instinct. What we do is act to learn particular belief systems to satisfy a sense of faith.”

Timo: “Mises was arguing against Pareto, who believed in nonrational motivation. Mises regarded preferences and motives and all ends as beyond rationality. The rational was the realm of means, where they were judged on efficiency to achieve given results. This is a demarcation problem, and a terminological matter.”

Brian may be on to something here, but I’m not fully convinced. I often accuse liberal atheists of substituting their faith and belief in God with an equal faith and belief in government. I’m not the only one. So many people have recognized this phenomenon that the phrase “secular theist” has started trending. But, really, this is just a re-discovering of old attitudes. Old school atheists were very open about why theistic religion had to be sacrificed before secular religion could be implemented. The intellectuals of the day used this cynicism brilliantly. They simply shifted (sometimes with great violence) the Proletariat’s faith in God to a faith in the government.

The new atheists fail to see the connection at all. They scoff at the idea of God, but they become indignant when their faith in government is pointed out to them. Their faith is blind to them, even though they profess it daily.

I’ve often puzzled over why people are so blind to their faith in government. Why would one choose to believe that minimum wage laws not only work, but are actually beneficial? Why would one choose to believe that there can be such a thing as “free” health care?

Back to the original quote by Koestler:

“A faith is not acquired by reasoning. One does not fall in love with a woman, or enter the womb of a church, as a result of logical persuasion. Reason may defend an act of faith – but only after the act has been committed, and the man committed to act.”

It very well may be as Brian postulates. It may be that “faith” is an inherent instinct in all of us. Some of us are better at either tuning it out or repressing it.

I think it’s a bit more nuanced than that. This faith we speak of is largely a social signaling system. It is acceptable to believe that minimum wage laws work and are beneficial because our peers believe it. It is acceptable to believe that going to the voting booth and pulling the lever actually does anything because our peers believe that it does.

That kind of faith seems incredibly rational to me.

Anyway, feel free to discuss.

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Josh S.Ponynomics: Economic Lessons from My Little Pony
Posted at 8:02 am on January 19, 2013, by Josh S.

There are a number of important economic concepts illuminated by the excellent My Little Pony: Friendship is Magic episode “The Super Speedy Cider Squeezy 6000” (season 2, episode 15). I want to talk about them here, but warning, there are some pretty heavy spoilers within.


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VromanRand Paul is right(ish)
Posted at 6:54 pm on August 18, 2010, by Vroman

Lets look at Rand Paul’s outline of political stances.

I agree with Rand about 85%. I hold more or less polar views on the bioethics and immigration categories, and Paul’s anti-war feelings are a little tepid for my tastes. The remainder though is quite inspiring. I suppose if you ever find a candidate you agree with 100%, you are probably looking at your own name on the ballot. So Rand Paul is strikingly wrong on a handful of issues, but on net would be a welcome addition to the Senate.

I establish this backstory in order to discuss Rand’s controversial Civil Rights Act statements a few months ago.

Speaking for the anti-Paul critics, I appoint my magic card rival Stephen Menendian, who got face time on Huffington Post. Nice work Steve.

First let me tell a personal anecdote regarding the consequences of racial job discrimination. I currently work for the business my grandfather started in 1951. Between that time and his death in 2005, grandpa was the sole decision maker and as far as I know, never once hired a non-white employee. All my memories of my grandfather are very fond ones of an incredibly hardworking, charitable, devoted family man. Though its pretty unavoidable looking back he was passively racist. And he suffered because of it! By subtly passing up qualified colored workers, we got stuck with a lot of burn out white trash guys. Many headaches developed over the years via his perverse hiring criteria. Gramps was a visionary businessman on the big picture deals, but certainly cost himself a lot in the details. This is exactly the result one would expect when arbitrarily limiting oneself to a smaller pool of applicants via a non-relevant criteria. Its a Gresham’s Law scenario where the bad apples are foisted off on to the firms who refuse to compete for the full range of workers. Not only do you lose good black workers, you tend to get the worse white workers as well.

Since I’ve been responsible for hiring, we have actually had a disproportionately high representation of black and hispanic workers, relative to St. Louis demographics, even accounting for this income bracket. Not because I want to help out minorities for its own sake, but because I’m an unapologetic capitalist. I want to pay as little as possible, and this is who shows up to accept our offered rates, while meeting my minimum standards. In fact in my dedication to laissez faire, I am an even more color blind employer than typical corporations, since things like criminal records, functional illiteracy, and active drug addictions, do not deter me, if the applicant comes recommended. Given the unfortunate higher likelihood of low income minorities coming from environments that have left them with such negative characteristics, my company is slightly easier job opportunity.

Discrimination is bad practice for both employee and employer. But Smennen makes it clear he doesn’t care about the efficiency arguments of non-racism, its solely a moral issue to him. I could make the more abstract case that there is no difference between the two. I will remain on more familiar territory today.

We’ll take the simple case of a sole proprietorship as opposed to publicly traded company. This business is some individual’s property, just like his home. An employment contract is an invitation by the employer to show up on his property, do some work, and receive payment. The invitee is free to decline. I do not see this as fundamentally different from an individual inviting individuals into his home for social purposes, which they are likewise free to decline. The fact that money changes hands is the business of these two people after they have agreed to meet on the owner’s property. There is no reason an individual should have any less discretion in who he extends invitations to at his business, than at his home. If said businessman were to foolishly only offer invitations to work for pay to select ethnicities, this is not force or theft against them.

Like, Rand Paul, I would support a non-discrimination policy for tax funded posts, and other public functionaries, but it is really not the government’s place to enforce morality upon citizens that does not transgress others rights. One does not have a right to a job at any particular business, any more than they have a right to walk in to a stranger’s house. To say otherwise, would give government carte blanche to enforce other moral paradigms regarding citizen’s private behavior; for example their sex partners, etc. Since we have relatively little control of what moral agenda is advanced by the ruling party of the moment, it is a wiser policy to reject government’s power to dictate morality at all.

This said, I do think Smennen has a point that Rand is dissembling somewhat by trying to obfuscate exactly what portions of the Civil Rights Act he opposes. I presume Steve’s analysis of the legal history is correct, and thus as a libertarian, I, and Rand, should indeed openly oppose the Fair Housing Act in entirety. I would stress that there exist far higher priorities though for the goal of reducing government interference. We are so far removed from an acceptable political environment, that I would hesitate to even call it progress should the FHA be repealed as a first step.

Paul is in a difficult position of course, since the logical conclusion of laissez faire leads to very politically incorrect places. Rand is presenting himself as more mainstream than his father, which is hard to do and remain ideologically consistent. I sincerely hope he does not give in to populism. Still, Rand Paul is undeniably a step in the right direction.

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VromanI’m not going to get speaking engagements with an attitude like this
Posted at 1:05 am on June 18, 2010, by Vroman

I heard Russ Roberts, noted rapper , speak tonight at some Republican club. Roberts expounded on strategies to rebrand small government propaganda efforts, and why this inspires a recent optimistic upturn in his perception of near future politics. Roberts is a good speaker, but I remain unswayed. Certainly his ideas have merit, but I don’t follow that implementing such will make a difference. Status quo corporatism is going to grind on indefinitely until cities are burning.

Roberts makes the facetious observation that big-govt proponents have more marketable objective, and lofty goals are more attractive than a concrete method. Its more engaging to claim one is “saving the children” and yet be fuzzy on the details of accomplishing that, or even abjectly fail; than to have a clearly logical economic algorithm that results in pedestrian outcomes like marginal increases in prosperity. “No one writes folk songs about efficiency”, Russ quips. The upsides of decentralist thought are more about opportunity cost and deadweight loss, and other painfully real, but not readily visible effects. This results in us defaulting to the easier rhetorical tactic of simply exposing a litany of government failures, and thus getting a reputation as unfun cynics relegated to the sidelines.

Roberts goes on to suggest re-framing the debate as not government vs business or collectivism vs individualism, but rather recognize that people are drawn to comforting concepts such as community and cooperation. Thus small-govt advocates should boldly co-opt the left’s central term, Socialism, re-defined as a system where people are given the incentives to freely socialize in all respects from the bottom-up, rather than top-down central planning.

All well and good, and maybe this or variations on the theme could indeed spark some life into general anti-statist sentiment. But bottomline, I see no reason to predict any change in the underlying systemic variables that allows continual siphoning of wealth into the inner circle of lobbyists and decision makers. Ever.

To people who naively accept face value assumptions that policy output ever has true common-good motivations, I suggest imagining the company you work for ran the government. Would your co-workers, bosses, and employees do a good job running the country? Of course not. They would have the exact same personality clashes, vested interests, and petty power plays they do in mundane private industry. Government bureaucracies are no different than any other institution composed of self interested human beings. Sure there are exceptions of self-sacrificing crusaders, but on net, structural incentives dominate.

These are the key powerful incentives faced by government and those it serves:

-Regulatory capture
-Majoritarian redistributionism
-Collective action problem

At any given juncture, if a negative-sum policy is on the table that reduces overall economic activity, but diverts a net gain in resources to a minority, there is a tendency for the minority to devote a greater percentage of their aggregate potential gains towards lobbying efforts to ensure the policy is enacted, than the percentage the majority is willing to spend of their potential losses. Making the reasonable assumption that behind the scenes government policy is a flat bidding war, then the special interest will get its way the lion’s share of the time.

In this way there is a ratchet effect that generates on net ever more restrictive regulation and protectionism. On the other end of the equation, in terms of transfer payments, a slim majority will always have the incentive to take any opportunity to vote itself payouts from the fund that all of society pays into. Again a ratchet effect that ensures ever larger welfare schemes and public projects.

Government will always be called on to tax, spend, and regulate more, because it serves those with the power to make the decision at that moment, regardless of the damage to overall standard of living. The economy will produce less, while spending rises. The deficits will be financed by borrowing for a time, but in the end inflation has to take over, and yet still nothing changes the underlying incentives, so trade will be stifled even more, more taxes will discourage remaining productive opportunities, and more spending will be piled on. Even up until the final moment, none of this changes. Wheelbarrows of fiat currency, martial law, emergency powers, etc. There has to be some kind of violent disconnect between our current structure and any hypothetical stable growth encouraging system. There is no way the political process as it exists now can smoothly self correct toward a laissez faire environment.

I suspect what Roberts and other optimists think they can accomplish via re-education is effectively increasing the percentage of potential losses that majorities are willing to spend to defend themselves from predatory minorities. A large part of this is just making many people in the non-special-interest-bloc aware that they stand to lose at all. However, I posit that its a natural law of political science within non-constitutionally constrained democracies (ie USA since at least 1860 if not earlier) that the legislative process is in effect a shadow market and special interests will always bring disproportionately higher bidding power to bear. They won’t always win if the stakes are too mismatched, but the tendency over time will always be to create more restrictions and spending excuses, rather than remove them. Thus in a weighted random walk, results inevitably in a fully restricted, hyper-inflated economy.

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Christine HarbinHow the Private Sector Can Influence Good Behavior
Posted at 9:04 am on April 9, 2010, by Christine Harbin

Earlier this week, the Wall Street Journal published an article that explained how NBC Universal is using its television programming to send a subtle message to viewers to improve their lifestyle. From the article:

The tactic—General Electric Co.’s NBC Universal calls it “behavior placement”—is designed to sway viewers to adopt actions they see modeled in their favorite shows. And it helps sell ads to marketers who want to associate their brands with a feel-good, socially aware show.

This illustrates how the private sector can address problems like global warming and encourage healthy behavior simply by setting a good example–not by legislating or by nudging via choice architecture.

Since NBC’s effort encourages other companies to adopt and be affiliated with corporate social responsibility, I would not be surprised if this had a larger “behavioral” multiplier than the public sector’s efforts.

[Cross-posted at Amateur Philosophy.]

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John W. PayneDoes This Count as Optimism?
Posted at 12:02 am on April 7, 2010, by John W. Payne

Cato Institute executive vice president David Boaz warns libertarians against the imagined limited government utopias of America’s early days that were actually far less libertarian than today in many important ways:

If we look at the long term—from a past that includes despotism, feudalism, absolutism, fascism, and communism—we’re clearly better off. When we look at our own country’s history—contrasting 2010 with 1776 or 1910 or 1950 or whatever—the story is less clear. We suffer under a lot of regulations and restrictions that our ancestors didn’t face.

But in 1776 black Americans were held in chattel slavery, and married women had no legal existence except as agents of their husbands. In 1910 and even 1950, blacks still suffered under the legal bonds of Jim Crow—and we all faced confiscatory tax rates throughout the postwar period.

This is vitally important information to keep in mind.  Sure, there was no Federal Reserve, income tax, or drug war in 1800, but the government still did plenty of unspeakably awful things back then.  Of course, some people go too far in the other direction and claim that we have only gotten freer over the years.  Although there might be a general trend towards liberty in the last four centuries or so, that trend has never been constant, and it is in no way a necessary fact about the world.

I truly believe that we can make it to a society of maximum individual freedom, but we won’t get there by looking for it somewhere in the past.  Certainly we can and should make use of the past to show the tragedies of state control and the successes of civil society and the market, but to the best of our knowledge, there has not yet been a completely free human society.  A few have come close, and many more recently have allowed people to be freer than the vast majority of humanity that has ever lived, but freedom is an idea that still has yet to be tried in its totality.

Cross-posted at Rough Ol’ Boy.

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Christine Harbin“Homeowner” Bailouts and their Unintended Consequences
Posted at 10:16 pm on April 3, 2010, by Christine Harbin

In an op-ed published on Thursday, the editorial board at the Wall Street Journal criticizes Washington’s latest attempt to bail out homeowners. They argue that this intervention will be as ineffectual as the those that preceded it, and that homeowners would be better off if the government hadn’t intervened. From the editorial:

Here’s a heretical thought: What if Washington had simply let housing prices fall on their own to find their natural bottom? The pain would have been more severe more quickly for some owners who bought more expensive homes than they could afford. But the pain might also be over by now as housing markets cleared faster, and housing might be contributing to a healthier economic expansion.

The practice of bailing out homeowners has several unintended negative consequences. The following are among the most egregious, in my opinion.

(1) Bailouts discourage employment.

Just like any other type of unemployment benefit, payments to homeowners decrease an individual’s incentive to be employed. This contributes to a higher and longer-lasting unemployment rate.

(2) They penalize individuals who borrowed responsibly, and they encourage people to live outside of their means.

Why put 20% down for a cramped ranch-style when you could buy a McMansion and have the taxpayers pay for it?

(3) Many people bought houses that they couldn’t afford anyway, and they will foreclose on them in the future. For many people, a bailout is just delaying the inevitable.

As described in a relatively recent article in the New York Times:

As a result [of Obama’s Making Home Affordable program], desperate homeowners have sent payments to banks in often-futile efforts to keep their homes, which some see as wasting dollars they could have saved in preparation for moving to cheaper rental residences. Some borrowers have seen their credit tarnished while falsely assuming that loan modifications involved no negative reports to credit agencies.

(4) They cause housing prices to be artificially high.

Here is a Washington Post article on the subject. The latest proposal, like many of its predecessors, inflates home prices. Additionally, the $8000 homeowner tax credit allowed individuals to buy a more expensive house than they could otherwise afford.

(5) There is a moral hazard problem. If a person knows that they are likely to be bailed out, then they are more likely to assume risk.

I oppose bailing out people who bought houses that they couldn’t afford, and I disagree that the government should encourage homeownership. When a person invests her money, she assumes risk. Higher returns are supposed to be the payoff for accepting larger amounts of risk. Buying a house is just like any other investment outside of Treasury Bonds — there is a possibility that the individual will lose money. In some aspects, real estate is riskier than stocks because houses are not diversified (i.e., in the event of a natural disaster, a person’s entire investment is wiped out). A person should do thorough research before she makes what will be one of the largest financial decisions of her life.

I recommend the article “5 myths about home sweet homeownership” by Joseph Gyourko, chairman of the real estate department at the University of Pennsylvania, in the Washington Post. It repudiates the commonly-held idea that homeownership is a investment that has good returns and no risks. To me, the following is the most eye-opening statistic in the article:

Between 1975 and 2008, the price for houses of comparable quality and size appreciated an average of about 1 percent per year after inflation. You would have earned well over 2 percent per year after inflation had you invested in Treasury bills over the same period.

[Cross-posted at Amateur Philosophy.]

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Henry Hazlitt"[T]he whole of economics can be reduced to a single lesson, and that lesson can be reduced to a single sentence. The art of economics consists in looking not merely at the immediate but at the longer effects of any act or policy; it consists in tracing the consequences of that policy not merely for one group but for all groups."
Henry Hazlitt, Economics in One Lesson






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