Saturday, December 14, 2013

The Arapahoe High School gunman was a right-wing Tea Party conservative

You've probably heard about the latest school shooting, this time at Arapahoe High in Colorado. A kid that everyone describes as totally normal walked into his school and shot two students. 

The shooter, Karl Pierson was a friendly, average kid who ran track and was on the debate team.  He did have some "extreme" political views (extreme economic conservatism) but no one dreamed he would ever open fire in a high school. 

This kid has done extreme harm to the cause of liberty and freedom. 

Here's the Denver Post:

In one Facebook post, Pierson viciously attacks the philosophies of economist Karl Marx, who through his condemnation of Capitalism pushed the notion that the Capitalist system would eventually implode and be replaced by Socialism.  In another post, Pierson describes his economic philosophy as "Free Market Libertarian."

"I'm wanting to ask all the Democrats and Leftists, why hasn't the Stimulus Package improved the economy?" he wrote. "If Keynesianism works so well, why aren't we seeing increased employment?"

Pierson also appears to mock Democrats on another Facebook post, writing "you Democrats are so cute" and posting an image that reads: "The Democrat Party: Health Care: Give us money, Climate Change: Give us power, Gun Violence: Give us power, Women's Rights: Give us control, More War: Give us spending. Is this really the side you want to be on?"

And since young Karl Pierson's economic conservatism is against everything that the mainstream media stands for, that's how the Denver Post chose to begin their story. 


Sorry folks.  I screwed up. 

Karl Pierson was a full blown Keynesian tax-and-spend advocate.  Had he been the type of kid that shows up at Tea Party rallies wearing a Ron Paul t-shirt, that's all you would be hearing about today.  I shouldn't be politicizing this tragedy, and he was probably too young to know stimulus from strawberries, but you can bet your ass that the boy's political leanings would be all over the media had he been a right-wing economic conservative. 

Here's the legit Denver Post excerpt.  You have to read most of the article to get to these little nuggets.  

In one Facebook post, Pierson attacks the philosophies of economist Adam Smith, who through his invisible-hand theory pushed the notion that the free market was self-regulating. In another post, he describes himself as "Keynesian."

"I was wondering to all the neoclassicals and neoliberals, why isn't the market correcting itself?" he wrote. "If the invisible hand is so strong, shouldn't it be able to overpower regulations?"

Pierson also appears to mock Republicans on another Facebook post, writing "you republicans are so cute" and posting an image that reads: "The Republican Party: Health Care: Let 'em Die, Climate Change: Let 'em Die, Gun Violence: Let 'em Die, Women's Rights: Let 'em Die, More War: Let 'em Die. Is this really the side you want to be on?"

We'll never really know what caused the Karl Pierson tragedy.  But had he been on the other side of the political spectrum, you know what they would've blamed.   

Friday, December 13, 2013

By this standard, I've spent 3 million dollars at

I like to go to Amazon, EBay, and other sites and fill my shopping cart with things that would be great to own. 
I rarely pull the trigger on a purchase. 
I have a somewhat addictive personality and if I ever start bringing stuff into the house from the intertubes I'll go broke.  Quickly. 

It looks like Obamacare shoppers do the same thing.  They make it through the website hurdles and find a policy that, if purchased, will keep them from being fined by the IRS.  They put it in their online shopping cart. 

And then they go to Amazon, Ebay, Craigslist, and Big Mama's House O' Midget Lesbian Porn and do the same thing without ever finalizing any sales. 

Here's Allahpundit:
 Obamacare administrators are counting people who've browsed the website and placed a plan in their virtual shopping cart -- but who never finished the process by checking out -- as "enrolled." That's a bogus metric. 

So what percentage of people have actually paid money to a real live Obama partner in this scam insurance company?
“There is also a lot of worrying going on over people making payments,” industry consultant Robert Laszewski wrote in an email. “One client reports only 15% have paid so far. It is still too early to know for sure what this means but we should expect some enrollment slippage come the payment due date.” Another consultant Kip Piper, agreed. “So far I’m hearing from health plans that around 5% and 10% of consumers who have made it through the data transfer gauntlet have paid first month’s premium and therefore truly enrolled,” he wrote me. “It naturally varies by insurer and will hopefully increase as we get close to end of December and documents flow in the mail,” added Piper, a former official at the Centers for Medicare and Medicaid Services. “But overall I’m hearing it’s a small portion so far. And that, of course, is a fraction of an already comparatively small number of people who have made it through setting up an account, getting verified, subsidy eligibility determined, plan selected, complete and correct data transferred to the insurer, and insurer set out the confirmation with invoice for consumer’s share of the first month’s premium.”

Let's assume that getting an account set up and throwing a plan into your online shopping cart has been easy.  (It hasn't.) 
Let's assume that effectively transferring your choice and your money (safely) to the corporate cronies insurance companies will be the hard part.  (It is.) 

Since the website has been a disaster, unfortunate people are going to be showing up at hospitals with nothing but a website I.D. number. The insurance companies will have no record of them.  The patient will say "Hey, I paid.  I signed up."  Some will be lying, of course.  Sometimes the insurance companies will lie. 

But this thing is so screwed up, it's going to take decades, and squadrons of lawyers, and billions of dollars to sort it out. 

This man could f*** up a two-car funeral.  (If you are in Britain, please translate that to mean "this man couldn't organize a piss-up in a brewery".) 


Thursday, December 12, 2013

Does anyone know anything at all about the new proposed budget?

Something has happened in the U.S. House Of Representatives but I have no idea what it is.  Most commentators are acting as if the lion has gotten cozy with the lamb.  I haven't seen anything like it since Jimmy Carter got Begin and Sadat to hang out at Camp David for a few weekends. 

It has something to do with the House agreeing on a possible budget deal, but no one is mentioning the most important thing about a budget.  If you read this within a couple of days after December 12th, check out Memeorandum for some typical articles.  None of them will tell you the most important thing about the budget. 

I'm afraid that people are going to start "reaching across the aisle" and "getting something done". 

"Tea Party groups have been marginalized."  That phrase is showing up a lot. 

Nancy Pelosi has said that they should "embrace the suck".  Whatever that means.  Something about restoring $20 billion in defense cuts.  As if we need more defending. 

The New York Holy Times has no important details about the proposed budget. 

CNN has no details.  But economic conservatives have experienced "diminished influence".   

Everyone in the mainstream media is typing their asses off about this budget, but no one has written the most important thing. 

How much further are they going to put you in debt? 

All the rest is noise....


Wednesday, December 11, 2013

30 Anti-Libertarian Fallacies

Someone named Max Borders at the Foundation For Economic Education came up with this list of anti-libertarian logical fallacies. 

Mr. Borders knows his stuff.  In fact, I've scraped it, just in case the Foundation For Economic Education goes bankrupt or the site disappears.  (This fallacy is also known as "The Blogger You're Reading Is A Lazy Bastard, And Ripped Off Another Writer".) 

Mr. Borders lists 30 logical fallacies that are often used in arguing against the libertarian philosophy.  You'll have to go here to see number 30

You already know what it is.  You've heard it a hundred times. 
  1. Argument ad KochBrotherium: This fallacy is a cousin to the genetic fallacy and guilt by association. The twist, of course, is that anything that the Koch Brothers ever say, said, fund, funded, might fund, came close to funding, could have funded, will fund, walked by, looked at, support, think about, or mention is invalid by virtue of, well, “Koch Brothers! Boo!”
  2. The Unicorn: You’ll recognize this fallacy from the question, “Why does no libertarian country exist anywhere in the world?” Embedded in the question is the assumption that libertarian countries don’t exist because they are fantastic creatures, like unicorns. Of course, just because something doesn’t exist yet does not mean it can’t exist. Indeed, the Internet in 1990 and the American Republic in 1775 beg to differ. And the unicorn fallacy fundamentally confuses the libertarian worldview with some “L”ibertarian platform that might be the product of some electoral processes—processes most libertarians reject. Michael Lind and E. J. Dionne have brandished this fallacy rather shamelessly, and have had it parried rather effectively by better minds.
  3. Nut-Picking: This fallacy has nothing to do with Jimmy Carter. In this style of argument, the arguer finds the kookiest or most insane person who self-identifies as libertarian and then ascribes all of that person’s beliefs or claims to all libertarians. (This one could also be called the Alex Jones fallacy.) This is a tough one to counter simply because there are plenty of nuts to pick from, and plenty of them use the l-word.
  4. Must Be Scared/Have No Answer: This one’s pretty simple really, and a unique creature of “debate” via social media. The libertarian leaves his computer or signs off for a while and the opponent accuses the libertarian of not being able to answer his or her FB claims, which the libertarian simply never saw or had no time to answer.
  5. The Tin Man: This fallacy was identified and named by Cole James Gentles (here) who inspired this article. With the tin man the arguer either concludes or falsely assumes that the libertarian “has no heart” because she argues against some favored policy. 
    This cousin of the straw man (scarecrow) fallacy assumes a direct line between sympathies and outcomes. Any failure to support some means amounts to a failure to support the wished-for end.

    The tin man fallacy is rooted in the assumption that one’s opponent, often a libertarian, has no heart. Unlike the straw man fallacy, in which the debater needs to mischaracterize their opponent’s position, the tin man fallacy allows the debater to build a sturdy-looking, if hollow, general facsimile of their opponent’s position (“You are against state mandated universal health care?”), but not give him a heart (“Then you don’t care about poor people who don’t have access to affordable, quality insurance, or people with pre-existing conditions!! You heartless monster! WHY DO YOU HATE THE POOR?!” Heard that one before?)
    The frightening part of this fallacy is that its wielder usually thinks exitus acta probat.
  6. Availability Cascade: Something big and bloody happens on the news (or goes viral) so the arguer implies or concludes that it’s a widespread occurrence.

    Example: A mass shooting has occurred, which points to an epidemic of gun violence.

    It’s not clear that if gun violence is at a multidecadal low point, the incident reflects an “epidemic.” The ready availability of some story leads one to conclude that a problem is widespread and demands a drastic response. Cass Sunstein, known for his work on “nudging,” gets credit along with Timur Kuran for identifying this phenomenon. (An availability cascade doesn’t always have to involve specious reasoning, but it very often does.)
  7. Man on the Moon: Remember Rachel Maddow standing in front of the Hoover Dam? She’s trying to convince her viewers that the government (which she calls “the country”) must tax and build some major make-work project in order to revive the economy (or whatever). Maddow is employing a form of the man on the moon fallacy, which takes the form, “If we can put a man on the moon, we can do X.” But it misconstrues any reservations about big, awe-inspiring State projects as doubts about “America’s” ability to do big things. It’s just assumed that anything requiring extensive collaboration must be done via State power for it to count. Questions of the value, cost, or feasibility (or some combination thereof) of any particular project are sealed off from the word “if.” And of course “we” is never carefully unpacked.
  8. The Gap: I wrote a whole book about why the following involves fallacious thinking. The fallacy goes something like this: “The free market widens the gap between rich and poor.” Now, strictly speaking that claim might be correct. But so what? I’ll pass over the problem that the “free market” has probably already been attacked with the unicorn fallacy at some prior point in the same hypothetical conversation. In any case, because economies are dynamic, the “rich” and “poor” change from day to day, and measured in quintiles, we don’t know whether the “gap” will be greater or smaller from one day to the next, even assuming a free market. The real problem with such reasoning is the built-in assumption that a gap itself is a bad thing. Suppose a really tall man moves into my neighborhood. Apart from my suddenly wishing I were taller, does the presence of the tall man make me worse off somehow? Of course not. The existence of the rich person doesn’t make me worse off, either, unless he got rich by using political means to transfer money from my pocket to his. This happens all the time. But such transfers have nothing whatsoever to do with free markets.

    Measuring an asset gap in and of itself tells us little. Indeed, without the functional story of how any gap came to be—stories, not snapshots matter here—we can’t make any judgments about it whatsoever. “Gap” talk is just a fetish that ignores how much better off the poor are thanks to the existence of innovators and entrepreneurs who got rich by creating value. And the unstated assumption is that if any group of people has more wealth at any particular point, the people with less are somehow being wronged simply because the other group has more. The gap fallacy is also meant to preempt debate, usually in the service of another agenda (which is rarely more than reinforcing the opponent's opinion of himself as a good guy).
  9. The Two-Step: Some opponents will simply change the subject in the middle of a discussion, leaving the original claim by the wayside. Usually neither party notices the two-step. For example, the opponent may refuse to answer the libertarian’s direct question and instead respond with another question. Or the debater may slide into one or another irrelevant point that has no bearing on the original point at issue. This process can go on for a while unless the libertarian rigorously brings the opponent back to the original point. The red herring, ad hoc and non sequitur are similar enough fallacies, so the two-step may also be classified as an evasive tactic.
  10. Panglossian Fallacy: Because the military-industrial complex was somehow involved in developing aspects of what later became the commercialized Internet, it follows that government funding is indispensable for such wonderful things to appear—and that all the things that go along with the funding (and revenue-collection) apparatus are therefore also acceptable. This variation of the post hoc fallacy is seductive particularly because we can never know what would have happened in the counterfactual private sector. Form: If it happened, it must be the best of possible worlds. (See also the “The Government R&D Canard.”)
  11. Your Side: Also known as tarring with the same brush, this fallacy has a couple of related forms (see No. 1 and No. 3). An opponent may accuse the libertarian of being a Republican or Tea Party conservative because he or she happens to agree with a majority of Republicans on some particular issue. One hears: “Your side thinks . . . ” when in actuality the libertarian doesn’t have a “side” per se. It works even better as a tactic if there is really no connection at all apart from being something the opponent’s “side” would never say. The “your side” fallacy allows the opponent to appeal directly to tribal biases, which are more immediate and powerful than any argument. When it’s intentional, this rhetorical maneuver is meant to appeal to others who may be watching—the hope being that they’ll swerve into the ditch that is their own biases.
  12. The We/Society Fallacy: This common form of hypostatization occurs when the user ascribes rational individual agency to “society” and conflates or confuses society with the State. Both usually happen immediately, or somewhere hidden, before the opponent even speaks. The opponent wants his moral position or emotional state to be reflected somehow in the organization of society.
     Although “we” or “society” is a useful ersatz word that appears to confer legitimacy on some aspect of the opponent’s claim, it is almost always an intellectual sleight-of-hand. Only individuals can act. Groups must work through processes of either collaboration or coercion. (Note: “The market” is often misused this way, by both supporters and detractors.)
  13. Deus ex Machina/Market Failure: People is people. And yet opponents sometimes think that it’s enough to argue that governments, by dint of largess and force, have the power to fix certain kinds of problems, which they label “market failures” because they happened outside the purview of State action. Note that this only works in one direction: Problems in any area covered by the State are usually chalked up to being problems merely of execution, whereas “market failures” allegedly reflect an inherent deficiency. Even if one agrees that one set of people working in voluntary cooperation cannot solve some problem (or at least haven’t yet), it does not follow that another group of people—“the government”—can. Indeed, greats like James Buchanan and Gordon Tullock have given us very good reasons why government is not likely to solve problems and will likely make matters worse.
  14. The Organic Fallacy: Such arguments take the form, “It’s organic therefore it’s good or good for you.” Or similarly, “It’s not organic therefore it’s bad or bad for you.” One hears this rationale to demand regulations and food labeling. And while there may be independent reasons to justify such regulations or labeling, these are not justified by the organic fallacy. It’s not clear that Socrates would argue for the health benefits of natural hemlock, nor would people with thyroidectomies argue they should go without Synthroid. I would add that, until there is more evidence to the contrary, there are plenty of GMOs that are good for me. (Note: Plenty of libertarians commit this fallacy too. Just because Monsanto is a rent-seeker doesn’t mean all its products are bad.)
  15. Nobel Fallacy: You may recognize the form “X has a Nobel Prize in economics, who are you to argue against his claims?” I don’t care whether Krugman or Stiglitz has a Nobel Prize, they’re wrong about just about everything.
    And the truth or falsity of one’s claim doesn’t depend on his credentials. (Meanwhile Nobel Laureates James Buchanan, Vernon Smith, Elinor Ostrom, Douglass North, Milton Friedman, and Friedrich Hayek are mostly always right. I mean, that’s like 6–2 for the good guys. [*rimshot*])
  16. No Parks for You: Snarkier opponents of libertarianism rhetorically ask why libertarians avail themselves of all the goods and services government happens to provide. “If you’re going to live by your principles, you can’t use X or Y” (insert: state universities or public roads). Of course, it does not follow that one should not avail himself of some good or service he thinks should be provided by other means.
    Indeed, one could argue that he is more than justified in consuming some good or service he has been forced to pay for against his will.
  17. The Self-Exile Fallacy: Snarkier still is the opponent who argues that “If you don’t like it, why don’t you just leave?” Implicit in this question is the suggestion that there is some positive duty for one to leave a condition he doesn’t like and/or that by one’s staying, he his implicitly consenting to whatever the system is. By this “logic,” if you have just bought a house with an ‘80s bathroom, instead of improving, changing, or upgrading it, you should just take a bath in the kitchen sink.
  18. Somalia: Opponents love to tell you that Somalia must be a “libertarian paradise.” Everyone laughs. If you respond with a phrase like “comparative institutional analysis,” everyone’s eyes glaze over and you lose, despite being correct. Somalia has been better off on most dimensions without a central government than it was under a brutal, centralized regime—warlordism notwithstanding.
  19. Social Contract: Rousseau left a terrible intellectual legacy. And progressives use his “social contract” to justify anything under the statist’s sun.
    Of course, there could be a real social contract, but libertarian opponents prefer the one that allows them to justify anything under . . .
  20. Start Somewhere: You’ve slogged through the data. You’ve offered a completely rational response. You’ve explained the ins and outs of why your opponent’s policy X won’t work and why it may even make things worse. The response? “We’ve got to start somewhere.” The idea here is that it’s better to do, well, anything—even if it might result in calamity. And, of course, the State must do that potentially calamitous thing. (See also No. 23.)
  21. Social Darwinism: “The free market is just social Darwinism!” This is actually a pretty old meme. It was used by progressive academics in the 1940s to smear the work of Herbert Spencer. Spencer was a biological Darwinist to be sure. And he also thought the market and social phenomena like institutions and ideas would be subjected to analogous evolutionary forces. But the unit of survival in markets is the business, not the individual. In other words, businesses that fail to create value for customers die. But advocating for free people to engage in voluntary exchange is not advocating people leave the weak, poor, or vulnerable to suffer.
    Quite the contrary. Most advocates of the free market believe a robust philanthropy sector is part and parcel to a system of voluntary exchange. Herbert Spencer thought so too. He writes: “Of course, in so far as the severity of this process is mitigated by the spontaneous sympathy of men for each other, it is proper that it should be mitigated.”
  22. Argumentum Ad Googlum: This fallacy proceeds when the libertarian makes a good point or builds a stellar case, or asks a question the opponent can’t answer. The opponent disappears for a while frantically Googling away. The opponent comes back with a series of links that stand in for argument. To be fair, this isn’t always a fallacy, as some will use links to support their claims. But often the tactic is used to thrust the burden of debate back onto the libertarian who is expected to read through the links and infer some point. At best, it’s bad form.
  23. We’ve Got to Do Something!: Related to the “start somewhere” fallacy, “We’ve got to do something!” is an argument that really means (a) the State has to do something, and (b) State action is preferable to both no action or private action. Numerous examples of this fallacy appear when opponents think any action riding on good intentions is good enough, consequences be damned. Often, however, it can be demonstrated that it is better for government to do nothing and to stop doing what it’s already doing. (Examples include stimulus spending, regulation, and other forms of intervention.) For government to do nothing is rarely presented as premise subject to debate and evaluation. Someone genuinely open to ideas would ask, “What should be done about this?” and “Who should do it?” Someone genuinely interested in answers would have the courtesy to make explicit what they already believe: “The government has to do something, which is beyond debate. Here’s what I think that something should be.”
  24. Empirical Fallacy: A familiar opponents’ refrain of late is: How do we know X isn’t going to work until we try it? We have to wait and see the empirical evidence before calling X a failure. With such reasoning we should let monkeys go to Washington and type randomly into a big machine that spits out statutes at random. Well, we already do this in a manner of speaking, but it might be a good idea to look at some well-established economic theory and economic thinking before sallying forth into legislative adventures that could have both predictably perverse and unintended consequences. More importantly, the opponent presumes it is the prerogative of the State—and, by extension, any governmental group within the State apparatus—to experiment on those under its auspices, and that it is the duty of the subjects in that jurisdiction to submit to the experimentation. (Also called the Pelosi Fallacy.)
  25. No True Libertarian: Ever heard of the No True Scotsman fallacy? Usually it’s applied by someone in a group to question another’s membership in that same group in terms of their ideological purity. Libertarians are famous for saying to each other “If you think X, you’re no libertarian.” But libertarians’ opponents use a variation of this, too. They’ll say something like “Libertarians believe in X. If you don’t, you’re no libertarian.” (X might be natural rights, collective non-State action, a social safety net, etc.) The No True Libertarian fallacy is a way of trying to force the libertarian to choose between a subtle variation in his argument and his own doctrine. It implies the libertarian lacks credibility: “This clown doesn’t know what he thinks!” Of course, such a tack has no bearing on the truth or falsity of either party’s claims, or the validity of their arguments. Libertarianism is a diverse school of thought. It is not a monolith. One need only demonstrate the consistency of his argument.
  26. Fascist Ignorance: This one should be familiar: Libertarian opponents were outraged—OUTRAGED—when John Mackey pointed out quite correctly on NPR that Obamacare is a fascist policy. Fascism is, of course, a doctrine that calls for significant State control over private industries, to be carried out in the service of State ends. So the fallacy of fascist ignorance is a form of ad hominem in which a libertarian opponent refers to the libertarian or his views as “fascist” despite, strictly speaking, holding fascist views herself. (One might also refer to this as the “Chicken calling the cow ‘poultry’” fallacy.) In the interests of good discourse, however, it’s probably not wise for anyone to evoke the power of the “F” word at all, given how much baggage it carries.
  27. Just One Life: The emotional appeal, grounded in nothing substantive, is meant to be a moralistic shutdown card. It goes “I’m sorry, but if we can save just one life with this policy, it’s worth it.” What does that even mean? Does it mean that every life has infinite value? Does it mean that saving lives at the expense of others and all other considerations is the purpose of government? Or does it mean that “worth it” is completely vague, but you just care a lot? It’s a heroic-sounding sentiment, but it demonstrates only the speaker’s commitment and earnestness—not any analysis of the policy itself.
  28. Consensus: This hybrid of the bandwagon and appeal to authority fallacies infects lots of discourse. It takes the form, “Lots of really smart and educated people believe X, therefore it’s true.” From the USDA food pyramid dieticians to macroeconomists, authorities are not always right.
    There are limits to any individual’s Fability to understand all the nuances of a given issue. Prediction and forecast are even more difficult. Political decision-makers must confront the same exact same cognitive limitations as mere mortals, which is why they, like libertarian debate opponents, rely far too heavily on expert “consensus.”
  29. Logo-phallo-euro-centric: Opponents accuse libertarianism of being hostile to women, minorities, homosexuals, and other marginalized groups. The fallacy lies in the idea that if your doctrine doesn’t acknowledge that groups deserve special, State-sanctioned treatment at the expense of other groups or individuals, it’s tantamount to some ism. Some even go as far as to say that if you use certain language some construe as racist, sexist, or homophobic, it invalidates libertarian doctrine. While many libertarians act like idiots and should probably not overreact to collectivist PC victim narratives with foul language, libertarian doctrine is at root a doctrine of anything peaceful—voluntary cooperation, decentralized power, and radical community formation. The heroes of libertarianism (of all races, sexes, and ethnic backgrounds) knew that collectivism and Statism are interdependent world views: It takes evoking collectivism and inventing group rights (or wrongs) to justify most State actions, and the State has historically had the power systematically to prop up or tear down people by group.
  30. You'll have to go here to read #30.  Heck, the guy went to all that trouble to make this list and you need to send him some traffic!!

Tuesday, December 10, 2013

The Good, The Bad, And The Governed

My friend Ken Stanford, who happens to be Treasurer of the Tarrant County Libertarian Party, let loose this gem on Facebook the other day:

I was listening to a radio show earlier that posed the question whether or not people are naturally good or not. His premise is that people on the left believe people are naturally good and people on the right believe people are naturally not good. Those on the left believe people are naturally good, therefore a large government is there for the benefit of all. People on the right don't believe people are naturally good, therefore are suspicious of large government.
My position is that people are naturally good, therefore we don't need the government in our life telling us what to do with every part of our life. As it has been said, Power corrupts and absolute power corrupts absolutely. Those with to much power become corrupt. However, in their own lives they are still good to those they are good to those around them.
(This is dealing with generalities so please do not bring up those such as mass murderers, molestors, or rapists. They are the exception not the rule.)
Yeah.  What Ken said.  If you believe in the natural goodness of humanity, you don't want 50% of your income going to being "governed". 

Here's Ken with Fox Business host John Stossel


Sunday, December 8, 2013

Why Detroit Will Remain A 3rd-World Country

In the early 1980's the Chinese government, mostly because of citizens starving to death, decided to liberalize their economy.  They did this by opening some "Special Economic Zones" on their east coast.  These would be places where businesses and individuals would be left the hell alone to make money and provide for themselves as best they could (relative to the rest of China, of course). 

The experiment was a huge success, and has changed the world. 

Here's Wikipedia:

Special Economic Zones of the People's Republic of China (SEZs) are special economic zones located in mainland China. The government of the People's Republic of China gives SEZs special (more free market-oriented) economic policies and flexible governmental measures. This allows SEZs to utilize an economic management system that is more conducive to doing business than in the rest of mainland China.
Since 1980, the PRC has established special economic zones in Shenzhen, Zhuhai and Shantou in Guangdong Province and Xiamen in Fujian Province, and designated the entire province of Hainan a special economic zone.

Here's a chart showing the changes in GDP in each economic zone. 

Xiamen is where I used to go as a Quality Control supervisor, and is probably the most hog-stomping example of free-market capitalism I've ever seen.  The government doesn't care how rich you get, as long as you don't get too powerful.  Therefore people are clawing all over each other to get in. 

This is what Shenzen looked like before the government got out of the way, circa 1978.  The main industries were fishing and harvesting bamboo.  The city had 30,000 people and not a single traffic light:

This is Shenzen now.  There's a good chance that the device you're using to read this was partially manufactured in Shenzen. 
(Some of you may be offended by this picture, as there is now more income inequality in Shenzen than 30 years ago.  Despite pulling millions and millions of people out of bone-grinding poverty, the people who accomplished this miracle are condemned by many because they are now filthy, stinkin' rich.)

So what's the difference between the SEZ's and the rest of China?   Back to Wikipedia:
  1. Special tax incentives for foreign investments in the SEZs.
  2. Greater independence on international trade activities.
  3. Economic characteristics are represented as "4 principles"  (See 4-7)
  4. Construction primarily relies on attracting and utilizing foreign capital
  5. Primary economic forms are Sino-foreign joint ventures and partnerships as well as wholly foreign-owned enterprises
  6. Products are primarily export-oriented
  7. Economic activities are primarily driven by market forces
SEZs are listed separately in the national planning (including financial planning) and have province-level authority on economic administration. SEZs local congress and government have legislation authority.
Leong (2012) investigates the role of special economic zones in liberalizing the Chinese and Indian economies and their impact on economic growth..... The presence of SEZs increases regional growth but increasing the number of SEZs has negligible effect on growth. The key to faster economic growth appears to be a greater pace of liberalization.

Liberalization, of course, is being used in the old-school sense of the word, meaning "leave people the hell alone".  The American sense of liberalization means "how many ways can the government f**k with your life".   

You have no idea how much better off the Chinese are in these SEZ's.  It's a brand new world for them. 

Meanwhile, on the other side of the world, in a city that's just as screwed up as pre-reform China:

This week, Senator Rand Paul, who is likely running for president, suggested that Congress act to pass legislation which would declare Detroit an economic “freedom zone.” That is to lower taxes in Detroit to near 0% levels, spurring business activity and development.

We at "Against Crony Capitalism" wholeheartedly agree with this idea. We even called for something similar last year. Unleash the market in Detroit and the city will bloom.
Few cities have been as ravaged by inept governing and crony capitalism as Detroit has. Because of decades of mismanagement and neglect, what was once one of the great cities of the world is now a rusting heap. But it need not remain so.
Detroiters are now presented with an incredible opportunity in the proposed Freedom Zone. In the face of despair and economic ruin, they can show that the city which spawned Joe Lewis can become a contender on the world stage – again.
Seems a bit optimistic given where Detroit is now to imagine the city solvent, never mind thriving. But if the power of the market were unleashed in the city, if Detroiters and entrepreneurs from across the country and around the world could realize the simple benefit of keeping almost all of the fruits of their labor in the city, Detroit would roar back to life.
Michigan would see massive wealth inflows. The young and ambitious would come from the coasts instead of the other way around. People would actually WANT to buy homes in the city. If Detroit truly became a nearly tax fee zone, with services engineered through the market, the ambitious and smart, not to mention moneyed, of the world will come.
Here's why Detroit won't see these simple, common sense reforms take place in my lifetime.

1.  The current president of the United States is a class warrior.  He has persuaded a majority of us that it's better to keep everyone down than to allow entrepreneurs to get rich  (and in the process make all of us better off).  They'll never to allow an entrepreneur to increase his wealth by 10,000% if it increases the well-being of the rest of us by only 10%.  We now have a zero-sum mindset. 

2.  Detroit's government is full of bureaucratic parasites, goldbrickers and featherbedders.  Worse than most.  The city has 40 people who do nothing all day but write checks by hand.  They still have a blacksmith on staff, just in case departments that haven't had a horse in 50 years need to have a horse shoed / shod / given new horseshoes.  (Sorry.  I don't know the tenses of the verb "to shoe). 
Chinese bureaucrats are some of the worst people in the world, but they could easily be commanded by decrees from Beijing.  If they resisted, they were propped against a wall and shot.  Detroit's parasites have more autonomy than China's. 

3.  Any possible improvements to Detroit will be burdened with race-based set-asides. 

4.  Detroit hasn't hit rock bottom yet.  The city is still getting money from Uncle Sugar without having to change anything. 

Great idea, Mr. Paul.  But they'll never do it.