Archive for July, 2010

Howard Dean Follow-Up

After being challenged with the facts on Fox News Sunday, Howard dean retreated to a friendlier battlefield and repeated the same lie!  Unfortunately the only clip I could find of this was from Fox News so I can’t make the point I was hoping to make which basically amounts to: you can lie on MSNBC without worrying about them bringing up the facts and throwing them in your face (at least as long as you’re on their side politically), since I have no evidence that  they didn’t challenge him on it.  But what do you think the odds are?


A Model of the State (What Would a Dictator Do?)

July 28, 2010 2 comments

Let us begin with a model of dictatorship.  This follows from the basic story layed out in The Role of the State.  We begin with a dictator who has established control over some group of subjects.  The dictator incurs some cost in order to protect the property of his subjects.  This is assumed to be an increasing function of the amount of wealth created and will be denoted G(Y) where Y is total output.  So if the population is fixed and equal to N, then each individual (they are assumed to be identical) produces y=Y/N.  Also, the dictator decides what percentage of output to seize (tax) from his subjects.  Let this percentage be denoted by t.  This means he will receive income equal to tY.  The problem faced by the dictator will be to choose t in order to maximize his profit given by tY-G(Y).

In order to do this, the dictator will have to consider the maximization problem faced by his subjects.  The issue, in a nut shell, is that the higher the tax rate t, the less incentive there is for people to produce because they get to keep a smaller percentage of their output.  This can be seen easily by imagining that each member of the economy produces output according to the production function y=l where l is the quantity of labor an individual devotes to production.  Also let us assume that each member faces a cost of labor c(l) which is increasing and convex (increasing at an increasing rate).  The amount of output that a worker gets to keep will be (1-t)l-c(l). (For simplicity I am measuring the cost as the value of foregone leisure in terms of output, so in other words I am counting that as lost goods which means the proper way to interpret this is as the amount by which the workers wealth increases from their initial state where they have all leisure and no production goods.  This is somewhat simpler, and in my opinion no less accurate, than dealing with a worker with a utility function over consumption and leisure)  So the worker’s first order condition for the maximization of this expression will be


From this we can easily see that when t increases the marginal cost of labor will have to decrease which means he will produce less (since c”(l)>0).  Going forward let us assume that c(l)=l^2.  This will make the above equation


which means l and y will be given by


Plugging this into the dictator’s profit gives us


Now, to make is simpler, let’s let G(Y)=Y/5.  This means that the first order condition for the dictators maximization problem will be (notice that the Ns cancel out)


This will give us

t*=.3     y=.35   

The profit to workers will be .35(1-t)-.35^2=.1225.

The profit to the dictator will be .3(.35)N-.2(.35)N=.035N.

Now let’s imagine a government of some form which makes decisions in order to maximize the prosperity of its citizens rather than of the dictator.  In this case, the government will need to raise just enough money to pay the expense of protecting the economy’s output.  Mathematically, we can impose the constraint

tY=(1/5)Y              which implies t=1/5

In other words, we can just set the tax rate equal to the marginal cost of protection (if G( ) were not linear this would work out a little different).  In this case the problem for each individual worker will be to maximize


which gives the first order condition


so l* (and y*) will be .4 and the profit to workers will be .8(.4)-.4^2=.16.

There are two important things to notice here.  First is that this benevolent government makes citizens richer by transferring the profit formerly accrued by the dictator to them.  Second, this is more efficient.  This can be seen simply by noting that output increases when the dictator is removed (in this case from .3 to .4).  This also makes the citizens better off.  This happens because the dictator, in his attempt to capture as much wealth from the society as possible, damages the incentive to produce.  He will not destroy it entirely because this would also destroy his source of wealth, but he will do so to an extent which is inefficient.  It is in an attempt to acquire both of these benefits for the people, that men endeavor to establish free rule of law societies.  The rule of law allows men to get the benefits of secure property rights without surrendering to a dictator the ability to loot their property to whatever extent he desires.

Now with this in mind consider the Laffer curve.    This is a theoretical curve showing the total amount of tax collected as a function of the tax rate.  For low levels of the tax rate it is increasing and for high levels it is decreasing.  This was the argument used in the Reagan administration to justify lowering the tax rate.  The position of that paragon of small government conservatism was that the tax rate was so high that it was on the downward sloping section of the Laffer curve so we could actually get more revenue by lowering the tax rate.  And this is the same argument going on now.  In a brilliant sleight of hand, Democrats are now claiming that we need to raise taxes in order to reduce government deficits and Republicans are saying that we need to lower taxes to “stimulate the economy” in order to lower deficits.  The entire debate amounts to an argument of where the maximum point of the Laffer curve is.  In other words, what tax rate maximizes government revenue?  Or in still other words, what would be the appropriate tax rate for an absolute dictator to impose on the economy?

You see the argument made by the Reagan administration was not that the government had no right to confiscate your property to whatever extent it desires.  The argument was that the government could actually confiscate more of your property if it lowered the rate of confiscation.  This argument would have been no less compelling had it been made to Castro.  And this is the closest thing we’ve had to a small government republican administration in… I don’t know let’s say fifty years (Ike wasn’t that bad I guess…). 

So how did we get here?  We kept convincing ourselves that we could get more stuff from the government without paying for it.  Now we have such a massive government (and government debt) that the maximum amount they can possibly confiscate is barely enough to pay the expenses of that government (and actually it’s probably far short of that amount).  This lack of foresight on our part has not only allowed the argument to become “what would a dictator do?” but it has allowed them to have the argument in the name of “fiscal responsibility.”

You Wouldn’t Want to be Disrespectful Now Would You?

July 27, 2010 2 comments

Ok, this is what I was actually looking for but I think I stumbled on an important point in the previous post.  Remember this: “when they don’t have any relevant facts to bring up they will always bring up irrelevant facts and obscure the argument.”  Then watch Obama’s interview with Bret Baier (part 1 can easily be found as well if you want to see the whole thing).  I am fighting the urge here to go through this interview word for word and point out how Obama never answers a single question but the main point I want to make is actually not about the interview.  What you need to notice about it though are two things. 

First, as I said, Baier asks a number of direct questions about facts and Obama never answers any of them.  Second, every question Baier asks requires him to interrupt the president.  It is not as though he isn’t letting him talk, there are long periods where the president goes on and on about things that are completely unrelated to the question he was asked.  But he never stops talking on his own.  If Bret Baier had never interrupted, Obama would have spent the whole interview “answering” the first question.  The reason for this is obvious.  He doesn’t want to answer the questions and the more time he can spend making vague ideological statements with little meaning, the fewer concrete questions can be asked.  Also, this makes Baier look rude.  Here is Bret Baier describing it in his own words.

Now for the big point, look at this and consider the absurdity of the statement “as this montage will show it was hard going, hard for him to get in a sentence, at least a full one.”  They literally cut out all the sentences that Obama said and then offered the doctored clip with them removed as proof that he was unable to finish a sentence.  And then the argument from intimidation begins.  They refer to Baier as “that character,” they laugh (the laugh is key, they always do this, it implies that it’s so obvious that they are correct that any attempt to argue with them would be a complete joke and therefore no actual argument in their defense is necessary), they trivialize it by comparing him to the White House party crashers, they say it was disrespectful, and they imply that if you even watch Fox, you are probably an imbecile.

Frankly, I think he did score some points, not with loyal Fox viewers but there might have been a few independents who were watching….

Most notably they actually betray the true nature of their strategy when they say

Every time they wanna go around telling us that they’re a news channel and not an opinion channel I think somebody should play that montage because that was extraordinary.

Think about what this statement actually means.  Every time Fox claims to be a real news organization someone should counter that by playing a doctored clip of nothing but interruptions.  Do not fight with facts!  Just show something that makes them look “disrespectful.”  Oh and it helps if you laugh a lot while you’re doing it.  All of this is designed to accomplish one simple purpose, to discourage people from asking questions and seeking out the facts.

By the way, there were in fact seven interruptions in that montage not 16 or 17.  Remember that time on Countdown when Keith Olberman made Chris Matthews look like a complete moron for not being able to count?  Me neither.  I guess I missed that one…

More Arguments From Intimidation

I went on youtube to look for some old clips I was thinking about and couldn’t help getting distracted by senseless attempts to make Glenn Beck look like a crackpot.  Here is another MSNBC personality.  Notice that he does not argue with any of the big ideas that Beck is talking about.  There are only two actual facts that he uses against Beck.  The first  is the fat that he spelled a word wrong.  OK you win that round Keith.  I think this is why most people on TV don’t use a blackboard.  Take it from someone who stands in front of people and writes on one every day, you’re gonna mess something up every once in a while.  Olberman seems to expect us to disregard all the horrible things Beck is pointing out to us not based on any contradictory facts but because he caught him misspelling the word oligarchy.  Surely any man who could ever make such an egregious error must be some kind of lunatic!

Second, he makes an argument that the term “czar” originated in the Nixon administration and was prevalent during the Reagan administration.  Again, this is correct but this has nothing to do with the point that Beck was making about czars.  The point is that they are becoming more powerful and that is a problem because it is making congress and the rule of law irrelevant and Beck would be the first to agree (I think) that we have been on the wrong path for a long time and it’s not about one administration or one party.  Olberman is the one making it partisan by cherry-picking two republican administrations who also had czars and pretending like this contradicts Beck’s argument.  This gives the impression that Becks argument was that Obama and Democrats are bad because they have czars.  This is a fact.  But the important thing to notice is that it is an irrelevant fact.  When these people have no relevant facts to offer they will always offer some irrelevant facts in their place and they will obscure the argument to make it appear that these facts somehow support their argument.  This will be much easier if they can get you to not even listen to the other side so they will go out of their way to make you feel like if you do, you are a dimwit by saying things like

…the one percent of the country who watches or listens to his show thinking they are not listening to an uneducated imperceptive panicky wackjob are completely mistaken

and repeatedly calling him names like “the mythical homespun ‘aw shucks’ TV totalitarian lonesome roads Glenn Beck.” 

Furthermore, youtube is crawling with doctored clips with names like “Glenn Beck Gets Owned on Teabagging.”  This raises another issue worth pointing out.  Most people in the country between age 18 and 35 were raised getting their news from The Daily Show.  Their idea of “getting owned” is not having the weakness of your position exposed by a clear illumination of the facts but rather it is being made to look bad by a clever comedic distortion of your position.  This is the way we have been trained to engage in debate our entire lives.  God help us….

An Interesting Bill

Did  you know about this bill?  Does it seem odd that there hasn’t really been a big public debate about this? Is Shirley Sherrod really more important?  Do you remember this line from some stuffy old irrelevant document that you read once in elementary school?

Congress shall make no law… abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the Government for redress of grievances.

The Temptation of the State

July 26, 2010 1 comment

The primary role of the state is to define and protect property rights.  This role requires it to wield coercive power against individuals.  Historically, the most common manifestation of the state is one where an individual or a small group of individuals has control over the state and therefore near complete control over the other members of society.  The emergence of what can be loosely called “democracy” or government by the people, is an attempt by free people to get the benefits of governance without subjecting themselves to serfdom.  This is done by entrusting control of the government to the people it is charged with governing.  But this creates some problems.

If “the people” was a single unified body that made decisions in its own interest then this would work out fine.  Unfortunately “the people” is really just a collection of individual people with different interests.  Each of these individual people will see the state, which is partly under their control, as a potentially very useful tool for achieving their goals.  And this is true, because the state has a special power that individuals lack, namely the power to coerce others with the threat of force. 

To understand the temptation that necessarily comes with this type of power, consider a man who has devoted his life to feeding the poor.  This, of course, is a noble pursuit which would no doubt be commended by almost any free man.  But any free man would not be willing to devote his life to it.  It may, in fact, be the case that most free men wouldn’t devote much energy at all to it.  To the man who does care, this will seem barbarous and mean.  He will see others enjoying plenty and not showing what he considers to be the proper concern for those with less.  He would like to get some of what they have and give it to the poor.  This would make him happy. 

In a free society, this man has a clear path to achieving his goal of getting some food from a rich man and giving it to a poor man.  He can work to produce something of vale and trade it to the rich man for the food that he wants to give to the poor.  On the other hand, if he has access to a coercive enforcer, he may be able to just use that power to make the rich man give it to him.  This process is attractive to him for two reasons.  First, it cuts out the nuisance of having to produce something valuable to trade.  Second, he is able to accomplish far more this way.  Instead of being able to donate the produce of only one man (himself) he is able to donate the produce of many of his fellow men to his cause. 

What is more, he will likely feel no moral reservation about pursuing such a strategy.  On the contrary he will probably feel the exact opposite and he may even develop a sense of righteous indignation toward those who would be so selfish as to resist his attempts to confiscate their property and direct it to what he considers a very worthy cause.  And this moral reproach will be used as a weapon to accomplish his goal.  He will brand those who don’t support using the government to direct peoples’ private property toward ends which they do not condone as enemies of the poor when in fact they are simply indifferent to the poor.  The public at large (who controls the state) will see the issue as one of who should get this wealth, the rich or the poor?  And that is what the issue is.  But this view betrays the fact that the public considers the wealth of every member to be public property which can be disposed of as “the public” sees fit. 

Likely “the public” will prefer the poor to the rich on some sort of moral grounds.  This will especially be the case when the burden of a policy falls on a minority of them.  This might not be very troubling except for the fact that everyone has a cause that they care more about than others.  They will all want to use the state to coerce others to support their cause.  The direction of resources will become a public political decision rather than a decision made individually by the owners of the resources.  Indeed, in this case the public is in fact the owner of all resources because they have the ability to seize any of them at any time and direct them to any cause they see fit.  This fact is illustrated by the current debate in this country over whether we should increase or decrease tax rates in order to increase government revenue.  Notice that this is exactly how a tyrant decides on the tax rate.  The thief-turned-governor in our initial example allows the foragers and hunters to keep some of their produce because it provides an incentive for them to produce more for him to steal.  In a free society the question shouldn’t be what will maximize tax revenues, it should be what is the minimum tax possible to achieve the necessary functions of government? 

The big problem with this situation is not that the poor get fed.  It is that when the objects of wealth become disassociated with the creation of wealth, wealth will not be created.  This can be illustrated with another parable.

Imagine a society made up of three individuals.  The first wants to feed the poor and provide universal healthcare.  The second wants to feed the poor and build roads.  The third wants to provide healthcare and build roads.  They each have $150 and spend $75 on each of their causes.  If they are left alone they end up spending $150 on feeding the poor, $150 on providing healthcare, and $150 on building roads. 

                If they can vote to make the government do things, the first person may propose that the government take $50 from each person and spend it on feeding the poor.  This will pass because two out of three people value feeding the poor.  And in this way those two get the same amount of benefit at a lower cost to themselves ($50) because they make the third person subsidize their efforts.  If only this happened, the society would end up with more feeding of the poor and less healthcare and roads.  However, the second person will probably notice that they could propose a measure to have the government take $50 from everyone and use it to build roads.  This will also pass because two out of three favor it.  And the third person may propose that the government take $50 from everyone and use it to provide healthcare.  After all of this they end up with the same amount spent on each project as they had to begin with ($150).  It is worth mentioning that this is not necessarily always the case.  The example is constructed this way to illustrate that it is not the reallocation of resources that is the main problem here.  The main problem is that now, if any one of these people earns another dollar, only 2/3 of that dollar will go to causes they care about.  This means they will have less of an incentive to produce.  If all three produce less, then every cause receives fewer resources.  The more people and causes you add, the more an individual’s wealth will be diverted away from projects that they care about and the less will be their incentive to create wealth. 

                In addition to this, it is likely that a lot of otherwise productive resources will be used up simply trying to manipulate the actions of government.  Every politician, lobbyist, campaign manager or volunteer, pundit, blogger, and bureaucrat could be employed in the production of some other good.  The cost of all of this together with the waste and corruption which is well known to be common in any government is most likely small however in comparison with the negative effect on incentives described above. 

                There is an important distinction to make here regarding liberty.  It is between the conception of a “free people” in which people is thought of as a single organism and that in which people is considered a collection of individual free people.  The idea that a people is free if its collective actions are chosen by the majority is fundamentally different from the idea that a people is free if they are individually allowed to live and act in a way of their own choosing so long as it does not infringe on the liberties of some other individual.  The fact that a man has some say in the actions of the state which wields complete control over his life does not make him a free man.  The difference between this and a dictatorship is not the degree of freedom, it is only the way in which the oppressing body makes decisions.  People are only free when there is no oppressive body making these decisions at all.

Aside: On the Morality of Government

 One man sees that there are poor people in his community and thinks to himself “I should do something to help.”  So he goes out and gets a part-time job to earn money to buy food for the poor.  Another man sees that there are poor people in his community and thinks to himself “somebody should do something to help.”  So he goes to the government and demands that it use its coercive power to force other people to give food to the poor.  Which man deserves more admiration?

The War on Fox

July 26, 2010 2 comments

Here is Howard Dean blaming Fox News for the Shirley Sherrod incident and calling them racist.  When asked the question “are you aware that Fox News never mentioned Sherrod before she was fired” Dean refuses to answer and instead claims that she was “about to be on Glenn Beck” which is a flat-out lie.  Meanwhile, when an MSNBC commentator invites someone on who “disagrees with them completely” you get a lively debate like this one.  (Notice how he says that Obama’s surrogates such as the Democratic National committee should deal with these issues and notice who was the chairman of the Democratic National committee until last year.)

If you haven’t read it, you must read The Argument From Intimidation.  Then notice the language they use–scorpions, liars, sleeze-artists, smear-artists, clowns–and understand that what Maddow is describing in the case of the birther issue and calling for more of is exactly this tactic.  Now I am not a birther, but one can’t help but wonder why the administration doesn’t just release the long-form birth certificate that the guy in that clip was asking for.  I suspect that the reason is that they relish the opportunity to make their opponents look like racists.  In a stunning bit of hypocrisy, here is Maddow in another rant about Fox News causing the Sherrod controversy saying

“Fox News continually crusades on flagrantly bogus stories designed to make white Americans fear black Americans, which Fox News most certainly does for a political purpose, even if it upends the lives of individuals like Shirley Sherrod, even as it frays the fabric of the nation and even as it makes the American dream more of a dream and less of a promise.”

and then following it up by declaring that what really matters is the facts.  But there is not a single fact in the above quote, it’s all hyperbole, and the entire segment is really about making Bill O’reilly look like a jerk for calling her “madame.” In fact, when she talks about Glenn Beck and Van Jones, she never actually says that any of the claims that Beck made were untrue, she just implies that they are.  In fact, she never addresses the simple fact that O’reilly was trying to point out, namely that Fox News never mentioned Shirley Sherrod until after the administration had fired her.  This seems like an important fact in this debate does it not?  In fact I challenge you to find any clip anywhere on MSNBC mentioning this fact (in order to avoid playing the same game as them I will say outwardly that you might be able to, I actually wish you would try.  I don’t watch them that regularly but I haven’t seen it.  Just for fun here is another gem where they revive the old “vast right-wing conspiracy” language).

The response by the White House to the birther issue that Maddow is such a fan of, is not based on fact.  I think that in that case the facts actually are on their side but they didn’t just release the proof and let the facts speak for themselves.  Here is what Hayworth is saying in the clip they show from his radio show:

“Questions continue, and until president Obama signs his name and in fact has the records revealed, the questions will remain.”

Is there an endorsement of “birtherism” in there?  What I see is a request for facts.  For the record, I have no idea whether  Hayworth is a birther or not, but this quote doesn’t make him one, it just makes him someone who wants a direct answer to a question.  But they put his picture next to two nut-jobs and say that they’re the same.  Similarly when the man asks Robert Gibbs for the same thing, he is laughed at and his question ignored. 

Instead of taking a clear stand and relying on the facts, they chose to impeach the character of those who questioned the facts.  They are actually demonizing the act of questioning the facts!  You may think it doesn’t matter because it’s a stupid issue but what happens if someone comes out and accuses the administration of something that actually is true?  They are creating a climate where questioning the facts doesn’t get you simple answers it just gets you called a racist and a wingnut.  They are establishing a pattern of arguing only with the character of their opponent while simultaneously claiming that it’s the facts that matter.