David Boaz

Last night National Government Radio promoted a documentary on National Government TV about the financial crisis of 2008, which concludes that the problem was . . . not enough government. If the "Frontline" episode mentioned any of the ways that government created the crisis -- cheap money from the central bank, tax laws that encourage debt over equity, government regulation that pressured lenders to issue mortgages to borrowers who wouldn't be able to pay them back -- NPR didn't mention it. For information on those causes, take a look at this paper by Lawrence H. White or get the new book Financial Fiasco by Johan Norberg, which Amity Shlaes called "a masterwork in miniature." Available in hardcover or immediately as an e-book. Or on Kindle! And for a warning about the dangers lurking in Fannie Mae and Freddie Mac, see this 2004 paper by Lawrence J. White.

I am delighted to report that Libertarianism: A Primer has been published in Chinese. Let's hope for sales in the tens of millions! The good folks at the Atlas Global Initiative posted an interview with me about the book, with subtitles in Chinese. (In my experience, it plays more smoothly if you turn the HD button off. But then, there's nothing really new in the interview for American viewers.) Thanks to the good folks at www.guominliyi.org and www.ipencil.org for making this book possible. The support of the project by a Chinese entrepreneur shows not only the growth of the Chinese economy, but one of the additional benefits of economic growth: diverse sources of wealth, with different people making different investments and encouraging diverse ideas. Libertarianism: A Primer has also been published in Russian, Japanese, Spanish, Czech, Polish, Serbian, Bulgarian, Cambodian, Mongolian, Kurdish, and Persian. Translations into Arabic, Portuguese, and Italian are underway. And of course you can get it in audio form. Not Kindle yet, but feel free to tell them you'd like a Kindle edition.

The New York Times tries to spin the work of Nobel laureates Elinor Ostrom and Oliver Williamson as not anti-regulation:

Neither Ms. Ostrom nor Mr. Williamson has argued against regulation. Quite the contrary, their work found that people in business adopt for themselves numerous forms of regulation and rules of behavior — called “governance” in economic jargon — doing so independently of government or without being told to do so by corporate bosses.

But none of us "anti-regulation" folks are against "rules of behavior that people in business adopt for themselves independently of government." The world is full of rules, from wearing clothes in the office to customary trade practices to the rules for managing common-pool resources that Ostrom studied. Anyone who opposed such "forms of regulation" wouldn't be a libertarian or even an anarchist -- he'd be a nihilist. (Of course, one could sensibly oppose particular rules; but no one seriously wants a world without rules of behavior.) David Henderson analyzes one of the misunderstandings about the laureates' findings:

Some have summarized their work by saying that institutions other than free markets often work well. But that statement can mislead you to conclude that government solutions are the answer. Free markets are only a subset of free institutions. A better way to sum up their work is that what Ms. Ostrom and Mr. Willamson really show is that voluntary associations work.

The Concise Encyclopedia of Economics defines "regulation" this way: "Regulation consists of requirements the government imposes on private firms and individuals to achieve government’s purposes." That's the kind of regulation that is controversial among economists and often criticized by libertarians. It is entirely different from "rules of behavior that people in business adopt for themselves independently of government." Those sorts of rules -- often called "governance," as the New York Times notes -- are private and voluntary, made by the voluntary interactions of a few or many people. The work of Ostrom and Williamson supports the idea of spontaneous order, an order that emerges as result of the voluntary activities of individuals and not through the commands of government. Spontaneous order can be hard to grasp, though it is the background of our entire world -- language, common law, money, and the economy are all spontaneous orders (though government has intruded into some of those orders). It's misleading to say that work of Ostrom and Williamson is somehow supportive of "regulation," given the way that word is commonly used. Sheldon Richman made a similar point back in June and wrote a Facebook note on the same paragraph that caught my eye.

Our friends at the Atlas Economic Research Foundation are offering prizes for the best essays on sound money by students and young faculty and policy analysts:

The Atlas Economic Research Foundation invites you to participate in its Sound Money Essay Contest, which has a deadline of November 24th, 2009. The contest is open to students, young faculty, and policy writers who are interested in the cause of sound money.  It aims to engage you in thinking about sound money principles with relevance to today's economic challenges. The overall winner will receive a cash prize of $5000.  Two additional prizes of $1000 each will be given to outstanding essays written by junior faculty, graduate students, or policy writers.   And three additional prizes of $500 each will be given to outstanding essays written by undergraduate students. Essay topics include: ·      “Money and the Free Society: Can Money Exist Outside of the State?” ·      “The Ethical Implications of Monetary Manipulation” ·      “Monetary Policy and the Rule of Law in the United States” To be eligible, you must be a legal resident of the U.S. or engaged as a full-time student or faculty in the U.S.  You must also be no more than 35 years old on the date of the contest deadline (November 24, 2009).   Atlas welcomes involvement of older and non-U.S. scholars in its discussions and ongoing work on sound money, but this essay contest is targeted to the audience described above. For a list of reference materials and writing guidelines, please visit the Atlas website.

And for Cato research on sound money, check here.

I talked with Dennis McCuistion, whose interview program appears on KERA in Dallas and other public television stations, about "libertarianism and the politics of freedom." It's an old-fashioned public affairs program, where the host asks intelligent questions for half an hour. No shouting, no four-minute segments, a good solid conversation. Find the video here. Other McCuistion programs with such guests as Dan Mitchell, Steve Moore, and Steve Forbes can be found here.

In a stunning upset, Elinor Ostrom and Oliver Williamson have won the Nobel Prize in Economics over President Barack Obama. Lynne Kiesling of Knowledge Problem is pleased:

Both Ostrom’s work on governance institutions and common-pool resources and Williamson’s work on governance institutions and the transactional boundary of the firm contribute meaningfully to our understanding of how individuals coordinate their plans and actions in decentralized, complex systems.

Arnold Kling stresses the implications of their work for issues of decentralized knowledge and centralized power. The official description of Ostrom's work by the Swedish Bank identifies some implications for regulation:

The main lesson is that common property is often managed on the basis of rules and procedures that have evolved over long periods of time. As a result they are more adequate and subtle than outsiders — both politicians and social scientists — have tended to realize. Beyond showing that self-governance can be feasible and successful, Ostrom also elucidates the key features of successful governance. One instance is that active participation of users in creating and enforcing rules appears to be essential. Rules that are imposed from the outside or unilaterally dictated by powerful insiders have less legitimacy and are more likely to be violated. Likewise, monitoring and enforcement work better when conducted by insiders than by outsiders. These principles are in stark contrast to the common view that monitoring and sanctioning are the responsibility of the state and should be conducted by public employees.

Paul Dragos Aligica and Peter Boettke of George Mason University showed excellent prescience in publishing a book this summer on the work of Ostrom, her husband Vincent, and their colleagues at Indiana University, Challenging Institutional Analysis and Development: The Bloomington School.

The Supreme Court today is considering the case of United States v. Stevens, a challenge to a 1999 federal law outlawing depictions of animal cruelty. The government says that such depictions are "unprotected" speech. Many First Amendment advocates and news organizations are supporting the challenge to the law. It seems an easy enough case to decide, given the plain language of the First Amendment:

Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press, except in the case of depictions of animal cruelty.

Right? For a more substantive discussion of the issues in United States vs. Stevens, see the Cato Institute's amicus curiae brief.

President Obama's real czar, "pay czar" Ken Feinberg, who has real power, brushes aside such claims even as he prepares to issue his Gosplan-style edicts on future and even past pay agreements:

The Obama administration’s pay czar says negotiations over executive compensation with the seven companies that received the biggest federal bailouts have been “a consensual process’’ - not a matter of forcing decisions on them. “I’m hoping I won’t be required to simply make a determination over company objections,’’ veteran Washington attorney Kenneth Feinberg told the Chicago Bar Association in a speech.

But note: he's "hoping" he won't have to impose his own view. He's hoping the companies will accede to his power without complaining. But the fact remains, he doesn't have to get their consent. He "has sole discretion to set compensation for the top 25 employees of each of those companies," and his decisions "won’t be subject to appeal." Or, as Feinberg himself puts it,

The statute provides these guideposts, but the statute ultimately says I have discretion to decide what it is that these people should make and that my determination will be final. The officials can't run to the Secretary of Treasury. The officials can't run to the court house or a local court. My decision is final on those individuals.

That's power. So where is Doonesbury? We need him to update his classic 1970s "energy czar" strips.

In a profile of Virginia Democratic gubernatorial hopeful Creigh Deeds, the Washington Post tells us about the grandfather from whom he got his unusual first name -- and his interest in political power:

Creigh Tyree mattered. While serving as chairman of the Bath County Democrats, during the Depression, Tyree's house was the first private home in the county to receive electricity from the federal Rural Electrification Act, proof of the power of government, he told his grandson.

Or at least proof of the practice of government. And that is in fact the lesson that young Creigh learned:

Watching the elderly man work the circuit of county shops and farms, the boy saw the power of political maneuvering, the influence it brought a man, the way it enabled the well-connected to pick up a phone and get something previously ungettable. Young Deeds started telling elementary school teachers that he wanted to be, would be, governor someday, and then president.

Using political connections to get things other people can't get -- that's the lesson young Creigh Deeds learned from his granddad's experience with the New Deal. In a story earlier this week, the Post made it clear that that's still the way politics works:

Sen. Thad Cochran's most recent reelection campaign collected more than $10,000 from University of Southern Mississippi professors and staff members, including three who work at the school's center for research on polymers. To a defense spending bill slated to be on the Senate floor Tuesday, the Mississippi Republican has added $10.8 million in military grants earmarked for the school's polymer research. Cochran, the ranking Republican on the Appropriations subcommittee on defense, also added $12 million in earmarked spending for Raytheon Corp., whose officials have contributed $10,000 to his campaign since 2007. He earmarked nearly $6 million in military funding for Circadence Corp., whose officers -- including a former Cochran campaign aide -- contributed $10,000 in the same period. In total, the spending bill for 2010 includes $132 million for Cochran's campaign donors, helping to make him the sponsor of more earmarked military spending than any other senator this year, according to an analysis by the nonprofit group Taxpayers for Common Sense. Cochran says his proposals are based only on "national security interests," not campaign cash. But in providing money for projects that the Defense Department says it did not request and does not want, he has joined a host of other senators on both sides of the aisle. The proposed $636 billion Senate bill includes $2.65 billion in earmarks.... The bill, however, would add $1.7 billion for an extra destroyer the Defense Department did not request and $2.5 billion for 10 C-17 cargo planes it did not want, at the behest of lawmakers representing the states where those items would be built. Although the White House said the administration "strongly objects" to the extra C-17s and to the Senate's proposed shift of more than $3 billion from operations and maintenance accounts to projects the Pentagon did not request, no veto was threatened over those provisions.... Sen. Daniel K. Inouye (D-Hawaii), chairman of the Senate Appropriations Committee, ran a close second to Cochran's $212 million in earmarks this year, having added 37 earmarks of his own worth $208 million, according to the tally by Taxpayers for Common Sense. Almost all of Inouye's earmarks are for programs in his home state, and 18 of the provisions -- totaling $68 million -- are for entities that have donated $340,000 to his campaign since 2007. His earmarks included $24 million for a Hawaiian health-care network, $20 million for Boeing's operation of the Maui Space Surveillance System and $20 million for a civic education center named after the late senator Edward M. Kennedy.... In Cochran's case, the proposed earmarks would benefit at least two entities that hired his former aides.

Folks, this is the way government works. If you think the programs of the New Deal or the stimulus bill or federal highway programs are necessary, fine -- and certainly a defense bill is necessary -- but understand that all such government programs involve taking money by force from people who didn't offer it up voluntarily and then distributing it to others, in many cases to people with more political clout. People in the reality-based community should recognize this reality. For more on this, see chapter 9 of Libertarianism: A Primer, "What Big Government Is All About."

When Samuel Johnson said that ''patriotism is the last refuge of a scoundrel," he overlooked the value of the word "reform." (I didn't say this first, but I can't discover who did.) Webster's says that "reform" means "to put or change into an improved form or condition [or] to amend or improve by change of form or removal of faults or abuses." So in political terms, a reform is a change for the better. But whether a particular policy change would actually improve things is often controversial. Unfortunately, the mainstream media typically use the word "reform" to mean "change in a liberal direction." It's bad enough that they constantly use the phrase "campaign finance reform" to refer to laws that restrict individuals' ability to spend their money to advance their political ideas. And of course every day we hear and read the term "health care reform" used to mean new subsidies, mandates, regulations, taxes, and restrictions on how health care is provided. Needless to say, there's heated debate in the country as to whether such laws would constitute reform. And now the Washington Post gives us this prominent headline (page 3, upper right):

450 Mayors Petition Obama To Adopt Broad Gun Reform

The story makes clear that what the mayors want is what used to be called "gun control" -- more power for the Bureau of Alcohol, Tobacco, and Firearms, the creation of an "Interstate Firearms Trafficking Unit," more restrictions on gun shows, more data collection on individuals.  No doubt anti-gun strategists have discovered that "gun control" is an unpopular term, so they advise advocates to use terms like "gun reform"; and reporters, headline writers, and editors at the Post go along with it. Now try to imagine this story in the Washington Post:

450 Mayors Petition Obama To Adopt Broad Media Reform A new report from a national coalition of mayors urges President Obama to adopt dozens of reforms to help curb media excesses, including steps to crack down on problems with unauthorized leaks, the creation of a federal interstate media monitoring unit, new rules on media concentration, a federal database of people who use hateful language in letters to the editor and online comments.

Hard to imagine the Post would blithely accept the term "reform" in that case, isn't it? And I don't think the Post and other mainstream media called President Reagan's tax cuts "tax reform." (They did use the term "tax reform" when the proposed policy involved eliminating loopholes and thus taxing more activities, along with a reduction of rates.) Nor, I think, did they call President Bush's proposed Social Security private accounts "Social Security reform." They should be equally careful when liberal activists dub their proposals "reform." Meanwhile, kudos to Mara Liasson of NPR, who in this story from Friday uses the terms "health care legislation" and "health care overhaul," but never "health care reform." I hope that was a conscious choice, in recognition of the fact that about half of Americans don't think the current subsidy-regulation-mandate legislation is in fact reform.