Nobody thinks,,,

From the Machinery of Freedom:

Nobody, except a few Brahmins in Delhi and two or three Trotskyites in New York, still believes that the earthly paradise can be achieved by nationalizing General Motors and turning the corner grocery store over to the Mayor's office. Socialism, as a coherent ideology, is dead and is not likely to be revived by student rebels in Paris or Soviet tanks in Prague. (emphasis added).

hmmm.

24, Machinery of Freedom, Journolist

1.

I agree that this is a non-apology apology. Best Parody of Jounolist e.v.e.r.

2.

Breitbart screwed up and should apologize to Shirley Sharrod. I don't agree with the the video's apologists (Also, I think its interesting that Sharrod thinks it's okay to pick and choose who to help based on wealth). I think the most interesting thing about this ordeal is how swiftly the right-leaning blogosphere corrected the misreporting and denounced the deceptive editing.

3.

Leigh and I have been watching 24. I like the show, but there are significant problems (spoiler warning). The whole real time thing seems to work, but really doesn't. Like apparently nothing important ever happens during commercial breaks, which count as time in this world (1 hour is really 40-50 minutes of air-time). Also no two important things are ever happening at the same time such that you can't watch them both. So I don't know that the real-time thing really contributes that much to the suspense of the show, because I don't think that it creates that much of a feeling of reality.

Also, I've only watched two seasons (plus, I think, season 6 when it was new) but we're already seeing a lot of the same suspense creating ploys: mole in CTU, injured person who needs to be aroused from/prevented from going unconscious to communicate some important information; nuclear bomb in L.A. The daughter's plot in season two is completely unbelievable--either that of every dude in L.A. is a creep.

4.

As I always do with books, I read about the first 30 pages of David Friedman's book, The Machinery of Freedom before stopping. It was, in a lot of ways, much like Capitalism and Freedom. I agreed with most of what I read, but I never got the anarchy stuff. Today I read a chapter on how anarchy would work, which buttresses into some of my own thoughts about government.

First, I reserve the right to revise all of these thoughts as, they are pretty much an off the cuff reaction.

So I don't think that David Friedman is right, but I do find his ideas interesting.

Here are my thoughts:

A protection agency could work like a renta-cop within a country, but what about war between countries? There seems to be a presumption that the entire world will submit to this scheme. What if America becomes a functional anarchy: how would it defend against foreign countries? contractual agreement between protection agencies? and what if one agency failed to live up to the contract? Who would enforce the contract? They would lose reputation among other protection agencies, but they would be helping the people they protect, assuming they can free-ride on other protection agencies, and pass those savings on to their customers. This could be particularly true if a foreign country's invasion is in an area where one particular protection agency has very few clients.

If a hit to a person's reputation for honesty was the only way a person is punished for failing to live up to their contract, then I think a lot of people would fail to live up to their contracts. I know a lot of shady characters who get sued regularly, and yet seem to do very well despite that fact. I just think that the transaction costs associated with learning the reputation of a person may be too high to be an effective deterrent to errant behavior. I guess the counter argument might be that in this anarchy world, reputation will become very important to business, and so people will become more protective of it.

The world has lots of community action problem. Protection is one of them. If my neighbor has really sweet cameras and a security guard checking up on him frequently, then he's protecting me to an extent too, and I do not need as much security. We need a government who can forcefully collect taxes to protect free-riding. I guess the counter argument might be that, even with some free-riding, the price reduction that comes from the efficiency of competition might more than make up for it for the person with the sweet security system. He might still get better bang for his buck than provided by government.

I think protection agencies may be able to create externalities that are not properly internalized. Suppose most protection agencies play by some sort of arbitration rules. But what if one protection agency doesn't, and acts quickly before another protection agency can act. Does this mean that what it did was legitimate? What if person is not protected by a protection agency? Can a protection agency act against them with impunity? What if one protection agency just decides that it prefers force to negotiation. Again, I think that a protection agency's repudiation for ruthlessness against people outside the agency may be plus to finding new clients. It may be more expensive, but there may be people willing to pay that premium. Is there a significant difference between government use of force and protection agency use of force? Maybe the counter argument here is that there is no difference, but the profit motive will make protection agency use of force less likely?

There's also a natural monopoly problem. Electronic surveillance may work on an individual property basis, but patrols wouldn't work, because you need to be in proximity to the property. And if people start to choose the protection agency that is closest to them, (and that, maybe, is mostly related to their ethnicity or religion), doesn't that start to look like tribal government, or just government in general?

This segues into what I've been thinking about in the association context. Associations exist to control externalities created by people in proximate to their homes. They solve a community action problem and are very much like small local government. You can't let new owners "opt in" or "opt out" because it disrupts the expectations of the surrounding owners, so you have to force these owners to comply. You do that by having the "contractual relationship" binding on future owners too. Otherwise the association will fall apart, disrupting the current member's expectations and destroying the system. The result is a constitution-like document defining property rights that is binding on future generations.

In what sense is this system of protecting property rights any different from government? (it doesn't have it's own police, but it could.)

Which raises the question: what is the difference between government and private control? Is the Association government or private? In almost all respects, other than the threat of force, it is the same a government, including the ability to bind future generations to things they did not agree to.

There is one difference, however, which I think is key. Associations are small. It is easy enough to leave them by moving down the street. Sure, that's inconvenience, but its a good way to select the rules and laws that you want to live by. Voting with your feet is very important.

So my thought is that the most meaningful way to protect liberty is to 1: have a central government that only does things like provide for the defense of the nation as whole (This is necessary to avoid the community action problem posed by defending against a war) and 2. have very small local governments with all other regulatory power, that people can easily leave by voting with their feet.

I suppose the issue then is how to keep the central government from assuming more power than you intend for it to have, like has happened in the U.S.

Marketing Done Right

Unemployment

There's difference between unemployment benefits being the sole cause of unemployment, and being a factor that increases unemployment at the margins. If the only point is that the graph doesn't support the thesis, great! It doesn't justify distorting Laffer's argument.

Hours of Education

You can watch all of Milton Freidman's PBS series, Free to Choose, here for ... well... free.

Fourth of July

Happy fourth. Even anarchists must be grateful that they ended up in a very wealthy, classically liberal illegitimate government.