Red Clay Citizen

The Staggering Costs of Regulation

Government regulations are destroying prosperity. Soon, the burden may be too great to bear.
-Max Borders

Lillington Democrat Etheridge to Meddle in Energy Markets

Wow! Can you believe this man's audacity?

So this week, with the help of U.S. Rep. Bob Etheridge, a Lillington Democrat, Congress will take on an obscure commodities market. Some oil experts say congressional action could have an immediate impact.

What experts? What impact? Even if it had a short-term "impact" it could have longterm devastation. The paper admits futures markets are obscure--which is to say Etheridge doesn't (nay can't know enough about them to get Congress to meddle). Etheridge - certainly no expert, with no stake in oil futures - is going to save consumers money at the pump by futzing around with futures markets! Lord have mercy. Just when you thought you'd heard everything, we've got people who not only think that they can repeal the laws of supply and demand, but that they know better than investors who help increase supply by their diverse, extremely critical judgments about these complex markets and related supply sources. Haven't they heard of short-selling? Again, I say wow.

Rep. Etheridge's meddling would be as dumb or dumber than skimming oil profits. It would be akin to my going down Papua New Guinea to educate the locals on better hunting techniques. Somebody please tell the News & Observer.
-Max Borders

Scary: Groovin' On Government

Even Instapundit picked it up... Asheville loves, nay worships, government. Scary.
-Max Borders

Mortgage Meltdown: What Happens When Government Tries to "Do Good"

As we've touched on several times in the past here at Red Clay, the mortgage meltdown is not a simple story of greedy lenders as villains with government as mere observers who are now swooping in to save the "victims."

This Washington Post article provides further insight:

"In 2004, as regulators warned that subprime lenders were saddling borrowers with mortgages they could not afford, the U.S. Department of Housing and Urban Development helped fuel more of that risky lending.

Eager to put more low-income and minority families into their own homes, the agency required that two government-chartered mortgage finance firms purchase far more "affordable" loans made to these borrowers. HUD stuck with an outdated policy that allowed Freddie Mac and Fannie Mae to count billions of dollars they invested in subprime loans as a public good that would foster affordable housing."

Spokesman Brian Sullivan said the agency and Congress wanted to increase homeownership among underserved families and could not have predicted that subprime lending would dominate the market so quickly.

"Congress and HUD policy folks were trying to do a good thing," he said, "and it worked."

Ah yes, good old government trying to do a "good thing." Another classic case of unintended consequences - in this case government forced lenders to extend mortgages to risky borrowers in the name of "equity" - so as to increase homeownership among previously "underserved" communities.

"The market knew we needed those loans," said Sharon McHale, a spokeswoman for Freddie Mac. The higher goals "forced us to go into that market to serve the targeted populations that HUD wanted us to serve," she said.

Yet another disaster that can largely be attributed to the liberal doctrine of attaining "equity" through government intervention. When will the "progressive" government fundamentalists admit to government failure?

Pro-life and Family Legislation

Here is a rundown of the pro-life and family legislation introduced during the 2007-2008 session:

ABORTION/REPRODUCTIVE ISSUES

H 1782 Ultrasound Before An Abortion
H 419 State Health Plan/No Abortion Coverage
H 1552 WRTK-Woman's Right to Know
S 481 Notarized Consent for Minor's Abortion
H 420 Abortion-Parental Consent Notarized
S 480 No Abortion Coverage/State Health Plan
H 155 Conscience Protection/Health Care Providers
S 897 Choose Life Special Registration Plate
H 1774 Born Alive Infant Protection Act
S 968 Born Alive Infant Protection Act

FETAL HOMICIDE
H 263 Unborn Victims of Violence
S 295 Fetal Murder

SEXUAL/EMOTIONAL EDUCATION
H 879 Modify School Health Education Program
S 664 Social-Emotional Curriculum in Public Schools

MARRIAGE
H 493 Defense of Marriage
S 1608 Defense of Marriage
S 13 Defense of Marriage

HOMOSEXUALITY
H 1366 School Violence Prevention Act

VACCINES
S 1018 Vaccine Requirements/School Entry
S 710 Immunization Changes-AB

See, also, our recap from last session.

And, if we missed anything, please let us know.

A Perfectable Union?

Arnold Kling points out something seemingly innocuous, but scary to the liberty-loving ear:

My guess is that Barack Obama just casually made this remark.

"I believe in our ability to perfect this union because it's the only reason I'm standing here today."

I suppose that to most people, this is just another nice, feel-good statement. But it alarms me. The desire for perfection is an excuse for endless intervention. Although earlier in the speech, Obama said,
"I trust the American people to realize that while we don't need big government," perfectionism justifies unlimited increases in government power. If every flaw is curable, then it follows that we need to give government all the power it needs to implement the cure.

I can think of no better assessment of governmentalists (government fundamentalists). These are the people with a simultaneous egalitarian and authoritarian bent -- so-called "progressives."

Freedom fundamentalists like myself think that moving assymptotically towards perfection is something each individual does with maximum elbow room and minimum interference from government. Each individual. My perfection is not yours. A collective perfection is a chimera, born from the minds of the power-hungry and deluded--aka people in Washington and Raleigh.
-Max Borders

Is your BLOG Government approved?

Do you gentle blog readers think we should delete or alter this post as the Senate President Pro Tem's Office is "respectfully" requesting? Let us know what you think... Doesn't the NC Senate Leader's office have more important issues to deal with like Mental Health Reform and Transportation?

Senate President Pro Tem's Office email:

 

Bailouts: Bad, whether Big Guys or Little

Russ Roberts hits a home run with with NPR piece on the Bear Stearns and (likely future) mortgage bailouts:

Yes, letting Bear Stearns go under would have been dangerous. But helping JP Morgan devour Bear Stearns is dangerous, too. Where does the government stop in protecting people from irresponsibility? Home owners and lenders are next. The political pressure is inexorable for some sort of bail out. And then comes more regulation of investment banks.

In a world where people who make bad decisions are spared the full consequences, only one thing is certain. We've encouraged more people to make more bad decisions in the future. The real price to be paid isn't the dollar costs of any bail out but the encouragement of recklessness and irresponsibility. That will make all of us poorer down the road.
-Max Borders

Disposal Backlash

The backlash from the Raleigh ban on garbage disposals has the rest of the state chuckling. But it's not funny for the residents who are ready to turn these council members out on their ears. While the garbage disposal presents a difficult question on the philosophical issues of individual rights versus the public good - as the disposal represents the interface between private and public spheres - it's one of those problems (clogging) that Raleigh would have done better to figure out without government intrusion.

What I find most interesting about this is that when state and local governments find ways to stick it to the public by indirect means (impact fees, excessive industry regs, subsidies, corporate giveaways) the public largely yawns because the media do a poor job of communicating the costs to individual families, and people, well, are just more likely to think "you can tax me, but don't mess with my garbage disposal." Ah, democracy. In any case, the public is "rationally ignorant" about the negative unintended consequences of what the government gets away with on a daily basis, but I can't give the media a pass. It's their job.
-Max Borders

Failures in NC's Auto and Homeowner Insurance Climate

In this just-released study by the Heartland Institute and Competitive Enterprise Institute (pdf), the property and casualty insurance environment (think auto and home insurance) of all 50 states are evaluated and graded. The primary criteria as outlined in the study was centered on the regulatory environment for each state, focusing largely on consumer choice and provider flexibility:

"Our ranking focuses on two key questions:

1) How free are consumers to decide what insurance products will meet their needs?

2) How free are insurers to provide products that meet consumers’ real or perceived needs?"

How does North Carolina rate? Not so good:

"Five states earned the lowest grade of F: California, Maryland, Florida, North Carolina, and Massachusetts. Their regulatory climates are hostile to insurers as well as consumers."

Why the failing grade?

"Three states—Florida, Massachusetts, and North Carolina—establish rates through the political process ... North Carolina has imposed a de facto price cap that makes it impossible for insurers to write actuarially sound policies for about one-quarter of the state’s residents. In all these cases, state regulators—rather than market forces—directly determine rates."

So if you are frustrated with your auto and/or homeowners insurance rates or coverage - you know who to thank.

Who Are the Real "Corporate Shills?"

Donald Boudreaux has this outstanding piece in today's Pittsburgh-Tribune, in which he replies to one of the left's most stale and lazy tactics - dismissing free-market advocates as "corporate shills." Even a cursory understanding of free market ideology reveals such name calling to be incredibly ignorant.

"if I were truly a shill for industry ... I would oppose free markets. Free markets, after all, are markets open to competition that invariably keeps the profits of existing firms from remaining excessive and, often, even bankrupts firms once thought to be invincible industry leaders. Existing firms almost all deplore competition in their industries. They seek government regulations that hamstring rivals and potential rivals. And, of course, firms are forever pleading for "protection" from foreign competition." (emphasis mine)

You see, free markets make life very difficult for corporations. Increased competition, lower barriers to entry, and no political favoritism or preferential treatment are all checks on corporate power. Fact is, the source of government intervention that corporate fat-cats love to exploit are those "progressives" on the political left. To paraphrase an old adage, "When government becomes interested in business, business becomes very interested in government."

Whenever a lefty refers to me as a "corporate shill," I remain unphased (and often amused), content in the fact that such an accusation merely betrays his ignorance of markets and dynamic economies.

Minimum Wage: A Bad Idea that Won't Go Away

More spurious labor economics from our friends at the Progressive Pulse (and Gubernatorial candidate Richard Moore apparently):

Earlier this week, Democratic gubernatorial candidate Richard Moore called for a $1 per hour increase in the state's minimum wage. That one move would boost the wages of 632,000 people or 16 percent of the state's workforce.

And this proposed while recession threatens? Populism-cum-broken-windows-fallacy. Here's my response.
-Max Borders

North Carolina: Losing Our Edge

North Carolina is losing it's edge. This eye-opening state-by-state index by Art Laffer and Steven Moore illustrates convincingly the close correlation between state policy and economic prosperity.

Years of one party rule mean NC is moving toward the Jennifer Granholm/European socialist model that has left Michigan and Old Europe in economic stagnation for years now. Nearly double-digit unemployment, outward migration and capital flight mark the states with policies hostile to entrepreneurship and economic freedom.

The more North Carolina gets into the upper marginal tax rates, continues to overcompensate by giving away corporate welfare (unsustainable), and spends like drunken sailors, the faller we will slip on this index and the further we will sink into the economic malaise that puts us at #19 - fair to middling - but poor next to our southern neighbors (Tennessee 5, Virginia 4, and Georgia 8).
-Max Borders

Progressives' Hand in the Mortgage Mess

Great piece on why progressives have a huge hand in the government-caused mortgage crisis:

Perhaps the greatest scandal of the mortgage crisis is that it is a direct result of an intentional loosening of underwriting standards—done in the name of ending discrimination, despite warnings that it could lead to wide-scale defaults.

At the crisis’ core are loans that were made with virtually nonexistent underwriting standards—no verification of income or assets; little consideration of the applicant’s ability to make payments; no down payment.

Most people instinctively understand that such loans are likely to be unsound. But how did the heavily-regulated banking industry end up able to engage in such foolishness?

From the current hand-wringing, you’d think that the banks came up with the idea of looser underwriting standards on their own, with regulators just asleep on the job. In fact, it was the regulators who relaxed these standards—at the behest of community groups and “progressive” political forces.

Read on.
-Max Borders

AFP Fights Forced Annexation in N.C.

Check out this video as grassroots residents in Pinewild fight (forcibe annexation [read: theft]) by their neighbors in Pinehurst.
-Max Borders

Keynesian Zombies

Keynes's corpse has awakened. It bit somebody and now throngs of Keynesian zombies are running around Washington croaking "stimulus, STIMULUS." They should be saying "more brains".
-Max Borders

Housing Foreclosures: Why Think? Just Blame Bush

Rob Schofield over at Policy Watch offers up this painfully shallow piece on the subprime/foreclosure mess. It’s amazing at the incredible lack of depth in Schofield’s “analysis.”  He understands economics about as well as I understand women’s fashion.

"How the heck did we get into this mess? There are a lot of reasons, but it mostly boils down to some toxic byproducts of Bushanomics - namely, a wildly under-regulated market of predatory corporations and a distressed middle class that's having a harder and harder time staying afloat. As Banking Commissioner Joe Smith said, we used to talk about the housing downturn as being only about the "subprime" market. Now we know its reach is much deeper."      

He blames things on a “wildly under-regulated market” while not mentioning a single regulation that has been stripped recently. More telling, there’s no mention of:

1) the HUD rules mandating that Fannie and Freddie finance a certain percentage of loans to “underserved” people

2) the fact that HUD had recently praised the lending industry for its “creativity and innovation” in developing new loan products (i.e. subprime and no doc) to help the underserved communities (mostly minorities) to attain a loan

3) the recently revealed fact that a large share of defaulted loans were taken out by people who lied on their loan application

4) international banking regulation which in the end directs large investor firms to increase their share of (high-risk) mortgage backed securities into their portfolio

5) the government-created oligopoly of credit rating agencies and the resulting perverse incentives for them to give high ratings to these risky securities

Then there is this statement:

"North Carolina

is actually not as bad off as some states. This is mostly attributable to the fact that our state legislators and regulators have done a much better than average job in defying the right wing's deregulatory push in recent years by passing anti-predatory lending and mortgage servicing legislation."

Actually, the states that are worst off are those experiencing the largest decline in housing values. NC is lucky to have experienced (until very recently) solidly growing housing values due to the population influx. As housing values in the state decline, watch the foreclosure rate increase.

Rather than examining some of the real forces at work, Schofield jerks his knee and takes his typical intellectually lazy route of blaming “Bushanomics.”  Why look into the actual incentive structure of the process when you can just blame Bush and call it a day?

Unintended Consequences: Do-Gooders Take Note

I've written before on the importance of unintended and hidden consequences. Short-sighted bureaucrats and feel-good pundits still just don't seem to get it. This NYT piece brilliantly lays out some examples of unintended consequences that those who govern by feeling need to pay attention to.

Take the Americans with Disabilities Act (A.D.A.). Who could be against helping the disabled?

"..(an academic study) found that when the A.D.A. was enacted in 1992, it led to a sharp drop in the employment of disabled workers. How could this be? Employers, concerned that they wouldn’t be able to discipline or fire disabled workers who happened to be incompetent, apparently avoided hiring them in the first place."

So, the result of the ADA was fewer disabled people being able to find work because employers feared its repercussions. Still feel the same way about that law?  Of course, nobody is trying to say that the ADA didn't have any positive impact. But such unintended consequences must be considered before enacting new laws and regulations, a consideration that seems to be lacking in the interventionists among us.

Check out the article, and remember what road is paved with good intentions. 

Just How "Free" is the "Free Market"?

A recent NYT article posed the question "The Free Market: A False Idol After All?" No doubt, progressives and anti-market types joined in one Pavlovian chorus in response. Folks like Fitzsimon and Schofield over at NC Policy Watch like to delude themselves and their readers into believing that we have been living in some sort of pure laissez-faire-lovers paradise ruled by "market fundamentalism" here in the US. "If only government would interfere just a little bit and correct some of the inherent injustices of the capitalist system, we would all be better off" they often lament.

Jeffrey Tucker has a great response to such nonsense. First, this notion that our economy is largely unhampered, and therefore any "failures" in the economy can be blamed on an unfettered free market is simply fantasy.

"We live in the 100th year of a heavily regulated economy; and even 50 years before that, the government was strongly involved in regulating trade.

The planning apparatus established for World War I set wages and prices, monopolized monetary policy in the Federal Reserve, presumed first ownership over all earnings through the income tax, presumed to know how vertically and horizontally integrated businesses ought to be, and prohibited the creation of intergenerational dynasties through the death tax.

Just how draconian the intervention is ebbs and flows from decade to decade, but the reality of the long-term trend is undeniable: more taxes, more regulation, more bureaucracies, more regimentation, more public ownership, and ever less autonomy for private decision-making."

Tucker then attacks what can be narrowed down to either ignorance or outright deceit on the part of journalists and pundits:

"How is it that journalists can continually get away with asserting that the fantasy is true? How can informed writers continue to fob off on us the idea that we live in a laissez-faire world that can only be improved by just a bit of public tinkering?"

Of course, bureaucrats will always long for more intervention because it provides them with more power, and elites will go along with it because they refuse to acknowledge anything less then their omniscient ability to plan and direct society, nevermind their complete denial of the superiority of spontaneous order and localized knowledge. Naturally, most interventionists think that their recommended dose of meddling is just the right amount to "correct" the perceived negative externalities of the market system. To those folks, I say this: Take one look at the massive tax and regulation codes (both US and NC) and try to convince that we need "just a little more intervention" to make everything perfect.

A "Stimulating" Piece

Russ Roberts on the wisdom of stimulus packages.
My favorite bit:
The money has to come from somewhere. If you raise taxes to fund the plan, the people who are taxed are poorer and they'll spend less. If you borrow money to fund the plan, the people who buy the government bonds have less money to spend and that offsets the stimulus. It's like taking a bucket of water from the deep end of a pool and dumping it into the shallow end. Funny thing—the water in the shallow end doesn't get any deeper.
(Ha! Update: Bryan Caplan weighs in on irrational voters and stimulus packages.)
-Max Borders

Take Our Landfills? Sue 'em

From NC SPIN:

"Raleigh’s Waste Industries and three other companies who had been in the process of building mega-landfills in the state have filed claims amounting to $25 million in compensation for expenses they incurred prior to the passage of a state law that prohibited them from continuing. The largest claim, $13.6 million was for work done on the Camden landfill. Waste Industries has also filed suit in court to have the law overturned."

Sadly, only lawyers and companies stand to gain from this suit. But I hope they win. The General Assembly has taken economic opportunity away from depressed areas of N.C. in the name of NIMBY syndrome and eco-religion. We will all pay more to dispose our waste and burn more gas to save glass.
-Max Borders

N&O: Recession Coming, Get the Handouts Ready

This N&O editorial reports gloomy economic forecasting, which the writer(s) believes justifies shoring up the welfare state (read: expanding yet further). Of course, 'compassionate' journalists aren't expected to understand the relationship between taxing, spending, and making people more state-dependent on the one hand, and economic hardship on the other. These phenomena are self-reinforcing, among myriad other factors. But the welfare-state/economic-hardship nexus is difficult even for lefties to deny in the wake of Welfare Reform.

The article gets one thing right, though: "Maybe the economic boat will right itself -- but if not, we can't complain that we weren't warned."
-Max Borders

The Hidden Consequences of Government Programs

Progressives are enamored of all the "good" that their beloved government goods and services seem to bestow upon society.

Unfortunately, they suffer from the tunnel vision which separates the good economists from the bad ones. As the 19th century French economist/philosopher Frederic Bastiat famously noted:

"There is only one difference between a bad economist and a good one: the bad economist confines himself to the visible effect; the good economist takes into account both the effect that can be seen and those effects that must be foreseen."

In this Freedom Daily article, Bart Frazier teases out this concept with modern-day examples and concepts.

In short, while most people see another government-created recreation center, bridge or auditorium, the good economist recognizes the innovation that could have been produced in the private market. All uses of resources have opportunity costs. When government uses taxpayer dollars to finance projects deemed unworthy in the marketplace, resources are wasted and wealth destroyed:

"... state bureaucrats have undertaken a project that no private venture decided was profitable. In other words, the market has deemed the project a waste of resources, which means that the materials, skilled workers, and time consumed would be better spent on other projects."

I encourage folks to think like Bastiat whenever considering the overall "good" provided by government programs. For every dollar spent on "public" goods or services, that is one less dollar that could go toward job creation, new medical technology, or any number of unforeseen innovations that would improve our lives.

More Non-Governmental Solutions to Sub-Prime

In another example of how increased government intervention is not needed in the mortgage lending market, the News & Observer has a story today about how credit unions are stepping up and helping their members refinance adjustable rate mortgages.  Voluntarily.

But note this quote from one of the "victims" of those dastardly mortgage brokers.

"I probably should have asked more questions," Evans said. "I learned: Don't be in a rush when you are making major decisions."

Nobody forced her to decide to purchase a home.  Nobody forced her to sign the loan papers from whoever wrote her mortgage.

I'm not saying that there weren't some rogue lenders out there taking advantage of people, there were.  But the core crux of this whole "crisis" is that many people who had no business owning a home were buying homes.  There is nothing wrong with renting.

But the tax code thinks so, and gives advantages to those who purchase a home, whether that is the correct option for them or not.  But, we all know tax loopholes are "vital to our economy."  Right, Rudy?

It's Getting Cold In Here

With the announcement late today that an agreement was near between the Bush Administration and Congress on a program to freeze interest rates of sub-prime mortgages to avert a housing "crisis," the government is overstepping its bounds into the market and setting a dangerous precedent for government intervention and bailout of a non-crisis "crisis."

Two independent parties, a mortgage broker and a homebuyer knowingly entered into a contract setting out terms and conditions of payments.  Any homebuyer knows there is risk in their purchase. If they lose a job or are for some other reason, unable to pay, they could lose their home. That's why many choose to rent.  Costs are lower and the ability to change your housing based on income is easier.

But the danger in this move by the Bush Administration is sending a message that, it's OK to spend over your head, or buy things you can't afford -- the government will come bail you out. If I go out and run up a big credit card bill on Christmas shopping and find out I can't afford to pay, should the government step in and help me since my shopping, like the housing market, is a vital component of the economy.

To freeze rates for five years "hoping" the market will eventually turn is comical.  What happens if it actually gets worse?

The market is self-correcting (if it hasn't already).  To pursue this proposal is an overreaction.  Banks don't want to foreclose.  It's a money losing proposition for them. Why would they want to pay the expense to go through the foreclosure process only to be stuck with an asset they can't sell?  The banks/mortgage houses should be left to fix the problem on their own.  Instead, we've created a culture of dependency on government, where industry feels it can get government to act in its favor instead of relying on self-sufficiency.  It's disgraceful.

Oh and get this golden quote at the end of the article:  "Mark Zandi, chief economist for Moody's Economy.com, called the administration plan a good first step, but said the government eventually will have to go further given the problem's size and the threat to the economy."

HA! Moody's telling us that the government needs to go further?  They are one of the ones primarily to blame for this whole mess by ignorantly over-inflating credit ratings of mortgage backed securities.  Moody's and S&P screwed up big time, and they should suffer the consequences of such action, not get the government to step in and bail them out as well.

Affordable Housing: Even the Regulators Think There's Too Much Regulation

I stumbled across an interesting document from 2002 produced by the US Department of Housing and Urban Development (HUD). Entitled "Barriers to Minority Homeownership," it details some of the primary obstacles facing low-income minorities seeking to buy a home. Primary reasons given deal with a lack of capital for downpayment and access to credit - no surprise given that we're talking about low-income people.

Of greater interest was point number 4, "Regulatory Burdens." Read the following points and tell me where you have heard them before:

• "The high cost of housing often results from a web of government regulations. Federal, state, and local codes, processes and controls delay and drive up the cost of new construction and rehabilitation.
• In some states, developers report that excessive regulation adds 25 to 35 percent to the cost of a new house.
• communities with the most restrictive land use and zoning regulations often have affordable housing shortages."

I'll give you a hint, it ain't from the "smart growth" advocates on the left. It never ceases to amaze me how they can call for more open space, zoning regulation, impact fees and building regulation and then complain about the lack of affordable housing.

For Moral Highground, Stand on Your Own Stack

To so-called "activists" looking to beat the drums for a tyranny the majority through new and more insidious forms of taxation, try pulling out your own wallets first. As Joe Coletti says in a new report:

“The reality is that you can donate as much money as you wish to your county government and school system,” said report author Joseph Coletti, JLF Fiscal Policy Analyst. “This report highlights one major county in which few people take advantage of that option. Until they do, they have no right to demand that their neighbors, who may have different values and priorities, be compelled to have more money taken away from them.”

Leftish activism is proof that they are not only against transparent, fair, and constrained taxation, but against civil society and volunteerism, too.
-Max Borders

Government and Industry: One in the same?

Is government an industry?  That’s the question I asked myself as I reviewed page fourteen of the State of North Carolina Workforce: An Assessment of the State’s Labor Force Demand and Supply 2007-2017. The document, compiled by the North Carolina Commission on Workforce Development lists the 25 fastest growing industries in North Carolina over the next decade. To my surprise, state and local government was listed as the second (i.e., non-essential services) and the fourth (i.e., education services) fastest growing industries in the state. Together these “industries” are supposed to bring in about 58,600 more jobs to North Carolina over the next decade.

Oxford defines industry as “economic activity concerned with the processing of raw materials and manufacture of goods in factories." What does government manufacture or sell? Government is formed to protect and serve citizens. Businesses are designed to make a profit.  Government may provide jobs through tax dollars. But government only redistributes money. It doesn’t create wealth nor contribute to economic vitality. Government? The number two and number four fastest growing industries? We can only hope this isn't true.  That it's even mentioned on the list of the 25 fastest growing industries is evidence that such distinctions are blurred in the minds of many. They shouldn’t be. 

Exposing the "Bipartisan" Energy Takeover

Check out a kind of expose I did here for Capital Research Center and their excellent GreenWatch team. In it I discuss the National Commission on Energy Policy, particularly their mild-mannered approach to pillaging the energy sector and monkeying with the economy -- all for the sake of "bipartisanship". 

You can see how our infinitely wise N.C. General Assembly got the intellectual fodder for a monstrosity like SB 3.

-Max Borders

Freedom or Equality?

I'm responding to a nice little teaser post from over at NC Policy Watch, in which Steve Turner - prompted by Rob Christensen's N&O piece - wants to know:

1)  Who among you favor freedom over equality?
2)  Who among you favor equality over freedom?

This is a very important question -- one that marks out both the philosophical and emotive differences among factions in NC, the US (and, indeed, everywhere). I want to thank NC Policy Watch for starting this conversation.

Before answering, though, I'd like to point something I take to be fairly uncontroversial: that we (as Christensen did on Cary Parkway) have certain affective responses to inequality in one of the following ways:

a) if I compare my station to yours and your station is apparently higher, I have a propensity to feel envy;
b) if I compare my station to yours and your station is lower, I have a propensity to feel guilt; and
c) if I compare the stations of two relatively unequal people, I may also feel indignation or sanctimony.

The question is: why?  Some would argue that this is a moral response and that our conscience directs us to feel this way because there is something inherently wrong with inequality. I would argue that this emotive response is largely evolutionary -- particularly given that human beings evolved in a situation in which these responses would have conferred a survival advantage to our forebears. The question about the justice of inequality is not really answered by these emotional responses, forged as they were in the paleolithic furnace during an age when we roved in small, familial clans; an age in which sharing arrangements actually worked as well as self-interest. But to extrapolate such  instincts upon the large-scale, contemporary social order is misguided not only from an economic perspective, but within the bounds of justice, as well. Forced redistribution based on guilt and envy, not only takes us from the "I" to the "we" very quickly, but from justice to injustice.

But, more importantly, are envy and guilt virtues to be celebrated? I don't think so. I live less than a half-mile from the very spot Christensen identifies in his piece. I'm not ashamed to admit that I am surrounded by wealth, but am not wealthy. My wife, child and I live a very modest lifestyle nestled among the rich. I am employed, after all, by a non-profit. My wife has chosen to be a stay-at-home mom. One non-profit income will not suffice to allow me to keep up with the Joneses. And yet I will always resist feeling envious of those around me in Cary. Instead, I feel lucky to live in a place marked by such prosperity. While there may be some lucky schmuck in the SUV beside me, I know that wealth as a rule is not created by apathy or luck, but from hard work, specialization, and value-exchanges among people with different conceptions of the good life. My concept of the good life actually keeps me from driving a BMW. Yet I still feel prosperous, and fortunate to live in a place that allows me to work doing what I love -- '96 Mazda Protege notwithstanding.

Thus, in answering Turner's questions above: I, personally, don't believe one should value equality over freedom. But more importantly, I don't believe I am morally justified in making this judgement on behalf of others, and by extention to bend them to my will. Values are inherently personal. When we start to think that there are values (like equality) that ought to extend universally across peoples, we also think that whatever means it takes to implement said values are justified. Thus, egalitarians believe the imposition of their values justifies force and expropriation. I don't. Extreme examples lie with Stalin and Mao. Milder forms lie with elites in Raleigh or Washington who let guilt, envy and indignation drive policy for everyone, instead of allowing people to find their sense of benevolence within, and to keep the spirit of charity within the breast of the individual.

The lover of freedom, in as much as she can, stops with harming others for the sake of her values. That is not to say there are no circumstances under which harm is required, but that non-harm rules work in tandem with the value of freedom. Freedom of exchange and association becomes the default value that underlies justice, because it does not attack the value of equality. The reverse cannot be true, however. This asymmetry is very real. And that is why the lover of freedom is truly tolerant, truly liberal.

In other words, what's so great about justice as freedom is that we can still choose to contribute to the betterment of others around us. And while any real freedom doctrine would proscribe the threat of force to create a utopia in which the "right level" of equality prevails, it still allows us dynamically to interact in ways in which the core values of equality - benevolence, charity, social entrepreneurship, and community involvement - are not crowded out by the coercive apparatus of the state.

And that's why freedom wins in my book.

Subprime: Tamny to Schofield?

It was as if John Tamny (here) were speaking directly in response to Rob Schofield here. -Max Borders

Intelligent Design a la NC Policy Watch

Rob Schofield (I actually mention his name out of respect for him and in the spirit of open inquiry) has penned a delightful little piece on the relationship between the sub-prime mortgage fallout and global warming. The connective tissue, by Schofield's lights, is the need for the expansive regulatory state:

In effect, those who would promote and benefit from the continued short-term expansion of a carbon-fueled economy are the equivalent (albeit in many cases unwitting) of the rapacious mortgage brokers who helped propel the home foreclosure crisis. Both groups perceive themselves to be in accord with some set of immutable natural laws in which the pursuit of individual wealth is the highest form of human behavior. Each is oblivious to the broader effects of their own action for the rest of society.

This narrative, of course, is not new. I'm actually surprised that Schofield didn't blame the subprime mortgage issue on global warming itself. Most zealots of the Big Green Church are as eager to blame global warming, as old world zealots blame the Devil. But no, Schofield simply thinks that individual market actors need to be reined in -- kept from their excesses under government jackboots. Or, if you like, government nannies who must keep people from making risky judgements (as if the market hasn't punished the both parties - mortgagers and mortgagees - enough in the case of the sub-prime fiasco). Nevermind that mortgage companies are changing their own rules as they see fit to contain risk.

Schofield's answer is simply to remove risk from life by fiat. He overlooks all the people who are currently benefiting from those subprime loans; people who have been financially responsible and would not have otherwise qualified under his utopian regime. But nevermind them. He and a handful of bureaucrats are prepared to make your household financial decisions for you -- to take away your ability to attempt to live beyond your means and a mortgage company's risky decision to allow you to.  The current market punishment for such excesses is not enough. Excess must be proscribed by law.

But what about Schofield's general celebration of the regulatory state? Does it protect "freedom and prosperity"? Is it possible for an elite to adjust the rheostats of the market to make it work toward some ideal envisioned by Schofield? I'd argue no. Schofield is suffering under the planner's illusion. You might say Schofield believes in Intelligent Design. Allow me to quote myself at length:

Consider quotes like this from the New York Times’ Paul Krugman: “What's interesting about [the Bush Administration] is that there's no sign that anybody's actually thinking about ‘well, how do we run this economy?’”

The very idea of “running” an economy is predicated upon the notion that economies can be run and fine-tuned, much like a machine. But what Krugman and folks like Galbraith fail to understand is that the economy isn’t a machine at all, but an ecosystem. And ecosystems aren’t designed, they evolve.

Recall the last time you were in a room with both liberals and conservatives. If the liberal heard the conservative start to talk about Intelligent Design, you might have seen him shake his head rather smugly. Why? Because he will have read his Kaufmann, his Dawkins, and of course, his Darwin. He’ll let the creationist say his piece, and then he’ll reply along these lines:

As long as the basic regularities of nature are in place, Darwinism and complexity theory predict that the myriad forms of life and details of the world will emerge from the simplest substructures -- i.e. atoms, amino acids, DNA and so on. The world doesn’t need a designer. The complexity of the world is a spontaneously generated order. The laws of nature yield emergent complexity through autocatalytic processes.

But does our smug Darwinist extend this self-same rationale beyond life’s origins?

...

People on the political left, while characterizing conservatives as being flat-earthers, do believe in a form of Intelligent Design. For like their conservative counterparts who believe that nothing as complex as nature could possibly have emerged without being designed, Beltway bureaucrats and DNC Keynesians believe nothing as complex as an economy can exist without being shaped in their image.

What both fail to realize is that neither needs a planner. Markets (individual actors in cooperation) do a better job of self-regulation than any government official can do from on high. Ecosystems (complex flora and fauna interacting in complex ways) regulate themselves better than the most determined ecologist ever could.

In fact, the intersession of bureaucrats in the economy almost always make things worse -- as harmful unintended consequences follow from their actions. Because unlike the Intelligent Designer favored by Creationists, bureaucrats are neither omniscient, nor omnipotent.

The final irony in Schofield's post is that he misses this parallel between the subprime issue and global warming. (Computer models can't map complex systems -- climate or economic.) All of this reflects the conceit of the central planner in thinking he can fully understand and adjust a complex systems to his whim. But he cannot. And that is why people like Schofield, despite all their good intentions, are paving the road to serfdom... And if people are truly being harmed by virtue of some commercial activity, there is a way to adjudicate without central planning. -Max Borders

Two Types of Special Interests: Parasites vs. Traders

One type of special interests (parasites) pushes regulation/legislation to increase their profits. That's because their competitors suffer in the regulatory environment--or, they simply benefit directly from government subsidy. (A good example of these would be renewables companies benefiting from the recent SB3 legislation.) The other kind of special interests are businesses (traders) trying to protect themselves from the unjust intrusion of government. It's the first kind of special interest the left likes, the second type this is so often the victim of legislation like this landfill bill reported on here.

Solid waste management is the cheapest and most environmentally friendly way to deal with waste. And yet this industry and all North Carolinians are being tyrannized by legislation that does nothing more than make people feel better about some nebulous eco-fears, while bleeding them for more taxes, funding dubious recycling programs, and making us pay unnecessarily high prices for our waste disposal. It appears that we can only stand by and watch as the parasites push aside the traders.

No Bullets for you Varmints!

OSHA, typically confines its burdensome regulations to America's employers. Not anymore.

Last week I learned of a new effort by OSHA to limit your Second Amendment rights to keep and bear arms by proposing new regulations on “explosives.” Now, to you and me and most everybody else, the word “explosives” pretty much means one thing: Dynamite or at least one its related cousins like the military’s C4 or its ugly sister from eastern Europe, Semtex. But, if you recall your Saturday morning cartoons, Yosemite Sam had a penchant for kegs of black powder. Black powder was once considered the explosive of choice some 200 years ago before Nobel came up with dynamite.

Typically, the only people who have occasion to handle black powder are classic arms enthusiasts who prefer antique weapons. But now OSHA wants to add a few new pieces to the definition of explosive by claiming that ammunition is gonna blow up the Walmart!

The proposed new rules would have a dramatic effect on the storage and transportation of ammunition (that means bullets, Earl) and handloading components such as primers or black and smokeless powder. The proposed rule indiscriminately treats ammunition, powder and primers as “explosives.” Among many other provisions, the proposed rule would:

    * Prohibit possession of firearms in commercial “facilities containing explosives”—an obvious problem for your local gun store.
    * Require evacuation of all “facilities containing explosives”—even your local Wal-Mart—during any electrical storm.
    * Prohibit smoking within 50 feet of “facilities containing explosives.”

The Deparment of Labor claims to have reigned OSHA in on this "minor" rule change.  But this is a clear example that Americans need to look closely at every piece of government intrusion into their lives for the real impact it may have on our freedom.  Remember, keep you powder dry!

NC Policy Watch Advocates Intelligent Design

Returning from a nice little mini-vacation, I arrived at the office and made my usual rounds in the blogosphere. Before I even got a cup of coffee in me, I was greeted by this lecture on intelligent design - albeit from an unlikely source.

You see, the left - while so very fond of the distributed, unplanned selection processes that form vital ecosystems - fail to see any analog in markets (you know, those places where human values are exchanged). They believe that there is a perfect utopia out there to be created by, well, intelligent designers. And corresponding to this utopia are sacred ueber-values that somehow supercede the values of market actors. To build this utopia, an all-benevolent, omnipotent government should be able to implement these values by brute force of will. And who will do the forcing? The smart kids!

Rob Schofield would like to be an intelligent designer, too -- joining that cadre of smart kids who grew up thinking that if you got all As in your Public Administration classes, you could figure out how to violate the laws of economics. It would be like scientists sitting around trying to figure out how to violate the laws of gravity. The central planners over at NC Policy Watch think demand curves magically bend at the will of people with politically correct ueber-values.

The trouble with this kind of thinking - nevermind your opinion about global warming or what people ought to value instead of air conditioning - is that it doesn't work. You can explain how subsidies destroy wealth. You can explain the law of supply and demand yet again. You can explain opportunity costs and even the reality that subsidizing renewables results in all manner of negative unintended consequences (even for the environment) All the intelligent designer will do is make some grumblings about "free market fundamentalism" as if such a nifty bromide counts as an argument for why economic fundamentals (and yes freedoms) can (or should) be waved away by government fiat.

But understanding market fundamentals is not about preaching a gospel. It's about communicating a science. And the fact is, economics is a science central planners would just as soon ignore. Marx did. Schofield, acting as a priest for the Big Green Church, would like you to accept his version of intelligent design. (He probably wants it taught in the schools.) But science is science, and scarcity is a solemn and severe master.

The only way faith-based central planning would ever be able to make a return is by the 21st Century's version of an apocalypse myth. Clearly, when it comes to climate change, NC Policy Watch has been washed in the blood. Hallelujiah!

(If large-scale anthropogenic climate change turns out to be true, try adaptation.) -Max Borders

The Logic of the Bureaucrat Leads to...

Whether we're talking about renewables or "open spaces," the logic of the bureaucrat leads to socialism. This great passage from Mark Hendrickson writing on ethanol could be applied to most anything the government does:

"One of the elementary insights of economics is that human choices have both costs and benefits. If you buy that expensive car that makes your pulse race, then there are other purchases that you will have to do without. Even the super-rich, though they can afford anything money can buy, don’t have time to enjoy every possible indulgence, and so they have to prioritize their choices, paying for the enjoyment of some things by forgoing others. Benefits always have costs.

Expanding this analysis to the realm of politics, Ludwig von Mises, the great Austrian economist, demonstrated with airtight logic that government intervention designed to benefit certain members of society inevitably imposes costs on others. Those who are inconvenienced by intervention—especially because they have seen that government is willing and able to alter the free market that would exist in the absence of government intervention—will seek intervention that offsets the undesirable side-effects of the prior intervention. However, any new interventions will themselves generate new side-effects, new costs, on other citizens, and so the political process lurches clumsily but powerfully in the direction of ever-greater government control that, taken to its logical conclusion, leads us further down the path of socialism."

Shocking: Bootleggers & Baptists on NPR

OK, so NPR almost explained Bruce Yandle's Bootleggers & Baptist theory of political economy on NPR (near the end of the piece). Almost is good for hand grenades, right? If climate change zealots are curious as to why corporate whores seem to be getting on board, read more here. And if you'd like an introduction to public choice, in general, read this.

Whither Wireless?

If municipal wireless were desirable, entrepreneurs would provide it. The move to offer WiFi as a public utility is misguided from the start:

First, it subsidizes wealthy people who can probably afford their own WiFi access; Second, it makes government get in the business of, well, doing business - which it shouldn't be doing, and; Third, it forces taxpayers to bear the risks of venture. (For example, what if mesh networks were to take over from the current architecture? Wouldn't that infrastructure investment be lost?) Gov't shouldn't any more try to pick winners and losers in markets than to get into the market to begin with.

Read more on my distaste for municipal tech ventures here. N&O has covered other failed experiments.

In any case, this Bill (HB 1587) would at least forbid denying access to real companies from providing their services competitively if they so chose. It's one thing for the government to conduct business, it's quite another for it to create its own monopoly through legislative fiat. This bill would forbid that, as far as I can tell. 

Minimum Wage Blues

Congress, in exchange for caving on war funding, must have struck a deal to get in their economically unsound minimum wage legislation that is sure to hit to small businesses particularly hard. I have argued elsewhere that this type of intervention in the economy is a bad idea for a number of reasons. Congressional lefties clearly don't understand the nuances of labor supply and demand -- clouded as they are by meaningless concepts such as "living wage." Alas, here we have another blow against the margins of businesses already plagued by the price of healthcare they've been saddled with the responsibility for providing due to our skewed tax code. Sigh. No joy watching these government circuses in our state and in Washington trying to fix and plan our economy like 'intelligent designers.'

Conscious Capitalism, Peace and Education Reform

Here's a great Podcast by a radio station in Texas of FLOW's Michael Strong.  Michael gets it in so many ways. I would strongly encourage leftish types to listen to this.

N.C. Budget Roundup

For a roundup of Civitas policy briefs on the N.C. state budget, visit here.

Mental Health Parity is Insane

The same people (legitimate