Monday, June 08, 2009

Monday Reading

Much thanks to Taylor who recently sent me the following essay by a dude named Allen Thornton. Read, digest, and enjoy:

A Dear Teacher

I remember my grandmother once saying, "Experience is a dear teacher/But the fool will have no other." I don’t know whether she was quoting a poem or a saying. The word dear has the old meaning of expensive. We have had thousands of years of experience with government. I ask, if government protects life and property, why do we have locks? Why, in fact, are there more private guards in America than policemen?

Suppose a man leaves $10,000 in cash on the front seat of his unlocked car in a bad part of town and that his money is stolen. When he reports the crime, he tells the police that the purpose of government is to protect life and property and that the United States spends more than has ever been spent. Therefore, he concludes, he felt safe in leaving his money in an unlocked car. The police would probably send him for psychological evaluation. We have had formal policemen for a century or two and we know that police do not and, in fact, cannot protect life and property. That has been our experience. Anyone who thinks otherwise is viewed as a possible lunatic.

We also have education. Our education tells us that the Securities and Exchange Commission (SEC) protects us from fraud and crazy speculation. It tells us that the Food and Drug Administration (FDA) protects our food supply. We have had only a few decades of experience with these institutions and can forgive people for believing these claims.

The poisoned peanut butter case highlights an interesting side effect of regulation. Even though hundreds of products were made by other food producers using Peanut Corporation of America (PCA) products, not one of those manufacturers took the time to verify that the PCA was selling them a safe product. I assume that they believed that the existence of the FDA guaranteed the safety of PCA peanut products. I’m going to guess that someone will sue one of those manufacturers. I’m also going to guess that one of them will be found liable. If that happens, the courts will make it official:

Believing that the FDA actually protects the food supply is gross negligence.

Since I started writing this essay, events have overtaken me. A lady in Vermont lost an arm after an antinausea drug was administered to her in a hospital. She sued the drug manufacturer and won. The case was appealed. The drug company pointed out that the drug was approved by the FDA and that the labeling of the drug had also been approved by the FDA. Nevertheless, the Supreme Court found that the drug company was liable for the lady’s loss. So we now have it on the record from the Supreme Court: Believing that the FDA actually protects the people from drug-related problems is negligence.

I heard a joke in the 1950s. The heroes were Rastus and Remus, two African-Americans. The choice of Blacks was no more important to the joke than the choice of blondes to recent jokes. Please substitute blondes or your own despised minority group or whoever.

Rastus is selling smart pills at a dollar a bottle. Remus buys a bottle and takes a few. After a minute, he says, "You know, Rastus, these smart pills taste a lot like rabbit shit." Rastus quickly responds, "See, you’re getting smarter already."

When I heard that the stimulus bill would quadruple the Department of Education’s budget, I immediately thought, "That should buy a lot of smart pills." Ever since the state and federal governments have concerned themselves with education, we have had a proliferation of smart pills. There was a time in America when education consisted of the illiterately named 3 Rs, but that was a century ago.

Education is a strange process. I belong to a listserve and within the past year I wanted to suggest an idea. I thought I would say that Roosevelt presided over seven years of a depression and that previous depressions had not lasted anywhere near that long. I wanted to say that there was a prima facie case that Roosevelt’s policies had prolonged the depression, that the onus was on his fans to explain those years. However, I knew that American eduction in all its forms declared that Roosevelt had "saved capitalism." Even though the listserve is decidedly conservative, I decided not to suggest my idea because it would make me seem like a flat-earther. Now that Obama and his spending are being opposed by the Republicans, the idea that Roosevelt exacerbated the depression has become part of the political discourse. The point is that political ideas include only what is approved by one of the political parties; saying anything outside the confines of the two-party debate is like speaking Greek.

Recent events should convince everyone that the SEC does not protect investors against fraud. On a more subtle level, the SEC gives people the erroneous idea that their investments are relatively safe if they are not in the hands of criminals. SEC regulations have obviously failed in that aim, too. Partisans have claimed that Bush’s "deregulation" caused the problems. Other partisans cite the efforts of Democrats to force lowered standards for home-ownership. I believe that the cause of the recent recession is the action of the Federal Reserve in keeping interest rates low so that the economy could continue to grow despite the spending on war and new entitlement programs. Cheap money creates risky investments. However, almost everyone in power agrees that new regulations are needed. When I think about regulations, I divide them into two kinds:

1. The U.S. tells GM that a certain class of car must achieve 28 miles/gallon. This kind of regulation doesn't care what the customer wants or what the consequences to the business are. The U.S. has other aims.

2. The U.S. tells a bank that it can only leverage its money at 10 to 1. In this instance, the U.S. is telling the company how to run its business for the benefit of the company. The second sort of regulation is what is being proposed by the administration. What we have is an administration setting the details of running a business.

As a general principle, I would say that you get the sort of regulation that you pay for. If you want the government to regulate companies (for free), you should probably expect the sort of protection of life and property that they provide for free. I ask again, if the government protects life and property, why do we have locks?

Suppose, though, that the regulations had been sufficient to prevent too much speculation. They would have been so drastic that institutions would have left the United States. People think that there can be a “correct” level of government regulation but that goal is the same as saying that politicians know the best way to invest money, when not even the professional investors know the best way to invest money. The population will ultimately learn about the SEC what we know about the police force: It is unable to achieve its stated goal. Even if regulations could produce perfect results, they would amount to nothing less than welfare for investors. In truth, that is what investors actually want even though they put it in different words.

Now we have a call for international regulation. I am reminded of a joke about international socialism, told by Russians in the 1970s. A commissar tells an American that soon the whole world will be communist except Australia. The American asks why not Australia. The commissar replies, "So we can find out what things ought to cost." International regulation would produce the opposite result: We would never know what a free system would produce. Of course, that is the idea. No country wants all its capital fleeing to X-Country because only X-Country allows its investors to do what they want to.

When corrupt lawsuits extracted billions from "big tobacco," I thought that a great opportunity had been created for anyone who wanted to manufacture cigarettes. I looked up the requirement for starting a cigarette factory and was confronted with a 60 page document. The details were appalling. Most interesting was the necessity for obtaining a "reference" from a member of Congress. Anyone who looks into the matter will quickly conclude the government does not want to punish big tobacco: Just the opposite, it wants to protect those giant companies so that they can efficiently collect taxes from the "addicts." If nicotine is a drug, the U.S. government is the biggest drug dealer in the world. The only difference is that drug dealers don’t lecture you about the dangers and wrongness of the drugs they are selling you. Regulation is often a means for keeping the have-nots from competing against the haves.

Here’s the only other Rastus and Remus joke I remember. Let’s make it a Pat and Mike joke. Pat and Mike are out fishing. A rattlesnake jumps up and bites Mike’s penis. Pat runs to the doctor and says, "Mike has been bitten by a rattlesnake. What should I do?" The doctor explains, "Make an incision at the site of the bite and suck out as much venom as you can." Pat runs back to Mike. Mike asks, "What did the doctor say?" Pat replies, "You gonna die."

Paulson tells President Bush that "credit has frozen up." Bush goes to a libertarian economist, who says, "Keep the dollar strong. Let those who must fail, fail. Remove (as much as you can) the restrictions, the licensing, and the regulations on lending. Everything will be OK soon." Bush rushes back to the American people and says, "You gonna have a depression."

The problem with Presidents Bush and Obama is that they are, to construct a Bushism, misovereducated. For a politician to give up control would be the same as admitting that his whole life was a huge mistake. We believe a simple idea: The use of violence (governmental or otherwise) in the economic system is counterproductive. I think that we are as far from turning this idea into reality as the people in Watt Tyler’s rebellion (1381) were from a working democracy. Resistance to our state is futile. Voting (along with democracy) has become a joke. All we can do is put forward a message. It’s a simple one:

"Your private life experience has shown that violence doesn’t work and when it seems to work, it only works for a while. You want to pretend that when the government takes money and tells people what to do with threats of violence, it benefits them. You are wrong. You are beginning to see it. You may have been on the winning side for a while but times change. The answer is not better government; we’ve tried that for centuries. The answer is to move away from the state and its use of force."

It may be enough to ask a very general question: What is good government? If we believe that government is created for the happiness of people, then a good government is one that most of the people are happy with. Because perfection is impossible, let’s say a good government is one that 90% of the population approve of and 10% do not chafe under unduly. In modern American democracy we have half the people set against the other half. But in fact, public opinion polls indicate that only 20% or 30% of the people actually approve of the government they have. The reason that such a bad form of government can continue to exist is that large portions of the population hate and fear other large portions of the population so much that they are content to elect members of their own party if only to keep their opponents out of office.

We challenge the utopianists in a very simple way: What form of government can satisfy 90% of the people without overly offending the other 10%? What form of government can achieve these ends over a long period of time? The intellectuals of the government simply cannot achieve such a state without declaring what will make people happy. They always declare what should make people happy; they never look at the people themselves. Of course, they believe in their own objective standards for the population’s happiness but fair-minded thinkers see through their arrogance. I cannot think of anything but radical decentralization of government power, perhaps even physical separation, in order to create a "good" government. One more condition: The utopianist isn’t allowed to kill 20% or 30% of the population when he starts. That has been the common practice but the "good" government has not been achieved.

I’m an anarchist and advocate no particular form of government. One of the reasons I feel this way is that I do not presume to tell the population what they should do. If the sort of good government I described, one that satisfies the vast majority without victimizing the rest, came into existence, I would not oppose it, but I’ve never seen such a system or heard of it.

Pretty good, huh?

Click here to get to Allen Thornton's antiquated homepage. There's plenty more there worth reading.

1 comment:

Anonymous said...

Great article.

On an unrelated note-the story of a productive 14 year old:

You don't have to love the eco angle-but you have to love the ambition and creativity. Wonder if he was homeschooled?

Slow out