Monday, June 30, 2014

The Profit Police



By Kevin D. Williamson
Monday, June 30, 2014

People intensely dislike profits. The belief that turning a profit is tantamount to operating some sort of con is disturbingly common. In their paper “Is Profit Evil? Associations of Profit with Social Harm,” Amit Bhattacharjee, Jason Dana, and Jonathan Baron asked research subjects to guess at the profitability of certain firms (e.g., Visa, Barnes & Noble) and certain classes of firms (e.g., oil companies, professional sports teams), and to estimate the social value of those companies and enterprises. The findings were not qualitatively surprising — the bias against profit in popular thinking is well-established — but they are quantitatively surprising: The correlation between perceived profitability and perceived social value was negative .62 for individual companies and negative .67 for classes of companies. (The always-insightful Bryan Caplan’s thoughts on the matter are here.) Identical economic tasks were judged very differently when the actor in question was identified as a nonprofit rather than a for-profit firm. It is worth noting that the anti-profit bias generally persists across party identification and political affiliation.

There are a few obvious potential explanations for why this might be. It could be popular culture, in which the world “corporation” is practically a synonym for evil, in spite of the fact that the power of individual corporations is in rapid decline. (It seems likely to me that the corporation as currently organized will not exist in 50 years. More here.) It could be envy; anything ancient enough to make the list of Seven Deadly Sins and to form the basis of a hundred thousand cautionary myths is bound to have some explanatory power. But we should consider the possibility that it is simply the result of an intellectual error.

Properly understood, all economic values are subjective. Some items have useful applications, but the relative value of those applications is itself subjective; there’s nutritional value in a pound of cauliflower, and there’s nutritional value to an ounce of Beluga caviar, and the difference in the price between the two is based on no objective criterion. Even scarcity does not explain the difference: There are more diamonds in this world than there are autographed photos of Anthony Weiner, but try giving your wife the latter for your anniversary and you’ll get a short and possibly violent lesson in the subjectivity of value. In fact, it is the subjectivity of value that makes exchange possible — if our values and preferences were perfectly aligned, we’d never trade anything for anything else, because we’d all value every item and service at precisely the same level, and there would therefore be no incentive to engage in commerce. That our preferences should be non-uniform ought not be surprising — our lives are non-uniform, too. If I operate an apple orchard, I am probably not going to buy apples from you at any price, unless perhaps they are a different sort of apple than the ones I grow. The rancher and the fisherman each assigns a different value to beef and fish than does his opposite number. Disagreement is fundamental.

The crude version of exchange — which is, unhappily, the common version — is inclined to suspect that there is an objectively correct price for a good, and that profit comes from duping somebody into paying more than the correct price for it. That error is fundamental to Marxism and other anti-capitalist philosophies, and it is implicit in such social phenomena as the anti-advertising movement, “Buy Nothing Day,” and similar political tendencies. But that bias does relatively little harm in the heads of greying Marxists, peddlers of “profit is a crime” banalities, and Occupy riff-raff. Where it is truly destructive is in the disorganized thoughts of the large majority of ordinary people with no particularly strong political commitments or economic orientation. Consider these phrases: “An honest day’s work for an honest day’s pay,” “just wages,” “fair price,” “obscene profits,” “price gouging,” “excessive executive compensation.” For any of those phrases to have any intellectual content, then there must be a price that is in some non-subjective sense the correct one. But if economic values are subjective — and they are — then “an honest day’s work for an honest day’s pay” can only mean one thing, that being the payment of an agreed-upon wage for an agreed-upon performance of labor, with “honest” referring only to the fulfillment of the agreement and saying nothing substantive about the terms of the agreement itself.

The Left often tries to explain its objection to free prices and wages in terms of asymmetrical economic power, and that analysis is not without some practical meaning: If you have been unemployed for six months, have $20,000 in debt, and are down to your last $4, then you are in a pretty poor negotiating position vis-à-vis most potential employers. But what is true at the anecdotal level is not true at the aggregate level: In spite of a lot of lamentably flat-earth commentary to the contrary, large, powerful firms such as McDonald’s and Walmart are effectively unable to raise prices, and firms such as Goldman Sachs and Wells Fargo are unable to dictate wages. While individual circumstances obviously vary, every potential buyer and seller, and every potential employer and employee, has precisely the same power in the market: veto power. McDonald’s would love to charge you $50 for a hamburger, and Goldman Sachs would love to pay a lot of people a lot less than it does. Neither firm can get away with that, because potential buyers and potential workers will walk away — that’s the upside of having lots of buyers and sellers in the marketplace.

Why this never occurs to, say, would-be health-care reformers is puzzling: In a market in which licensing rules and other regulations ensure that most states have only a handful of major policy sellers in the health-insurance market, and in which the outmoded model of employer-based health insurance means that there are a limited number of buyers, you’d think that the most popular policy would be radically increasing the number of buyers and sellers — and you’d be wrong. What we get instead is extraordinarily primitive thinking about the role of profit in the health-insurance business (an evil, and a deduction from the sum of the public good), price-fixing schemes, and the like. All of which is based upon the idea — the superstition — that there exists a right price or a right profit for this or any other good.

In the entire history of economic thought, nobody has ever been able to demonstrate that there is an objectively “right” price for anything separate and apart from the subjective valuation that happens in the marketplace. Progressives like speeches about diversity, but they loathe the actual diversity of views and desires, especially the idea that prices should be sorted out according to the billions of subjective valuations in the marketplace through a process that nobody is in charge of. (In Dante’s Hell, the engraving reads: “Abandon Hope All Ye Who Enter Here.” In Ezra Klein’s Hell, the engraving reads: “Nobody In Charge.”) Implicit in this belief is that most people — consumers and workers alike — are too stupid or too weak for us to allow them to act on their own subjective valuations, that we are compelled by . . . justice, efficiency, expert opinion, whatever . . . to substitute our own judgment for theirs. And then all you need is two government studies and a rent-a-philosopher writing in the New York Times to proclaim that there is some real-world basis for your own preferences as compared to those of the rabble on whose behalf you have just deputized yourself to organize the world. The language of “social justice” is largely a sort of moral minstrel show designed to distract from the real argument, which is: “You’re too stupid to be entrusted with your own life.” Something close to the entirety of the progressive agenda (apart from sexual license), from wage rules to health care to “investments” in modish fantasy projects to industrial policy, assumes that that metaphysically correct price is out there, simply waiting for the right people with the right ideas in service of the right policy to discover them, or at least to approximate them.

We should not continue to let them get away with that, whether we charitably consider it sloppy thinking or less charitably judge it to be outright intellectual fraud. You can have the Congressional Budget Office model your magical, metaphysical prices however you like, but what’s happening is nothing more than the sneaky insertion of a set of unsubstantiated moral principles disguised as math into an issue without any more inherent moral aspect to it than the fact that some lumps of carbon are cheap by the ton while others are tens of millions of dollars an ounce simply because they have a prettier crystal lattice.

If the Left is going to argue that profit is a scandal, then we should at least make them do the math and show their work.

Sandra Fluke the Sexist: Women Can’t Take Care of Themselves



By Michael Schaus
Monday, June 30, 2014

I don’t mean to be (entirely) dismissive… But does Sandra Fluke actually still matter to anyone? I mean, you would think that even Democrats might eventually grow tired of listening to a 30-something year old college student whine about wanting free birth-control. But, I guess you would be wrong. Sandra is at it again, ahead of the Supreme Court’s ruling on the Hobby Lobby case.

Hobby Lobby has been fighting for the religious liberty of its owners before the Supreme Court. Today, SCOTUS is expected to release its ruling on the matter – determining whether or not the Obamacare contraception mandate (requiring employers to provide their employees with “free” birth control) is a violation of the First Amendment. Sandra, of course, is busy crusading on Twitter for free no-baby pills: (HT: Daily Caller)


Thank God we have people like Sandra in the twittersphere to help us understand these issues. See, until Sandra straightened us out, I thought Hobby Lobby was simply refusing to pay for someone else’s morning after contraception pill… I wasn’t aware that the company was actually banishing women from healthcare clinics, and forcibly denying them the ability to purchase contraceptives from their local Planned Parent–

Wait… What? Oh… As it turns out, I was actually right the first time: Hobby Lobby just wants their employees to pay for their own contraception (The horror!). Apparently, if a company has the audacity to require that their employees pay for their own elective healthcare options, they are engaged in “denying women” their right to contraception. I guess this means that employers are also denying their employees the right to food, clothing, housing, transportation, and most other basic necessities of life in the 21st century; because (gasp!) employees have to pay for all those things with their take-home pay.

It almost seems like liberals are a little confused about the meaning of the word “denial”. In the entitlement society of Fluketopia, being forced to pay for birth-control out of your own pocket is an egregious violation of human rights… After all, women can’t possibly be expected to take care of their own health, right? I mean, it’s pretty obvious that equality and empowerment come from depending on entitlements and government mandated acts of charity… Or something.

The link in Sandra’s tweet is just as ridiculously manipulative:


Please join Sandra Fluke and the DCCC and sign this petition declaring that a woman’s boss should not have a say in her health care decisions.


Right… Apparently, employers aren’t supposed to care about your lifestyle, your sexual activity, your healthcare priorities, or your moral compass. They’re just supposed to subsidize it. Sandra doesn’t want your boss to have a say in your healthcare decisions. She just wants them to pay for it.

Sandra, the DCCC, and the American Left have an obviously low opinion of women in today’s world. Long gone are the days of individual empowerment, and equal treatment. Today, the feminists of the Left demand government-sanctioned dependency for the fairer sex. After all, in the mind of Sandra Fluke, women are clearly too weak to shell out eight bucks a month for their own birth control pills… That should be a man’s company’s responsibility.

World Leader Pretend



By Mike Adams
Monday, June 30, 2014

Dear Michael (Stipe):

You don't know me but I feel like I know you because I know your music so well. Back in the '80s, R.E.M. was easily my favorite band. In fact, in 1989 I joined a band that played a lot of your music. The job financed my PhD and made it possible for me to become a college professor. Naturally, I thank you for writing those songs. Your music inspired me and countless others.

Just last week, I ordered a copy of the 25th Anniversary reissue (released in 2013) of your 1988 album Green. I listened to it twice in one afternoon and reflected back on the time period when you and I shared a similar worldview. The song "World Leader Pretend" brought back vivid memories of what I now consider to be a glorious time in our nation's history. I've reprinted the lyrics of the song below and made some comments about how history has shed new light on your now 26-year old observations:

I sit at my table and wage war on myself

It seems like it's all, it's all for nothing

I know the barricades

And I know the mortar in the wall breaks

I recognize the weapons, I've used them well

When I first heard the opening verse of this song, I was thrilled. I was a member of the Democratic Party and a supporter of Michael Dukakis. Your album was released around the time of the 1988 election and I recognized it as a scathing indictment of the Reagan Administration as well as a dire warning that we could not continue with Reagan's foreign policy by electing George Bush to what would amount to a third Reagan term.

This is my mistake

Let me make it good

I raised the wall

And I will be the one to knock it down

I was never exactly sure what every line in your songs was saying because I was almost always intoxicated when listening to them. However, I always sensed that this verse was a reference to alleged deleterious effects of Reagan's policies on our image around the world. I also thought it was a call to repair that image by electing Dukakis - and, believe me, I was on board with the plan. I voted for him proudly - even though I knew he would lose by a wide margin.

I've a rich understanding of my finest defenses

I proclaim that claims are left unstated

I demand a rematch

It appeared to me then, as it does now, that your principal complaint with Reagan was the military buildup of the 1980s. This particular paragraph also seemed to contain a barb against the much maligned SDI missile defense system that was derisively referred to as the "Star Wars" program.

I decree a stalemate

I divine my deeper motives

I recognize the weapons

I've practiced them well

I fitted them myself

Part of the genius of this song is that it juxtaposes two interesting themes. The first is criticism of Reagan for fancying himself to be the leader of the entire world. The next is that of you imagining yourself to be the leader of the entire world and also declaring how you would do things differently. There are religious overtones attached to each idea. Reagan is seen as a religious crusader who equates his own motives with the will of God. But your humanist solution to the Reagan build-up was a crusade of a different sort - no less religious in nature.

It's amazing what devices you can sympathize

Empathize

This is my mistake, let me make it good

I raised the wall

And I will be the one to knock it down

The wall imagery was the most fascinating aspect of your writing in this song. At times, it sounds like you are referring to a metaphorical wall erected by Reagan foreign policy. But at other times it seems as if you are referring an actual wall. I'll come back to the actual will later in my commentary.

Reach out for me

Hold me tight

Hold that memory

Let my machine talk to me

Let my machine talk to me

I have no idea what this verse is saying. I got off drugs back in 1991.I'll just move on to the next verse.

This is my world, and I am the World Leader Pretend

This is my life, and this is my time

I have been given the freedom to do as I see fit

Its high time I razed the walls that I've constructed

In this verse it seems clear that you are referring to metaphorical walls. It is also clear that you are referring to nuclear disarmament as a way of repairing the damage inflicted by the Reagan administration on the rest of the world. The transition from "raising walls" and "razing walls" is clever wordplay, indeed.

It's amazing what devices you can sympathize

Empathize

This is my mistake, let me make it good

I raised the wall

And I will be the one to knock it down

The only question I have when I read this verse repeat is whether you really think that just one man, positioned as a world leader, can knock down walls (real or metaphorical) on his own. The next verse seems to supply an answer.

You fill in the mortar

You fill in the harmony

You fill in the mortar

I raised the wall

And I'm the only one

I will be the one to knock it down

As you know, Michael Dukakis, was not elected in 1988. Instead, George Bush was elected. Consequently, Reagan's basic foreign policy continued. And just one year later something very interesting happened. A wall fell down. It wasn't a metaphorical wall. It was a real wall that separated East and West Berlin. It was a testament to a failed view of the world.

As I look back on those days of being a leftist atheist and listening to R.E.M. in a drunken and drug- induced stupor, I realize just how truly lost and naive I was. I hated my own country and I sympathized with our enemies. I also imagined a new world order that had its basis in the worship of humanity, not in the worship of God.

Historical events have led me to conclude that my view of the world was wrong. But how about you, Michael? Have you ever considered changing your view of the world now that history has spoken and the Cold War ended through strength, rather than unilateral disarmament?

In other words, is your view of the world one that is based in reality? Or is it only make believe?

You Blew It! World’s Free University is Sadly Biased



By Mark Skousen
Monday, June 30, 2014

Bengali-American educator Salman Khan is a brilliant reformer who wants to bring a free education to everyone in the world. With degrees from the Massachusetts Institute of Technology and Harvard University, and a background in the financial world, he decided to create a “free, world-class education for anyone, anywhere” through his Khan Academy.

His story is a classic example of democratic capitalism and the growing equality in the world. Rich or poor, you can now have access to a first-rate education. Thomas Piketty should take note! Inequality is shrinking, not growing, when it comes to useful goods and services.

Khan has been wildly successful and was recently named one of Time magazine’s 100 Most Influential People in the World.

He has produced 4,800 video lessons teaching a wide spectrum of academic subjects in mathematics and the sciences.

And now he is adding economics. But there’s the rub. As a professor who has taught economics, finance and business at Columbia Business School and now Chapman University, I was surprised how one-sided (teaching primarily Keynesian economics) his macroeconomics course is at the Khan Academy… with students reading and discussing only one book (Piketty’s “neo-Marxist” work, “Capital in the 21st Century”).

I just finished preparing a video course in “Modern Political Economy: Who’s Winning the Battle of Ideas?” for the Teaching Co., and I go to great pains presenting the entire spectrum of economic philosophy and schools of thought, whether Keynesian, Marxist, Austrian, Chicago, supply side, etc. I divide them into the Big Three in Economics (title of my book): Adam Smith, Marx and Keynes. Students love this balanced approach to learning economics. Salman Khan is doing his students a disservice by focusing on primarily one viewpoint.

Saturday, June 28, 2014

The Eternal Dictator



By Kevin D. Williamson
Saturday, June 28, 2014

I’m 41 years old, which doesn’t feel that old to me (most days), but history is short. With the exception of those trapped behind the Iron Curtain, the world as I have known it has been remarkably free and prosperous, and it is getting more free and more prosperous. But it is also a fact that, within my lifetime, there have been dictatorships in Spain, Portugal, Greece, Poland, India, Brazil, Argentina, Chile, South Korea, and half of Germany — and lots of other places, too, to be sure, but you sort of expect them in Cameroon and Russia. If I were only a few years older, I could add France to that list. (You know how you can tell that Charles de Gaulle was a pretty good dictator? He’s almost never described as a “dictator.”) There have been three attempted coups d’état in Spain during my life. Take the span of my father’s life and you’ll find dictatorships and coups and generalissimos rampant in practically every country, even the nice ones, like Norway.

That democratic self-governance is a historical anomaly is easy to forget for those of us in the Anglosphere — we haven’t really endured a dictator since Oliver Cromwell. The United States came close, first under Woodrow Wilson and then during the very long presidency of Franklin Roosevelt. Both men were surrounded by advisers who admired various aspects of authoritarian models then fashionable in Europe. Rexford Tugwell, a key figure in Roosevelt’s so-called brain trust, was particularly keen on the Italian fascist model, which he described as “the cleanest, most efficiently operating piece of social machinery I’ve ever seen.” And the means by which that social hygiene was maintained? “It makes me envious,” he said. That envy will always be with us, which is one of the reasons why progressives work so diligently to undermine the separation of powers, aggrandize the machinery of the state, and stifle criticism of the state. We’ll always have our Hendrik Hertzbergs — but who could say the words “Canadian dictatorship” without laughing a little? As Tom Wolfe put it, “The dark night of fascism is always descending in the United States and yet lands only in Europe.”

Why is that? Is there something magical about Albion’s seed — Protestantism? the English language itself? the combination of the two in the King James Bible? — that inoculates the United Kingdom, the United States, Australia, Canada, and New Zealand against the European intellectual disease? That disease mutates every 20 years, but the primordial strain of the virus is always identifiable: more power, centralized power, consolidated power. If you were observing Earth from space, or from Rome during the reign of Hadrian, you would not be likely to think of England as the planet’s great mover and shaker; it is just a little island sneered at by Europe’s great men as “a nation of shopkeepers.” But culture and history are sensitive to initial conditions, and somewhere between the drafting of the Magna Carta and the invention of the first power loom, a British butterfly flapped its wings in the right way at the right moment, and the deeply intertwined phenomena of the Industrial Revolution and the liberty revolution emerged together, creating an entirely new kind of civilization, one that showed the world that it is indeed a glorious thing to be a nation of shopkeepers. Walk through modern-day London, or drive through Houston, and see how their shopkeepers are keeping themselves — most of them won’t even bother to sneer at the memory of Napoleon and his grubby little wars.

But freedom, self-rule, and prosperity are extraordinarily delicate things. The natural state of the human animal is not security and plenty, but terror and privation. When the Romans overthrew Tarquin, they swore they’d never have another king. Soon enough, they had an emperor, a word deriving from the Latin imperator, which, some of my conservative friends would do well to remember, means “commander-in-chief.”

We Americans venerate our Constitution as the English venerate their Magna Carta (which is our Magna Carta, too), but it isn’t our laws or our documents that keep us free. The United States and the United Kingdom have very different forms of government, and there are many contradictory and incompatible laws, institutions, health-care arrangements, etc., across the countries of the Anglosphere. What keeps us free is our civilization and our culture, and our tenacity in defending the best aspects of them.

As John Fund points out, 13 times since 2012 the Supreme Court has felt itself obliged to unanimously stop Barack Obama from doing violence to the Constitution and the law in the service of aggrandizing his own power. The president’s most recent defeat, in the matter of his attempting to make recess appointments when the Senate is not in recess, was a naked power grab, ugly and vicious enough that even Elena Kagan and Sonia Sotomayor, whom President Obama named to the Court, both felt obliged by duty to blow the whistle on his transgression. But even the mighty Supreme Court can be overcome: When the Court decided that the First Amendment means what the First Amendment says, Senate Democrats under the leadership of Harry Reid introduced a constitutional amendment to repeal the First Amendment. The president himself has made it clear that when it comes to appointing justices to the Court, a commitment to his political agenda — he calls that “empathy” — trumps any commitment to the Constitution. The Constitution can be defaced, and it can be perverted. All it takes is a willing hand. You do not want to bet the future of our civilization on the mood swings of Anthony Kennedy.

When I was visiting Madrid a few years back, I sat drinking coffee on one of that city’s beautiful public squares and watching the Spanish go about their business — walking to work, shopping, flirting, reading newspapers, enjoying the sun — and I wondered: How is it that these people — these civilized, elegant heirs to Cervantes, Velázquez, and Ignatius of Loyola — manage to inflict upon themselves a cartoonish dictator such as Francisco Franco? (The answer, of course, is: by narrowly avoiding inflicting on themselves a Russian dictator rather than a Spanish one.) I am not much of a multiculturalist; there are some societies that one expects to be governed under roughly the same principles around which a baboon troop or a cackle of hyenas is organized. But the Greeks? The Germans? The Italians? The Norwegians, for Pete’s sake? If it can happen to them — and it has — it can happen to anybody.

The worrisome lesson of history is that there is no shortage of strongmen and generalissimos, and their holding power and exercising it ruthlessly is the natural state of human affairs. Nobody has to do anything to make that happen; it’s making that not happen that requires our attention.