Hunter Middleton, Where Are You?

Last heard of taking a job leading an anti-piracy technology group (say it ain't so Hunter, once you start down the dark path, forever will it dominate your destiny!), my old roommate and schoolmate from NCSSM and NCSU Hunter Middleton was last seen in a photo when he was at Covad.

I think this blog has an occasional readership of maybe 2 or 3 people, at this point (and I know you don't know where he is) so this is not an attempt to actually look for Hunter among readers. But since I know that the various web search engine robots crawl through here on occasion, I thought maybe he might Google his own name (everyone does it, it's OK) and come across this post. My (very brief and amateurish) attempts to find him didn't turn up much, so let's try a passive approach!

Scooby Doobie Don't!

Gillespie again with a piece discussing how the FCC is gearing up for greater regulation of "children's" programming. It is a generally well written bit of libertarian analysis, but I feel compelled to point out his one glaring omission. In a hilarious listing of the various ways that Scooby Doo will run afoul of the morality patrol, he skips the most (in)famous issue: The well-known fact that Scoob and Shag clearly have a chronic (ahem) case of the munchies!

Libertarian Democrats... Not Really, but OK...

Reason editor Nick Gillespie's essay on, or survey of, the "Libertarian Democrats" is pretty solid, overall. The honest libertarian list of all of the Democratic bad ideas is quite a long one, and yet I still tend to go into the polls and mark the "D" column. When the subject of my political orientation comes up, I generally say, "ex-Democrat, but PLEASE don't think that makes me a Republican." My only quibble with Gillespie, or at least the great majority of libertarians who have traditionally cast their lot with the GOP, is that I've never understood that affiliation-the current administration may have made the GOP's rampant statism more glaringly obvious, but I think it has been there all along.

My own theory is that libertarians and their cousins, the small government conservative Republicans, must make one or both of a couple of major (in my view) errors.

Libertarian - GOP Fallacies

1. Cutting taxes is somehow an absolute good. Sigh. What gives here? The Laffer curve simply doesn't hold up to any serious scrutiny. Then there is/was the "starve the beast" meme-you know, go ahead and cut taxes without cutting spending in the hopes that this will somehow constrain future growth. This always seemed patently ridiculous on it's face… but can we finally put it to rest now? As long as the government gets to borrow or print money at will, it's going to do so. Period. If you want to reduce the size of government (and I'm for it, in general), you're going to have to cut spending. Or at least restrain spending growth so that it lags behind economic growth, which is, I believe, what happened under the Clinton/Dole/Gingrich regime, along with some modest tax hikes under Clinton and Papa Bush (after we read his lips, of course, and saw that he was fibbing).
2. Reagan was a small-government conservative. I can only figure this comes down to giving the man credit for "talking the talk". OK, I'll go over it again. Huge deficits. He actually raised taxes a couple of years after he cut them. He and darling "Nancy No" accelerated and abetted the institutionalization of the drug war. (The term "drug war" actually comes from the Reagan/Bennett era, does it not?) In practice, the man was nothing like a small-government conservative, but he gave some very compelling speeches in which he spoke like one. Hmm, good acting, bad governance--just about sums up the whole Reagan presidency, no? (Actually, I do give Reagan serious props for generally striking the right moral tone at the end of the cold war, but I'll leave a full treatment for another day.)

I have always feared the religious right's moral crusade to meddle in my private life more than the lefty urge to lighten my wallet for the public "good," hence my nose-holding support for the Dems. That uneasy equation still holds, just barely. Sadly, the Democrats have adopted their own strident brand of meddling moralism, even as the GOP has abandoned any sense of fiscal restraint, even rhetorically. Not happy times, for this voter. I may well become a principled non-voter, if this keeps up. But for now, George Bush's unbridled bid for unchecked executive power (and a craven Congress predisposed to give it to him), has me voting and hoping for anything and anyone that might get in his way.

Stagnating Wages and the Future of Trade

Looks like the issue of wage stagnation is going to continue to be a hot topic, perhaps for some time to come--perhaps with unfortunate results. Since I first posted on this a while back, at least a couple of major pieces in major publications have visited the topic, with similar results. There was the much discussed NYT piece on falling real wages in August, and I highly recommend "The new titans" a survey in the Economist from last month. (Hmm, looks like the full survey may now be behind a subscription wall, I was able to download it for free last month.) While not conceding any ground to the protectionist camp, the Economist piece does conclude

The fact that many workers seem to be excluded from the spoils of globalisation is a big challenge to orthodox economics.... At the same time, protectionists exaggerate [the] costs and ignore the benefits. It is time for a more honest debate about trade.

The main economic theory being that the influx of massive amounts of labor and (relatively) less capital from the developing world will decrease the value of labor relative to capital. Greater supply, lower price (i.e. wages). This seems to be an alternate way of stating what Tim Worstall was getting at in the piece that inspired my first post. But it is indeed also rather Marxist, after all, which was what I had suspected.

So, what should be done about it? Maybe nothing, but growing inequities seem to be driving a backlash, which will almost certainly be counterproductive...

More on Prop 87

Now there's a reply in the form of an open letter to Khosla by Shikha Dalmia at the Reason site. I still don't know whether Prop 87 is a good idea or not. Dalmia, not surprisingly, is against it, and alleges that although oil companies do not pay drilling fees in California, as elsewhere, there are plenty of other fees and regulations for their CA operations, and that, yes, the fees will represent an undue burden. Again, I don't know, but the principle is potentially valid, and Dalmia also points out the fallacy about costs not being passed on to customers... thank you!

Drilling Fees and Oil Markets

A stimulating advocacy piece in Wired by Vinod Khosla on ethanol as the “fuel of the future”. It warrants more investigation no doubt. Here is something that sticks in my craw, however. The piece generally adopts the language of good, old-fashioned entrepreneurial enterprise and free market thinking, which is great, but then, in the midst of a discussion of a proposed fee for oil companies drilling in California (Proposition 87), he pulls out this bit of wizardry:

Prop 87 will not raise gas prices as the oil companies would have you believe. Market forces ensure that world oil prices, not production costs in California, determine gas prices. Besides, the California attorney general has confirmed that Prop 87 makes it illegal for oil companies to raise gas prices or pass the fee on to consumers. The US Supreme Court has already ruled that states can prohibit oil companies from passing drilling fees on to consumers.

It may be true that these fees would not be significant in the overall world oil market, but this law against passing on fees is highly suspect. The California attorney general and SCOTUS are powerful entities indeed, but they do not have the ability to repeal the basic laws of economics, do they? Any time you see the phrase “law prohibits company X from passing on fees for Y to consumers” then something pretty much has to be out of whack. The only way for government to fix prices is to, well, fix prices—i.e. set them with price controls. Other than public utilities, I don’t think this has been done on any wide scale since the Nixon administration, and I think that Nixon’s policy is almost universally considered a failure. If the government is not actively setting actual consumer prices, then any law “prohibiting companies from passing on” a given cost to consumers will just mean that companies cannot create a line item surcharge for that cost. But the cost will still be there, it has to be born by someone. The implication of the argument is that is the fees will come exclusively out of corporate profits, or employee compensation at oil companies, but there is simply no way to enforce that or show that it will actually happen. Expenses, revenues, and profits in any business of any size and complexity simply can’t be micromanaged by some government policy, however well-intentioned, unless the government just takes over the business—i.e. blatant socialism.

I hate to dwell on one thing, but it is rather disappointing to see this in what would otherwise be a very exciting article. I’m not opposed to Prop 87, nor for it; I don’t know enough about the details. In principle, it sounds fine, especially if this really just applies to drilling on public land. But it’s more than irritating to see this blatantly non-economic argument intruding on an otherwise exciting article. It tends to undermine the author’s credibility and make me question the rest of his argument.