Addicted to Oil?

Politicians of all stripes keep bleating on and on about our addiction to foreign oil. At last, someone (Robert Higgs) has described why this is a nonsensical argument. The concept of opportunity costs is close to the heart of economics, even more fundamental than the division of labor. Still, the idea seems a mystery to the political class.

Obama’s Tax Plan

Well well. This analysis shows that Senator Obama’s “tax cut for the middle class” is actually a tax increase for at least some of the middle class. This happens because of the complexity created by tax credits and tax credit phase-outs. I’m sure the good Senator doesn’t intend to increase middle class taxes (or, at the every least, doesn’t intend for people to know). These kind of problems result from the bewildering complexity of the tax code and Congressional attempts to micro-manage the economy. Regardless of what policitians propose, further complication of the tax code will make it harder to predict consequences. Obama may want to reduce taxes on the middle class, but without simplifying the tax code, the actual results are unpredictable. It’s a shame that tax simplification isn’t a big campaign issue.

Putin for President?

I refer to this article which, with tounge in cheek (I hope), advocates Putin for President of the US. More importantly, it has a view of events in Georgia that is quite different from what is portrayed in the US. It’s more of a realpolitik view than we’re accustomed to, but the logic can’t be easily dismissed. I particularly liked this observation:

Half the world’s population now resides in the world’s three largest countries, namely China, India and the United States. These are not multi-ethnic, but rather supra-ethnic states, whose identity transcends tribe and nationality.

Read the whole thing for a different view of the world.

Naked Short Selling

…not as exciting as it sounds! If you need a good in depth analysis of short selling, naked short selling, and the dubious nature of the new government restrictions, this article is about as good as it gets.

Might Makes Right - And Left

Don Boudreaux makes a fine point:

Just as many on the right naively fantasize that foreign problems are best solved by force, “liberals” fantasize that domestic problems - real and imaginary - are best solved by force.

Given that some degree of government is essential, it is always tempting to use the power of government to force other people to change their behavior to become more to your liking. This is the essence of politics.

Economics and Politics

If you have a little time, there’s a fine old (1970) essay by Murray Rothbard that explains the relationship between economics and political theory. It’s the best thing I’ve read of its kind. He wrote a new introduction to it in 1991, which is also worth a read. These are great reading because they connect with first principles which sometimes get overlooked in thinking things through.

Workplace Democracy

The Democrats in Congress have been pushing for a mode of union organizing called “card check”, which denies workers the right to secret ballots when considering unionization. This vile piece of legislation is easy to understand if you first understand the political theory of pluralism. This is simply a way of rewarding union bosses for taking money from workers and giving it to Democratic politicians. It’s easy to understand, but I’ve still been surprised that so few Democrats oppose this kind of legalized extortion. But Democrats haven’t totally abandoned principle - George McGovern is speaking out, chastising his own party. It’s about time that we hear from at least one Democrat who favor workplace democracy.

Special Interest Politics

I was not familiar with the work of Arthur Fisher Bentley, but at one time his theory of politics was all the rage. Nicholas Lemann has a great article in The New Yorker explaining Bentley’s views and their application to contemporary politics. In short, Bentley argued that all politics, in all political systems, is “special interest” politics. The process of government is the process of balancing the demands of interest groups. This view is called pluralism. Two things struck me about this. First, even those who promote an abstract ideological view are really a kind of special interest - they want a world that conforms to their mental model. Second, most of us belong to several “interest groups”, giving society a lot of cross-cutting cleavages.

Pluralism has a lot of pragmatic appeal and certainly adds a deep and rich flavor to political analysis. It also fits nicely with Public Choice theory.

I offer this modest thought: as self-interest drives markets via voluntary actions, so self-interest drives politics through coercive actions. While some theorists like to think of societies driven only by market-based self interest, that only works until some well organized and well armed group of thugs come to town. A workable view of society must encompass both markets and political pluralism.

Anti-Capitalism

Anti-capitalism is stirring in the land. People should remember a few basic things. But that’s human nature: we tend to be ingrates. Who was it that said that man is the only animal that bites the hand that feeds him?

The Mises feed has a nice short warning :

John Dewey once said that more democracy was the cure for the problems of democracy. Similarly, the cure for economic problems is not more government, but more markets.

This is not a local American problem. We think of ourselves as a capitalist nation, contrasted against the semi-socialist and crony-capitalism governments of other countries. But while we’ve been creeping away from free market capitalism, other nations have been galloping toward it. Now some of them are starting to worry about us. From a Canadian paper :

Politicians and regulators get a lot of mileage blaming everything on speculators and the markets, but we are surely long past the time when generalized economy-wide inflation — which now threatens the world — can be pinned on anybody but central bankers and, indirectly, on governments.

Now we’re threatening the world and the world is worried!

Why They Hate Us

It could have to do with our ridiculous policies on oil and ethanol. Somehow, I doubt that the Democrats will lead the way in restoring international respect for the US of A.