Monthly Archives: December 2007

Explaining The Appeal Of Ron Paul

Are political analysts finally starting to figure out why someone who was, until earlier this year, an obscure Congressman from Texas has garnered the support that Ron Paul’s Presidential campaign has seen ?

Here’s Ezra Klein at The American Prospect:

With Paul, the positions aren’t the point. His candidacy is tonal, aesthetic in nature. It’s a movement united behind Howard Beale: They’re mad as hell at politics, and not going to take it anymore. The force of that statement is far more important than whether Beale’s political opinions or likely comportment in office precisely match up with what his supporters would desire. Paul’s candidacy is an indictment of the system, not an argument for who would best administer it.

And Andrew Sullivan:

Paul’s candidacy is a moment of protest from all those who once saw the GOP as their home and who have become enraged at what Bush and Rove have done to conservatism. So many of us feel like refugees – forced out of our homes by Christanist intolerance and neoconservative fanaticism. The Paul campaign is a refugee camp, pitched temporarily at the border of old-school conservatism, as we wait to see if our politics is really over in the Republican party, and whether a freedom agenda can still have a future in America.

Incidentally, Sullivan endorsed Paul a few days ago:

[T]he deeper reason to support Ron Paul is a simple one. The great forgotten principles of the current Republican party are freedom and toleration. Paul’s federalism, his deep suspicion of Washington power, his resistance to government spending, debt and inflation, his ability to grasp that not all human problems are soluble, least of all by government: these are principles that made me a conservative in the first place. No one in the current field articulates them as clearly and understands them as deeply as Paul. He is a man of faith who nonetheless sees a clear line between religion and politics. More than all this, he has somehow ignited a new movement of those who love freedom and want to rescue it from the do-gooding bromides of the left and the Christianist meddling of the right. The Paulites’ enthusiasm for liberty, their unapologetic defense of core conservative principles, their awareness that in the new millennium, these principles of small government, self-reliance, cultural pluralism, and a humble foreign policy are more necessary than ever – no lover of liberty can stand by and not join them.

He’s the real thing in a world of fakes and frauds. And in a primary campaign where the very future of conservatism is at stake, that cannot be ignored. In fact, it demands support.

When Sullivan’s right, he’s right. Ron Paul isn’t perfect by any means, and I’ve detailed some of my disagreements with him, and discomfort with some of his supporters, here more than once. But he’s a damn sight better than any Republican running for President this year.

Should Oil Producers Embargo America Again? The Democrats And Republicans Seem To Think So

In 1973, OPEC announced an embargo of oil sales to countries whose governments had supported Israel in the Yom Kippur war. In the U.S. this precipitated a major economic crisis as the U.S. government attempted to ration gasoline and control production and sale through a regime of price controls. The U.S. Central bank also embarked on an inflationary spree in an attempt to “stimulate ” the economy. Just as in the Great Depression, the result was a combination of inflation and economic stagnation, known as “stagflation.”

Today, nearly every presidential candidate is calling for something called “energy independence”, which amounts to an attempt to reenact the embargo, although this time it would be the U.S. government turning back oil shipments instead of the Saudi Government. This suicidal course is supposed to insulate the economy from high energy prices and to promote attempts to mitigate global warming. However, rather than insulating the economy from higher energy prices, these measures will have the perverse effect of making the high energy prices we face today more devastating and permanent. Making energy consumers all over the United States of America search for the best electricity rates in Texas and other states to combat rising energy prices.

Energy is merely a factor of production; one of many inputs that are converted into a more valuable product or service. Because energy is one of the most important inputs into most manufacturing processes, consumers of energy tend to be very price-conscious; attempting to get the most ergs for their dollar. However, unlike a person shopping at a grocery store, they can’t easily switch from oil to natural gas as easily as a consumer switches switches from buying eggs and bacon for their breakfasts to buying oatmeal. Once a factory or some other piece of heavy equipment or facility is designed to use on particular energy source, switching to another source is either very expensive or impossible. Thus, the largest consumers of energy look at not only the current price of energy products, but also at the long term trends. They try to lock in suppliers to long term contracts. They study the long term availability of the various sources and try to predict what the supply situation is like.

This desire for predictability forces energy producers to focus on keeping prices low and stable, if they want to attract customers. Because there are so many consumers of energy who will pick a supplier and stick with that supplier for a long period of time, and because these customers strive to understand their supplier’s business in great detail, the sources of energy that they choose to consume tend to be the most stable and cheapest sources then available, generally energy from oil or other petroleum products.

The plans being promoted by the politicians attempt to force American businesses to consume not the cheapest forms of energy, but rather more expensive and less economical forms of energy. They take one of four forms:

The Manhattan Project

Most programs call for the U.S. government to take money from tax-payers and to spend it on scientific research and engineering development to develop new sources of energy, or to make the consumption of new energy sources more “efficient”.

The problem is that these R&D programs will be funded by a political process and not necessarily based on criteria of which programs are most likely to bear fruit on a reasonable time-scale. The R&D that is expected to provide a payoff is already being done by investors or companies that expect to make a mint if they are the first to market with more efficient, less costly mechanisms that satisfy the demand for energy. The works that are not already being done, for the most part, are boondogles with an insufficient probability of a positive return. Essentially, the money confiscated and redirected to this research will necessarily displace investments that would otherwise be made in more profitable or less risky ventures. Thus, these programs are guaranteed to be as big a waste of money as other forays of the government into R&D such as nuclear power plant design and space exploration.

For my theory on why this is so, see my article Government Funding of Science: Inherently Susceptible to Junk and Superstition.

Subsidies for ‘local’ energy sources

Most plans involve subsidies for energy sources that do not use imported oil, things like wind-mills, ethanol and other ‘sustainable’ forms of energy. Essentially, these alternative sources of energy exist, but are so much less economical than imported oil, that nobody seriously uses them. The government’s plan is to subsidize these alternates so that the price demanded from people who are purchasing them is competitive with that of the hated imported oil. There is, of course, one problem with that: TANSTAAFL.

The subsidies must be paid by taxpayers, the same people who, for the most part, are consuming the subsidized energy. The result? The tax-man boosts the cost of energy to higher levels than we currently pay for “imported oil”. If the high cost of gasoline is painful, the cost of ethanol enhanced gasoline will be much more painful. In the end, this is the equivalent of treating the pain caused by a patient’s sore muscles by beating him up.

Subsidies for increased fuel efficiency

The rationale for this scheme is that if we could reduce the amount of fuel consumed, the price of the fuel would go down. However, it assumes that consumers want more efficient vehicles or factory equipment, but are powerless to influence manufacturers and producers to make more efficient machinery. This is, of course, poppycock. People balance fuel efficiency with many other criteria in making their choice. In times of bountiful, cheap energy, they may decide that a vehicle of large mass and carrying capacity is what they want. Increased efficiency generally comes at the expense of cost, or reduced performance in some other area.

Again, the principle of TAANSTAFL applies. By mandating that all products have a certain degree of efficiency, these plans essentially are forcing consumers to forgo other wants, or pay higher prices to purchase equipment that meets their needs.

Paying for Externalities

Currently it is in fashion to blame combustion of fossil fuels for causing a warming of the Earth. Of course, the change in climate causes people to bear costs in the form of reduced crop yields or loss of land to the sea etc. Many of these plans attempt to ‘mitigate’ this damage either through additional taxes levied on fuel consumption or from cap-and trade schemes. Both ideas suffer from flaws:

The rationale for remedying externalities through taxation is thus: Let us say that every gallon of gasoline burned in the U.S. causes $0.25 worth of damage to everybody on Earth. A tax of $0.25 is levied on each gallon of gasoline that is purchased or produced and the money is then spent to compensate the people suffering the damage.

Of course, the reality is quite different. The funds rarely are spent to reimburse injured parties, assuming that the injured parties can even be identified. Rather the funds are apportioned through a political process. A glaring example of this is, for example, the use of tobacco settlement money to pay for athletic programs in government schools as opposed to reimbursing Medicare for the costs of caring for ill smokers.

Cap and trade schemes have their own sets of problems. Under such a scheme, the state sells or issues permits to individuals or businesses permitting them produce X amount of pollution. The owners of these permits are then free to sell permits to those who wish to buy the right to pollute. There are two basic problems unique to these schemes:

First, there is the question of how many permits to issue? Of course, there will be a conflict between those who favor more permits and those who favor a reduction in the numbers of permits that are issued. The process for setting the number of permits will be a political one, and as such only loosely coupled with the actual number of permits that is appropriate, assuming that the number of appropriate permits is even calculable.

Secondly, there is the question of who gets the permits? If the permits are given away, then the state will have to ration the permits it issues. The distribution of permits will again be a political process with connected individuals and organizations being granted a windfall of permits that they can then sell at a great profit. Alternately, if the permits are sold, typically by auction, then once again the problems associated with the state levying taxes to repair externalities will manifest themselves.

Do We Need a National Energy Policy?

To me, the answer is a resounding NO! We no more need a national energy policy than we need a national food policy or a national entertainment policy or a national clothing policy.

The fact is that those who consume energy are already driven by reasons of frugality and profitability to seek the least expensive and most cost-efficient forms of energy out there. In order to prevent people from using oil, the state must force people to pay more for oil than they ever would under a volatile free market scheme. This means that in order to ensure energy the U.S. government must, in effect, force an embargo upon its subjects. Under international law, it is considered an act of war for one nation’s navy to blockade another nation’s sea trade. The fact that U.S. politicians are attempting to carry out such an act of war on their own people – worse that a significant portion of the U.S. population thinks this is a good idea – is quite disheartening.

I am an anarcho-capitalist living just west of Boston Massachussetts. I am married, have two children, and am trying to start my own computer consulting company.

An Open Letter to Neal Boortz

Mr. Boortz, I am writing this letter as a plea for you to reconsider your support for Mike Huckabee‘s candidacy for Republican nomination for President.

I’ve listened to you since I was fourteen years old. I remember my mom telling me when I was eight or so that I was going to like your show when I got older because I was just as opinionated, and for the most part she was right.

You single-handedly sparked my interest in classical liberalism/libertarianism and the Libertarian Party. My involvement in the Libertarian Party went as far as getting elected as the Chairman of the Libertarian Party of Georgia in 2006 at the age of 25. I have since left that post, and I consider myself to be an independent, but still very much a believer in the libertarian philosophy (limited government, capitalism and the Harm Principle).

I was disappointed, but not surprised, to see your endorsement of Mike Huckabee, in an Athens newspaper. No doubt the endorsement is because of his support of the FairTax, a cause that you’ve taken up over the past few years. I have no comments to make on that issue, other than the fact that the only two reasons you are supporting Mike Huckabee is because he performed reasonably well during the GOP debates. He never really answers tough questions, choosing instead to make a joke and avoid the issue. The most obvious reason you have backed his campaign is because he supports the FairTax.

I do not intend this to be an attack on you because when it comes down to it, I respect you, but I disagree with you. I believe that you have betrayed your principles and ultimately your belief in limited government due to your support of Mike Huckabee.

There are several political commentators that have pointed out that Huckabee is a populist candidate. He is using some of the same class warfare rhetoric (the same rhetoric that John Edwards has used) in order to appeal to the emotions of individuals that simply don’t know better or they refuse to acknowledge reality…and it disappoints me when I think that you may have fallen into one of those categories of voters.

Huckabee’s record is troublesome for anyone who claims to be a fiscal conservative or a limited government conservative. As John Fund and FactCheck.org have noted, the taxpayers of Arkansas saw their tax burden increase by 47%, an increase of more than $500 million.

He has signed into law or supported numerous tax increases ranging from an increase in the state sales tax on several occasions, gas tax, taxing nursing home beds and opposed repealing sales taxes on groceries and medicine. Spending increased by more than 65%, triple the rate of inflation. Huckabee likes to say that he left the state with budget surplus, but he also left the state with $1 billion in new debt. One Arkansas newspaper put together an editorial which shows that Huckabee is more of a tax hiker than Bill Clinton.

The Cato Institute gave Huckabee a grade of “F” in fiscal policy in 2006 (16 Democrats received higher grades), and a “D” for his entire tenure as Governor of Arkansas.

Reason magazine probably put it best, “The vision of ‘compassionate conservatism’ promised by George W. Bush was actually practiced by Huckabee, with all the flaws that entailed. He’s the GOP candidate who’d probably get along best with a big-spending Democratic Congress.”

He has been hostile to school vouchers and has even managed to pick up the endorsement of a state branch of the NEA. You’ve been hostile to teachers unions, even saying that they pose a greater threat than al-Qaeda. This is a man that called No Child Left Behind, “the greatest education reform effort by the federal government in my lifetime.”

During his campaign he has been hostile to the concept of free trade, a fundamental human right, Huckabee instead has ignored the benefits of free trade, latched onto the protectionist “fair trade” rhetoric and opposed trade agreements that may not be perfect, but have had an overall positive effect on the American economy. I find it ironic that the candidates that support the FairTax (Tom Tancredo, Duncan Hunter and Mike Huckabee) are all anti-free trade.

His reasoning for agriculture subsidies is because it is a “national security” issue. Subsidies are misguided for a number of reasons, but the main problem with them is they drive up the cost of food, which only hurts American consumers.

He has offered no plan to reform the unfunded liabilities (Medicare, Medicaid and Social Security) that pose a threat to the stability of our economy. He supported the 2003 Medicare drug benefit and was the only GOP hopeful that didn’t support Bush’s veto of SCHIP.

This is a candidate that supported an increase in the minimum wage in his state, as well as an increase in the federal minimum wage. He believes that it is a biblical duty to fight global warming and supports cap-and-trade policies. Not to mention that he rails against Wall Street and the salaries of CEOs, going so far as to deem them to be “immoral.”

Conservative columnist Jonah Goldberg shined some light on Huckabee’s view of government. He said, “The problem with someone like Huckabee is that he much like, in my mind, a liberal sees no dogmatic constitutional limits on the “do-goodery” of the federal government. Whatever he thinks is the right thing for the federal government to do, if he thinks there’s a good thing that can be done by the federal government, he wants the federal government to do it whether it’s constitutional or in accordance with principles of limited government. And maybe what he wants to isn’t what a cultural liberal would want to do but he still wants to use the government the same way. It’s big government conservatism.”

This is your candidate, Mr. Boortz. I haven’t even touched on his social authoritarianism and nannystatism, his comments about AIDS patients and homosexuality, his commutations, his ethics issues or the Wayne Dumond scandal. This is just limited to his fiscal record. And please don’t hand me the ramblings of a political mercenary as a response.

I know that if you happen read this, you’ll probably just brush it aside and continue your blind support for Mike Huckabee based solely on the FairTax, no matter how irresponsible and dangerous it is. It’s no different than a religious collectivist basing their vote on the issue of abortion or someone basing their vote due to their opposition of the war in Iraq. You have made yourself into a single issue voter.

It disappoints me to no end that someone who introduced me to the ideals of liberty and principle can abandon those beliefs so quickly due to his stance over one issue to support the candidacy of someone who antithesis of those values. Mike Huckabee is no fiscal conservative. He is no believer in limited government…and he is playing you for a fool.

1 2 3 4 5 14