"Unsurprisingly, Japan is kicking serious metallic ass."

Is there still a mine shaft gap? From Reason, we are lagging very far behind in robots:

"Domo Arigato

Katherine Mangu-Ward | January 9, 2009, 2:30pm

Robots are not quite up to Asmovian levels worldwide yet, sadly. But we've hit about 1 million industrial robots worldwide. Check out the distribution of robots about the globe, from IEEE:

Unsurprisingly, Japan is kicking serious metallic ass. And these figures don't even count adorable robot dogs and creepy robot women (hello uncanny valley!).

Assuming our march toward an all service economy continues despite the downturn, we'll probably never catch up to Japan on industrial robots, so we'd better make a go of it with service robots, America.

Via BoingBoing"

"Former Attorney General Alberto Gonzales actually made John Ashcroft look like the Bush administration's resident civil libertarian"

Radley Balko on Reason:

"Sure, Al. A Couple Hundred Tortured Detainees, 100,000+ Iraqi Citizens, the U.S. Constitution, and You.

Radley Balko | January 2, 2009, 10:29am

Former Attorney General Alberto Gonzales actually made John Ashcroft look like the Bush administration's resident civil libertarian( WELL PLAYED ). By the time he left office, his zeal for executive power coupled with political ineptitude and general incompetence managed to win him contempt from both the left and the right.

Now Gonzales can't find a publisher for his book, and no one has yet offered him the cushy, high-paying job at a D.C. law firm that high-ranking public officials seem to think they're entitled to upon stepping down.

According to Gonzales, Gonzales is a victim. Check out this quote from his interview with the Wall Street Journal this week:

"What is it that I did that is so fundamentally wrong, that deserves this kind of response to my service?

. . . for some reason, I am portrayed as the one who is evil in formulating policies that people disagree with. I consider myself a casualty, one of the many casualties of the war on terror."

It's beyond contempt.

"Che hated artists, so how is it possible that artists still today support the image of Che Guevara?"

Here's some hero worship I've never understood. Nick Gillespie on Reason:

"Killer Chic: Hollywood's Sick Love Affair with Che Guevara

Gisele Bundchen wears him on the runway, Johnny Depp wears him around his neck, and Benicio Del Toro becomes him in the new, highly acclaimed, two-part epic film from Steven Soderbergh, Che. Ernesto "Che" Guevara, the revolutionary who helped found communist Cuba, is the celebrity that celebrities adore. And be it Madonna, Rage Against the Machine, or Jay-Z, musicians really dig Che.

It's something that baffles Cuban jazz legend Paquito D'Rivera. "Che hated artists, so how is it possible that artists still today support the image of Che Guevara?" Turns out the rebellious icon that emblazons countless T-shirts actually enforced aesthetic and political conformity. D'Rivera explains that Che and other Cuban authorities sought to ban rock and roll and jazz.

"Che was an inspiration for me," D'Rivera tells reason.tv. "I thought I have to get out of this island as soon as I can, because I am in the wrong place at the wrong time!" D'Rivera did escape Cuba, and so far he's won nine Grammy awards playing the kind of music Che tried to silence. But D'Rivera says Che's crimes didn't end with censorship. "He ordered the execution of many people with no trial." Che served as Castro's chief executioner, presiding over the infamous La Cabana prison. D'Rivera says Che's policy of killing innocents earned him the nickname-the Butcher of La Cabana.

"We're rightly horrified by fascist murderers like Adolph Hitler," says reason.tv's Nick Gillespie. "Why aren't we also horrified by communist killers?" Certainly, Che's body count isn't anywhere near Hitler's. But what about someone Che idolized, someone whom he might have liked to wear on his chest?

"Che, Castro, all the communist regimes idolized only one thing that Mao personifes-violence." Kai Chen grew up in China under the reign of Mao Zedong. Although he won gold medals for China's national basketball team, Chen's was far from the celebrity life of an NBA star. Says Chen, "You have no right to talk, and you have no right to think."

The punishment for questioning Mao's authority was often death. The Black Book of Communism estimates that Mao is responsible for the deaths of 65 million people-a figure that dwarfs even Hitler's body count. "Mao is a murderer," says Chen. "The biggest mass murderer in human history."

And yet, like Che, Mao's image is becoming an increasingly popular way to move merchandise. You can buy Mao t-shirts, mugs, caps-you name it. Near Chen's Los Angeles home there's even a restaurant called Mao's Kitchen. "Can you imagine a restaurant called Hitler's Kitchen?" asks Gillespie.

Neither D'Rivera nor Chen understands why communist killers are considered Chic, but each finds his own way to have the last laugh on these anti-capitalist icons.

"Killer Chic" is written and produced by Ted Balaker. Director of Photography is Alex Manning.

Go here for embed code, related materials, and iPod and HD versions."

Here's my comment:

Don the libertarian Democrat | December 11, 2008, 9:37am | #

It's a mystery. He's hardly icon material. More like Chamber of Horrors. I could be wrong about this, but didn't the Bolivian peasants tell him to the get the hell out of here?

"In this they were undoubtedly wise, because I should not have been able to tell them."

Firstly, a quote about counting from Titchmarsh:

"Little children easily learn to count. Very early in their lives, they notice the existence around them of recognizable objects. As soon as they can speak, they learn to say the names of some of these. Almost at once they notice that some objects may be classed together, as being obviously of the Same kind. In particular they notice the existence of pairs of objects, and learn to use the word "two". When I speak of two hands and two feet, the child realizes that the set of my hands has something in common with the set of my feet. When I turn on a light and then another light, the child says "two lights". This is the beginning of counting.

Soon other numbers three, four, five and so on are learnt. The use of the word "one" probably comes later, the existence of single objects, being at first too obvious to call for a special name. "Nought", the negation of the existence of any objects of a particular class, is a comparatively abstract idea, which only occurs to us when we are used to counting. Some ancient races had no symbol for "nought", which they did not think of as the same sort of thing as "'one" or "two".

Older children learn the routine of counting up to quite large numbers. Beyond thirty or forty this must soon cease to have any particular meaning for them, but the rhythm of counting (twenty-one, twenty-two, twenty-three) makes it rather like saying very easy poetry. Children sometimes even count backwards to amuse themselves.

It soon becomes obvious that the process of counting can go on a very long way. I once overheard my children discussing the question, "What is the largest number?" One of them thought that it must consist entirely of 9's. The second thought that it must be possible to get it by using all the words "hundred", "thousand", "million", and whatever else there might be, in the most favourable way (the idea of repetition not being thought of). The third objected that one could never count as far as that, supposing apparently that to make it fair one ought to be able to count through all the numbers up to the largest. They all agreed that the subject presented serious difficulties, and passed on to other topics.

They did not ask me what the largest number was. In this they were undoubtedly wise, because I should not have been able to tell them. I should have been faced, like any other mathematician, with a serious dilemma. Either there is a largest number, and when we get to it we must stop; or we go on for ever, and the set of numbers is endless, or, as we say, infinite.

It might be said that, as all the numbers which are ever actually used or thought of individually form a finite set, we might as well confine our attention to such a set, and avoid the necessity of trying to think about infinite classes of numbers. Perhaps it would be possible to do this, but it would really make the practice of mathematics more difficult. Not only should we be condemned for ever to the trivialities of finite arithmetic, but almost every statement in mathematics would be limited by a condition that the numbers involved must not be too large. Of course in our minds there is no barrier to endless counting. However far we have got, we can always count one more.

Practically all mathematicians agree that there is no upper limit beyond which counting must cease; that is, they agree to regard the numbers which begin with one, two, three, ... , the primal elements of mathematics, as an infinite class. Such an agreement, or declaration, which is itself incapable of proof, but which is a necessary starting point for further thinking, is called an axiom. The axiom about the set of numbers going on for ever is called the axiom of infinity."

I thought of counting when I read this post in Reason by Matt Welch:

"The L.A. Times on Sunday updated the numbers on 2008's historic (and historically awful) round of bailouts, and came out with a shiny new figure: $8.5 trillion. It's a useful piece of journalism, so I almost hate to complain, but the lead-paragraph framing is really annoying:

With its decision last week to pump an additional $1 trillion into the financial crisis, the government eliminated any doubt that the nation is on a wartime footing in the battle to shore up the economy. The strategy now -- and in the coming Obama administration -- is essentially the win-at-any-cost approach previously adopted only to wage a major war.

What a godawful mix of imprecise, played-out metaphors ("wartime footing," "battle," "major war") and couldn't-possibly-be-accurate absolutism ("eliminated any doubt," "win-at-any-cost approach," "only"). As in the inaccurate, propogandistic usage of "rescue" over "bailout," this paragraph conveys the impression that the financial crisis can be likened to a finite, singular goal, one that can be accomplished if only you marshal enough resources. Neither are true. Globalized economies are organisms that evolve constantly, not stationary mountains that can be climbed with enough sherpas. And by definition, not all government interventions into a national economy get you closer to the goal of allaying a capital-C Crisis, particularly when key elements of said Crisis (politicized lending practices, moral hazard caused by federal guarantees, cheap monetary supply, mark-to-market accounting rules) were caused by...government intervention!"

Hold on mate! I agree, but apoplexy isn't the answer either.

"Anyway, the rest of the article is actually about that latter conundrum, which is another reason to read it. Here is a section devoted to sanity:

Once the financial crisis eases, higher interest rates and soaring inflation will be risks. If they materialize, they could dramatically increase the government's borrowing costs to meet its annual debt payments. For consumers, borrowing could become more expensive even as the price of everyday items rise, holding back economic growth.

"We could have a super sub-prime crisis associated with the meltdown of the federal government," warned David Walker, president of the Peter G. Peterson Foundation and former head of the Government Accountability Office.

My only quibble there being with the word "if," since we will have bailout-triggered inflation, mes amis."

Where's the bit about sanity? My only quibble is with the phrase "mes amis".

"And here's a quote that scares me:

"You just throw everything you have at the problem to try to fix it as quickly as you can," said David Stowell, a finance professor at Northwestern University's Kellogg School of Management. "We're mortgaging our future to a certain extent, but we're trying to do things that give us a future."

Submitted for your approval, Matt. I thinks it's the word "mortgaging" that scares him. He's afraid it's Subprime.

"As the economics journalist Amity Shlaes told Nick Gillespie in a January 2008 interview, such kitchen-sink problem solving, and the uncertainty it creates, certainly prolonged the Great Depression. A selection from that interview:

Both the Hoover and Roo­sevelt administrations (but especially the Roosevelt administration) were so unpredictable. That hurt the economy very much, and when I went back and saw the extent I was astounded. Uncertainty is a factor that I thought needed to be explored. There were lots of people who said, "I will not invest 'til I know what's going to happen."

During the Depression, you heard the phrase "bold, persistent experimentation" all the time. We've been taught that was good. Somebody had to do something, was what we learned. But what I saw was this enormous cost, especially during the second half of the 1930s."

The Kitchen Sink approach. Yikes.

What really bothered me was the number $8.5 Trillion. What's the point of keeping track? Originally, I thought that it was a good idea to keep track of what the IMF was doing in this crisis, so I got in touch with Brad Setser and Calculated Risk ( Who've had a very bad day today, I'm sorry to say ), but neither took up the gauntlet.

Then, I thought for about a microsecond about keeping track of layoffs, but that was beyond awful to contemplate.

Finally, this Trillion Dollar number. There's a great graph on shopyield.com and Jesse's Cafe Americain, with lots of great colors, which normally entrance me like an infant, but the numbers, as I'd already said to Stacy-Marie Ishmael, were a terrible bummer pour moi, ma cherie.

So, here's my comment on Reason:

Don the libertarian Democrat | December 1, 2008, 11:58am | #

Who's counting?

Not me.

"And falsely shouting "socialism!" in a crowded theater such as Washington causes an epidemic of yawning. "

Matt Welch on Reason noticed a George Will piece I missed:

"George Will on Sunday furthered his valuable recent service to the nation by giving Republicans the kind of intellectual shock therapy they'll need if they are to learn anything both useful and objectively pro-freedom from their electoral drubbing earlier this month:"

Shock Therapy? They need a head transplant, and those are still at least a decade away at current levels of funding. President Obama, are you listening? Is this Rent Seeking?

Here's Will:

"Conservatives rightly think, or once did, that much, indeed most, government spreading of wealth is economically destructive and morally dubious -- destructive because, by directing capital to suboptimum uses, it slows wealth creation; morally dubious because the wealth being spread belongs to those who created it, not government. But if conservatives call all such spreading by government "socialism," that becomes a classification that no longer classifies: It includes almost everything, including the refundable tax credit on which McCain's health-care plan depended. "

You know, I agree with Will here. He and I disagree about much and most, and, I suppose, economically and morally. But the principles are spot on.

"Hyperbole is not harmless; careless language bewitches the speaker's intelligence. And falsely shouting "socialism!" in a crowded theater such as Washington causes an epidemic of yawning. This is the only major industrial society that has never had a large socialist party ideologically, meaning candidly, committed to redistribution of wealth."

Now, that's just too good. He's on par with Buiter here.

"In America, socialism is un-American. Instead, Americans merely do rent-seeking -- bending government for the benefit of private factions. The difference is in degree, including the degree of candor. The rehabilitation of conservatism cannot begin until conservatives are candid about their complicity in what government has become.

As for the president-elect, he promises to change Washington. He will, by making matters worse. He will intensify rent-seeking by finding new ways -- this will not be easy -- to expand, even more than the current administration has, government's influence on spreading the wealth around."

Have to agree with him again. I think that our disagreement is in degree and timetable.

Here's my comment on Reason:

Don the libertarian Democrat | November 17, 2008, 11:49am | #"Hyperbole is not harmless; careless language bewitches the speaker's intelligence. And falsely shouting "socialism!" in a crowded theater such as Washington causes an epidemic of yawning."

That quote is so good I'm good to keep it posted on my blog. I sure wish I would have said it. Maybe someday, a few years down the road, I will.

"The consensus was that this was not a mandate for Democrats"

It's not a Mensa meeting, for sure. From David Weigel on Reason:

"The American Spectator's Philip Klein reports from a meeting of the conservative movement's old Reaganite hands in Virginia.

There's a strong feeling, [Spectator Editor R. Emmet] Tyrrell said, that social conservatives, free market conservatives, and national security conservatives will all be able to work together.

He also said that "there's a sense that the Republicans on Capitol Hill are freer of wobbly-kneed Republicans than they were before the election."

[Spectator Publisher Al] Regnery said, "The consensus was that this was not a mandate for Democrats, that this country is still center-right. The overriding fear was that the Republican Party does not represent conservatives," and there was a desire to get behind genuinely conservative candidates."

Here's my comment:

Don the libertarian Democrat | November 7, 2008, 3:48pm

"The consensus was that this was not a mandate for Democrats, that this country is still center-right"

It might be more useful if this consensus was among the citizenry, rather than a small group of biased ideologues trying to make themselves feel better.

"Only people who want to kill themselves for what the government considers a legitimate reason are eligible"

Good news about assisted suicide in my state by Jacob Sullum on Reason:

"On Tuesday voters in Washington state approved an assisted suicide law similar to Oregon's Death With Dignity Act by a 58-to-42-percent margin. Washington is only the second state with such a law, which allows patients who are certified as terminally ill to obtain prescriptions for barbiturates they can use to end their lives."

Here's my response:

Don the libertarian Democrat | November 6, 2008, 5:19pm | #I voted for this and am happy it was approved. There were a number of commercials against it, but it still passed.

"you can never go wrong by lamenting the decline of the middle class and the stagnation of wages."

Steven Chapman on Reason has a post about what I've called median wage stagnation. He says it isn't so:

"Terry Fitzgerald, a senior economist at the Federal Reserve Bank of Minneapolis, says the answer is simple. Far from declining, he writes, "the economic compensation for work for middle Americans has risen significantly over the past 30 years."

The mistake made by the School of Gloom is looking only at wages, narrowly defined. According to the Bureau of Labor Statistics, average hourly earnings of production and nonsupervisory workers, adjusted for inflation, fell by 4 percent between 1975 and 2005. But those figures deceive because they omit fringe benefits like health insurance, pensions and paid leave, which make up a bigger share of total compensation than before. The numbers also rely on a mismeasure of inflation.

When those flaws are corrected, a very different trend leaps off the page. Median wages, says Fitzgerald, rose 28 percent between 1975 and 2005. Nor were the gains restricted to Bill Gates and Hannah Montana: Significant gains occurred in the middle as well.

The same pattern holds for households. The figures that suggest families are struggling to stay even overlook some types of income, and they don't account for the fact that households have gotten smaller on average. After accounting for such things, Fitzgerald found that "inflation-adjusted median household income for most household types increased by roughly 44 percent to 62 percent from 1976 to 2006."

So I found the study:

"Conclusion

The claim that the standard of living of middle Americans has stagnated over the past generation is common. An accompanying assertion is that virtually all income growth over the past three decades bypassed middle America and accrued almost entirely to the rich.

The findings reported here—and summarized in Chart 8—refute those claims. Careful analysis shows that the incomes of most types of middle American households have increased substantially over the past three decades. These results are consistent with recent research showing that the largest income increases occurred at the top end of the income distribution. But the outsized gains of the rich do not mean that middle America stagnated.

Why does the debate about middle America matter? Because an accurate assessment of the economic progress of middle America is a crucial input in formulating good public policy. Claims of long-term middle America stagnation—such as those quoted at the beginning of this article—are often part of a broader argument about the adverse impact of globalization, outsourcing and free trade. And middle class stagnation is used as motivation for a specific set of policies. But if middle America has not stagnated—as this analysis has shown—then this motivation for those policies is without merit.

Furthermore, if it is understood that middle America has indeed experienced substantial gains, policy priorities may change. For example, more emphasis might be placed on policies that promote continued economic growth or that target deeply rooted poverty rather than middle class stagnation. But regardless of the specific policy, policymakers and the public should base their decisions on an accurate assessment of how the economy has impacted and continues to impact people’s lives."

I agree with the idea that we should focus government on the needy, and really help them, and not on the middle class. However, we have to have a middle class that feels itself to middle class and not hovering above destitution.

I see a few debatable points in the study:

1) Overstated inflation ( I don't know, take your pick, but don't pick because you like the results )

2) There are fewer persons per household, so more for each person ( This cuts both ways. If households are smaller, it could be because people don't feel as wealthy as they used to and are having less children )

3) Expenses paid by employer, etc. ( This could actually cancel out a bit, if these expenses used to be cheaper and were paid by the employee )

It's a good paper, and Fitzgerald has more on the same subject.

Again, I agree with his emphasis, but not necessarily his conclusion, in the following sense: An emphasis that he and I both want needs to be based on how people actually see their situation. I'm not convinced studies like this can do that, however well argued.

I agree with Chapman about this:

"Thanks to American capitalism, ordinary workers and families are better off today than they were a decade or a generation ago. In the midst of scary economic times, that's a heartening fact to keep in mind. Even if certain Democrats would rather you didn't."

But not for the same reasons. It is still possible that median wage stagnation has occurred. Perhaps a libertarian can never be wrong about things always getting better.

Don't They Ever Read The Comments?

Reason list the presidential choices of their staff:

"By my count that's three definitely for Barr, three definitely for Obama, one definitely for McCain. Five won't-votes, four probably-Barrs, one probably-nobody, and one "anybody but McCain/Palin." What does it all mean? You tell us."

Here's my comment:

Don the libertarian Democrat | October 29, 2008, 5:23pm | #It means that not enough of you are reading my posts.

Some Proposals Make Too Much Sense

Also from Nick Gillespie on Reason, a great idea from Hitchens:

"Over at Slate, Christopher Hitchens proposes a novel solution to the "problem" of Afghan farmers continued interest in growing opium poppies, their biggest cash crop: The U.S. should buy the crop rather than letting the Taliban do so.

We don't have to smoke the stuff once we have purchased it: It can be burned or thrown away or perhaps more profitably used to manufacture the painkillers of which the United States currently suffers a shortage. (As it is, we allow Turkey to cultivate opium poppy fields for precisely this purpose.) ...

Read the rest. Too reasonable to go anywhere, of course.

A Fun, If Unlikely, Proposal

An interesting article on Reason also recommended on Marginal Revolution:

"Such simple measures—raising the capital ratio requirements of investment banks, eliminating implicit guarantees to government-sponsored enterprises, suspending mark-to-market accounting back in 2006, and extending tax cuts on capital gains and dividends into the future—would have allowed the market to continue to reorganize its financial sector at absolutely no cost to taxpayers.

That being said, if the president and Congress were dead set on addressing the lack of cash in the economy, they still could have done so in a way that would have achieved the goal of injecting liquidity into the banking system while exposing taxpayers to far less uncertainty.

How? By taking the $700 billion they plan to give to Wall Street and sending checks worth $3,600 to the 191 million U.S. taxpayers. Such checks would then have to be deposited into some type of retirement account or be subject to the IRS's premature IRA distribution rules.

The most risk-averse people would invest this windfall into relatively safe money market funds, thereby preventing the credit crunch predicted by the pundits. Some would buy instruments such as mutual funds, which would sustain the market. Savvier investors, or at least those with a high risk threshold, would profit from the low prices on Wall Street to purchase stock in distressed banks."

Read the whole post, which I find interesting and basically like. And yet, here's my one note response to all such plans:

Don the libertarian Democrat | October 8, 2008, 2:26pm | #

"When the federal government guarantees bank loans or assets, banks have less incentive to evaluate loan applicants thoroughly, but they do have an incentive to engage in riskier behavior than they would otherwise undertake."

Bingo! That's what I've been saying all along.

The reaction of the credit markets to the failure to bailout Lehman showed that the market players were expecting a bailout. The real analysis needs to take into account the real world implications of government interventions in financial crises. Without a clear understanding of what that role will be, it's hard to know exactly what investors are relying on in making many of their decisions. If they're assuming government intervention, one can assume that their decisions are different than if they weren't.

Again, we also need to know the actual assumptions that various parties in this crisis were relying on. If a government bailout is one of them, that seems very important to me to know.

The real question is whether or not government will intervene in situations like the current one. Without an answer to that, it is very hard to determine what will actually occur in the real world, or what a rational policy should be.

There's no point going on and on about the free market without knowing the actual assumptions and restrictions we're laboring under.

The Delusion Of Credit Default Swaps

From Brian Doherty on Reason, an excellent post on Credit Default Swaps, quoting this article by Arnold Kling:

"If my theory is correct, then the credit default swap protection is somewhat of a delusion. The contingency plans of individual sellers of swaps cannot be executed collectively. Just when you need to sell short in order to manage your risk, everybody else is trying to do the same thing, and it doesn't work.

It is too late to undo the delusion. In the aggregate, markets under-estimated the risk of the bonds they were buying."

Here's the conclusion:

"There are two types of errors that regulators can make. One type of error is to allow a good security to become undervalued or a solvent financial institution to fail. The other type of error is to over-pay for a bad security or to prop up an insolvent institution. The simple way to avoid errors in security valuation is to stay out of that business--don't execute the Paulson plan. As far as institutions are concerned, I think you have to give the FDIC and the Fed the latitude to make those calls, and hope they get as many of them correct as is humanly possible."

I'm not sure I want to know any more. As I said in an earlier post, even when I understand CDS's, I don't understand them. That can't be good.

A Review Of "Nudge"

Will Wilkinson reviews the book "Nudge" on Reason. The conclusion:

"All Nudge really offers is the idea that we should use what we know about how people act in order to design policy that will help them. And we shouldn't take away their choices. Well, I'm for all of it. If some policy makers really are misled by unrealistic economic models of rationality, then they should cut it out and bone up on psychology. Behavioral economics provides valuable new information about what will and won't work, and why. Thaler's work on savings plans is a great example of what can be done by taking into account new findings in psychology.

But it's no source of ideological realignment, no basis for what Thaler and Sunstein call a "Real Third Way." This book offers some whiz-bang behavioral economics that can be used for any ideological end, and it gives us the agreeably banal doctrine of choice-preserving helpfulness. The whiff of paradox in "libertarian paternalism" may have set up hopes for a category-defying revolution, but Nudge is the book where those hopes, and that tiny monster of an idea, prove flightless."

I consider Sunstein and Thaler to be proponents, more or less, of my agenda, so I'm going to have to read the book myself. However, Wilkinson does make some good points.

A Libertarian Democrat Status Report Of This Crisis

Here's how I feel as of Thursday morning. Expect me to feel differently later today.

First, I'm not in favor of the bailout. As Steve Chapman writes on Reason:

"Not only that, the more effective it is, the more damage it will do to the free market system. Saving companies from their bad gambles turns business into a game of "profits for me, losses for you," corroding the incentives that make capitalism so innovative and efficient.

And for what? Bernanke warns of a recession. But economic downturns are not to be avoided at all costs. And one good thing about recessions is that they end, usually in a matter of months. An intervention of this nature, by contrast, would have malignant consequences for decades to come.

A group of 122 economists, including at least two Nobel laureates, signed a letter this week summarizing the danger: "If the plan is enacted, its effects will be with us for a generation. For all their recent troubles, America's dynamic and innovative private capital markets have brought the nation unparalleled prosperity. Fundamentally weakening those markets in order to calm short-run disruptions is desperately short-sighted."

Not to mention the risk of giving the executive branch powers that a Russian czar would envy. If this bailout goes through, the term "limited government" will have to be permanently retired.

Paulson and Bernanke say, and probably believe, that their program is for the good of us all. But remember what Thoreau thought of their 19th-century counterparts. "If I knew for a certainty that a man was coming to my house with the conscious design of doing me good," he wrote, "I should run for my life."

Second, if there has to be a bailout, I prefer a version of the Swedish Plan, because it has worked, and I understand it. It also protects the taxpayers, which I doubt other plans will.

Third, I like Warren Buffet and William Gross, but their touting this bailout worries me. I feel as if they know something we don't, and that they're going to profit handsomely in this crisis. Again, they're two of the few financial people I respect.

Fourth, Sen. Dodd and Rep. Frank and the Democratic party have greatly improved the original Paulson proposal. In fact, the Democratic party has proven itself far more capable than the GOP in this crisis.

Fifth, many liberal blogs like Kos have featured a lot of libertarian themes in discussing this bailout, and the chatter on Reason, Cato, and libertarian democrat blogs, and also from liberals like Bob Kuttner, Bob Reich, Henry Blodget, Ezra Klein, Paul Krugman, etc., has been much better than GOP blatherers like David Brooks in the NY Times.

Sixth, Sen. Obama has proven himself far more capable in this crisis than John McCain.

Seventh, I've realized that I distrust these hybrid plans being put forward, precisely because they are neither fish nor foul, and so far easier to turn into a disaster.

Eighth, I wonder if there would even be a crisis if the Bush administration wasn't in power.

Ninth, even when I understand credit default swaps, I don't understand them. That can't be good.

Tenth, as a libertarian Democrat, I feel very good about how people I respect are reacting to this crisis, and am more determined to pursue this road in the future. A mix of libertarianism and liberalism in the Democratic party is the only way forward for those who want a less intrusive and powerful goverment.

Corporatist Socialism Is Our System

Radley Balko on Reason says the following:

"Many commenters have blamed all of this on capitalism. This isn't capitalism. It's a peculiar kind of corporatist socialism, where good risks and the resulting profits remain private, but bad risks and the resulting losses are passed on to taxpayers. There's nothing free-market about it."

It's a good post, but here are my responses:

Don the libertarian Democrat | September 24, 2008, 2:31pm | #

That's why we need a trade-off, like a guaranteed income. Corporatist Socialism is our system. The only way to attack it is to move the social safety net to the truly needy, and then let the economy grow reducing the number of truly needy. However, you're going to have to produce a real and viable social safety net for the truly needy in order for the state to ever meaningfully decrease over time. In the short term, we're stuck.

Don the libertarian Democrat | September 24, 2008, 4:42pm | #

My definition of truly needy is not middle class. In other words, people who are destitute. We need to reduce the size of government dealing with the upper and middle class, and confine it to the poor. For a plan put forward by somebody smarter than me, read Charles Murray's "In Our Hands".

How Much And What Kind Of Pain?

Anthony Randazzo gives a free market solution to the current crisis on Reason. It's interesting, but he asks the following:

"Ultimately, the debate over what to do comes down to a threshold of pain and perspective. Capitalist philosophy suggests that short-term financial pain—even a great degree of pain—will prevent long-term financial destruction. The markets, in other words, are going through a cleansing process. But this is not acceptable to many, particularly the politically motivated, who always prefer to solve future problems at a later date.

Here's the issue: Are we willing to consider all treatment options, or will we dive for the quick, easy, and untested procedure and then hope for the best?"

The problem is that some of the pain will fall on parts of the economy not directly involved in this financial crisis.

In order for people to accept such pain, I believe that we would have to put in place a more significant social safety net which would address the issue of people being destitute or wiped out in such a crisis.

So, there are really two options:

1) Put in place regulations to keep such crises from occurring.

2) Have a social safety net to address the problem of the truly needy, in which case such pain might be accepted.

Otherwise, no matter how much we might want to leave government totally out of this equation, it won't be possible.

Crises Call Forth Regulation

From Reason comes the following post by Katherine Mangu-Ward entitled "It Is Quite a Punt". Here's the conclusion:

"But as that other noble Brit, Douglas Adams, would remind us: Don't Panic. It seems as if the world is ending, and it may be. But keep your cool, because everything is going according to plan.

As a former Goldman Sachs executive, Paulson understands that the unravelling of Lehman is not a sign, per se, that free markets are failing. Quite the reverse. They work best when driving out weak and inefficient operators. Creation and destruction are part of the game. Nobody said that capitalism was devised to provide soft landings for hopeless losers. Sending a message that all sinners will be saved only encourages reckless behaviour."

Here's my response:

"Don the libertarian Democrat | September 15, 2008, 10:30pm | #I'm sorry, but that's wishful thinking. Allowing crises like the current one to occur is the one way to make sure of regulations being passed which are much too onerous. It's better to have fewer regulations that work, than allowing meltdowns that bring forth an avalanche of government regulations, which will take quite some time to get rid of when instituted."

Here's a clear difference between libertarian Democrats and libertarians. It is in such crises as the current one that government often gets a lot of it's power.

It is much better to have some minimal but effective government regulation than allowing crises which will call forth a torrent of regulation, much of it quite awful.

Leftists Are Listening To Libertarians

Interesting post by Jesse Walker on Reason about the Ron Paul press conference today. I particularly like this:

"I doubt anything concrete will come out of this press conference (other than the damage to Bob Barr among what ought to be his strongest supporters). But the event reflects something interesting and valuable that's happening out there in the ideological long tail, a collection of conversations that cross the ordinary political lines. In essence, two leftists and a paleocon just held a press conference to say, "We're listening to the libertarian." They did this because actual leftists and actual paleocons are listening to libertarians. And even third-party candidates -- or some of them, anyway -- have sharp enough political instincts to respond to their constituencies. "

He's right. Many on the left are now willing to listen seriously to libertarians, and to consider libertarian ideas. This is a trend worth exploring.

I've already mentioned that a balanced budget is a libertarian Democrat position, and so would be decreasing the national debt ( even if they agreed to simply not increase it) , one of the two principles discussed and agreed upon, in theory, today.

Let's keep this conversation going. There's going to be differences, but more agreement than many people think.