Revisiting a Heated Debate

Once upon a time, the debate over global warming and climatic change was mildly amusing to me. I could point out the false assumptions, the inadequate science, the contrarian historical evidence, and the typical human arrogance wrapped up in the matter, but I’ve grown very tired of it all now. As I noted several years ago, the obvious and most practical “solution” is already at hand, and I will revisit that in part today.

First, though, I put solution in quotes above because the most important potentially false assumption is that global warming is a problem at all. It may well be, but the facts are not yet in evidence for such a conclusion. Our models are inadequate and have failed to accurately predict outcomes thus far. Alarmism simply isn’t warranted.

Nevertheless, as I’ve previously stipulated, climatic change is something we should be concerned about. There is ample historical evidence for this, and in the longest term, we will have to actively manage the climatic conditions of our habitats, wherever or whatever they may be, if we would have human life and civilization continue indefinitely into the future. The short-term risks, though, are minimal and probably self-correcting.

The real problem, in my opinion, is that legitimate scientific inquiry and concern have been co-opted by political factions that are anti-capitalist and to some degree anti-human. They would slow, halt, or even reverse economic development for a variety of reasons, ranging from misguided environmentalism to outright misanthropy. These factions have spread the dubious alarm and fanned the flames of fear to engender public support for their political goals—and if their most radical proposals are enacted, billions of people will have to die. We will have replaced a remotely possible climatic catastrophe with a very certain political catastrophe.

For the most part, the way to mitigate potential climatic disasters is to keep doing what we have been doing throughout much of the modern era: lifting more and more people out of poverty through global economic development, reducing environmental pollution through improvements in energy technologies, and adapting to ecological changes when necessary. While our times are historically exceptional, these processes aren’t anywhere close to their theoretical limits. Taking the optimistic view, human civilization is only at the end of its beginning.

No! We’re at the beginning of the end! If we don’t do something right now, global warming will lead to mass extinctions and render the planet uninhabitable! Or so the alarmists would have us think. This doomsaying would be laughable … if it weren’t becoming the mainstream narrative believed by so many otherwise reasonable people.

That brings me back to the most obvious and practical solution to the technical problem of climatic management. The primary driver of climatic effects and cycles is solar radiation, sunlight. If we want to control or at least manage the terrestrial climate, the simplest and most direct way would be to control insolation, the amount of sunlight that reaches Earth’s surface.

There are several so-called geoengineering proposals that could achieve this, but the safest and most straightforward would be a series of orbital reflectors or shades. A constellation of such satellites could regulate global temperatures in a dynamic and very controllable manner, decreasing or increasing insolation as required. It’s a solution that would be both elegant and permanent.

The cost of such a program would not be insubstantial, but it wouldn’t be outrageous either. The technological concepts are decades old and would require no scientific breakthroughs to implement. I expect that initial development and deployment of the system would require less than $100 billion. Ongoing maintenance should be considerably less expensive, and follow-on benefits could likely repay the investments.

An array of solar reflectors would work well in conjunction with another proposed space-technology asset, the solar-power satellite. A fleet of these spacecraft could collect solar energy in space and beam it as microwaves to receiving stations, where it would be converted to clean electrical energy. While certainly not the only way to improve solar-power generation on Earth, space-based collection and re-transmission would overcome the reliability/availability problem that local ground-based collectors will always face.

Solar power holds a lot of promise even without on-orbit generation, but it probably can’t supplant hydrocarbon fuels in all applications. The real breakthrough in energy technology will be controlled nuclear fusion. Effective long-term implementation of that technology will also almost certainly require the exploitation of extraterrestrial resources, but the implications of essentially unlimited energy are staggering.

The availability of energy is at the root of all economic systems. The modern economic revolution is due in large part to the high energy density and relatively easy accessibility of our hydrocarbon fuels. Again, despite the doomsaying, petroleum is not going to be exhausted anytime soon. In fact, given unlimited energy, non-terrestrial resources and high-energy conversion methods can deliver virtually endless supplies. That’s when pollution and climatic effects should become our primary concerns.

A fusion-powered infrastructure would open a range of possibilities. Indoor, climate-controlled farming would become viable almost anywhere on the planet … and beyond. High-intensity water-purification and desalination processes would become affordable. Pollution reduction and capture technologies would become similarly inexpensive. And, of course, as basic survival needs became vastly easier to meet, societies would have more wealth to direct toward solving secondary and tertiary social problems.

In fact, the chief dilemma human civilization will face in the future may be surviving its own prosperity.

A Deepness in the Sky

While not exactly a new work, A Deepness in the Sky remains one of the most important novels I have read. Even after 15 years or so, it has continued to influence my thinking on the human condition and the historical processes that constrain it. Rereading the book this year, a review seemed apropos.

Written by Vernor Vinge, the novel is science fiction, set many thousands of years in the future, when human civilizations have spread into interstellar space. It serves as something of a prequel to his earlier work, A Fire Upon the Deep, making it for the most part both less operatic and more realistic. People still face the physical and temporal limits of slower-than-light travel—and their historical consequences. The economic expense of interstellar flight is even more staggering. The details of interstellar trade aren’t explicated quite so well, but I will return to that problem in my criticisms.

The plot itself is a swashbuckling tale of conflict between different human factions set amid first contact with an alien species inhabiting an anomalous star system. Vinge splits the narratives between the humans and the aliens. He anthropomorphizes the aliens through a clever storytelling device that allows the reader to identify with them while still recognizing their unusual biology and culture.

The characters form an ensemble cast. However, the almost mythical figure of Pham Nuwen towers above the rest. A man from humble beginnings who sought to unify human civilizations and to prevent their inevitable cycles of collapse, he finds himself tempted with a second chance to achieve this goal. His internal battle represents the novel’s primary moral conflict, the struggle between the desire for libertarian individualism and the impulse toward a totalitarian pursuit of the common good.

Perhaps the novel simply came along at the right time in the evolution of my own political philosophy, but it was this moral dilemma that I found so affecting. Pham Nuwen’s personal evolution is not dissimilar to my own, though his tragedy is played out on interstellar scales. To accept and embrace freedom is to also accept the consequences that may come along with it. The alternative, however good the intentions may be, is to reject fundamental morality and to control others through violence and coercion—to provide for the common good by somehow abusing power more justly, as I have lately taken to describing the conundrum. Civilizations may fall, but history has already proved that force cannot long maintain them.

As much as I love this novel and would recommend it to the canon of philosophically meaningful fiction, it isn’t without flaw. First, there is the unambiguous nature of the characters. As I described earlier, the story’s moral conflict is personified by Pham Nuwen. Almost everyone else of importance is clearly good or evil. It isn’t enough that the villainous human faction is composed of treacherous would-be conquerors. Its leaders have to indulge in torture and rape as well.

Next, though Vinge goes to great lengths to describe the interstellar trading culture, he ultimately fails to explain how it would actually be profitable. With most of the sum knowledge of human experience and technology being freely broadcast throughout inhabited space, the marginal value of the additional technical information carried aboard a starship would be negated by the enormous expense of interstellar travel itself. That said, I think he is still closer to the mark than most. Thus far, we’ve seen only the first inklings of economic or political theory being applied to explain why our galaxy isn’t already teeming with interstellar civilizations, so the paucity of fictional representations is understandable.

The final problem is a plot hole that follows from the preceding fault. After the human factions nearly destroy each other in battle, they choose to lurk, conceal their presence, and wait for the alien civilization to mature. This would seem like a prudent, non-destabilizing strategy. However, why can’t the aliens already detect the ongoing broadcasts from human space designed to promote common language, culture, and technology?

The lessons of A Deepness in the Sky seem more relevant to me than ever. I still can’t say whether our civilization is at the beginning of its end or the end of its beginning, but it has become increasingly clear that some great transformation is imminent. Vernor Vinge himself would probably argue for the advent of a technological singularity, though this novel was written to describe human fate in a world where such has expressly not occurred. While I think the concept of the singularity is useful when examining changing historical paradigms, I also think that Vinge and the likes of Ray Kurzweil are wrong. Humans and our technologies may be capable of amazing things … but nothing that fantastic. If we make it that far in the present historical epoch, we may try, but we will fail. However, in the current moral paradigm, human civilization itself will fail. No hero can prevent it. No government can prevent it. Indeed, they will be its authors.

So … do read this novel … while you still have the luxury to do so.

A Question of Migration and Assimilation

Americans, Europeans, and anyone else who values egalitarian multiculturalism, I would like to pose a question. If you found yourself as an immigrant, how quickly and how thoroughly would you adopt the cultural values and practices of your new country? Would you assimilate easily?
 

Let’s say, for example, that circumstances compelled you to emigrate to Saudi Arabia in pursuit of a better life for you and your family. Would you try to learn Arabic? Would you embrace Saudi cultural values? Would you encourage your sons to adopt Islam so that they might become successful in Saudi society? Would you be happy that your granddaughters would have to wear the hijab and lose the legal rights and privileges they would have enjoyed as women in the West?

Now, let’s also imaging that the Saudi kingdom were as generous to you and other immigrants as European and American governments are to their immigrants. The kingdom would pay to meet your basic needs at least modestly and would cater to the educational needs of your children. In fact, you and tens of thousands of other immigrants could subsist without ever integrating with your host nation. How eager would you be to assimilate into this alien, sometimes antithetical culture without any real economic pressure to do so?

I submit that you probably would not assimilate and neither would you try. On the contrary, you and the other immigrants would leverage whatever political power your numbers gave you to change Saudi culture to more closely match your values and practices. That’s what large groups of related people (tribes and nations) do.

Mass migration is conquest by other means, and history records such events as invasions, even when actual warfare is infrequent. Just ask the Celts or the Khoisan or the Ainu or the Australian aborigines or the Dravidians or the Maori or the first nations of the Americas. It is a political and cultural truth that none of us can escape.

As a libertarian humanist, I would celebrate the free movement of people and ideas … but as a historical realist, I also have to recognize, however grudgingly, that a borderless world is a last-order freedom. Only when other liberties and responsibilities are firmly in place or adequately protected by institutional safeguards can we safely open our borders to welcome anyone who would come. To do so now—with our massive, irresponsible welfare states—is to finance the diminution or destruction of our own egalitarian cultures.

Toward the Voluntary Society: An Introduction

All too often, political philosophy is an exercise in utopianism, the construction of imaginary, idealized societies. On their face, these visions are impossible to realize given disparate human motivations, actions, and desires. The processes proposed are also frequently illogical, invoking non sequitur after non sequitur in their explication.

Marxism is perhaps the most famous example. On his projected path to a stateless, classless communist society, Karl Marx predicted that, despite their own rising standards of living, the working classes in prosperous capitalist economies would revolt against the owning and ruling classes. Thereafter, socialist dictatorships would be established to control every aspect of cultural and economic development in order to eventually eliminate all human inequality. Then, somehow, this totalitarian state would simply surrender all of its power, giving way to a completely free society, where each individual person would produce according to his ability and consume according to his need. Though all attempts at its practical application have failed at every step, Marxist ideology is still immensely popular for obvious reasons.

The reasons why Marxism would never work should be equally obvious, but I’m not writing today to critique Marx. Rather, I want to introduce another political philosophy and explicate it without magical thinking or utopian idealism. The voluntary society I will describe may be no more achievable than Marx’s communist paradise, but I think it can be approached much more closely through the application of ideologically consistent libertarian philosophies and realistic political processes.

All of this presupposes that human freedom is a desirable outcome. I can understand and accept that not everyone shares this goal. Indeed, slave states have flourished throughout human history and have created widely revered cultural landmarks. For those who see such states as the superior way to live, nothing that I can say or do will ever change their minds. Instead, I want to chart a possible course for those who do value human freedom but struggle to understand why the current paradigm also appears to be failing to deliver it.

I will follow with a series of essays discussing various aspects of the voluntary society and how they might realistically be achieved. None of these will demand the adoption of any one model of social or economic organization. In fact, I will argue that all organizational models are permissible within a voluntary society so long as they adhere to just two fundamental moral principles.

On that moral foundation, we can move toward the voluntary society in a logical fashion. This will also account and allow for human differences that other political philosophies have simply and improbably hoped to erase. The choices demanded won’t be easy by any means, and some of the ancillary outcomes that will be implied may be disconcerting where they can’t be mitigated, but this is the only path toward lasting freedom—one that won’t vanish in the mirage of utopian fantasy.

The Parable of the Ditch Digger

Let us consider the plight of the lowly ditch digger, the stereotypical example of the unskilled laborer. He is barely literate and so bereft of other talents that he is probably unemployable in any other vocation—or at least that’s the way many of us treat him. What is to become of such a marginal worker in our modern globalized economy?

“We must help the poor ditch digger,” says the altruist. “Society should provide him with food, housing, and medical care, so he can live in good health and security. We can’t let the wretch starve to death on the street while others live in luxury and dine upon the finest fare! Everyone must sacrifice to save this poor soul from himself.”

“No, no!” replies the interventionist. “Instead, the government should pay him to dig ditches and fill them in again. The money he spends will stimulate economic activity. No new goods or services will be produced, since we’ll only be moving resources around, but everyone will be employed.”

“I have a better idea,” offers the capitalist. “I could employ several ditch diggers on my construction projects. Their labor would add real value to my investments! I would pay them small wages, but they would enjoy honest remuneration, the dignity of productive work, and the opportunity to learn new workplace skills and advance their careers. If my investments succeed, there will be more goods and services available, and everyone will grow a little bit wealthier, including the ditch diggers.”

“You can’t pay him small wages!” the altruist says in horror. “How would he support his wife and children on such a pittance?”

“The ditch digger needs a fair wage—a living wage,” the interventionist adds. “The government should mandate minimum wages that guarantee workers won’t live in poverty.”

“Frankly,” the capitalist responds, “his labor isn’t worth more than that. If higher wages were mandated, I would be better off dismissing the ditch diggers from my employ and acquiring mechanized entrenching equipment to enhance the productivity of my more skilled workers. The ditch diggers will be out of work, my projects will be a little less profitable, and we’ll all be little bit less well off than we might have been.”

“Have you no heart?” laments the altruist. “Will you let the poor ditch digger suffer and perish for your greed?”

“I certainly do have a heart!” retorts the capitalist. “When I can, I donate to charitable organizations that support the victims of disaster and indigence. You do the same, I’m sure.”

“Well …” the altruist hesitates. “I pay my taxes.”

“Indeed!” the interventionist says. “Contribution must be mandatory in order to maintain the public welfare in an equitable manner.”

“Don’t worry,” a politician slyly interjects. “I can fix everything. I’ll write laws setting a minimum wage for all workers and providing food stamps, housing vouchers, and free health insurance for the unemployable. Of course, we’ll have to levy higher taxes or borrow money to pay for all these benefits. Grateful for the public largesse, the people will reward me with their votes, and I will win re-election!”

“You do realize what will happen?” asks the capitalist. “Costs will rise throughout the market until the buying power of the higher wages has been reduced to their real value. Meanwhile, the ditch diggers and many other unskilled workers will be driven from the workforce. Some will never return, permanently relying on public benefits for their survival. In other words, your policies will actually perpetuate poverty!”

“So much the better!” enthuses the politician. “I can legislate for higher wages and increased public benefits again and again. I’ll have those ditch diggers voting for my party for the next 200 years.”

So what will become of the benighted ditch digger? Will he be allowed to contribute his value, however meager, to the economy at large and to share in the concomitant opportunity for advancement toward prosperity? Or will he be consigned to live in unemployment and relative poverty forever—or at least until other people’s money runs out?

The Benefit of Labor Unions

The humorous picture says it all, doesn’t it? Thanks to labor unions, we enjoy five-day workweeks, break time, overtime pay, and so forth. It sounds great on the surface … except for the little problem that it’s not really true.

While labor unions certainly did champion these things—a point I will return to shortly—it was employers who first implemented such reforms. They did so for one very simple reason: to improve productivity. Efficiency studies conducted in the late 19th and early 20th centuries AD demonstrated that a worker’s effectiveness would decline quickly after a certain length of time without ample rest periods. Why pay one worker for 16 hours of labor, when two eight-hour employees can produce significantly better results for the same price?

As an aside, vacations and other extended leave times were a touchy subject for historical reasons. In the early years of the industrialized economy, employers faced the problem of workers who would simply disappear after several weeks or a few months. This was a holdover from earlier impermanent employment traditions. Historically, agrarian laborers had to work regularly only during the planting and harvesting seasons, saving enough money to last them through the winter or other down times. This cultural mindset took a good deal of time to change in the continuous-production environment of the industrial economy, so employers were equally slow to allow latitude for time off and continued employment.

Nevertheless, the competition between corporate management and organized labor was having synergistic effects within the free market, improving working conditions, increasing profits, and generally enriching everyone. That’s when things went too far. While the labor unions hadn’t brought about the workplace reforms on their own, what they did manage to do was to get them mandated by law.

Today, this legislative achievement is commonly presented as a great benefit for working people. In fact, labor laws have simply limited workplace flexibility, often to the detriment of the worker. Younger workers—those just getting started in their careers—are particularly handicapped. Eager and full of energy that their older compatriots may lack, these workers are often willing to work harder for longer hours at lower pay rates. Doing so would allow them to increase both their income and experience much more rapidly, but labor laws prevent employers from “exploiting” their enthusiasm and productivity—making it that much harder for young people to build solid financial futures.

Similarly, union shops tend to encourage mediocrity in the name of protecting workers from arbitrary employers. The least competent workers get to retain their jobs, but the best workers see little reward for their efforts. The consumer ultimately gets a less satisfactory product or service at a higher price.

Labor unions have become an entrenched part of the political system, just like any other moneyed corporate interest group. The unions themselves can easily become focused more on expanding their own influence than on improving the lots of individual members. However, as they are co-opted and subsumed by political parties, the unions actually lose power. When a given party can take their members’ votes largely for granted, what else can organized labor accomplish?

None of these problems mean that labor unions are a bad thing. Like any corporate entity, they have strengths and weaknesses. Unions are at their best when it comes to collective bargaining, which can give employees as a whole the same short-term advantages enjoyed by an employer over an individual worker. Of course, both employers and union members can still suffer in the long term, when they misjudge market conditions.

The fundamental problem faced by both unions and corporations is their desire to use the political process and the coercive power of the state to advance their own interests. The result is stagnation and inefficiency. The corporations protect established businesses by making it more difficult for entrepreneurs to enter the marketplace. The unions protect the positions of veteran workers at the expense of fewer opportunities for those entering the workforce.

While labor unions can be an asset to the worker at the bargaining table and have had and can still have an important voice in establishing the healthiest and most productive working conditions, they certainly don’t deserve all of the credit for workplace reforms and improvements. Furthermore, the dangerous excesses of unionism also have to be recognized—just like the dangerous excesses of large corporations and other powerful commercial interests. All of these entities will be tempted to use government authority for their own selfish goals. When this happens, we all pay the price.

The Myth of Peak Oil

More accurately, perhaps, this post could be titled “The Myth of Steady-State Technology” or “The Myth of Zero Marginal Utility.” In short, though, the concept of peak oil is that petroleum production will reach a maximum point and then decline as global reserves are rapidly depleted, leading to a shock in the energy economy and an overall contraction in the general economy. For the alarmist, this idea can have dire implications, while the optimist may see little more than some minor inconvenience.

However, at either extreme, the idea is still seriously flawed. There is certainly a limit to the terrestrial supply of petroleum, but peak-oil alarmism often, if not almost always ignores the technological innovations that overcome various extraction problems and the economic forces that spur those innovations. Techniques such as hydraulic fracturing have made the extremely large ancient deposits easier and less expensive to access. Simply stated, as long as “fossil fuels” remain economically desirable, technological development will continue to open previously unobtainable reserves for centuries to come.

Of course, none of this is without controversy. Concerns about environmental pollution have moved to the forefront of public discourse, even as geopolitical problems have begun to retreat. Luckily, cleaner fuels and more efficient mechanisms have been steadily mitigating pollution problems for several decades now—unless, as many today do, we consider carbon dioxide to be a pollutant. In the developed world, particulates and toxic byproducts have been drastically reduced, and the air quality has noticeably improved.

Human health and prosperity have reached unparallelled heights in our petroleum-fueled modern age This situation is historically exceptional, so it’s impossible to say whether our current population is sustainable or whether any potential correction would be catastrophic and painful or gradual and painless. What we can say is that the lack of access to oil won’t be the cause of any contraction in the near future. The only barriers that we face are political, not technological or economic.

Affordable Medical Insurance

Now that the Affordable [sic] Care Act has been revealed as a legislative scam and may shortly be facing its legal and political comeuppance, let’s think about what real reform might look like. Once again, I claim no special expertise, nor do I think that I have all the answers, but there has to be a better solution than another legalistic monstrosity like the ACA or some bureaucratic nationalized monopoly. Here are a few ideas that I’ve gleaned from my observations.

Provide a tax credit for medical insurance and divorce said insurance from employment. The income tax isn’t going away anytime soon, but we can protect the employees while ending the dysfunctional relationship between employment and medical insurance and bring the ultimate consumers back into the decision-making role. (Using my present employer as an example, that would mean a $5,000 to $10,000 raise per year for every employee.) The market will provide a range of options from costly, comprehensive health-management plans to inexpensive, catastrophic insurance policies.

Eliminate statutory barriers in the interstate insurance marketplace. Laws and regulations that hinder insurance providers from operating across state lines artificially reduce competition and drive up costs in disadvantaged markets. We sign onto international free-trade agreements, but we don’t even have free trade within our own country.

Establish a non-profit public insurance corporation as a moral equalizer. If an agency operating at cost can provide better service at lower prices than can “greedy,” profit-driven insurance companies, then the market will force down overall prices. A public option can also guarantee access to insurance for customers with pre-existing conditions and for other uninsurable individuals.

Finally, you’ll notice that I’ve been talking about medical insurance. Health care is a more holistic concept and can’t be properly insured, because insurance is a means of mitigating unpredictable financial risk. Health care involves routine, predictable expenses, so trying to allay such costs through third-party agency is less efficient and thus more costly overall. That, of course, is exactly what we have been doing, which explains why health insurance is so ridiculously expensive.

On the Unequal Distribution of Wealth

 
Lately, economic discussions (and arguments) have often focused on the inequality in the distribution of wealth. While much of the concern is directed at the extreme ends of the distribution range—the desperately poor contrasted against the tremendously wealthy—there is also a vocal set who decry any unequal distribution of the economic pie. To them, any economic inequality is an artificial construct of nefarious human intentions and therefore unfair and unjust.

While I would argue that wealth and income inequality isn’t as much of a social problem as some make it out to be, I won’t dispute that some of the unequal distribution is the result of ongoing political corruption and cronyism or of historical exploitation and other injustices. However, the assertion that any unequal distribution of wealth is necessarily bad and should be eliminated is patently false.

Industry and trade are the engines that create and distribute wealth. However, like all dynamic systems, an economy is fundamentally about the organization and flow of energy. These forces are driven by differences in potential, moving and consolidating energy here and there about the system. Of course, some energy is also lost to entropy—and we see economic waste as well.

To describe a situation where there is no unequal distribution would require an appeal for total consolidation or for total entropy. Neither scenario is physically possible within a dynamic system nor desirable for human economies. The artificial controls and constraints that we impose on economic activities often do little more than introduce more inefficiency into the system, especially when such are built upon previous flawed attempts at interference. In other words, instead of applying a few careful drops of lubrication to our economic engine, we tend to throw random handfuls of sand into its moving parts. When that fails to produce the desired results, we throw in more sand.

On top of this legislative and regulatory blundering—and here I’ll set my usual cynicism aside—the mistake that too many “liberals” make is to equate all industry with exploitation and all trade with theft. While problems do exist, they are confined to a small segment of economic actors. Our response should be appropriately narrow and measured. Instead, as always, the impulse is to punish everyone for the crimes of a few. That impulse is as foolish in the statehouse as it was in middle school.

Time for a Basic Living Stipend?

In her seminal science-fiction novel Beggars in Spain (William Morrow & Co., 1993), Nancy Kress describes a futuristic American welfare state wherein 80 percent of the population survives comfortably, if somewhat squalidly “on the Dole,” rather than engaging in productive employment. This largess is financed by patent royalties from an energy-production breakthrough, but the actual United States of the early 21st century A.D. is a fantastically wealthy country and already provides extensive public benefits to its poorest citizens. However, these benefits are delivered through hundreds of different programs that are administered under a variety of political conceits, making the American welfare system both inefficient and condescending.

According to the Cato Institute, federal, state, and local governments spent over $950 billion on welfare benefits in 2012. That’s over $20,000 per poor person or nearly twice the federal poverty threshold. Of course, a significant portion of these funds are lost to bureaucratic overhead. Therefore, as bleeding-heart libertarian Matt Zwolinski asks, wouldn’t it be better to put the money directly into the hands of poor people rather than passing it through layers of government administrators and social workers?

That’s where a basic living stipend comes into the picture. While fictional, Nancy Kress’s version of universal welfare is broadly similar to historical proposals such as the basic income guarantee or the negative income tax. Under such proposals, governments would provide all their citizens with a certain minimum income, either as an outright grant or as a variable tax credit, in order to keep them above the poverty threshold. In theory, minimum-income schemes would replace inefficient, paternalistic welfare states with streamlined transfer-payment systems, maximizing benefits to recipients and minimizing costs to taxpayers.

A “heartless libertarian communist” myself, I am generally skeptical of welfare schemes, both social and corporate, but before I indulge that skepticism here, I should note that, as Dr. Zwolinski points out, the idea of income guarantees also has origins and support in modern libertarian thought. He offers three reasonably compelling arguments in support of such proposals. These include the aforementioned efficiency improvements, approximate reparations for historical injustices, and necessary requirements for democratic legitimacy.

I find the last argument, advanced previously by none other than free-market economist Friedrich Hayek, to be the most morally compelling. Though I would advocate for the voluntary society, the fact remains—and may always remain—that all human beings live under the rule of coercive states. Since it is the political tendency of both left and right authoritarian regimes to institutionalize relative poverty, it becomes morally imperative for governments, in order to maintain their own legitimacy, to ensure that their citizens do not fall into absolute poverty.

Moving as that argument may be, I remain highly skeptical of income guarantees for two reasons. First, I doubt that they would reduce relative poverty at all. There would still be plenty of comparatively poor people, but they would all have food, clothing, housing, and entertainment. Their numbers would also seem likely to expand due to the free-rider problem, though this could be mitigated to some extent if the system were implemented correctly.

The second reason follows from the first and is significantly more disconcerting. If free riders or economic disincentives lead to an expansion of relative poverty, how much of an increase in income transfers (and concomitant decrease in productivity) can the general economy absorb before collapsing? Assuming that the threat of such a collapse is considerable, the risk will increase with the sensitivity of income guarantees to normal political processes. This latter concern is why Dr. Zwolinski rightly suggests that income guarantees should be enacted only at the constitutional level, though the controlling economic indices would no doubt still be subject to political manipulation.

Nevertheless, I’ve begun to think that it’s a risk worth taking. One reason that the byzantine welfare state is so pernicious is because it effectively conceals the diseased portions of the political organism, allowing otherwise good people to support programs that while ostensibly intended to help the poor actually perpetuate their relative poverty. Though income guarantees would probably do no better at reducing poverty, they would cast off the veil, exposing both the free riders, who would no longer have anything to hide, and bringing greater transparency to the political kinesthesis that institutionalizes poverty. Presumably, once these problems were open to ready observation, rational political actors would move to address them.

On a more optimistic note, public stipends should sweep away paternalistic welfare schemes by treating recipients as adults responsible for their own financial decisions. This would also be a step toward the moral courage required to accept individual failure as a natural and occasionally healthy part of human development. Furthermore, though this may mostly be Marxist wishful thinking, it is possible that even free riders might contribute some unexpected dividend to justify the productive members of society carrying their general slack. In fact, savvy free riders who were wise with their public stipends could eventually save enough money to channel into private investment, profiting for themselves while financing real economic growth. Finally, since guaranteed incomes would effectively remove low-end workers from the labor pool, competition in the labor market should become more robust, leading to increased wages and salaries for those who remain in the workforce. Both of these would be examples of Keynesian economic policies properly applied.

Welfare reform remains the key to unlocking and resolving many social problems, and as counterintuitive as it may seem, basic income guarantees might just be the kind of reform we need. In the end, I find myself swayed by the argument that we have a moral duty to the beggars in Spain, not out of guilty compassion for their relative destitution but because our coercive states are largely responsible both presently and historically for creating them. When that is done, perhaps we can continue the journey away from the coercive state and toward the voluntary society with greater alacrity.

Spending Fallacies

It’s no secret that people spend their money in different ways, depending on whether they are comparatively rich or poor. The poor will usually spend a larger portion on basic necessities, while the rich will typically spend more on luxuries. The latter never fails to cause consternation and concern among many observers.

Naturally, “liberals” are quick to condemn the “excesses” of the rich, but even self-styled free-market “conservatives” will express dismay at how the affluent use their wealth. Both political factions seem to think there are better, more beneficial ways to spend all this money. That betrays their fundamental misunderstandings about economics … or at least shows that their own emotional responses can blind them to economic realities.

For example, the lavish wedding of a wealthy heiress will employ caterers, florists, photographers, and the other creative and service professionals whom “liberals” supposedly want to help while also feeding the free market that most “conservatives” claim to support. Would these funds be better spent on charity? Or should they simply be taxed and redistributed as welfare payments? Then the recipients would know well enough to elect Democrats, I suppose.

The Parable of the Old Refrigerator

Let’s say you have a spare refrigerator in your garage. It keeps a few extra beers cold for you, just in case you might need them on short notice. If that old refrigerator starts to cost you so much that you have to borrow money to pay your electricity bill each month, what would you do about it? Would you demand a salary increase from your employer to cover the difference? Or would you simply dispose of the costly relic, maybe even selling it for a little extra cash?

Perhaps you would just keep that old refrigerator and borrow more and more money to keep it running—because, you know, you might need those cold beers someday.

Taxation and Revenue

Though it has become politically irrelevant and I am now committed to soaking the rich until California blooms or burns or at least until I have my share of the spoils,* I have been asked why I previously “voted against my job” and opposed tax increases, so I will answer that question as a final nod toward fiscal wisdom and responsibility.

In the simplest terms, tax rates are not directly proportional to tax revenues. Beyond a certain point, higher tax rates will actually result in reduced revenues as the economy declines in response to the rising costs and as overburdened taxpayers find ways to avoid or evade taxes. Of course, the reverse is also true. To an extent, lower tax rates can allow for economic growth that increases tax revenues in the long term.

Stated another way, if the private sector prospers, then the public sector will prosper in turn. If the public sector demands too much from the private sector, and the private sector suffers as a result, then the public sector will also suffer in the end.

I don’t know where we are on the curve, but I’m fairly certain it is somewhere beyond the point of revenue maximization. That was my pragmatic reason for opposing higher taxes.

*Apparently, it’s greed only if you make more than $250,000 per year.

Who Built That

It annoys me to no end when “conservatives” take Barack Obama (or Elizabeth Warren) out of context. When the President said “you didn’t build that,” he was clearly, if clumsily, talking about infrastructure (roads, bridges, etc.). Indeed, most business owners didn’t directly finance the baseline infrastructure that services their businesses.

It annoys me just as much when “liberals” fail to recognize such remarks as the claptrap and political flimflam that they are. While even ardent libertarians acknowledge that government can and perhaps should have an important role in developing and coordinating infrastructure projects, the fact is that very little of our tax revenues go toward public infrastructure.

Even when stretching the imagination, no more than three to six percent of the federal budget was allocated to infrastructure in FY 2012. The numbers are a little more favorable when we combine state and federal spending, but infrastructure still accounts for only a small sliver of the pie. Most of the pie goes to welfare and “defense.”

When the people complain about taxes, they aren’t talking about infrastructure … and when the President talks about raising them, neither is he.

Ending a Heated Debate

I must confess that the debate over anthropogenic global warming (climatic change for those of you who’ve shivered through recent summers) has been entertaining. The only thing more amusing than human arrogance is even more human arrogance. Be that as it may, I think the time has come to end the debate.

For the record, human activity obviously affects the global climate. Of course, everything affects the global climate, so that information is not terribly instructive. Where do human influences rank among the various factors? Only the arrogant can provide a definitive answer. However, we should still acknowledge that solar output and orbital dynamics generally have the greatest impact on climatic cycles—an important fact that I will return to shortly.

Since it’s the popular thing to do, I’ll go ahead and assume that anthropogenic climatic change is a bad thing and that we should probably do something about it. Now, though, I will buck the trend and dismiss the mainstream solutions as atmospheric alchemy. Arbitrarily reducing carbon-dioxide emissions over the short term will have a very small effect on global temperatures and will be prohibitively expensive.

Rather than spending hundreds of billions or even trillions of dollars for minimal benefit, why not spend only tens of billions on mitigation efforts and on general economic development? As Bjørn Lomborg has cogently argued, focusing on these goals would have a much greater positive effect at only a fraction of the cost. (Dr. Lomborg is also rightly critical of proposed cap-and-trade schemes, which are ripe for corruption.) Yeah, that’s just wishful thinking.

So let’s spend a bunch of money on prevention, but let’s use science instead of alchemy. That brings me back to the sun, since controlling insolation would be the most cost-effective method of regulating global temperatures. Several “geoengineering” schemes have been proposed to accomplish this goal, but one stands above the rest.

A constellation of solar reflectors in orbit could shade the Earth and reduce global temperatures in a dynamic and very controllable manner. Such a system could probably be developed and deployed for the price of a low-budget manned Mars landing (around $50 billion). Ongoing maintenance of the infrastructure should cost significantly less than that. This would keep us within Dr. Lomborg’s suggestion of cost-effective solutions without the more politically difficult challenge of defeating the institutionalized corruption that stands in the way of his more noble goals.

An orbital sunshade may sound like science fiction, but it makes a lot more sense than mucking about blindly with complex atmospheric chemistry. Insolation could be decreased or increased as needed, allowing for long-term climatic regulation (and other potential benefits). Combined with ongoing pollution controls, a soletta program would provide an elegant and permanent solution to the problem of global warming.

So the debate is over. If you want to control the climate, control the amount of sunlight that reaches the planet’s surface. Doing so would cost a fraction of other less effective solutions.

An Economic Crisis (and Miracle) Revealed

So I took the predictable flack from my “liberal” friends on Facebook after my recent comments on the “occupy Wall Street” business. There has also been much discussion of the protests elsewhere on the Internet. Eventually, these discussions turn toward uncomfortable things, such as facts and data.

An article cited made much out of the fact that the portion of U.S. gross domestic product (GDP) comprised of wages and salaries has shrunk quite dramatically over the last 50 years. While this apparent disparity isn’t necessarily a cause for concern, the article’s evocative graphic led me back to its source, the Federal Reserve Bank of St. Louis. There, I examined the data for myself and built some of my own graphs.

The Federal Reserve data yielded two interesting and somewhat unexpected facts. First, the sharp decline in income (adjusted for inflation) beginning in A.D. 2008 is one of historic proportions. That alone can explain the unprecedented anguish so many people are feeling. They are suffering, or at least they’ve received quite a shock after decades of relative prosperity. It also explains why “occupy Wall Street” took me personally by surprise, as I will explain shortly.…


Second, the overall growth in real income was equally unexpected. I had long subscribed to the “liberal” economic theory that real wages had been generally flat or even declining for several decades, driving the proliferation of the two-income household. Now, if the data are to be believed, that notion must be largely false. Yes, we can surely parse the numbers to show how certain segments have not benefited, but that would turn us toward other uncomfortable things, such as personal choice and responsibility.…

However, my own observations have now been confirmed, repairing a troubling logical contradiction. Since the late 1980s, I have watched a dramatic increase in personal wealth among the general population. Since that increase only rarely applied to me, I explained it away as a personal sampling error. Nevertheless, the people around me in a variety of income brackets seemed to have plenty of food, personal electronics, and expensive telecommunication contracts. Indeed, prices in these sectors were either fairly flat or even declining in some cases.


I’ve been a formal member of the workforce for 20 years now. As the graph above shows, change in real income was entirely positive during this period … until the financial crisis. My personal experience was very different. Though my working life has seen only three official recessions, my real income has been recessionary in nine of those 20 years. In other words, coping with declining wages has become normal for me.

The time when I felt the richest came shortly after I finished college and before my wife and I bought our house. Working full time, our disposable income increased rapidly but was still moderate. This allowed us to pay off our vehicles and student loans on time or early, so we were effectively debt free until buying our house.


That brief window of perceived prosperity came to an end when we became homeowners. In fact, the opening phase of my next personal recession was part of what enabled us to buy into an affordable housing program. Thereafter, my income continued to decline in real terms for six out of eight years. When it arrived, the great recession was simply treated as more of the same in my household.

Without digressing into those other uncomfortable matters, the moral of this post is that the financial crisis has had a profound effect on real income, much more so than I had thought. (Consider me properly chagrined.) However, the data also show the heretofore dramatic and largely sustained growth of that income. This latter fact should not be forgotten as we find our way out of the current crisis.

Occupying Wall Street

As I’ve said before, emotions run high in hard times, and people look for someone (usually someone other than themselves) to blame for their financial woes. That observation has been starkly illustrated in the last few weeks as thousands of mostly young people have rallied to protest flaws in the American economic system. This so-called occupy Wall Street movement began in New York but has spread to other cities.

Actually, my description above is a charitable one. Most of the protesters don’t fully understand what they are protesting. Instead of challenging they very real problems within our economic policy and regulatory structure, they are lashing out at big corporations, free markets, and capitalism in general—and griping about having to repay their student loans.

The more strident critics of the “occupy” movement are quick to point out the apparent hypocrisies and contradictions among the protesters. The protesters, they note, have arrived wearing designer clothes, bearing the latest smartphones, and enjoying many other accoutrements provided by the very corporations that they’ve come to decry. However, such criticism is as misdirected as the protests themselves, even if the observation is an extremely important one for a different reason … which I will explore shortly.

Predictably, the “occupy” movement has been met with approbation from the leadership of the Democratic Party and generally favorable reporting by the mainstream news media. In his panegyric for CNN, Douglas Rushkoff writes that the protesters “are pointing the way toward something entirely different than the zero-sum game of artificial scarcity favoring top-down investors.…” While something different may be on the horizon, Mr. Rushkoff displays some of the same economic ignorance shared by the protesters he admires.

Before I explain why they are misdirecting their rage, I must confess my sympathy for the “occupiers.” I understand their desires and frustrations. It is perfectly natural to want more for oneself and to envy those who appear to already have it. Channeling those feelings onto productive courses is the challenge that we all face.

Now, here is where they’ve gone wrong. Economics is not a zero-sum game. In fact, capitalism itself is predicated on an increasing-sum paradigm. Therefore, investors aren’t trying to take wealth from others via any sort of zero-sum chicanery. They are instead risking some of their existing wealth to build even more for themselves and by extension for society at large. The evidence of this and for capitalism’s unmitigated success is so ubiquitous that it often escapes notice. Capital investments and market forces have created and distributed so much wealth in a few short centuries that it boggles the mind. Human expectations are only just now catching up with this economic accelerando.

So the wealthiest people who have ever lived are presently complaining about the very economic engines that have delivered their wealth. Yes, if you have fine clothes on your back, magical electronics at your fingertips, and thousands of calories easily within your grasp, you are rich in absolute terms. Some of us have more than others, but we are all rich beyond almost any previous imagination.

And that brings me to why so many people are so angry. Our imaginations and expectations can expand. Revolutions may be triggered when expectations rise more quickly than they can be met. That is clearly the environment we see today, even if many of the heightened expectations are still unwarranted … still belonging to a future that we can’t quite touch.

Nevertheless, a new economic revolution may be on the horizon. Unfortunately, revolutions are always an uncertain business, prone to failure and fraught with potential danger. If there will be change, we must identify the right targets for reform, but that is not what I see happening within the “occupy” movement. If this economic anguish remains misdirected, it risks being co-opted by the very forces that have always sought to maintain that anguish for political gain.

I don’t know what shape the new economic model for a “post-industrial” America will take, but I do know that the best course into the future won’t be the quickest or the easiest one. Let’s begin with an inventory of our enemies and allies on the journey forward. Capital investments and free markets are not our enemies. They are our tools for building and distributing wealth. (We just have to learn to use them correctly.) Our only real enemies are those who would abuse economics for political gain and those who would abuse politics for financial gain. They aren’t that hard to identify.

Meanwhile, here is the best way to occupy Wall Street.


If you have no stake in the system, then you have no right to change it. Fortunately, in a free market, you can buy yourself a stake. Your dollars will often speak louder than your votes or your misdirected rage.

Economic Musings

As a libertarian, I advocate for individual freedom and responsibility. However, I focus mainly on the personal aspects of this and am fairly content to let economic matters wait. While economic freedom is tremendously important and has far-reaching implications, the route to more libertarian economic policies must first pass through such subtler points as the right to privacy and the freedom of association.

Nevertheless, economic questions have been impossible to ignore in the face of the most recent financial crisis. When jobs are lost and financial security evaporates, emotions naturally run high and hot, and frightened, angry people look for someone or something to blame. Predictably, capitalism and free markets end up taking much of that blame.

The irony is that we don’t actually have free markets. Even in nominally capitalist countries such as the United States, the markets are managed, regulated, influenced, and manipulated by governments. This often, if not usually occurs with the participation or at least the tacit approval of powerful corporate interests, which are happy to see a regulatory status quo that protects their profits from potential competitors. In the latter respect, a private company can be as unfriendly to free markets as any state socialist.

In fact, free markets have never really been given a fair shake. While the young United States embraced the idea of capitalism after throwing off the legacy of British mercantilism, the federal government was still quick to regulate international trade. The industrial and banking magnates that rose to prominence after the Civil War also sought to control markets by building monopolies when possible or by colluding with their competitors when not. The legislation and regulation that followed, though born of good intentions, created new problems, especially for organized labor.

Regulations or rather bad regulations helped turn the recession of A.D. 1929 into the Great Depression. As with the latest crisis, easy credit fueled bad investments and outright speculation. Governments worldwide tried desperately to solve the problem through deficit spending, increased taxation, and ultimately warfare. When prosperity began to return after the Second World War, this had the curious effect of appearing to be successful. Government intervention in the economy had surely ended the depression!

The corollary observation was that capitalism and free markets had failed—though it’s hard to imagine that the economy wouldn’t have recovered naturally after nearly two decades. If greedy bankers and speculators had triggered the depression, then obviously the government needed to keep these dangerous “capitalists” in check by maintaining an active regulatory role and to help their victims by providing generous social welfare supported by significant taxation. This became the framework that encloses “free markets” today.

Therefore, it is now effectively a given that governments should step in to “fix” economic problems caused by “failures” of the free market. Indeed, many high schoolers learn about John Maynard Keynes, but few college graduates have even heard of economists such as Ludwig von Mises, F. A. Hayek, or Milton Friedman. Public education has framed the discussion very thoroughly, if incompletely in this regard.

Of course, under the right fiscal circumstances, Keynesian economic policies make perfect sense. We should set aside some funds in the good times and spend them in the bad times, smoothing out the ups and downs of the “business cycle.” However, governments are almost always spending beyond their means, abusing fiscal power for political favor. In the end, rampant Keynesian interventionism provides the would-be socialists with the power they crave and the so-called capitalists with the wealth they cherish.

When both of the factions that would destroy free markets are happy, I have to worry.

The Perils of Charity

Hundreds of thousands dead or injured. Millions displaced. Billions of dollars in damage. How can we respond to last weekʼs devastating earthquake in Haiti? Americans are generous … and wealthy, so we give. How can we not?

But charity can also be dangerous to its would-be beneficiaries. Too much giving can destroy local economies. How can the farmer sell his produce when food is given to the hungry? How can the manufacturer sell his goods? The merchant his wares? When they canʼt, they too end up in line for the dole. If and when the largess comes to an end, its recipients are left without the means to support themselves, permanently dependent on the fickle generosity of others.

Haiti poses an especially difficult problem in this respect.

Even before the earthquake, Haiti was one of the poorest countries in the world. It was and is also one of the most corrupt. Nearly 40 percent of its national budget was already based on foreign aid, while just one percent of the population controlled half of the nationʼs wealth. With that in mind, how much of our charity will really go to those in need?

How can we truly help Haiti and the similarly troubled nations of this world? Neither our generosity nor our military might can fix their problems—at least not without more money and time than we will ever be willing to invest. Maybe the best we can do is to lead by example, which means fixing our own problems and achieving our full potential as a nation of freedom and opportunity.

But thatʼs enough cynicism for one day. Besides, I have a donation to the relief effort to make. How can I not?

The Financial Crisis Simplified

Here is a visualization that explains the current financial crisis clearly and concisely.

The Crisis of Credit Visualized from Jonathan Jarvis on Vimeo.

However, I also have to point out that the private sector is not solely responsible for the mess. The government did its part to set the stage by artificially inflating housing prices through poor but well-intentioned regulations.