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Two Seens, Many Unseens
Probably the most important thing I learned in economics — and a keystone to my political views — is Bastiat’s what is seen and what is unseen.
In the department of economy, an act, a habit, an institution, a law, gives birth not only to an effect, but to a series of effects. Of these effects, the first only is immediate; it manifests itself simultaneously with its cause – it is seen. The others unfold in succession – they are not seen: it is well for us, if they are foreseen. Between a good and a bad economist this constitutes the whole difference – the one takes account of the visible effect; the other takes account both of the effects which are seen, and also of those which it is necessary to foresee. Now this difference is enormous, for it almost always happens that when the immediate consequence is favourable, the ultimate consequences are fatal, and the converse. Hence it follows that the bad economist pursues a small present good, which will be followed by a great evil to come, while the true economist pursues a great good to come, – at the risk of a small present evil.
Two recent examples illustrate the point perfectly.
The first is that GM is going to emerge from bankruptcy and have a public offering. No doubt the Obama Administration will tout this as a triumph of their economic policy. What is seen is a big car company supposedly back on its feet. But Daniel Ikenson reminds us of what is unseen.
The intervention was akin to theft — from Ford, Honda, Toyota, the other automakers and taxpayers — and was highly damaging to crucial longstanding institutions in the United States, like property rights and the rule of law.
The costs of GM’s ”turnaround,” if it is to happen, will never be fully appreciated. The other auto companies were denied the spoils of competition. Had they been able to pick up the market share that the nationalized GM has maintained, then more resources would have flowed to the companies that are best at making the products that people want to buy. These are huge implicit costs–the costs that are not seen–that are happily swept under the rug by Obama administration officials.
We could have had a more dynamic car sector, thousands of more jobs and tens of billions less debt. That’s not to mention the damage done to pensions and 403b’s when the government illegally prioritized the unsecured debt of GM’s union pension obligations over the secured debt of GM’s lenders.
But what is truly unseen may be the long term damage in which the government can declare an industry to be sacred, violate the law and pour billions of dollar into it. It’s popular now among the Left because it involved car companies, the rust belt and unions. Will they be so sanguine when it’s an oil company? Or a wall street firm?
Another example is last week’s boasting by Obama of a battery company supposedly leading the way into an era of clean energy. Obama was touting ZBB, which is trying to create batteries to store energy produced by wind and solar, a process which has proven both difficult and costly.
That hasn’t stopped the Obama Administration, which has been investing willy-nilly in the commercial battery industry. And so last January, when the Department of Energy announced $2.3 billion in “clean energy manufacturing tax credits,” ZBB was one of 183 recipients—collecting $14 million.
We wonder who in government looked at ZBB’s filings with the Securities and Exchange Commission. Since going public in June of 2007, ZBB has been hemorrhaging money. The firm lost $4.9 million in fiscal 2008 and $5.5 million in fiscal 2009. In its most recent filing, in May, it said it had lost $6.9 million for the first nine months of its current fiscal year. It explained it had a “cumulative deficit” of $44.1 million and informed shareholders that it “anticipates incurring continuing losses.” It acknowledged that its ability to continue as a “going concern” was predicated on its ability to drum up additional funds.
Now it’s fine for private investors to put money into such an endeavor. But when the government does so, that tends to politicize. Money goes to companies that are connected and projects that are popular on capital hill, not necessarily companies that are well run and technology that is popular with the laws of physics. What is seen is a big company making batteries, what is unseen are the companies that could be making better ones.
An illustrative example here is HDTV. When HDTV was first being developed, companies went to the federal government demanding subsidies so they could compete with subsidized Japanese companies. Bush the First, who, unlike his son, was an actual conservative, refused. As a result, the companies went out and did it on their own. As you may have noticed, we got our HDTV eventually.
We can’t be fooled by high-minded press releases and boasts of government officials. We have to look deeper if we want to see the true impact of economic politicization. And the impact isn’t pretty.
Sigh. Remember when Democrats thought handing out subsidies to big business was a bad thing?
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Boortz On Rauf
How crazy have people gotten over this mosque? Neal Boortz has a rant today in which he accuses Imam Rauf of wanting to … God, I don’t know. Impose Sharia on the country or something. His evidence? The title of Rauf’s book. He hasn’t read the book, of course. And isn’t familiar with anything Rauf has said other than elided quotes the Right Wing is dragging around. But he knows Rauf is an Islamist who is going to subject the entire nation.
I feel like I’ve fallen into an alternate universe. I am shocked with how rapidly the Right Wing (and “libertarian” Boortz) have descended into unthinking shrieking fear and terror.
(Boortz is getting unreadable these days. Every item is some shrieking rant about how Obama is destroying the country. Today’s notes are:
1) Obama is “dismantling” America (screaming hysteria)
2) The Mosque is being built by Islamists (screaming factually-challenged hysteria)
3) School choice (legitimate issue)
4) The pension bailout (legitimate, if unlikely issue)
5) Obama seizing 401ks (screaming hysteria Boortz has been flogging for about 15 years)
Moroever, it’s laced with enormous amounts of angry invective (referring to Obama as “the Community Organizer” instead of the President, for example). It’s tiring to read. How can people wallow n such a morass of anger and hatred? What happened to the movement that was so vibrant and fun when it opposed Clinton?’
Update: Dave Weigel reminds us of the last time this thing erupted. And it was a Democrat driving the hysteria.
Update: So this.
Party Like It’s 2004
An analogy occurred to me today that I’m surprised took so long. I was reading the latest rantings about Park51, the so-called “Ground Zero Mosque” when it struck me.
The Ground Zero Mosque is to 2010 what gay marriage was to 2004.
Allow me to elaborate.
During the Bush years, the Republicans decided to throw the gays under the bus of their political ambitions. They rallied behind things like the Defense of Marriage Amendment because their political strategists, e.g., Rove, told them it was the path to political victory.
At the time, I thought it was monumentally stupid. Apart from my own opinions on both gay marriage and bus-throwing-under, it was a bad long-term strategy. While polls showed that the majority of Americans (and massive numbers of conservatives) opposed gay marriage, the long term trend was in favor, especially among the youngest voters. For a temporary political gain, the Republicans sacrificed long-term strategy, turning off moderate Democrats, independents and young voters. Like so much under the Bush Administration, the future was sacrificed to the present.
Indeed, as the link above notes, many Republicans had misgivings among themselves at the time. And in recent years, they’ve been backing away from that position, supporting civil unions in increasing numbers. Hell, even Glenn Beck is not opposed to gay marriage any more.
I fear the GOP is about to run down an even more dangerous culture war dead end with this Cordoba House business. In the last week, the campaign has only intensified, especially now that Obama has voiced his support for religious freedom. Now the mosque opponents are accusing Obama of standing with the 9/11 hijackers, a statement that truly vile (especially in light of the President’s increasing efforts to destroy terrorists). This disgusting line is now showing up in the political ads of major Republican figures.
But the parallels to 2004 and gays are eerie:
1) Both involve stomping on a small minority.
2) Numerous moderate — or at least non-stupid — conservative are staying away. I’ve noticed a number of blogs and a handful of politicians being conspicuously silent on the issue (although unwilling to call the GOP out). They realize how dumb this but are unwilling to go against their own tribe.
3) In both cases, the root emotion may be understandable uneasiness with changes to our culture: increasing acceptance of gays in 2004 and increasing religious diversity in 2010.
4) In both cases, the Republicans were on the side of the opinion polls of the moment — majorities opposed gay marriage in 2004 and the majority oppose Cordoba now.
5) In both cases, the Republican position will only become less popular with time.
The latter, to me, is very obvious. The Ground Zero Mosque is a fabricated issue. Salon runs down how this controversy evolved. Objections were fairly muted until it came to the attention of anti-Islamic bigot Pamela Geller. Now the GOP is going full bore, riding the whirlwind. In time, however, passions will cool and people will wonder what the big deal was. And when that happens, the GOPs complicity in this will not go unnoticed.
(This is also why I disagree with the people praising Obama for his political courage in defending the mosque against popular opinion. We’ve seen time and again that Obama is smarter than the GOP. While they are focused on the tactics of the moment, he is focused on the long term political strategy. In time — I’m guessing by November 2012 — the mosque will be forgotten. But Obama’s stand with a religious minority will not be.)
But there’s more than just politics to this. I feel that, to gain a temporary political advantage, the Republicans are unnecessarily undermining the War on Terror. Mark Halperin:
Up until now, you have restricted yourself as much as possible to an economic message, eschewing social issues and foreign policy as you try to establish contrasts for the electorate between your brand and the Obama-Pelosi-Reid record. This is a smart, straightforward strategy, since worried voters chiefly are concerned about unemployment and the nation’s future financial prospects.
…
But please don’t [make an issue of the Mosque]. There are a handful of good reasons to oppose allowing the Islamic center to be built so close to Ground Zero, particularly the family opposition and the availability of other, less raw locations. But what is happening now — the misinformation about the center and its supporters; the open declarations of war on Islam on talk radio, the Internet and other forums; the painful divisions propelled by all the overheated rhetoric — is not worth whatever political gain your party might achieve.
It isn’t clear how the battle over the proposed center should or will end. But two things are profoundly clear: Republicans have a strong chance to win the midterm elections without picking a fight over President Obama’s measured words. And a national political fight conducted on the terms we have seen in the past few days will lead to a chain reaction at home and abroad that will have one winner — the very extreme and violent jihadists we all can claim as our true enemy.
The Republicans do not need this issue to win in November. And the people who will be most delighted by Bloquing the Mosque will be Osama bin Laden and other radical jihadists who will be able to claim that America is not what she claims to be; that Islam is oppressed in the West; that this is a religious conflict.
Look, I’m not a completely insensitive prick (just mostly). I understand why a mosque might bother some people. But we’re talking about a fundamental liberty at a moment when we are faced with an enemy who is desperate to turn their violent lunacy into a global religious conflict. We do not need this.
(And, yes, I am aware that Harry Reid has waffled on the mosque. All the more reason for that asshole to go down in flames, even if that means pig-headed Sharron Angle in he Senate for six years. But Obama is the de facto leader of the party. His support for the mosque is he party’s official position, just like Sarah Palin’s is the official position of the GOP until larger political figures say otherwise.)
Update: Unbelievable. The mosque opponents are now claiming victim status because they’re insulted by being portrayed as prejudiced. Welcome to the Modern GOP. If they can’t say or do whatever they like, they’re being oppressed.
Update: More evidence that this will be political poison for the GOP in the long term: while the majority of Americans opposed the mosque, the majority of Americans also believe the Muslims have a right to build it. In other words, they oppose it personally — but they don’t want the government to get involved. That’s certainly a more reasonable point of view.
Postdocs of the World Unite
Research scientists in California are now unionized. This idea surfaces in academia from time to time, but usually doesn’t get much support. The reason is not because mid-level scientists are satisfied with their pay or situation. Being a postdoc is incredibly frustrating: it pays less than comparable industry positions and, for some reason, it’s been decided that uprooting postdocs every 2-3 years is a good idea. My own field is a fairly reasonable one for non-tenured scientists — the pay scale gets set by the big institutions, the big fellowships and NASA so there’s not much variation on that score. But in other fields — which I won’t mention by name — researchers are sometimes paid well below the recommendations of funding agencies. I’ve known more than a couple that were doing faculty level work for just about graduate student salaries.
However, unionization remains on the back burner for most scientists. For one thing, most people understand that science funding is limited. If you pay some researchers more, that means fewer can be hired. For a second thing, strikes would be massively self-defeating. If you’re not publishing, you’re not getting grants. A state-wide research strike would be death to California research associates. Not that California is any stranger to economic self-destruction, of course. But I really don’t see this becoming a nationwide trend, especially given the amount of research that goes in in Right to Work states.
A few things to note. Less than half of the researchers voted to join the union. The Democrats are trying to go national with this model, so that shops can be unionized by motivated minorities. The second thing to note is that the LA Times “news” article completely carries the union line, with almost no skepticism.
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Terror Babies
A perfect example of how insane parts of the GOP have become is this rant about how we need to end birthright citizenship because Middle Eastern women might have babies in this country. And those babies will grow up to be terrorists who can come back to this country easily and blow things up.
Destroying this idea is the work of seconds. To wit: we have plenty of people in this country, born to citizens, who grow up to be terrorists all on their own — John Walker Lindh, Jose Padilla, Timothy McVeigh, eco-terrorists. It’s plenty easy for terrorists born in other countries to legally enter the US and blow things up (the first WTC bombers, the 9/11 terrorists, the Undie Bomber, the Shoe Bomber, etc.). And terrorists, almost be definition, do not think long term.
In short, we’re being asked to deny citizenship to millions of people because … someone someday might become a terrorist. This is the most vile nativist thing I think I’ve ever heard. It pointlessly insults millions because of a hypothetical and thus far mythical danger.
But moreover, it represents the diseased thinking that infests every aspect of the War on Terrorism. The way to deal with terror threats is:
1) Figure out what the threat is;
2) Figure out how much it would cost to mitigate that danger, in time, money and lost liberty;
3) Deal with the threats that have the greatest danger against the least inconvenience. If something is a minimal threat and could only be dealt with by a tremendous amount of effort (and suffering to innocents), suck up and deal. Trust in the American public to defend us.
Screening airline passengers is an example of this thought process gone right. It’s something of a burden but there is a very real danger in not screening passengers. Air marshalls are another example. It costs some, but the potential of stopping an attack is good.
The above thought process is so obvious, I feel like an idiot even typing it out. But this straight-forward policy seems to be beyond the ken of most politicians, who prefer to deal with terror threat like so.
1) Imagine a threat;
2) Declare that we must do whatever it takes to mitigate that danger, no matter what the negative consequences.
From three ounce limits on liquids to torture, our policies are based not on an objective analysis of reality, but upon someone sitting around and thinking about things that might happen. We are not asked to think about how likely it it is to happen nor the cost of dealing with it. We are just told that must sacrifice treasure, freedom, lives and our national principles to deal with any danger, no matter how remote it is.
Of the many things that turned me against liberalism, one of the greatest was the tendency to defend massive expensive intrusive social programs by claiming they were “worth it” if they only helped a single person. (To be fair, conservatives do this too on drug policy). This always seemed massively irrational to me. If a program costs a billion dollars and helps one person, that’s a gigantic waste of resources. Give me a billion dollars and I’ll help more than one person. And in the 90’s, that thinking began to infiltrate our government in such things as setting limits on how much regulations could cost industry against how many lives it saved. The thinking was that saving one life at a cost of ten million dollars wasn’t worth it. Putting ten million dollars into a hospital would be a better use of resources.
This idea — cost-benefits analysis — used to be the domain of Republicans. No longer. The menace of bearded maniacs has filled them with such pants-shitting terror thatno price is too high to pay to remove whatever potential threat they’ve conjured up in their imaginations. For people who like to quote Thomas Jefferson about sacrificing essential liberty, this is truly depressing.
PS: I actually am not sure that even Gohmert believes this pile of shit. This is probably just a justification for removing birthright citizenship because of the mythical anchor baby menace. He’s invoking the threat of terrorism as cover. But, in a way, that’s even worse.
The Kidnapping Capital
Cross-posted from the other site.
The Village Voice has an enragifying article on kidnapping in Phoenix. You really should read the whole thing.
Phoenix is labeled the kidnapping capital of the United States because of people- and drug-smuggling out of Mexico. It’s a catchphrase that politicians like U.S. Senator Jon Kyl of Arizona use to alarm voters into buying the get-tough-on-illegals policies they’re selling. But it’s the smuggled immigrants—not the general public—who overwhelmingly are the primary victims.
In 2008, the most recent year for which complete statistics are available, there were 368 reported kidnappings in Phoenix, up from 160 in 1999. Almost all of the abductions were inside the smuggling world. In 2008, IIMPACT detectives worked 63 kidnapping cases, investigated 49 drop houses, and arrested 129 human smugglers.
What happens in these cases if horrifying. If people choose the wrong “coyotes” to smuggle them into this country, the can be killed, raped, tortured and/or held for ransom:
They’re known to beat and torture victims while family members listen on the telephone. The torment continues for as long as it takes to get the money, until hostages die from their injuries, or—in the rare instance—until the police burst in and free them.
…
Kidnappers kick and punch hostages, beat them with baseball bats, submerge them in bathtubs and electrically shock them, burn their flesh with blowtorches, smash their fingers with bricks, slice their bodies with butcher knives, shoot them in their arms and legs, and cut open their backs with wire-cutters. The kidnappers usually video-tape the sexual humiliation and violence and send the images to family members if ransoms aren’t paid.
The authorities are doing their best to crack down on it, but they are fighting a losing battle against the tide of illegal immigrants. And laws like Arizona’s 1070 are making the problem worse by diverting resources and keeping illegals from going to the police for fear of deportation:
Besides, law enforcement authorities, including Phoenix Police Chief Jack Harris, think 1070 will make it even harder for cops to do their jobs. Already, the victims of smugglers are reluctant to report crimes to police. If all of 1070 goes into effect, even more violent crime will operate under the radar of law enforcement.
The Pearce-inspired statute, many cops say, will only make departments, particularly Maricopa County Sheriff Joe Arpaio’s, go after law-abiding illegal aliens (maids, gardeners, tree trimmers, restaurant workers) all the more, leaving violent smugglers to carry on as usual.
Of course, the thing that has driven illegals into the arms of the coyotes is the lack of an easy legal way to get into this country for temporary or seasonal work. Faced with violence and poverty in Mexico, they do what any human being in his right mind would do — try to go somewhere better. But going somewhere better in a legal way involves massive paperwork, oceans of time and big piles of money — all to be most likely denied in the end.
U.S. Citizen and Immigration Services, the federal agency that processes U.S. permanent residency applications, is just now working on applications filed in 1994 by Mexican nationals seeking visas or green cards. These people who followed the rules have already waited 16 years.
Federal law allows 26,260 people from Mexico to receive visas each year. There are more than 1.1 million Mexicans on a waiting list.
What would you do in their situation? If you could not find work and you had a family to feed? What would you do?
Stories like this are one of the biggest reasons I am strongly in favor of immigration reform. Not amnesty — people who broke the law should not be the first to get legal status — but a massive overhaul of the system. The cornerstone of this has to be a program to make it easy for people to come into this country for temporary or seasonal work (a guest worker program by any other name). My justification of this is below the fold.
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