Anybody Else Wonder Why College is Such a Bundle?

Customer variance explains variety in product sale; from fast food to computers, the options range in price- a one dimensional measurement- and also quality as defined by numerous dimensions.

Apple Computers, for example, sells cheaper products and more expensive products that fill very nearly the same role. Within the categories "cheap" and "expensive" they supply a number of options with different sorts of advantages. The Mac Mini is distinct from the iPad, the Macbook distinct from the iMac, but all four can be applied to the same sorts of consumers: people looking to buy a computer.

Why don't colleges do the same thing?

Now, obviously, within the category "college" there are options-- Harvard's a good fit for some, BYU's a better fit for others, CU Boulder for still others and so on. But the many idiosyncrasies that define these choices account for a wide array of possible factors that customers might appreciate. Within the category "extremely gifted", Harvard may tempt the market- but what about the sub-category of extremely gifted: "rather poor" or "otherwise unwilling to spend"? Like other colleges, Harvard only offers Harvard-- the full Harvard experience. You'll have access to a free library, and other various resources at no additional expense, but only because you already "bought it" as a piece of tuition.

Imagine a Smashburger- a high quality burger joint- where your only option was to buy everything on the menu at once. If you didn't want to dish out so much cash, sure, you can always run to McDonald's- but McDonald's isn't the same for a host of different reasons.                 

Any given college-- to which uniqueness renders an array of potentially desirable qualities-- seems only to offer a "bundle", where some customers might be happier with just a piece of that bundle. Furthermore, by offering their many services free of additional charge, those services which center around scarcity can easily become crowded and overused. See my earlier post here for a good example.

I'm tempted to say this is rooted in deeper, more fundamental problems with the college education system, which I'll explain in more detail at another time. If anyone else has an idea or has considered this before, they're welcome to offer a simpler explanation.

Global Warming-- The Problem with no Solution?

Firstly, I'm not convinced global warming is an issue. Man-made or not, the evidence seems rather inconclusive that the various impacts of raising Earth's temperature by a few degrees in a hundred years will have a net-negative effect on humanity. Certainly some things would be negative, like rising sea levels and heat strokes, but other things would be positive, such as newly-inhabitable land north of Canada and increased crop yield.

That said, if it *were* a problem, is there any conceivable "solution"-- government or otherwise?

Global warming, in theory, is an economist's absolute nightmare. It's the public good problem on a massive scale-- where absolutely no one has an incentive to change their behavior, and together they burn to death.

Liberals and interventionists are quick to point to the government as an answer, but this is rather unconvincing. Creating a government that solves global warming requires a citizenry that votes the "right" politicians in and the "wrong" ones out. Since the impact of one vote to aid this process means virtually nothing, we are faced with another public good problem-- no one cares to learn what solves global warming, nor which bureaucrats plan to enact that solution.

I inquired with economist David Friedman on the issue-- who believes governments would be a hindrance to solving global warming-- and proposed an option in the following exchange:

"Undoubtedly much cheaper" [than fossil fuel reduction]

One thing David doesn't touch on in his brief analysis is whether or not geo-engineering could solve the problem in a society where government was too limited to have a say in the matter, though I'm not sure I or he knows enough about the details to make that argument convincingly.

To reiterate, I don't believe the evidence suggests that global warming will have even a net-negative effect on humanity-- much less that it will cause us all to burn and die. Humans have lived through many kinds of temperatures throughout the history of their race, and we don't have reason to assume that the present climate is exactly optimum for society.

However, should new evidence come to suggest otherwise, I'm not sure human nature is apt to stop it.

Understanding Anarcho Capitalism: A Simplified Case (Part 2)

If you haven't already read it, here's part one.


A continuation of 'Why roles that shouldn't exist shouldn't exist'

Corporate Regulation
Most notably, we're concerned with organizations such as the Food and Drug Administration-- noting its regulation of food sale, its ban on drugs and its restrictions on some other drugs. Other relevant regulations include mandates on the level of safety of automobiles, requirements for business to pay at a minimum wage, prohibition of prostitution and restrictions on firearms sale.

So, to outline the big ones:
1. Government food quality inspection
2. Drug prohibition and drug restriction
3. Various safety mandates
4. Minimum Wage
5. Gun Control

I'll tackle these from the top down.

Government food quality inspection
For most of US history, the FDA has decided to take pointers from Upton Sinclair's The Jungle, and perhaps also the science-fiction movie Soylent Green. The rationale goes: 'bad' food is cheaper to produce than 'good' food; producers desire to lower costs, and will therefore produce 'bad' food; people are better off with 'good' food than they are with 'bad' food; the government should mandate and ensure that producers produce 'good' food.

This reasoning is flawed-- while producers may desire to lower costs, they also won't be able to sell food that poisons their customers. Every time there's even a moderate suspicion that business x is selling unsanitary meat, the media- without government enforcement- immediately latches on. In virtually every case their claim is unfounded, but the fact that they're always checking is reason enough for it never to occur. Imagine the damage to a company's reputation should further investigation prove their food *is* harmful-- they'd be lucky to ever do business again.

Thus, any government mandate to "ensure food quality" is either superfluous- and therefore a waste of money and labor- or else unnecessary to actual food quality, making it harmful both in wasted money and labor, and also in needlessly raising the price of food. The latter of these two scenarios has a particularly negative effect on the poor, who spend a much larger percentage of their income on food than do richer persons.

Drug Prohibition and Drug Restriction
First- on the subject of prohibited drugs. Marijuana, Cocaine, Meth, . . . are considered dangerous for consumption, by one reason or another, and on these grounds are made illegal for sale (with the exception of medicinal marijuana, and also recent amendments that allow limited recreational marijuana use in certain states). The rationale is never exactly stated more than it is somehow implied, but any reasoning must follow the key assumptions that 1. some individuals don't know what's best for themselves, and 2. government intervention will improve their decisions.

On the first part, it should be recognized that the exact conditions of individuals cannot be verified, nor can their preference be determined by anyone other than themselves. Even if it's true that the vast majority of all people- were they to use meth- would ultimately suffer negative consequences, it cannot be said that this is true for all persons. Perhaps a man is in such poor conditions that he wishes death, and he would prefer a stimulated overdose to a bullet (for fairly obvious reasons. Remember that these arguments are made on a Utilitarian basis, and are also made secularly). The mere fact that most people would likely suffer negatively from cocaine use based on past actions and inferred (though inexact) preference does not imply that cocaine users use cocaine as an irrational means to attain their ends. Their ends, being inherently rational, may coincide- perhaps obviously- with cocaine use.

Furthermore, the argument becomes increasingly weak with regard to "weaker" substances such as marijuana, against which there is little evidence that even a majority would suffer negatively as a result of its consumption. With regard to drugs that serve medicinal roles, which is virtually every drug to one extent or another, the more applicable the role the yet weaker this pro-restriction contention.

The most fatal blow to drug restriction arguments however lies in the second assumption-- that government intervention generally improves decisions/conditions. As we've seen with the United States infamous and never-ending 'war on drugs,' the monetary expense alone is reason enough to shatter the prohibition case. Current estimates place the cost in 2010 at $15 billion, with the rate of expense annually growing larger since that time, and still the "war" goes on. At this point, we can practically assume such expenses are, and will always be, the cost of enforcement.

Furthermore, the black market of drug sale allows for very little means of ensuring quality or honesty by the sellers, as transactions necessarily happen in secret and go unscrutinized by media attention. Not even the FDA has the means to interfere. Thus, buyers are often tricked into purchasing weaker drugs laced by stronger, more addictive substances, ensuring continual business at little or no cost.

Being inherently criminal organizations, drug sellers lose incentive to coincide with other, important legal regulations, thereby causing them to resolve disputes in brutal fashions and eliminate competition by force (note that the non-existence of strong private defense agencies to solve these problems is due to their being unfairly out-competed by a monopolizing government. Once again, the private sector cannot compete with that which an entire country is forced to pay for). Annihilating opposing drug-sellers in this fashion exacerbates the problem, as newly-formed cartels become more profitable without competition, granting them more incentive to proceed with war-like activities. This has resulted in numerous needless casualties from the United States to Mexico, from cartel gunman to police.

Safety Mandates
Similar in nature to food inspection, safety mandates by government are equivalent to the restriction of an otherwise viable goods market. Under "normal" circumstances, firms will supply any and all products that have x demand, and cost no more than y to produce (with the value of y being dependent on that of x), provided there does not exist another product of similar function that is overwhelmingly preferred by consumers (given both its quality and price). A safety mandate is the means by which government either eliminates an otherwise available good from the marketplace, or trades a market good for its widely-unpreffered substitute.

As example, let us consider the seat belt mandate.

US automobiles first entered production in 1913*-- they were not produced before this time because the costs of building such a thing were too great. Henry Ford's genius, manifested in the creation of the conveyer belt assembly line (along with the steady march of technology by the genius of some others), reduced costs to such a level that- given the demand for automobiles- there became a market for their production. The automobile was relatively expensive when it first entered the market because it was produced as soon as costs were low enough relative to demands of some group, any group; it follows logically that the first to meet this prerequisite as costs fall are 'the rich.'
*- I do not guarantee the correctness of this historical claim, the accuracy of which is not relevant to my arguments.

Parts that make up the product "automobile" are great in number and complex in effect, so much so that few else besides those who designed it understand what they do. The question "what to include?" is not easily answered. Reducing risk for the driver is important to the company's reputation as dead customers tends not to make for good business, but reducing costs of production is essential to keep the product on the market. With regard to how much risk a given part reduces, and at what cost, there are complicated calculations that car manufacturers will need to make to ensure an affordable, quality product that isn't drowned out by competitors.

Suppose an automobile company is considering the inclusion of seat belts. First they'd need to consider the speed of the car-- at its outset, the automobile did not move particularly fast. Automobiles were also expensive, so maybe traffic was expected to be light. How complicated is it to operate the car? How likely are drivers to focus their attention on the road? Are public roads well maintained? What about the car's headlights and other sources of light on the road? All of these are factors that must be considered in a risk analysis, and then these must be compared with the cost of seat belts. Suggesting, then, that seat belts are always necessary to produce the optimum car at any given point in the history of automobiles is pretentious and absurd.

Fortunately, automobile producers have all the right incentives to make these calculations and decide accordingly. As the car becomes yet cheaper, perhaps it becomes wise to sell some cars with seat belts and some without, appealing to the differing desires of consumers at varying levels of income. If incomes rise and costs fall yet further, perhaps there's no longer a market for cars without seat belts. All the same, these are complex considerations for producers to address.

The government's mandate that cars should have seat belts ruthlessly ignores the complexity of the matter. It forced the market to provide consumers with a less-preffered substitute- cars with seat belts at a higher price to cars without seat belts at a lower price- and simultaneously applied the newfound burden disproportionately to the poor, some of which could previously have afforded a car and now cannot. If people had desired the seat belts government forcefully mandated more than the money they lost as a result of added costs, it would already have been so.


CONCLUSION OF PART TWO.

THERE WILL BE MANY MORE THAN TWO PARTS.

TJ's Recess Economics

I was linked this video the other day from one of my all time favorite TV shows, and thought I'd discuss where it doesn't grasp economics as well as one might've hoped.

First, watch the video. It's quite amusing.

A brief rundown then:

The school's recess "privatizes" in TJ's absence (in the way one might privatize a dorm). Capital and land that was previously unowned by individuals was distributed as property in an undisclosed fashion. 

Whether their method was just, considering some who previously had claim to these resources were entirely left out of the distribution process-- such as TJ-- isn't exactly knowable given the lack of details, but is also mostly irrelevant. We know that resources were divided between many different groups, as one guy owns the drinking fountain while another owns the basketballs and a third man owns the slides, etc.. in what was hopefully a quasi-equal fashion.

The video goes on to display a sort of divide between those who have capital and those who don't: Randall's a good example of this as the basketball monopolist. He clearly overprices his goods by selling them at a non-market price.

What's ignored is the incentive for competition. Should Randall be making economic profit (i.e. more than is "natural") by selling basketballs, other children would be enticed to start selling basketballs. They sell at a high price- and high price means high supply. Presumably the counter-argument goes something like: Randall buys up the business of every basketball seller to maintain his monopoly. But as common as this answer remains for children's TV shows and world-class sociologists, it is wrong.

Average total cost curves for selling products are u-shaped a la the law of diminishing marginal returns. For any given supplier, there's an optimal size (represented by the lowest point on the curve) at which his business should remain-- any smaller or any larger and you become less profitable. As Randall's business grows beyond a certain size it becomes progressively more clumsy- eventually it hits the breaking point, and yields to the inevitable competition of the marketplace. This is not necessarily a gradual process, nor should we expect it to be.

We should also note that other similar though non-identical businesses will compete at least indirectly with Randall. Playing frisbee is a plausible alternative to playing basketball, at least for some, and so is riding the slide or relaxing in the shade- perhaps to a lesser extent.

Such logic renders the concluding scenario-- with TJ in total control of every industry-- an impossibility. His unrealistic pricing would have had too crippling an effect on demand to produce even a scrap of revenue, making him fully willing, from a profit-motivated perspective, to sell land and capital to others who could find market applications at affordable costs.

Brief Somalia Explanation

Been asked about this a little recently. Already put my thoughts about Somalia on someone else's blog, so figured I'd post it here too: short and sweet.

Somalia, despite its poor state of being, is actually a highly-convincing case for anarcho-capitalism-- especially as related to other forms of predicted anarchy (anarcho-communism/syndicalism). Quite simply, it's an anarchy- applied on a nation-wide scale- and it turned out to be capitalist, as opposed to literal chaos or some different form of order.
Not only did it turn out capitalist, but many of the institutions ancap theory predicts have manifested-- granted, sometimes in crude forms. Arbitration is managed by various mutually-agreeable professionals with regard to disputes (incentivized to rule justly so as to be picked again) who operate under privately-constructed civil and tort law, and private defense is provided by very large security agencies.

This, incidentally, is where the real problem lies-- "very large security agencies." It's widely acknowledged that ancapism functions properly when the industry of private defense is managed by a large number of smaller entities, and currently the number stands at about 4 or 6 major players for Somalia. The problem with so few and so large is that they each have the potential to become government, and so they wage war for that when the goal is in sight.

This issue is heavily exacerbated by UN funding to various what-have-now-been-deemed-warlords, since it makes the possibility gleam a little brighter each time it happens. As result, it's a power politics game king-of-the-hill style, where each time one guy's too high up the hill, the rest have to bring him down- by force.

Despite all of this, which is the major flaw- likely caused as result of the defense agencies being various pieces of the pre-existing government military still loyal to specific generals- Somalia's conditions have improved dramatically since the government's removal, including improvements to life expectancy, literacy rate and vast GDP growth.

Source: http://mises.org/daily/5418/Anarchy-in-Somalia

They're doing better than they have ever done with a government by a very wide margin-- and that's given the unfortunate, at-least-partially-'artifical' scenario of large defense agencies and the flaws associated.

Understanding Anarcho Capitalism: A Simplified Case (Part 1)

The Simplified Case for Anarcho Capitalism

By Jacob Oveson

Anarcho Capitalism

To establish support for a complex social concept, it must first be explained.

Definition
Anarcho Capitalism, also referred to as 'Market Anarchy,' is a political philosophy that advocates the removal of government. It distinguishes itself from the typical concept of 'Anarchism' by predicting a different outcome than that of most traditional Anarchists. Anarcho Capitalists (AnCaps) believe laws are necessary for the safety and well-being of the citizenry, and also that these laws need proper enforcement, but they dispute the commonly-held notion that only government has the ability to create and maintain a just legal system.

Thus, Anarcho Capitalists, as the name would suggest, favor both Anarchy and Capitalism.

Myths regarding Anarcho Capitalism
The most important myth to dispel is that Anarcho Capitalism supports lawlessness (and/or chaos). Just like (probably) you, AnCaps recognize that if Bill punches Joe, Bill should be punished in order to satisfy justice and deter him from doing so again (or in the first place).

A second myth that deserves speedy death is that AnCaps tend to be violent, or otherwise dangerous members of society that seek widespread rebellion against "the man" and "the system." Most AnCaps favor some form of the non-agression principle, which quite simply reasons that non-retaliatory physical aggression in any form is immoral and unjustifiable. Being capitalists, they also see no problem with people creating institutions and businesses for profit. "The rich" are not inherently evil in the eyes of AnCaps, as they sometimes are for traditional Anarchists-- on the contrary, those who make large sums of money in the marketplace are seen as forces of great good, undeserving of punishment for their success.

Many people, particularly those of some right-wing political affiliation, agree the government is an evil, but they claim it is a "necessary" evil. Anarcho Capitalism simply disputes that the government is necessary.

Problems with Government
The Ethical Case Against Government
On a moral level, the government violates a principle backed by most AnCaps: the non-agression principle (NAP). Unlike business, which gains its money through voluntary transaction, government can only obtain funding through coercive means. If you- as a customer- choose not to buy an iPhone, Apple will leave you alone. If you- as a United States citizen- choose not to pay your taxes, the government will forcefully detain you and lock you in a cage.

Oftentimes the argument is made that you can simply choose to leave the country if you wish to avoid taxes, but this is merely an extension of the problem. If you *don't* pay taxes, the government will restrict your next choice to: leave the country, pay your taxes, or be sent- involuntarily- to jail. You were born - or otherwise moved and purchased property - in some part of North America. The government has no right to insist payment or ask you to leave, and by doing so it immorally violates the NAP.

Furthermore, governments often impose forceful restrictions on fully innocent people. To list some examples, people that choose to smoke marijuana or hire prostitutes are detained or fined, whether or not they harmed another person in the process-- and businesses that offer labor at a wage below ~$7 are told to cease doing so, even though all they've done is make an offer.

To dispel another myth- these positions do not imply that all AnCaps are prostitute-hiring weed-smokers. AnCaps are no different from the rest of the population in their variance regarding victimless and non-aggressive actions they choose to make, but they support the rights of others to make those choices for themselves. For example, as an AnCap, I choose to refrain from drug use, but I also choose not to impose that lifestyle on others-- either directly, by force, or by supporting the force of government. Similarly, much as I disagree with socialist and communist ideologies, I strongly oppose any notion of jailing people for preaching any ideology they so choose.

Annexed- 5/10/13

The validity of this claim (the NAP) is dependent on the partisan's acceptance of ethical norms. According to- as Anarcho Capitalist Murray Rothbard once labeled them- "natural rightsers" (himself a natural rightser), it is unethical to violate certain rights- framed in the context of property rights- with which all human beings are naturally endowed. According to the theory- mostly derived from a Lockean interpretation of ethics- people have ownership over themselves, and things that they homestead, i.e., unowned land that they work, or unowned resources that they use- given selective definitions of "work" and "use" upon which we will not elaborate here. By this standard, members of government cannot claim to ethically own a country whose economic elements they themselves did not make productive, and, as no government has ever done so, it is therefore unethical for government to tax (or likewise support itself and exist).

Those who do not ascribe to this theory- that is, the non-natural rightsers- tend to be ethical consequentialists of some form, usually egoist or utilitarian. In either case, these partisans are concerned only with the ultimate effect of a given action on the welfare of people. So, if government "steals", we cannot claim- by these ethics- that it does so in an inherently unethical manner, as it is only unethical if the result, on net, hurts people. Thus, the Anarcho Capitalist consequentialist maintains that government should be disposed of because its actions have a net-negative effect on human welfare. Consequentialists may still maintain a rule-of-thumb closely resembling the NAP, i.e., they may conclude that actions which violate the NAP tend to be unethical. That said, the economic argument against government adequately describes- in and of itself- the entirety of the consequentialist position.

The Economic Case Against Government
Regarding the question "what's best for everyone?" AnCaps tend to look at this from an economic point of view. That's not to say they have a 'cold' or 'calculated' opinion of the human experience-- it just means that as a political philosophy, Anarcho Capitalism is concerned with the way capitalism affects people.

To start, AnCaps are far from alone in their support of capitalist economics. The vast majority of economists and social science theorists generally favor capitalism in one form or another, as opposed to socialism or communism. This is primarily as result of the failures of socialist and communist economies throughout history- particularly in the former-half of the 20th century- and also the astounding success of largely-capitalist economies, such as that of the United States and those of Europe.

The argument between most economists in present times regards what type of capitalism best favors society. Some favor "mixed-capitalism," which supports government involvement in the marketplace, while others-- including AnCaps-- favor "laissez-faire ('hands off') capitalism," which advocates the government stepping out of the picture.

First of all, we need to recognize what the "price" of government intervention really is.

It should be plainly obvious that if the government taxes working people (or 'the private sector') money that would have gone to the production of various goods and services that the private sector provides instead go to politicians and other government agents for the provision and enforcement of regulation. Thus, the cost of an $100 tax is at least $100.

As it turns out, it's actually more than this, as taxation also reduces production. To see why, consider a hypothetical Home Depot employee making a cost-benefit analysis of his situation. For each hour he works- taxation aside- he earns $10. Going home and staying with his wife for the day is worth $5/hour, so he works during the day. When his boss asks him to work overtime, the worker will now make $12/hour if he accepts. Going home to his wife, now that it's late and she isn't busy, jumps up to a value of $11/hour. The Home Depot worker will continue to produce, working overtime. If, however, the worker is taxed at 20% of his income, he will only make $8/hour throughout the day and $10.60/hour during overtime. Now he will produce during the day, but go home- instead of produce- if his boss asks him to keep working.

This is a simple example, but it applies to all businesses and all workers in all aspects of the private sector. Net production goes down as taxation goes up, and therefore, a tax of $100 costs $100 + loss in production. How great the loss is depends on a large number of factors, such as the elasticity of supply and demand for particularly relevant goods and services, which are too complicated to explore for a "simplified" case. All the same, it should be realized that taxation results in a net loss.

Furthermore, when a task is managed by the government, there's little reason for it to be managed well. Governments monopolize whatever industry they choose to operate, because no private sector institution can compete with a product the entire country is forced to pay for. As the government has no competition, they also have very little incentive to innovate, or otherwise make their service better and cheaper. Additionally, government salaries, at all levels and for various reasons, tend not to be based on the success of their operation-- thereby further reducing incentives to do the job well. Government workers are almost never fired.

Exploring the Private Sector Alternative
The Current Role of Government in Society
If the cost of funding government agencies results in a net loss to the economy, and the service they provide is of lower quality, it follows that whatever job the private sector can do, it should do. As social scientists have come to realize this, the government's role in the economy has taken a massive step backward over the years, and the vast majority of goods produced are produced by the private sector.

As government retains a few select, albeit very important, functions, the question rises- could the private sector manage these instead? AnCaps arrive to the conclusion that yes, it can. To see why, let's examine all roles that governments does play, specifically in the United States.

Summed up:
1. Law Creation (Congress and the President)
2. Law Enforcement (Policeman)
3. Protection of the Nation's Borders (National Guard)
4. An outgoing military (to make war with other countries, or otherwise become involved in the international scene)
5. Road Construction/Maintenance
6. Schooling (partially, though not completely)
7. Welfare For Those in Need (Medicare, Medicaid, Social Security, etc.)
8. Pigouvian taxation (Pollution tax)
9. Tariffs
10. Firefighting, Mail Delivery (FedEx), Transportation (various bussing operations)
11. Corporate Regulation (FDA, HOA, FCC, etc.)
12. Corporate Subsidies (Money grants to agriculture/elsewhere)
13. Environmental Protection (Wildlife preservation, National Parks)

I've listed these in the functions that, generally speaking, more people agree the government should manage-- with the most support at #1 and the least at #13. In particular, numbers 1 through 3 are supported as government functions even by most minimalists and libertarians, though many in these camps believe most (if not all) of the others should be abolished as government functions. Left-leaning economists may support as many as most or all of these functions, and some support a few more on top-- such as healthcare provision, carbon tax and plastic tax (though debatably the latter two can be grouped under 'environmental protection.').

As each and every one requires funding through taxation, and is therefore a violation of the NAP, AnCaps support zero.

Before we examine how the private sector might "take over" these roles, I will first separate the different roles into two categories: desirable roles, and undesirable roles - as according to my own opinion, and that of many other right-wing political theorists.

Should exist
1. Law Creation
2. Law Enforcement
3. Protection of the Nation's Borders
5. Road Construction/Maintenance
6. Schooling
7. Welfare For Those in Need
10. Firefighting, Mail Delivery, Transportation
13. Environmental Protection

Shouldn't exist
4. An outgoing military
8. Pigouvian Taxation
9. Tariffs
11. Corporate Regulation
12. Corporate Subsidies

Why roles that shouldn't exist shouldn't exist
In explaining why some roles the government performs shouldn't exist in society in any fashion or form, I'll begin my analysis from the bottom up (that way we're likely to see eye-to-eye a little better at the start).

Corporate Subsidies
If your goal is to swiftly eliminate as much competition as possible within an industry to create giant, inefficient monopolies- look no further than subsidies. Interestingly, it seems the most convincing way to expose the harmful (or at the very least useless) nature of corporate subsidies is not to examine the economic implications of their implimentation, but to show how they come into being.

The US steel industry has been the product of enormous government subsidy since Carnagie, but each time the government writes a check to steel giants, no one who's fully aware imagines thoughtful politicians sitting down and carefully analyzing the needs of the country. As the record will always show, the steel industry pandered to the government and got money as a result. When doing so comes at a slight harm to each of 300 million people, the widely-distributed citizenry has no ability to rally together and lobby to stop it. More importantly, they can't target politicians who engage in this malicious behavior, because the vast majority of citizens either don't know it's happening, or don't understand the implications. Instead, people think: 'steel... I like products that come from steel...' and that's the end of it.

This is not to say people are "stupid" (a rather ridiculous claim, since they would be stupid compared to what, exactly?), it's to point out a problem with democratic government, being that it favors concentrated sources of wealth at the expense of that which is more spread out. Any given individual, as a voter, has virtually no incentive to understand issues so minor as how steel subsidies affect him or her personally. If s/he takes the time and effort to become informed, it would serve virtually no purpose-- that individual's one vote has approximately a zero percent chance to determine the outcome of any election, even on a relatively small scale. So, rationally, the vast majority of people shouldn't- and don't- waste their time with such research.

Thus, 300 million people are robbed- and they don't even know it.

As we then examine the results of such a subsidy, the subsidized industry is sure (obviously) to benefit. It's competitors, however, will quickly falter-- even if they provide better goods at a lower price.

To illustrate- first know that $20 billion dollars annually funds direct subsidies to the United States agricultural industry, most of which goes to the subsidization of corn. Ever looked on the back of your soda can and checked for sugar in the ingredients? Odds are pretty good you found corn syrup first. Countries like Brazil produce sugar at a substantially lower cost than the US produces corn syrup, and are therefore sensible to use, but we take the latter ingredient in abundance because farmers make too much of it. All to collect sweet government subsidies.


CONCLUSION OF PART 1.

Choice Tolerance

I've been profoundly influenced by Human Action - a work by Ludwig Von Mises, a critical figure in the haphazard compilation of oft-conflicting but generally accurate ideas umbrellaed under "Austrian economics" - and a foundational axiom outlined and discussed in the book's first part has had a rippling effect on the way I consider actions made by myself and others: that every man can read his own preference exactly, but the preferences of others not at all. Mises takes the point to its obvious 'economic' conclusion-- poking holes in the case for central planning-- but it also applies nicely to the general concept of action tolerance, as while one can always say "I'd do x if I were you," one can never say, with perfect confidence, "it is in your interest to do x." The statement "you don't really know what you want," is always false, and more so if followed by "but I do." You could explain to the man that without x he dies- but maybe that's what he desires- or that given x he inherits an instant million dollars, but maybe he'd rather not. Patterns of human behavior collectively allow the social sciences to make predictions about human action in groups, since the vast majority of people share certain preferences such as money and life, but on an individual level- in any given case- no one can possibly have authority to deem an action as certainly "wrong" (if by wrong we mean the "incorrect" action, or that which does not maximize net gain) if the one in question, him- or herself, deems it right.

On a simplistic level, everybody knows this. If you feed me chocolate and vanilla ice cream in two separate spoonfuls, respectively, my announcement that I prefer the former to the latter is taken as fact, since I'm far and away the single best person to verify. Whether 50% or 95% of all human beings on Earth prefer vanilla to chocolate, my word will be equally and fully accepted as truth if I state my preference the other way around. Thus, each and every time I'm asked "vanilla or chocolate?" people accept my response as what is certain to be the right option, rather than raise contentions.

However, we also know that there is another factor to be considered in decision making, and that is reason. No one contends that I should be served chocolate ice cream, but it's also generally accepted that every human being has the reasoning skills to determine which one of those would bring him greater satisfaction. As it happens, the vast majority of decisions people make require this same very insignificant level of reason-- I will call these sorts of decisions "minimal reason" decisions, which virtually everyone has the capacity to make-- but when it comes to something complicated like "invest in Apple Computers or start a business" people become more skeptical that one has the capability to choose correctly for himself. But then the question is raised- "who does?" No one can say with certainty that they are guaranteed to choose correctly, or even near-correctly, but generally we want as good as we can get-- and that will ultimately come down to two options:

1. The person directly affected

2. A person deemed very knowledgable

For each of those possibilities, I would propose there is an equation to be made with regard to their likelihood of choosing a correct or near-correct decision, with three major variables to consider:

1. The reasoning skills of the chooser

2. The knowledge of the preferences of the person directly affected

3. The chooser's intent

With regard to the reasoning skills of the chooser, it will remain at an imperfect level in either case. For very small children or otherwise underdeveloped persons, they may be, abnormally, in a position of only a barebones reasoning capacity, and this factor alone may rule them out as the best chooser of decisions that directly affect them. Thus, I would agree- as does almost anyone- that parents are just to make decisions for their young children, or for any vegetable child. Now we consider the case for those who are 'fully human.' On the one hand, the person deemed "knowledgable" will know more on the subject in question than the chooser, assuming he is deemed so correctly. On the other hand, the person affected has incentive to become more knowledgable so as to make the decision better, and has the capability to enhance his own reasoning skills on the subject-- even if that means hiring an advisor or asking free advice of someone who will not then *make* the decision, but will provide useful information. Of course, this would require that the person affected know at least the relative significance of the decision he's making, thereby allowing him to know whether his time and resources are worth investing to increase the likelihood of choosing appropriately, but I would contend that in most cases the determination of importance is of minimal reason (or something close), and arguably relates to the nature of his preference anyway-- which only he understands. Furthermore, one's conditions-- which are necessary to understand in order to reason appropriately-- are almost certainly understood better by the person directly affected. The only way the 'knowledgable person' could even remotely understand them is if he were a friend or family member, or else invested himself in the time-consuming process of studying-- which can only get him so far. He could ask the person directly affected about his conditions, but this would likely be rather unhelpful, as said person would have incentive to lie in whatever manner would cause the knowledgable person to align the decision more closely with the one that he who is directly affected wishes for.

With regard to preference, the person directly affected overwhelmingly prevails-- having a perfect understanding, as a function of human nature, of what it is his preferences are. The knowledgable person would have to rely on what statistics tell the majority of people tend to prefer-- and even this is an ironic means to attain such information, as most studies of preference are based upon actions that directly affected persons choose to make for themselves. He could ask the one directly affected, but once again the problem of incentivized deceit persists, as this person will explain his preferences in such a way that the decision made will more likely be the one he wants. Furthermore, even if the person were to be fully honest, preferences aren't easily described in words or mathematical speak, since they are interpreted by feelings.

With regard to intent, the palm must go again to the one directly affected according to the axiom of rationality. People desire to pursue ends that maximize their well-being, meaning that if the person directly affected is also the decision maker, he has the perfect intentions, and therefore the perfect incentive to make the right choice. When it comes to someone else making that decision for him, this can never be the case and is often far from it (especially with government bureaucrats, but we won't go into that).

"Ah, but then," you say "I know where you, Jacob, have erred. For the 'right' decision is not that which brings maximum net gain to the person directly affected, but that which brings maximum net gain to all sentient beings! How then can you suggest, oh foolish Jacob, that it is somehow better for the incentive to be benefiting he who is directly affected rather than benefiting any other person- such as he who is deemed knowledgable?" And the answer to that is, quite simply, that the person directly affected is essentially *always* the person who is *most* affected. If the vast majority of the impact hits one specific individual, the total net-gain is guaranteed to be larger if *his* net-gain is maximized, rather than if the net-gain is maximized for some other person that happens to know something about the decision's subject. 

Thus, freedom wins, and so does choice tolerance. This only applies, however, to those decisions that are not of significant negative impact to other human beings. Actions that involve physical, non-retaliatory harm invoke the non-aggresion axiom, and require the consent of those harmed on moral grounds, for universally accepted and otherwise obvious reasons (besides the fact that without such recognition, rational action would very often lead to "incorrect" decisions)-- it should be recognized that this classifies all governments as inherently evil and illegitimate institutions, but I digress.

Any fully-human being that acts without victims-- provided his actions do not significantly harm others against their will in a non-retalitory fashion-- should not only be fully free to do so, on both moral and utilitarian grounds, but cannot be labeled as one who acts immorally, and cannot be told, with any degree of confidence, that they are unfit to rule themselves. There is no other person more fit to make these actions.

Happy Birthday, Ayn Rand

108 years of lasting influence.

Here's to hoping for at least that many more.