Libertarian Takes On Occupy Wall Street

I've previously mentioned the common ground I believe libertarians can hold with left and right alike on Occupy Wall Street. Mainly, the bailouts to financial institutions were not just. If we just keep it right there, we can get along. If we start shading it, the coalition that would be falls apart- fast.

I really like what Libertarian Party Chair Mark Hinkle had to say about OWS and crony capitalism, in a recent press statement:

"It's true that 99% of Americans do not enjoy the special benefits of crony capitalism. Crony capitalism is very different from real capitalism. In crony capitalism, government hands out special favors and protections to politically well-connected businesses.

"The TARP bailouts, Solyndra, and the military-industrial complex are all facets of crony capitalism.

"Libertarians love free markets and hate crony capitalism.

"Unfortunately, hypocritical Republican politicians have taught a lot of Americans to think that 'free markets' means freedom for government and big business to engage in crony capitalism.

"That's not what free markets are. A free market is where the government leaves businesses alone, does not attempt to pick winners and losers, does not stifle competition, does not hand out corporate welfare, and does not absolve businesses of liability for their actions. Most of our economy today does not resemble a free market at all.

I would be interested in seeing an OWS reaction to this statement. Can people on the left agree and draw the distinction between actual capitalism and crony capitalism? Can the left agree that corruption is dependent upon crony capitalism, or do they actually like crony capitalism- so long as the winners chosen are ones they favor, such as green business?

For that matter, can the right see the same distinctions? Can they shed crony capitalism when the chosen winners are military suppliers?

Doug Masson has some similar ponderings today:

It’s always seemed to me that the corporate form should be anathema to Libertarians. It’s a government construct that exists for the purpose of evading personal responsibility.

I quite agree. It's interesting to see some libertarians and folks on the right who love all things business, and should equally cherish self-responsibility, overlook the latter in embracing corporations, merely because corporations are business entities. Business in and of itself is not the same thing as free enterprise.

We all have blind spots. These are the days when it would be a great idea to self-examine and find those blind spots, and acknowledge them. We end up with shitty solutions when we're full of shit.

Common Ground, If Desired

I continue to be fascinated with the Occupy Wall Street protests. I can't help but notice points of comparison with the Tea Party protests, as certain positions have been reversed. Mainly, where patriotism or anger-as-hate was seen in the Tea Party, it has now reversed position on Occupy Wall Street in many quarters.

What a loss! Blind partisanship and tribalism can be so debilitating. I believe there is great common ground to be shared, if Tea Partiers care to unite with Occupiers. How hard is it for both sides to agree that government shouldn't have bailed out financial institutions, especially if the money was going to be spent on executive bonuses and the like? The common ground is injustice.

The common ground for anger is the injustice of crony capitalism, which isn't capitalism at all, but corporatism. The transfer of wealth from the many to the few is unjust. Period. Focus on that, and the movements can merge and become a dazzlingly effective, powerful force. Otherwise, the left and the right will snipe at each other over so many things, many of which are far from substantial, and the energy will be wasted.

Meltdown Blame Game

I've been fairly astonished to see some of the vitriolic piling on against libertarianism with the meltdown of the derivative markets and subsequesnt bailouts.

Does anyone think Libertarians have been running the Federal Government? Really? Here's your reality check.

Ok, some point to Alan Greenspan, the erstwhile Ayn Rand devotee. You know- the same Greenspan that presided over the Fed during the entire Clinton Administration- that mythical period of time of milk & honey. I wouldn't call Greenspan a libertarian. Any libertarian running the Federal Reserve would have done anything in his power to return our dollars to specie-backed legitimacy. That certainly didn't happen. Link to Murray Ruthbard's libertarian critique of Greenspan.

Moreover, what made the trading in derivatives legal in the first place? A law signed by Congress, unanimously, in 2000. Catch 60 Minutes last night?

The vehicle for doing this was an obscure but critical piece of federal legislation called the Commodity Futures Modernization Act of 2000. And the bill was a big favorite of the financial industry it would eventually help destroy.

It not only removed derivatives and credit default swaps from the purview of federal oversight, on page 262 of the legislation, Congress pre-empted the states from enforcing existing gambling and bucket shop laws against Wall Street.

"It makes it sound like they knew it was illegal," Kroft remarks.

"I would agree," Dinallo says. "They did know it was illegal. Or at least prosecutable."
In retrospect, giving Wall Street immunity from state gambling laws and legalizing activity that had been banned for most of the 20th century should have given lawmakers pause, but on the last day and the last vote of the lame duck 106th Congress, Wall Street got what it wanted when the Senate passed the bill unanimously.

So, at what point do we blame lawmakers. It seems pretty clear that they didn't even read what they voted on. Just like the Patriot Act. Just like John McCain and the proposal for the bailout when it was merely 3 pages long.

The bucket laws were good regulation. The bets on stocks without any skin in the game affects the stock price. It's not like a football game, where the bets do not affect the outcome of the game. (This leaves aside point shaving, NBA refs, the 1919 Black Sox, and other notorious interactions with gambling.)

Unfortunately, I believe that this one place is going to place America squarely in the pro-regulation camp for everything. It's kind of ironic, because the critics of deregulation and capitalism decry its' adherents as 'dogmatics' and 'idealogues' in the pejoritive, when they themselves as dogmatically and idealistically pro-government, pro-regulation, and anti-capitalist.

Worried About China?

I'm not, even though it seems to be poised to surpass the USA in so many meaningful ways, with GDP being just one such. To me, the meteoric rise of the Chinese economy is an fine example of what even a little capitalism can do to raise the standard of living anywhere- even within a farily totalitarian regime.

It should be a stark lesson to us, and easy to see: More capitalism = more wealth. More government = less wealth.

There is an interesting Washington Post article today that gives many reasons not to worry about China, despite our huge trade deficit with that country. Here's one:

One important nuance we keep forgetting is the sheer size of China's population: about 1.3 billion, more than four times that of the United States. China should have a big economy. But on a per capita basis, the country isn't a dragon; it's a medium-size lizard, sitting in 109th place on the International Monetary Fund's World Economic Outlook Database, squarely between Swaziland and Morocco. China's economy is large, but its average living standard is low, and it will stay that way for a very long time, even assuming that the economy continues to grow at impressive rates.

Remember what kept that economy down- the Communist regimes, beginning with Mao, and to the present.

I don't like the conclusion in the quote, though. The USA was once in the position China was, relative to Britain, as an economic power. The US was the up and coming low-tech, cheap production underdog, while Britain was the high-tech economic ruler of the day. The British once scoffed at America's position in the world, confident it would never be surpassed. The USA kept producing cheaply and innovating, eventually becoming the high-tech producer of the world.

Why was Britain surpassed by the US? Two things. The UK became increasingly regulated, and Britain had a worldwide empire. "The sun never sets..." That took enormous effort to sustain, and proved unsustainable. The British choked off innovation in their industries, via regulation.

Here we are in the USA, repeating the mistakes of history. We hyper-regulate our industry, driving the business to other countries. We are trying to play the world's cop, intervening in affairs that don't affect us directly, paying for bases and operations in most of the world's nations.

The US built its wealth under relative 'isolation'. Notice that China, once greatly involved in funding revolutionary forces in SE Asia, now is relatively isolationist itself. How about that? Increase capitalism, reduce interventionism, and China begins to assert itself as a growing financial power.

China is hardly perfect, but in some important ways, they are going in the right direction, while here in the USA, in those same important ways, we are going in the wrong direction.

Power Plant, Floriana Style

When I visited the Galapagos Islands last month, I visited one of the least populated- Isla Floriana. The population? 87.

The people of the Galapagos are very aware of their fragile environs. So, on an island where the total energy needs are so small, the power plant can look like this:

That's it! the whole plant! About 25' x 25', altogether. No smoke, no wires above ground leading away from the plant. Perfectly adequate for 87 people. They won't let you just walk through a coal-firing facility. In Floriana, they don't even have a fence around the werks. Ame and Isabel walk around with our guide, Rick.

Solar power. Makes perfect sense for an island within 75 miles of the Equator and a fragile environment.

That's an island that was starting from scratch. They chose wisely. Indiana isn't starting from scratch. There are already state-granted power monopolies in place, so it's illegal for an inspired would-be competitor to just go ahead and build a power plant. Under such conditions, could it be done here?

No. Unless state granted monopolies go away, this kind of innovation isn't likely to happen. Let's assume that they did disappear tomorrow, and there was a would-be competitor waiting to provide electric power on a small scale.

Begin with the purchase of that vacant lot in the neighborhood that's been little more than the regional dump since the fire, then erect the structure, bore conduit through the public right-of-way to junction boxes or transformers at the frontage of the property, then bore a duct to the customer- no poles or above-ground wires necessary. Fire it up and go. Lots of cost on the front end, but not a whole lot after that- just maintenance.

The electricians out there will argue that the reason power is on poles and not underground (unless mandated by law or new subdivision covenant) is the loss of juice underground. So what? I'll counter by saying that since the power source is closer to the end-user, you eliminate the line-loss of transmission from faraway plants. And besides, it's solar.

The lack of Equatorial sun-drenching a concern? No problem- place a windmill or two at the top of the structure. Many days here in Indiana, we get both sun and high winds.

I think we can do better by getting rid of the monopolies and the barriers to entry for would-be competitors, not worrying about too what an extra wire or two might be like, and see if we don't provided better rates and produce less pollution at the same time.

Indiana- Home Of Crony Capitalism

I absolutely hate it when a critic makes the mistake of seeing a government created monopoly business situation that creates problems, and assailing it broadly as a failure of capitalism.

I expect such criticism to begin to mount in the wake of the Indiana prison riot in New Castle. From the Indy Star report:

State officials will temporarily halt the transfer of Arizona prisoners to the New Castle Correctional Facility after a riot Tuesday that prompted calls for an end to housing another state's inmates in Indiana.

Department of Correction officials said nine people -- two prison employees and seven inmates -- suffered minor injuries in separate disturbances involving Arizona and Indiana prisoners during a two-hour period Tuesday afternoon at the facility 50 miles east of Indianapolis.

The other day, it was the "In God We Trust" license plates. Today it's this 'imported inmates' deal. What do both have in common? True conservatives should be opposed to both.

True conservatives should be opposed to special interest group-driven license plates on the basis that government has no business being a clearing house for private organizations, or for promoting mottos or images. Instead, Republicans seek balance- some plates they can call their own.

True conservatives should be opposed to selling off excess prison capacity on the basis that government should only have marginal excess prison capacity to begin with, and that state government has a limited proper role in protecting its' citizens from dangerous criminals. Instead, Republicans seek to turn the state into a business, making a profit on the excess prison capacity that should not be, taking in prisoners that are not the proper responsibility of the state of Indiana.

Indeed, Indiana government turned its responsibility on its' head. While by housing Indiana prisoners it is supposed to be protecting the law-abiding citizenry, it imported Arizona prisoners and thereby threatened the safety of the law-abiding Indiana citizenry.

This is without even considering the social implications of bringing two distinct prison populations together. Also from the Star:

"The idea of bringing in people from another state who bring along their gangs, allegiances and different alliances immediately was a mixture that was bound to bring trouble," said House Speaker B. Patrick Bauer, D-South Bend.

This is something that should have been anticipated by the State. It's obvious. Was it even considered? It isn't just culture clashes between populations that should have been considered, but also between procedures. Another quote:

Commissioner J. David Donahue said the Arizona prisoners may have been upset
because Indiana prisons have different rules, including a ban on smoking and
limits on personal items inmates can have in their cells.

What causes riots? When a prisoner has so little, they hang on to the few things they have. If they had cigarettes in Arizona and lost them in coming to Indiana, anyone with a shred of common sense had to know the inmates would be unhappy. All these differences should have been scouted in advance. It appears they were not.

So, capitalism is likely to take the hits, when it doesn't deserve it. Let's be clear on terms:

Capitalism is business that exists in the private sector, and outside of monopoly settings. This privatization deal is not capitalism. There is no competition in Indiana for private operation of prisons. This prison is the only one that is privately managed. That's crony capitalism. I detest crony capitalism.

Privatization is allowing a private operator to manage a function previously managed by government. This prison is no longer managed by government, being managed by a private corporation, GEO Group.

The importation of prisoners into this prison was not the brainchild of GEO Group, however. This was a Daniels Administration initiative. GEO had to deal with the situation.

Both Daniels and GEO have failed here, but I hold Daniels as most accountable. The importation never should have happened, as outlined above. If it hadn't, the riots most likely wouldn't have happened.

Today's Republicans will accept anything the people wearing the Elephant Brand promote. Expanding the state government's role in prison management? What principled conservative could possibly be in favor? Ah. There's just an absense of principled Republicans.

So, Republicans. Don't wince to sternly when capitalism gets beaten up because of this. You helped make it so.