Los Angeles Welcomes the Robots

I weep for Los Angeles. The “fight for 15” has made it to the LA City Council and is now poised to pass, setting the stage for a $15 minimum wage by 2020.

Progressives are celebrating of course, but thankfully there are some who understand that this is a bridge too far. Both Jordan Weissman and Danny Vinik of Slate and The New Republic respectively expressed reservations about such an exorbitant hike in the minimum wage, despite their favorable stances on progressive and union economics. Weissman frets that the available economic research “doesn’t really tell us anything about what happens because of an increase along the lines of what Los Angeles is now poised to pass,” while Vinik worries that “this isn’t a small hike and the employment effects could be significant.”

They are right to worry even as they celebrate the effectiveness of the “grass roots” (scare quotes for the fact that this is entirely a Big Labor driven initiative) campaign to agitate for a higher wage. Where they go astray is in their reliance on the “research” of experts and economists because as anyone paying attention knows, an economist or think tank or lobbying interest can produce the research they want to bolster support for a given policy. Data manipulation and rosy projections of a policy’s impact are the rule rather than the exception in Washington. An army of experts is just as fallible as an army of the first four hundred names in the Boston phone book, and in fact most of us would opt for the latter. Instead, progressives are never going to face reality unless they are forced to reckon with their glaring failures.

Fortunately, they seem to think that skepticism of the $15/hr minimum wage is just noise coming from conservative scolds who hate poor people. This kind of dismissive arrogance is going to be their undoing. Whereas Detroit and Baltimore and most major American cities under the thumb of one party Democratic rule took decades to succumb to the market distortions and bad incentives that go hand-in-hand with progressive economics, Seattle, San Francisco and Los Angeles – all who have adopted $15 minimum wages – are going to crater much faster if they adhere to utopian visions of egalitarian societies brought about by coercive meddling in the most basic and essential of all economic tenets: supply and demand.

It still boggles the mind that we have to keep repeating this, but if you arbitrarily hike the cost of labor, an equal and opposite reaction is inevitable. Either the employer will reduce his suddenly higher (doubled!) labor costs by reducing the amount of labor generally (i.e. layoffs) or he is going to raise prices to account for higher costs. That means $7 Big Macs sold through electronic kiosks. In fact it means a whole lot of robots replacing a whole lot of humans as employers find it cost effective to install automation in place of low-skilled workers making $15 an hour. Progressives seem to believe that costs can be magically deferred, or else ignored altogether. This juvenile, childish, ignorant view of the market explains how so many call for companies to pay their employees double what they earn now, because they can “afford” it.

One question: when did we cease treating fast food jobs as the entry level, foot-in-the-door opportunities that they are and instead as vocations in need of proper benefits?

I almost wish the LA measure took effect immediately, as I am eager to get this experiment underway and then over with, as it is going to be anything but pleasant for the residents of my beloved home town. $15/hr is insane. You’re going to see franchises hightailing it to Nevada and Arizona, a massive spike in unemployment, and a huge influx of robots. Remember when George H.W. Bush was raked over the coals for being in awe of an grocery store checkout automation? Prepare yourself for legions of frustrated people whose exasperation at encountering machines and kiosks in every store is compounded by the fact that everything is twice as expensive as before. Progress!

Obviously LA has some time before they implement this folly, so there is hope that someone with sense will get the ear of the city council during the next five years. And as Megan McArdle explains in her warning for Los Angeles, most noticeable impacts from minimum wage distortions tend to take a while:

When the minimum wage goes up, owners do not en masse shut down their restaurants or lay off their staff. What is more likely to happen is that prices will rise, sales will fall off somewhat, and owner profits will be somewhat reduced. People who were looking at opening a fast food or retail or low-wage manufacturing concern will run the numbers and decide that the potential profits can’t justify the risk of some operations. Some folks who have been in the business for a while will conclude that with reduced profits, it’s no longer worth putting their hours into the business, so they’ll close the business and retire or do something else. Businesses that were not very profitable with the earlier minimum wage will slip into the red, and they will miss their franchise payments or loan installments and be forced out of business. Many owners who stay in business will look to invest in labor saving technology that can reduce their headcount, like touch-screen ordering or soda stations that let you fill your own drinks.

This is right, but it is a summary of what typically occurs with small increases in the minimum wage. LA and Seattle and San Francisco are each flirting with stratospheric wage hikes, on the order of 80-100%. Thus, all of the symptoms and reactions by business McArdle outlines will still occur, just much faster. You will see major layoffs, major automation and major corporate flight from Washington and California if these states don’t wise up and walk back these wage increases. I assume this is what will happen, especially once politicians start getting browbeaten by their preferred business interests as well as by their less well off constituents suddenly faced with soaring prices for food and basic essentials. But all this does beg the question: why are they doing it?

Unions. By raising the minimum wage unions enjoy a higher corresponding wage floor from which to bargain in the future. Once a minimum wage is set, it affects contractors across the economy. Bids for public and private sector work must compete with union wage edicts to have any chance at the bid. This serves to crowd at smaller competitors and secure easy access for unions. And it similarly lifts the baselines for pension and benefit negotiations in addition to wages. In short, every single minimum wage initiative in America is about fattening the pockets of unions at the expense of the working poor, who are doubly affected by this union greed in the form of higher prices and fewer available jobs.

But we’re supposed to cheer on the “Fight for 15” and take to the streets to rail against corporate greed. But who is being greedy here? Somehow this mosaic of heroic workers in solidarity loses some romance once you realize they are just props for a larger union agenda, one that doesn’t give an actual damn about poor people or jobs. Unions by and large live by the wisdom of Michael Mulgrew, the former president of the New York United Federation of Teachers, who said

“If someone takes something from me, I’m going to grab it right back out of their cold, twisted, sick hand, and say it is mine. You don’t take what is mine. And I’m going to punch you in the face and push you in the dirt.”

Beautiful. It is also the prevailing wisdom of unions and the Democratic Party. This same sentiment animates progressive objection to reforming the welfare state or anything to do with public pensions. Same with cutting federal spending or eliminating waste. Right now the Ex-Im Bank is close to going the way of the dodo, something all of us on the free market right are cheering with heightened enthusiasm since it will be the first actual elimination of a federal anything in as long as I can remember. This worthless avatar of abject cronyism purports to serve America’s economic interest by providing taxpare loans to companies that deal heavily in exports. In practice the bank is an unfair bonanza for two large companies, Boeing and GM, who enjoy protection from smaller competitors without crony access to the bank’s largess. Conservatives and libertarians in Congress are close to declaring victory by not renewing the bank’s charter. Democrats are threatening to walk from the trade deal if Ex-Im is not renewed. What a farce of a position that is for a party purporting to stand against cronyism and speak for the little guy. Ex-Im is most definitely not about the little guy, rather it is federal bank for handing out favors to connected corporations. Not even Elizabeth Warren will allow it to expire, proving how sincere she is about reducing the incestuous and toxic relationship between big business and big government.

In the end, when it comes time to let a useless federal program sunset, the left rallies in unison to condemn it as heartless and bad for the economy. Because for the left, anything that reduces government at all is bad for the economy. The inverse of never wanting to allow government programs to disappear is always wanting to make more government appear, which is thew motivation behind the “fight for 15.” This is all about expanding union power and reducing private commercial autonomy in the market. The result will be more robots and less humans in the workplace.

While it is possible that Brett and Jermaine might welcome the robot revolution, the rest of us will be screwed. Straighten up, Los Angeles.

 

Michigan and Special Interest

Everybody loves roads.

Elizabeth Warren likes to lecture about roads and President Obama loves speaking about investment in crumbling infrastructure. Get past the talking points and into the weeds and the MSNBC set will offer something about “rebuilding America” as their pet panacea for, well, everything. Even Rand Paul has teamed up with Barbara Boxer on a bill that would fill the coffers of the federal highway fund via revenue brought in by a lower corporate tax rate. Libertarians can hardly go five minutes without being condescendingly informed that our free market paradise could never happen because who would build the roads?!?!?!?!?

In Michigan this week, Republican governor Rick Snyder saw Proposal 1 – a ballot measure to hike sales taxes to finance road and highway improvement – go down by an 80-20 margin. The governor and his party supported this bill which would have increased the average household’s annual tax burden by as much as $545 a year. The key support for the measure came from a lobbying consortium representing several concrete, asphalt, paving and excavation interests in the state. They outspent the opponents of the tax hike by 30 to 40-1.

Proposal 1’s “sound defeat undermined the media assumption that Big Business and Big Government working together represents a public consensus,” says Tim Carney in a piece for The Washington Examiner. Carney ends his column urging conservatives to build on this and sees it as an effective way to make the case against cronyism more broadly: “This points towards the way to sell limited government: When government has more power, it empowers those with connections to government.”

It is naive to think special interest lobbies will ever be eliminated. As long as we put the people’s representatives forward, interest groups will be there to gain their favor. The only way to limit lobbyist influence is to limit the number of laws coming from Washington. Bastiat feared an overabundance of legislation would lead to “legal plunder” which would give incentive to special interests to use the legal system for its own advantage. Illegal plunder earns universal scorn whereas legal plunder is considered “democracy.” But because we are never going to convince self-interested politicians who think they are divas to curb their enthusiasm for passing laws, we might as well abandon the dream of a lobby-free zone in Washington.

Instead, we should focus our attention on the small instances where Big Government-Big Business collusion is exposed, as just happened in Michigan. And we should heed Carney’s advice to highlight how ballot measures such as Proposal 1 “undermine the common liberal trope that the push for lower taxes is the agenda of Big Money, and that higher taxes is the populist agenda.” This is a crucial point.

President Obama, that fierce populist champion and avatar of the working man, showed in his first major act in office just how comfortable Big Business is with the progressive agenda. The stimulus was nothing more than a massive special interest kickback to blue state governments, public unions and friends of the progressive left. The most infamous example is Solyndra, a solar panel firm granted half a billion dollars by the Obama administration for no other reason than the CEO was a huge Obama bundler. The federal bureaucracy is notorious for how it awards contracts to connected firms over more qualified bidders, a fact that became known to most Americans during the Obamacare website’s China Syndrome moment. CGI Federal, a subsidiary of a Canadian firm infamous for completely botching a Canadian gun registry, was given the insanely lucrative contract in part because a Princeton classmate of Michelle Obama’s was the Senior VP. Even Rick Perry was not immune to the special interest lure when he was governor of Texas. Despite presiding over the best economic record of all states since 2007, Perry routinely offered state subsidies to chic tech companies such as Tesla, Google and Apple to entice them to open plants in Texas. That many companies express interest in locating in Texas speaks to the favorable tax and regulatory climate, sure, but the subsidies certainly play a role too.

Conservatives are generally fans of federalism and celebrate the idea of states experimenting with distinct economic models. By foregoing uniform economic policies drawn up in Washington to be applied nationally, we encourage competition between states as they experiment in various ways. Illinois is probably going to have to walk back its progressive obsession with high taxes and oppressive regulations because they are bleeding jobs and capital to neighboring Indiana, Wisconsin and Michigan, all of whom have lowered taxes and cultivated friendlier business climates in the last several years. Unfortunately, state competition for business goes too far when it devolves into a circus of competing subsidies and special treatment, also known as the “Redevelopment Racket.” Cynics say this is the way the game is played, but Michigan offers hope for a brighter alternative.

As Rick Perry and other conservative governors prove, conservatives can also be guilty of catering to special interest lobbies. However, a conservative politician engaging in crony capitalism is straying from established principle whereas a progressive doing the same is adhering to the only principle he knows: grow government. And despite the myth progressives maintain about high tax policy equaling populism, Michigan reveals the truth of the matter. Special interests representing road construction lobby the Michigan government for more spending and more taxes to pay for it, all so they themselves can get rich off the exclusive bid grant. The government – in this case a nominally conservative one – agrees that improved roads are desirable and does the bidding of the special interest by insisting that the voters agree to a pretty stiff tax hike. Perhaps voters would be more open to the measure if they thought the deal wasn’t riddled with corruption and back-scratching to begin with? At the end of the day, governments rarely look for ways to get what they want on the cheap. Why bother being frugal when powerful lobbies are there to suggest a simple tax increase?

Corruption and cronyism know no ideology, but government itself is the engine that drives them. Therefore, the party of government needs to come to terms with this reality and perhaps reconsider their dogma surrounding the benevolent Leviathan. Until then, let us hope for more Michigan-style tax proposals being met with boisterous thumbs down and that they serve to show the public exactly how deals are made in politics and what always lies beneath calls for more “populist” tax increases.

Prescience

“But we had better be careful. An apparent verification by prima facie favorable cases which are not analyzed in detail may be very deceptive. Moreover, as every lawyer and every politician knows, energetic appeal to familiar facts will go a long way toward inducing a jury or a parliament to accept also the construction he desires to put upon them. Marxists have exploited this technique to the full. In this instance it is particularly successful, because the facts in question combine the virtues of being superficially known to everyone and of being thoroughly understood by very few. In fact, though we cannot enter into detailed discussion here, even hasty reflection suffices to suggest a suspicion that “it is not so.””

-Joseph Schumpeter, Capitalism, Socialism and Democracy (1942)

Schumpeter was arguing against Marxian orthodoxy which insists that every event and occurrence can be explained and predicted by the inherent logic of history that points to the inevitable endpoint of capitalism.

But while Marxists eventually, grudgingly had to give up on their “arc of history” fantasies, the appeal of the technique outlined above persists, most obviously on the matter of climate change. I have my strong opinions about it and people are free to theirs, but the point Schumpeter makes is instructive and should discourage climate zealots from being so self-righteously assured of their position. The scientific method was conceived in response to the understanding that the science is almost never settled and any honest broker must acknowledge that shutting down debate with the “denier” epithet is the opposite of good scientific norms and practices. It’s the mentality that got a whole bunch of heliocentric advocates burned at the stake in yonder eras.

So much of the modern left is ignorant of the degree that Marxist tenets and arguments still reign over their thinking. Those who know from whence their ideology springs are keen to disguise the heritage of their ideas and, more importantly, their tactics. If it was conventional wisdom that modern leftwing methods are just warmed-over Marxist retreads, far fewer people would embrace them.

Climate change demagoguery takes a page directly from the Marxist playbook and that makes sense once you appreciate how the rise of the green movement and its activist impulses directly correlates with the fall of the Soviet Union. All those Commies had to end up somewhere and in the environmental movement they found their home.

Schumpeter’s critique of the flaws of Marxian “synthesis” as a means of explaining the logic of history (an endeavor championed more by early 20th century Neo-Marxists than by Marx himself) were incredibly prescient. His analysis of mid-20th century Marxist tendencies translates quite well to those of the Western left today. Climate change is the most acute example of modern leftists channeling techniques from a time when unabashed reverence for their ideological godfather was a matter of pride and rebellion rather than a secret. But the left’s reliance on “verification by prima facie favorable cases which are not analyzed in detail” and which “may be very deceptive” extends to many other topics as well. Every lie told about Obamacare, for instance. The left’s entire economic model of redistribution is itself a barely-disguised Marxist policy founded on the ridiculous idea that there exist always and forever only two classes, owners (capitalists) and workers (labor), and that the obligation of government is to take from the owners – who only could have accumulated their capital through theft – and distribute to the workers. Their cultural agenda is rooted in the Marxist belief that tradition and social norms are the sole provenance of the bourgeoisie and must therefore be eradicated everywhere. Thus are we subjected to notions of “patriarchy,” “white privilege,” “systemic bigotry” and “us against them” populism aimed at nothing more than placating the jealousy cultivated by the Marxist idea of permanent class war. It does not end there. The family and religion are under assault everywhere you look, displayed most openly by MSNBC’s Melissa Harris-Perry in a fine bit of #Grubering that included this nugget of Marxian wisdom:

“We’ve always had kind of a private notion of children. Your kid is yours, and your responsibility. We haven’t had a very collective notion of ‘These are our children.’ So part of it is we have to break through our kind of private idea that ‘kids belong to their parents’ or ‘kids belong to their families,’ and recognize that kids belong to whole communities.”

Whether the nuclear family, religion, property rights, conscience rights or the Bill of Rights, the neo-Neo-Marxists that comprise much of the Democratic Party in the U.S. and many elements of Canadian, Australian and UK Labour are hell bent on burning it all down. Like all good Marxists they can never lose sight of the ultimate goal of bringing about the inevitable demise of capitalism, so for all the shiny cultural distractions into which they pour considerable energies, the animating impulse can always be traced back to the fundamental misconception that society is locked in a fateful struggle between classes, of which there can be only two. Having only two classes – like political parties – creates a situation of permanent adversaries, an alluring construct for the aggrieved and the charlatan alike, never mind that this construct has little tether to reality. Once established in the popular mind, it is exceedingly difficult for critics to persuade the converted that they are being sold false hope based on a lie. The intoxicating promise of seeing the capitalists ultimately succumb to their own evil system of theft and greed has endured to today. How else to explain Occupy Wall Street and the inchoate ramblings of faux-populist Elizabeth Warren?

The goal of the Marx-inspired left is simply to stand for the advancement of government interests over individual or traditional interests at every turn. If you adhere to a belief that social progress is fixed to a logical arc of history defined by the never-ending class war and that the “good guys” are predestined to triumph over the “bad guys” and their ill-gotten capital accumulation, you’re unlikely to be receptive to philosophical or economic arguments in favor of capitalism. Instead your concern falls to the “little guy” who can only be made whole by dint of an aggressive correction to the unjust and immoral status quo of market economics. The vehicle for the correction is the state. No matter how much academic evidence emerges to prove the fallacy of the project, no matter the real world evidence that confirms the futility of collectivism in practice, and no matter the human toll erected on the mantle of socialism, the cult of Marx persists because he offered a moral foundation to anticapitalism. The world was rigged in favor of the bourgeoisie and against the proletariat. Entreaties to trust the invisible hand or the beautiful twin phenomena of innovation and creative destruction would always be met with derision and contempt, for they purported to put the onus for solutions on the very class the workers had been indoctrinated to never trust. The same dynamic at play in 1914 is alive and well in 2014.

The left will not allow us to dissolve the broader class war narrative because it suits them to perpetuate. As Schumpeter might say about the left’s overriding world view today, “even hasty reflection suffices to suggest a suspicion that “it is not so.””

Uber Alles

There are few things I enjoy more than the idiotic leftwing backlash against Uber. Besides revealing an utter lack of comprehension of market forces, those on a moral crusade against Uber are actually engaged in a transparent effort to carry water for cartels, aka the taxi unions. Because nothing says “progress” like championing the perpetuation of inefficient, corrupt, politically protected 19th century labor practices over spontaneous order and innovation.

Customers love Uber. Political hacks on the left hate it because it threatens unions and therefore threatens their donor base.

In Sydney last night, Uber’s decision to respond to spiking demand by quadrupling rates as a way to attract more drivers caused more hubbub on twitter than the actual hostage crisis. How dare that evil, greedy, private company raise its rates in the middle of a crisis? Well, if the intent was to incentive more Uber drivers onto the road to provide their in-demand service, what the hell is the problem? The problem apparently, is that profits are inherently evil, but especially so when sought amid a crisis. Mollie Hemingway corrals some representative tweets here and lobs justified scorn at the mob.

My favorite Uber anecdote is from this past summer, when European capitals saw coordinated protests against the disruptive taxi app by having all their taxi drivers block traffic at key arteries and walk out in solidarity, causing massive traffic jams. The result? Uber subscriptions skyrocketed 850% across the continent in a single day as many who had never heard of Uber were suddenly inclined to check them out. Talk about your all time backfires. Who among us would not leap at cheaper and more efficient modes of travel, especially when those already tasked with public transport merit such disdain for their petty and annoying protests, not to mention for their general performance?  As if the intent is to conform to stereotype, Paris taxi unions are back at it again today, blocking traffic and demanding an end to Uber while determined to learn nothing from their last failed protest. Hope it goes just as well as last time.

One would think the writing would be on the wall and the taxi union would understand that their days of holding a protected monopoly are over. Alas, the unions are doubling down and their allies in media are drooling for any story that can undermine Uber’s credibility. The constant harping on unfair pricing betrays a thorough ignorance of how markets work, though even more disturbing is the lack of imagination on display by these critics. In order to not only appreciate but celebrate the free market, one has to tap the frontier explorer mentality within, which will allow for the acceptance of “creative destruction.” Every innovation we love is born from this basic concept: existing products and services are displaced by new ones that invent better and cheaper ways to satisfy customers. This process requires businesses, jobs and brands to sometimes disappear. Executives and employees alike at firms such as Research in Motion (makers of Blackberry), Blockbuster, LaserDisc and the legacy music labels would undoubtedly have preferred to see their companies remain viable, but economics is like gravity – it is futile to fight. Now think of the firms that took their place: Apple, Netflix, BluRay and Spotify. In ten years, we may or may not still have these popular companies with us. The thing to do is accept reality and applaud the lower prices, better products and services and technological wonder at hand, while the thing one should not indulge is barking at the moon or vainly wielding one’s fist at the heavens because one is uncomfortable with the metaphysical reality that things always change. (Ironic that the vapid slogan “Change” deployed by Obama in ’08 should be so utterly lost on he and his followers when it comes to the constantly changing dynamics in the marketplace, otherwise known as “capitalism”). If you are in favor of change and progress, it makes no sense to stand opposed to innovative and disruptive new technologies just because they threaten old models which you favor and wish to see preserved.

By all accounts, Uber CEO Travis Kalanick is kind of a jerk and has perhaps gone out of his way to stoke the ire of his antagonists. Frankly I could care less what the man’s personality is like or whether he encourages his employees to aggressively (but legally) recruit drivers away from competitors. Competition is not always polite and ethics are important to maintain even in a ruthlessly competitive and nascent market such as the booming sharing economy. But forgive me if I perceive every “Uber is shady” story as part of a broader unease with these carefree, ambitious and cocky tech titans who are supposedly planning to take over the world and turn it into Galt’s Gulch.

While it is surely not the driving motivation behind their attempt to discredit and ultimately destroy Uber, one factor must be that these champions of the uber-state and haters of anything that can reasonably be attributed to the philosophy of Ayn Rand are petrified of the growing “libertarian moment” and feel it is their moral obligation to stop it in its tracks. The level of Ayn Rand paranoia on the left is staggering. There are at least a dozen more influential philosophers and economists on the right than Rand, though she is unquestionably among the canonized thinkers for libertarians. As Robert Tracinski lays out in a wonderful piece, the one enduring lesson the left could learn from Ayn Rand is that “there are no evil thoughts except one: the refusal to think.” Rather than do the hard work of reading Hayek or Schumpeter, or even bother much to think, critics of free market economics lazily single out Rand as our one true prophet because she is easier to demagogue and her arguments easier to caricature. But I think the fundamental explanation for the left’s passionate assault on anything to do with free market economics or deregulation has to do with the libertarian moment coming directly on the heels of what was supposed to be the great progressive resurgence of 2008.

We are the ones we have been waiting for” was only six years ago but it feels a generation ago now. For all the starry-eyed millennials and social justice warriors and would-be authoritarians in cloistered academia, the rapid erosion of Hope and Change is surreal and responsible for massive whiplash. Beaten and bloodied and staring the demise of their movement in the face, progressives are behaving as any cornered animal would, by lashing out. “The Liberal Hour,” as the WSJ editorial page characterized the national mood in April of 2009, is no more. All that remains is an embittered hostility to actual, observable change.

 

Stupid Laws and Unintended Consequences

The scourge of progressivism is always on display, but sometimes the sheer stupidity of its arguments goes to eleven.

Behold the progressive left’s comprehensive rebuke of Rand Paul’s recent argument that cigarette taxes and the black markets which consequently ensue are partly responsible for Eric Garner’s death. Because racial division benefits the Democratic Party politically, there exists a profound desire on the left to sustain such a beneficial narrative for as long as possible when afforded the opportunity. Conversely, an even stronger desire to prohibit the narrative from being hijacked by other focal points manifests whenever someone challenges the established left wing conventional wisdom.

On MSNBC’s Hardball, Rand Paul offered this completely reasonable opinion on Eric Garner’s tragic death:

I think it is hard not to watch that video of him saying ‘I can’t breathe, I can’t breathe’ and not be horrified by it. I think it is important to know that some politician put a tax of $5.85 on a pack of cigarettes so that driven cigarettes underground by making them so expensive. But then some politician also had to direct the police say, ‘hey we want you arresting people for selling a loose cigarette.’ For someone to die over breaking that law, there is really no excuse for it. But I do blame the politicians. We put our police in a difficult situation with bad laws.

The last thing the left wants is their racial injustice narrative derailed by concerns over taxes or big government (which is not unlike radical feminists’ desire that the agenda outweigh the truth). Hence the surreal spectacle of countless left wing pundits levying passionate rebukes of Paul and the broader right who picked up on his critique. Jon Stewart made the splashiest headlines with his “What the fu*k are you talking about?” zinger on The Daily Show.

Joan Walsh weighed in to pronounce Paul’s 2016 hopes “wrecked,” while Gawker, Vox, Rachel Maddow’s stenographer Steve Benen, and Jeffrey Toobin all joined the chorus condemning Paul for his comments.

Meanwhile, Jonah Goldberg, Rush Limbaugh, Sean Hannity and others on the right responded to the left’s claims with justified scorn. There are some lines of attack that go unanswered because they are not worth responding to, such as charges that Republicans wish to “throw grandma off the cliff” (by reforming Medicare) or wishes to “see kids starving in the streets” (by cutting food stamps). But then there are some arguments belched out of the left’s hive mind that demand swift correction and incessant mockery. The argument that taxes had nothing to do with the Eric Garner tragedy is just plain stupid.

With the opposite of all due respect for Jon Stewart, let me explain just “what the fu*k” Rand Paul and everyone else with a brain is talking about. New York progressives believe that nothing is immune from their regulatory reach, especially those activities which they define as bad. Smoking is indisputably bad for individual health, ergo there must be government restrictions on access to this legal product. That constitutes the “seen” whereas all the unintended consequences that go into enforcing these laws constitute what is “unseen.” By and large, the right knows at least that the unseen exists as a real phenomenon that must be accounted for in public policy, while the left treats the unseen at best as an abstraction and at worst as a sort of urban legend, a myth invented by unsophisticated rubes who can’t quite wrap their puny minds around the need for government to operate as independent arbitrator.

The unseen in the matter of Eric Garner is the human response to incentives. Had there been no six dollar surtax on cigarettes, there would have been no need for the emergence of a massive smuggling racket, whereby trucks would smuggle cigarettes up from the South by the half million. Contrary to popular liberal mythology, human nature is not malleable and thus not prone to radical shifts in personal behavior just because the authorities believe that passing a law equals solving a problem.

Who smokes cigarettes? It’s not coastal elites or academia’s assembly-line activists, that’s for sure. It’s middle American whites and inner city minorities. It’s nice and noble that nannies wish for them to quit, but you know what is not nice and noble? Making packs in New York City and Chicago $14. You think by magic all these smokers are going to magically and radically change their behavior? No, they’re going to look for cheaper avenues to acquire smokes. Progressive do-gooderism and a failure to understand market dynamics, incentives and human behavior leads them to passing these sorts of taxes and levies on the poor in all of our big cities. And the left gets mad when the people don’t comply with their central plans, so they create a strike force (as Cuomo did) to crack down on those nefarious criminals who dare to sell “loosies” outside of the jurisdiction’s onerous taxes.

Progressives want everything to be about social justice and race, and nothing to be about economics or the perverse incentives created by well-intentioned government programs. Both things can be true: Eric Garner was a victim of excessive force by above-the-law police and he was also the victim of the tragic unintended consequences that often arise when black markets emerge in response to bad policy. This is not complicated, but judging by the left’s reaction, I guess it is.

How to Help the Poor

Mother Jones’ Kevin Drum laments the Democrats’ worrying trend with working class white voters and traces the discontent to lingering unhappiness with the Democratic tax and spend welfare state model. Drum accurately highlights how liberal obsession with food stamps, unemployment benefits, Medicaid and Obamacare can alienate working class whites as they see more and more assistance going to their marginally less well-off neighbors while they get nothing. Personally I think race has very little to do with what is really an economic and a government problem, but since the left can’t tie their shoes without noting the latent racism involved in shoelace production, they have to identify their middle and working class voter problem as one to do with the “white working class.” Fine. Whatever gets them to any level of introspection is only good news for the debate going forward.

In getting to his conclusion that he has no conclusion for how to solve this electoral dilemma, Drum offers this precious piece of liberal self-congratulation:

“Helping the poor is one of the great causes of liberalism, and we forfeit our souls if we give up on it.”

I wonder if the left will ever understand observable reality and change its mind on what constitutes helping the poor. Everyone with a conscience, left or right, wishes to see the plight of the poor improve, the question is how to achieve improvement. I (kinda, sorta) accept Drum and liberals at their word that their aim is true when they advocate for these government programs for the poor; my problem is with their stubborn refusal to be accountable and admit that the ambitious War on Poverty was a failure, especially if viewed in terms of trajectories – American poverty was steadily declining between 1945 and 1965, only to flatten after the Great Society was introduced. The line has remained flat for a generation.

us poverty graph

It is an insult to basic intelligence to suggest these programs were successful at eradicating American poverty. Possessing noble intentions does not automatically translate into good policy, but seeking well-intended results through government is guaranteed to create bad policy because government is inherently inefficient (and likely inherently stupid too).

Whatever merits progressives assign to the Great Society are dwarfed by the incontrovertible fact that its biggest legacy is likely to be the destruction of the black family in America. And not just the black family, either. One of the more fundamental disagreements between left and right is over the matter of incentives. The left doesn’t bother with incentives because, if I may be so bold, they typically don’t care about how their policies cause people to behave; they just care that a policy they came up with is made binding on others. Or if you want to be more generous: the left doesn’t focus on behavioral incentives in law because they don’t believe such things exist. Since most leftists come from academia, they are used to theoretical models that deal in static data. The real world, however, deals in dynamic data, in that there is no way to account for the variable known as “human behavior” in academic models of society or the economy.

Laws create behavioral incentives because humans are not robots. Just because it makes sense on paper to increase government spending in order to stimulate aggregate demand does not mean such policy will work in practice. In fact, we know it does not work because rudimentary market economics informs us that government intervention into the economy only creates distortions and mis-allocation of resources. The left has never understood this basic premise when it comes to – well, everything – but especially when it comes to helping the poor.

By aggressively inserting itself into the lives of inner city and rural constituencies the federal government has wildly distorted the markets for labor, education, spouse and dignity in America’s poverty-stricken regions. Government intrusions in the form of food stamps, unemployment and Medicaid sound benign at the outset. But consider how these benefits alter incentives for the beneficiary. Is a worker in the inner city more or less likely to ardently search for work when 99 weeks of unemployment are on the table? Is a struggling shop-owner looking to hire two extra workers on the cheap (offering them an opportunity out of poverty, perhaps) going to be more or less likely to do so when the price of labor is arbitrarily raised on him via a minimum-wage increase? Most crucially, are a couple with children more or less likely to stay together when there are no consequences to family dissolution thanks to the ubiquitous welfare state that allows single mothers to collect plenty of money with none of the dignity attached.

The $64,000 question is whether the American left, facing its worst political moment in a century (the 1920’s were the last time the party had so few seats in the U.S. House of Representatives and the state legislatures – they were wiped out the last two midterms), chooses to double down on welfare statism or decides to speak honestly and culpably about the failures of their grand experiment in leveraging the public sector to fix poverty. If Democrats really want to speak to the white working class again, or for that matter, the poor and underclass who they today purport to serve, they need to accept that there is one – and only one – proven tool for lifting masses of people out of dismal economic conditions: capitalism.

So that’s where we are. The left’s future as I see it depends on their developing a non-transparent and believable appreciation for what makes economies grow. The fact that the global poverty rate fell from 26.8% in 1970 to 5.4% in 2006 due primarily to the introduction of free enterprise and free trade to the rest of the world is entirely lost on the inhabitants of America’s faculty lounges. If they are even aware of this remarkable 80% decline they shrug and attribute it to government aid or something (seriously). Empowering individuals through trade and entrepreneurship is not some fashionable dream concocted by libertarians but the cold hard reality of the how wealth and prosperity are made. The middle and working classes in America aren’t eager to join the poor in the ranks of the dependent class. The poor themselves do not wish to be pandered to and showered with candy while no observable improvements are made in their communities. People are ready for something different, above all in the country’s approach to economics, employment and welfare.

The good news is that, for all the lefty hand-wringing (and really, there ought to be more than there is) over losing the white working class, there is no way they are going to suddenly become champions of capitalism and that means the right is well positioned to cast some much needed light on the plight of overlooked and left behind Americans.

world poverty since 1970

Marxist Millennials?

There’s nothing more embarrassing than the left’s periodic flirtation with Marxism. Anytime a skeptical critique of capitalism is given a quasi credible veneer, the left goes nuts and forgets that their most successful (and cynical) tactic of the past hundred years has been to hide their very real and very confused hostility towards capitalism and markets.

So enter Thomas Piketty, who claims that inequality can only get worse with capitalism in his new book Capital in the 21st Century and leftist morons screech “See!!! Inequality is the only thing that matters!!! We don’t know anything about economics but we’re still certain that income inequality is a scourge because, well, because the proposed measures for addressing it involve expanding the reach of the federal government.”

Leftists hate the free market because a) the extent to which they comprehend it is roughly analagous to the depth of Hodor’s vocabulary and b) because free markets and a premium on individualism undermine the left’s sacred fantasy that society can be planned and managed and shaped to fit the majority’s will. The statist mind chooses not to accept the obvious superiority of free market capitalism over all the others because the statist believes, like a child, that perfection is possible in this life and utopia is attainable.

Utopia is impossible. Greed and avarice are innate characteristics of human beings. The least bad method for harnessing humanity’s fallible nature is to allow for maximum individual freedom. The absolute worst method for harnessing productive instincts in society is to concentrate power centrally; to trust other fallible human beings with “expertly” administering a just and equal state is to completely ignore all of human history. Leftists refuse to learn the most important lesson: that power corrupts absolutely, that there are no angels among men, and that central planners don’t fail because they have the wrong plan, but because planning (scientific, Marxist, Keynesian, etc) itself cannot work. Ever.

Are the progressives right to be so in thrall to Piketty’s work? Is their assumption that millennials and minorities will forever stay wedded to the tribe of identity politics and cultural conformity? Progressives used to genuinely champion freedom of thought and expression, but those days are over. In their pursuit to establish an unassailable culture of “tolerance,” the left has so convinced itself of possessing the moral high ground that it takes for granted that it has become indifferent to its own cynicism. This is how you get scores of bright young intellectuals at places like Mozilla and Brandeis acting like intolerant clowns by reviving timeless leftist traditions like censorship and the thought police. When you carry as an article of faith the smug certainty of your own right-thinking benevolence, you are more likely to turn a blind eye on obnoxious conduct so long as the culprits are on the right “team.” It’s all a long way of saying that I have no idea what the fate of millennial politics is. However, I suspect that Marx is the furthest thing from their minds in 2014, especially when Democrats and their Marxist-sympathizing base have had the run of the capitol for the past six years, and their ideas continue to get worse. As technology makes us more individualistic and libertarian every day, millennial lusting for a return of Marx strikes me as the left’s latest iteration of adorable wishful thinking. More likely, when the economy ultimately improves (a development sure to be delayed until our current regime steps down) and jobs are being created and filled by the chronically unemployed youth, millennials will begin to awaken from their stretched-thin hypnotism and absorb the wisdom that comes to all men with age: that government is incapable of delivering on its promises. Every effort to fulfill its promise serves to crowd out the productive private sector, which slows the economy and prolongs stagnation.

Maybe they won’t arrive at this revelation en masse, and maybe it will take longer than I hope for my generation to finally open their eyes to the awful truth of collectivism, but I will be more than a little surprised (and profoundly dismayed) should the millennial generation sustain its dalliance with the identity politics left that demands total fidelity to every aspect of the cause, with heretics put on permanent notice.

The Failed War on Poverty – 50 Years of Prog Facepalm

Quite a few depressing anniversaries of late: 100th year of Federal Reserve; 50 years since Kennedy assassination; and now 50 year anniversary of War on Poverty.

First, you can’t declare “wars” on abstract or social phenomena like poverty or drugs or terrorism. We of course have the progressives to thank for this stupid idiom: William James argued that early 20th century progressivism needed to transcend the “moral equivalent of war” to domestic, non-war progressive social policies. If you give something the urgency of “war” you’re likely to get an urgent reaction.

So what have we gotten out of all this asymmetrical “warfare?” Far less than was promised, an exorbitant sum of wasted energy and money, and worse outcomes for those intended to benefit.

The greatest tragedy of the War on Poverty is that it has been on autopilot and is free from critique or reform. If Bono can figure out the secret to solving poverty, surely your average American progtard should be able to appreciate his sentiment: “Commerce [and] entrepreneurial capitalism take more people out of poverty than aid.” (http://bit.ly/1afrqbA)

Bono can’t be accused of not caring. The guy has spent the last 20 years making African poverty eradication his personal crusade. He’s seen plenty of money thrown at the problem, and yet he gradually arrived at where he is because the different outcomes from capitalism and from aid are so striking that even a rock icon and former skeptic of free enterprise can come around.

So if it is now painfully obvious to Bono that foreign aid to Africa is a gigantic boondoggle that has nothing on entrepreneurial capitalism’s ability to lift people out of poverty, why does the progressive left in this country still insist that aid from the government is the answer to poverty, unemployment, etc? Is it because they use the aid as a cynical tool aimed at political gain? Or are their hearts in the right place and they’re just too economically illiterate to understand that there’s a much better way to fight poverty?

Charles Krauthammer was a Great Society liberal working at The New Republic up through the mid-80’s. His principle reason for converting to conservatism was the War on Poverty. He said he was in favor of LBJ’s programs initially, but after 20 years it was impossible to ignore the data; not only had poverty not dramatically changed since the inception of the war against it, it had grown worse and the federal aid had contributed to it. This conclusion was enough for Krauthammer to ditch the Great Society and liberalism, unfortunately he was essentially alone on the left in admitting its failure.

50 years, $20 trillion spent, poverty still winning the war. And the real shame is that progressives won’t admit it, and in fact call for more spending and more aid. The only way to eradicate poverty is to embrace markets and capitalism. But those are bad, scary, evil things that only rich, selfish conservative racists would endorse, or so believes the modern left.