Wednesday, December 22, 2010

Different Mindsets

Most of us know about Benjamin Franklin's kite. He showed that lightning is an electrical phenomenon. Based on that theory Franklin invented the lightening rod to protect people's homes. He had the curiosity of a scientist combined with the practical mind of an inventor. In fact had he not been so famous as a statesman he would be famous for his scientific and creative endeavors.

Over a hundred and thirty years later the great German scientist Heinrich Hertz showed that radio waves are electromagnetic. He produced a scientific paper. It was left to Marconi in Italy to turn that knowledge into a practical radio – and Marconi had to go to England to get financial support for his invention. Though Hertz's paper was valuable in terms of scientific knowledge, he had no apparent interest in putting it to practical use.

I believe those two events illustrate a difference between what we might call the European and American mindsets. I suspect the difference comes from our respective histories. Europeans have a tradition of class structure with the aristocracy not stooping to manual labor or to such mundane things as engineering or invention. Why should they? They had servants to take care of everything. Because of that it was easy for the Europeans to think of practical labor as the province of the lower classes, people who were not as good as the dukes, princes and other aristocrats. In some cases anyone there who engages in practical work will suffer a lower status.

The U.S., on the other hand, explicitly rejected any form of aristocracy. The belief that “all men are created equal” allows for no inherited class structure. Our constitution allows any citizen to aspire to any office. (It is said that any baby born in the U.S. could become president and that is just one of the risks he takes.) A people who had to survive in an untamed land tended to have more respect for practical skills than for noble birth. In fact our first president was a farmer and by all accounts a very good one. George Washington continually sought ways to improve production on his farms.

This mindset is undoubtedly behind many of the differences between the U.S. and Europe described in Hannan's book The New Road to Serfdom which I reviewed earlier. It is easier for the Europeans to accept elite that will rule without direction from the masses. With a history of regarding the king as God's anointed, it is easier for them to adopt the statist attitude that government is the source of wisdom.

However if we believe that we are all created equal we usually accept the corollary that we should all have an equal voice in how we are governed. We are more likely to reject the quangos Hannan describes and to form movements such as the Tea Party.

Of course this is not a 100% separation. There have been European inventors and there are Americans who consider the intellectual life a higher form of existence than working for a living. However in general Europeans are less likely than Americans to ascribe high status to the practical inventor and Americans are more likely to demand that their government listen to them. With this difference in mindset is it any wonder that Europeans often regard the U.S. as having a “cowboy” attitude while we often regard them as cowards?

This is something we should keep in mind as President Obama and others seek to have us emulate Europe. Do we really want to hand our thinking and government over to quangos or even to elected officials with unlimited power? I know my answer to that question.

Wednesday, December 15, 2010

The New Road to Serfdom, Book Review

OK, I hope readers don't mind anther book review
The New Road to Serfdom, A Letter of Warning to America by Daniel Hannan, 187pp plus index, Harper (imprint of HarperCollins), 2010

Daniel Hannan, a member of the European Parliament, writes this book to warn the United States not to follow the route Europe has taken. In it he contrasts the historical freedoms in the U.S. with the European situation. He regards the U.S. as the best hope for the world, not only as an example but as the only country likely to stand between freedom and the undemocratic destination toward which Europe wants to lead the world. The real power in the EU is not the elected representatives but appointed bodies essentially accountable to nobody. In fact the British have coined the word “quangos” for those Quasi-Autonomous Non-Government Organizations. These are what Hayek warned about over 60 years ago in the book from which this one takes its name.

The ruling body of the European Union is officially something that can be called a quango. A group of appointed officials is the only body allowed to initiate legislation. Europeans have no way to vote those people out. In addition, European judges often believe that they have power to do what they think right, regardless of the law and international borders. They have issued writs against Ariel Sharon, Donald Rumsfeld and others on the political right (but not of course against Fidel Castro, Yasser Arafat, or Robert Mugabe).

Mr. Hannan describes how the U.S. has historically been different in demanding government by representatives of the people while Europe has moved toward rule by quangos and judges, neither of which is constrained by any representative law-makers. In fact while then first words of the U.S. Constitution are “We the people.” The EU Constitution begins, “His Majesty the King of the Belgians...”

Indeed the EU document was to be approved by voters but when the first two countries (France and the Netherlands) voted they defeated it soundly. After that a team of lawyers went through the document line by line and without changing the meaning made it deliberately unreadable. Then the national governments announced that their previous promise of a referendum no longer applied. Government officials approved the union in flagrant disregard of the wishes of the people.

On a related subject, while the U.S. at least pays lip service to the idea of power dispersed to local and state governments, the EU deliberately takes the opposite track, concentrating power in Brussels. This is combined with constitutional mandates for many aspects of daily life. People are supposed to have a right to a job, to respect, vacation, food, medical care etc. However as in the old Soviet Union those rights exist on paper more than in reality. The author describes many conversations he has had with EU officials in which he points out a problem only to be told in effect, “that isn't a problem, we've listed it as one of our priorities.” Sadly the remedy seems to stop with the paper claim that the problem should be solved.

Mr. Hannan describes why it is a bad idea to copy Europe in economics, health care, welfare, society in general, and immigration and why we should not abandon federalism. He makes a good case for a return to the constitutional principles that the U.S. seems to be moving away from.

The one weakness in this book is the lack of references. While much of the material comes from the author's personal observations, there is much that should have been documented. However in spite of that weakness it is an important book, one deserving of wide attention. As Barack Obama and others try to move us toward a European model we really should look at where we are going if we follow that route.

Tuesday, November 23, 2010

New Deal or Raw Deal (Book Review)

Book Review, New Deal or Raw Deal by Burton Folsom, Jr., 2008 Threshold Editions (Davison of Simon & Schuster). 270pp plus notes and index

Conventional wisdom among many historians and educators is that Franklin D. Roosevelt's New Deal brought an end to the Great Depression of the 1930s. Those who look at the data realize that is not the case. However many have fallen back on less conventional but still popular “wisdom,” namely that World War II ended that depression. This book disputes both conclusions and in my opinion should be required reading in our schools. As many of our current politicians attempt to duplicate the New Deal we should inform ourselves about what really happened during FDR's administration.

Briefly Folsom shows, with copious notes and data, that the New Deal actually worsened and extended the depression. Furthermore though the war did reduce unemployment, major effects of the depression persisted until Harry Truman dismantled much of the anti-business climate FDR had created.

The book describes FDR's background which may have been the cause of his lack of understanding of business and economics, as well as his dishonest ways. His family on both sides demonstrated a lack of business sense. His father James inherited a fortune but barely maintained it, making a series of poor investments. On his mother's side his grandfather made money selling opium illegally to the Chinese. When he tried honest business he did so poorly that he returned to that illegal business. FDR was raised without being taught basic budgeting or anything else that would have prepared him to deal with financial problems.

FDR was a mediocre student, having a C to C+ average at Harvard. He concentrated on the social-political world of clubs, debates and journalism and ignored subjects like economics that might have prepared him better for his future career. At the same time he regularly misled his parents with out and out lies, claiming to have performed better than he actually did in sports and other events. For example after doing poorly in a race he told his parents he came in forth. He knew his parents would see the school newspaper which listed only the top three finishers. That disregard for truth was also manifest later when he would categorically deny having made certain statements he had in fact made.

The result of all that seems to be a future president who did not like business and did not understand economics. He was, however, very charismatic and persistent. Those characteristics governed his presidency.

The next section of the book discusses the causes of the Great Depression, why what might have been a short-lived economic downturn became the epitome of an economy in trouble. While those causes are complex the three major causes were the Smoot-Hawley tariff bill which caused retaliation from trading partners, very poor decisions by the federal reserve which cut back on the money supply at the worst possible time to do so, and refusal of other countries to repay debts incurred during World War I. (Smoot-Hawley contributed to refusal to pay those debts since debtor countries used that also as retaliation.) Though those causes happened before he took over, Roosevelt did not understand the causes so it is no wonder that his corrective measures missed the mark.

Roosevelt's response to the depression was to crack down on the very businesses that needed to do well in order to increase employment. One of his first measures was the National Industrial Recovery Act, NIRA, later shortened to NRA. That encouraged price fixing and even allowed major players to set prices with the force of law. Some smaller competitors went to jail for undercutting prices so determined. That drove many companies out of business, worsening unemployment.

Other measures such as the Agricultural Adjustment Act had similar effects. By law farm prices were set high with the resulting loss of business to farmers. Particularly bad was the undistributed profits tax which discouraged business investment.

While damaging the economy, FDR managed to gain power and get re-elected. That was due not only to his charm and charisma but also to the way he used the federal budget to influence (many would say buy) votes. States firmly in his favor or firmly against him got little federal money. Swing states were saturated with federal relief money and FDR's people made sure they knew where it came from. They also hired 300,000 WPA workers just before the 1936 election, then dismissed 300,000 soon after that election. Only someone with FDR's charm and charisma could have pulled that one off.

The result was that the depression continued at least until the start of World War II. Unemployment remained high and business was terrible. The war reduced unemployment by putting over 12 million men in the armed forces and many more to work building war materiel. However stock prices remained low and other economic indicators also failed to recover. That changed only when Truman became president and allowed the business climate to improve.

The last two chapters describe why historians have missed the mark on the New Deal, and how it continues to affect us today. Basically historians have mostly favored statism and have indulged in groupthink. Any historian deviating from the conventional wisdom will be dismissed as irrelevant. Meanwhile, the New Deal legacy of big government, high taxes, and distrust of business continues to harm us today.

I strongly recommend this book. There are eerie parallels between what FDR did and what many Democrats want to do today. We should study the effect of the New Deal before trying to repeat it.

Thursday, November 18, 2010

Game Theory and Government

After a couple of blogs on game theory, let's now tackle how it fits with government. I already mentioned the foolishness of city governments throwing taxpayer money after professional sports teams. Sports leagues make sure that a city has essentially no added value. That leaves the league with all the power in negotiations so the league and the team owner win every time

However professional sports are small potatoes compared to other government functions. What about those? Do they have added value? The answer is that some do, some do not.

At its best government provides added value in what economists call external benefits. That is benefits not worth the price to any individual user but useful to enough people to make them worth the cost in the aggregate. For example few companies would find it worth the cost to build a road for their customers. However if we consider all the users of that road it becomes worth the price. Government can use tax money to build the road which then gets used by not only that company but nearby businesses, shoppers, even visitors from far away. The road provides external benefits.

Notice that if there were no government there would probably be no road. The value of the road represents added value provided by government. Whether that value exceeds the cost is another question but that is not our concern here.

Police and fire departments also provide added value. Few homeowners could afford their own fire department but the city or county as a whole can spread the cost over all citizens. The fire department can then save homes and lives as well as lower insurance costs. It represents an added value.

However many government expenditures add no value to the game. What happens in a typical economic bail-out? The statists would claim added value because they think it really helps the economy but does it? So far in this crisis our government has saddled us with huge debts, yet unemployment remains high. Where is the added value in that? The fact is that such programs merely move money from one pocket to another, they do not create goods or services. Instead they take money one business or person might have used to create wealth and give to someone else.

The real effect of many government programs is apparent only in retrospect so it will probably be years before we can really understand the effects of the Bush-Obama bail-out. However there are eerie parallels with the Great Depression and the measures taken by Hoover and Roosevelt. Most economists now recognize that the New Deal prolonged that depression.*

The problem with government it that it has not only a monopoly but also the power to force its will on others.. A business that insists on being paid more than its added value will soon find itself with no customers at all and thus no business. However government has the ability to take what officials want or think necessary. That allows it to grab more value than it provides. In almost all cases, government provides no added value if it does something a private business could reasonably do

The only solution is a strictly limited government, one constitutionally restricted from expansion and in which the citizens insist on following that constitution. And please note that the added value problem is only one of many reasons to limit government. Even if government can add value there are often good reasons for it to stay out of the game.

*cf the book New Deal or Raw Deal by Burton Folsom, Jr.

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Tuesday, November 16, 2010

A Bit More Game Theory

Remember the eccentric millionaire who handed you a puzzle piece and offered $100 for that plus its matching piece? He's back, this time with a twist. First he informs you that you were not the only player in the last game. He actually handed out 100 identical pieces, scattered around the country so players could not know the others who were playing. Joe had 100 identical matching pieces. All 100 pairs were turned in so the millionaire paid out a total of $10,000. The players were sensible so Joe walked away with half of that, $5,000. The other players got the other half, $50 each. Everybody got half of his added value.

Our rich if slightly crazy friend now wants to play the game again, but with a difference. Again you have one of the 100 puzzle pieces scattered around the country. However this time Joe only has 95 pieces but he knows there are 100 pieces out there to match his. Five players are going to get left out. The total value of the game is now only $9500. Joe's added value is again the entire value of the game, this time $9500, but what is your added value now? If you pull out of the game how is does that change the total value?

Well, if you pull out that leaves Joe with his 95 pieces but there are 99 others with whom he can negotiate. You cannot change the value of the entire game so your added value is zero. You have no negotiating power at all unless you can contact the other players and negotiate as a group. Joe has all the power and if he offers you a dollar for your puzzle piece you might as well take it. In fact if he offers you a dime you might as well take that. If you don't, somebody else probably will and you will be one of the five players who get nothing. Joe is negotiating with people who have no added value.

Does this happen in real life? You better believe it. Some businesses make sure that they never quite fill demand. That leaves them with the power to set the price, subject only to the maximum people are willing to pay. Of course that works only when those businesses have an effective monopoly. They may have patent protection or their product may be the “in” thing, people believe that they must have not only the product but a particular brand name. It also happens in franchise businesses which limit franchisees so they don't compete with each other. And it happens in entertainment.

Movie stars provide a good example. When a director looks to hire actors he must look at how many people will pay to see the movie. He may find a wonderful unknown actor willing to work for a pittance to get the exposure. However he will prefer the star, the well-known veteran who is popular with the public. In fact he will pay that star many times more than an unknown whose acting talent is equal or even better than what the star offers. The unknown has no box-office drawing ability so he provides no real added value. The star however will bring in paying customers and he has a monopoly since there is only one of him. He has a high added value and can demand a lot of money to play the part.

Consider also professional sports. The National Basketball Association, the National Football League, and major league baseball have effective monopolies on their product. They could put franchises in any city big enough to support a top-notch team in their sport but they don't. Instead they limit the number of teams. They know that many cities regard having a major sports team as a very desirable status symbol so they make sure that there are fewer teams available than cities wanting those teams. That forces those cities to compete against each other. Typically the city must be willing to provide a fancy stadium or other facility. In many cases it is the city, not the team owner that foots the bill for that and is stuck with that bill should the team move to another city. Any given city has an added value of essentially zero when negotiating with a professional sports league. (There are some exceptions such as New York with so many potential fans that they want teams there. However even there the “New York” Giants and Jets actually play in New Jersey.)

That is one reason why professional teams often move to new cities. They get better deals by moving. The Seattle SuperSonics became the Oklahoma City Thunder. The St Louis Cardinals now play in Arizona. The Dodgers long ago stopped dodging trolley cars in Brooklyn and moved to Los Angles. Many other teams no longer play where they once did, leaving behind empty stadiums or arenas and unhappy fans and taxpayers. Cities are put in a position in which they cannot win in that game.

What should cities do to level the playing field with the sports leagues? Clearly bidding against each other is a losing battle; the team owners have all the power. They have only two rational choices. First of course they can just refuse to play the game, tell the sports team owner that they are not going to give him any special treatment. That is an option I think voters and taxpayers should insist on in the present situation. The other rational choice is to get together as a league of cities and negotiate as a group. Such a group would have an added value equal to that of the sports league. No longer would the owner of the Seattle Sonics be able to tell Seattle and Oklahoma City that they better give him what he wants or he will go to another city. That owner would have to deal with a league of cities that has as much added value as he does. Of course cities being jealous of one another will probably never form such a league so the owners will continue to have all the power.

I could go on but you get the point. Any person, city, or business that understands added value can use that concept to decide if it wants to play the game. If it does play, that concept helps know how to play and what results to expect.

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Monday, November 15, 2010

A Bit of Game Theory

Game theory so-called is an interesting and useful subject, and it's not just about playing games for entertainment. It can be very useful in a wide range of situations. In fact most students of the field would agree that it is mis-named. It would be better if it were called something like “theory of human interactions.” However game theory is the historical name and we are stuck with it. That means that we call such interactions games, be they games like poker or other interactions such as business decisions.

For our purposes here, a good definition of a game is any interaction between people who do not control the actions of others in the game. The theory deals with finding the best course of action when playing such a game. Obviously that means it can apply to business, government, international relations, family life, and a myriad of other areas. Just as obviously I cannot cover the entire subject in a couple of blogs. However I can point out some interesting results.

One useful idea is the concept of “added value” discussed in the book “Co-opetition” by Brandenburger and Nalefuff. In any game your added value is the difference between the value of the entire game with you in it and the game if you do not play. For example if a tire manufacturer were to invent a tire that reduced fuel consumption by 10%, the added value would be the value of the fuel saved.

In most games you can never hope to get more than the value you add. The major exceptions are shysters, criminals, and governments. All of those can take out of a game more than their added value. They do that by taking the value someone else adds. However in honest games participants get no more than they add and usually a lot less. Here is an example, based on one in the book:

Suppose an eccentric millionaire walks up to you and hands you piece of a jigsaw puzzle, along with a toll-free phone number. He tells you, “If you call this number you will be able to talk to Joe who has the matching puzzle piece. I will pay $100 to whoever gives me the matching pair.”

The total value of this game is $100, the amount the millionaire will pay if you and Joe agree to turn in the matching puzzle pieces. But the real question is what added value you have, and what added value Joe has. If either of you pull out of the game and refuse to play, the whole game is worth nothing. The interesting part is that your added value is $100, but Joe's added value is also $100 even though the entire game is worth only $100. You cannot both get your added value. The best compromise would be to split the difference. Joe pays you $50 and you give him your puzzle piece. He then turns the matching pieces in to the millionaire and walks away with the $100. You are each richer by $50.

In a fair game, your added value is the maximum you can expect, but in many cases you will get less than your added value. That is an important idea when entering into any negotiation. You may think that you are adding a certain value to the game and you may be right. However others also add value and the total added value usually exceeds the total value of the game.

A more practical example would be when an employer and his employees divide up the gains from a business, say manufacture of some widgets which bring in sales of a million dollars per year. The employer provides the equipment, the raw materials, and the building. He may even provide the knowledge of how to make widgets. Without the employer nothing gets made and the value of the game is zero. Therefore the employer's added value is the entire value of the game, one million dollars per year.

But wait. The employees do the actual work of making the widgets. If they don't play the game no widgets get made and the value of the game is again zero. The added value of the employees is also one million dollars per year. Clearly employer and employees will not all get of their added value. Should either side insist on one million dollars per year the other will walk away, remove his added value, and the value of the game will be zero. They must reach some compromise in which each gets only part of the added value they provide.

Similar considerations hold for almost any interaction, be it trade, family relations etc. We can only function as a society if we are willing to compromise and settle for less than our added value.

Now that's enough for one day. Next I'll throw an interesting curve-ball at the eccentric millionaire game and see how that applies to life.

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Friday, November 12, 2010

Hooray for the Irish

Here is a big cheer for the Irish. No, I'm not talking about the Notre Dame Football team; I'm talking about the people of Ireland. Like much of the world Ireland has economic problems. Unlike many other countries they are not asking for someone to bail them out of those problems. Instead most seem determined to deal with the situation on their own. To do so they are willing to take pay cuts, cut back on luxuries, and otherwise tighten their belts.

Many Irishmen are making comments like, “batten down the hatches and take the pain.” “Ireland recognizes one of the things about being an independent country is if you borrow, you pay your way,” “It’s time for the Irish to pull together and make sure they keep control of their finances, even if that means enduring higher taxes like the Greeks.” That is to their credit and a refreshing change from Greece and France where people riot if asked to cut back.

Of course Ireland's problems are serious and at this point there is no guarantee that they will be able to avoid requesting outside help. A minority of Irishmen do want to request help. However most are trying and are willing to make the hard decisions, even if it means unpleasant lifestyle changes.

The Irish are an example for all to follow. They realize that there is no money tree, no big daddy with unlimited resources. They also know that if they accept outside aid it will come with strings attached. Rather than sell their freedom and independence to a bail-out plan, they are willing to suffer the inconveniences that come with remaining self-reliant.

If only other countries, including the U.S. would emulate the Irish attitude. What a difference that would make.

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Tuesday, November 9, 2010

Olberman the Biased

By now you know if you care. MSNBC suspended Keith Olberman because he donated to some congressional candidates. The reasoning was that those donations demonstrated bias on Olberman's part. Well yes they did and we would like our news people to be unbiased. That is pretty obvious and it will be no surprise that I disagree strongly with Olberman's views. However I also disagree with his suspension. In fact I believe all news people, judges etc. should demonstrate their bias so we can know what their real beliefs are.

The fact is that news people do have political beliefs, that is inevitable. The better ones try, often quite successfully, to keep those biases out of their work but they still have political beliefs. Wouldn't it be better if they were all up front about it so we could know where they are coming from?

A similar problem affects judicial candidates in many states. In Oregon, for example, judicial candidates are prohibited from expressing their views during their campaigns. A candidate may believe that criminals should not be incarcerated, or he may oppose the death penalty, or he may think that freedom of speech should be restricted. Voters should be made aware of those beliefs but under the current system he is not allowed to tell them what he believes. He may only list qualifications, endorsements etc. Aside from its first amendment implications, that restriction puts voters at a disadvantage.

Now there may be some reason for judicial candidates to be discrete in their campaigns. They should not express views on particular cases since the evidence will not yet be in. However they should tell us what they believe in general terms, things like if they support the constitution or specific laws etc.

I would support MSNBC if they suspended Olberman for expressing flagrantly biased views on the air. If they want to present unbiased information they should insist that their employees do just that (though it is questionable if that is MSNBC's objective). I would also support disciplining judges for allowing their bias to influence courtroom decisions. Judges are entitled to their beliefs but their job is to deal with the law as written, not to make or modify law (except when the law violates the constitution). However I cannot support institutional hiding of the beliefs of either judges or news people. That sort of policy withholds important information from the citizens.

If a news person is so biased that he will refuse to publish stories that go contrary to his belief, we have a right to know that.

If a judicial candidate is so set against the death penalty, for example, that he will never apply it, voters have a right to know that.

We need news people who can say openly, “I have these political beliefs. This story seems to contradict my beliefs but I also believe it is important to get the information to the public so I am publishing it.”

We need judges and judicial candidates who can say openly, “I believe this law is wrong and should be changed. However it is the law and until it is changed I must follow it.”

The problem is not when such people admit to their biases; it is when they allow those biases to affect their work. That problem is exacerbated when they are required to hide their biases.

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Monday, November 8, 2010


As discussed previously, most of today’s so-called liberals are really statists. Maybe we should discuss statism, the idea of strong government control. What are its advantages and disadvantages?

The statists point out that true liberalism allows inequalities. Those who have more ability and work harder will have more, as will their descendants (until they become wasteful or lazy and lose it). In fact some will have more simply due to luck. They also point out that in a liberal society the poor often lack good medical care and similar benefits. While those accusations are true, we must be careful about the proposed solution. It is easy to find problems and nearly as easy to propose solutions. The difficulty comes in making those proposed solutions effective without causing more serious problems.

Indeed one of history's most colossal failures was the result of well-intentioned solutions to the problems mentioned above. Communism, the ultimate form of statism, was supposed to fix inequality, poverty, lack of medical care and the other problems allowed in a liberal society. The results were the exact opposite of the intentions. Poverty was rampant, the government class was "more equal than others," medical care was abysmal for most of the people. Why? Why was statism such a failure?

The problems with statism start with the assumptions one must accept in order to believe in it. Implicit in statism is a belief that government is somehow wiser and more moral than the average citizen. Unless it possesses that wisdom and integrity there is no reason to trust government instead of average citizens.

Communism demonstrated that, contrary to statist assumptions, government has no special wisdom, nor is it less subject to temptation to abuse of power than is the average person. Good intentions may be comforting but they make a poor supper.

The communist state attempted to be all things to all people. It gave quotas to farms and factories, telling them what to produce and how much of it. It even assigned people jobs.

The result was one of the most spectacular failures in human history. The five year plans failed. The factories and farms did not their quotas and what they did produce was often shoddy. The people were held captive in an unworkable system. Communism produced shortages of nearly everything except misery.

We must now ask, where would government get the wisdom and integrity statists think it has? It must come from one of two sources:

1. Divine wisdom. Monarchists claimed that the king was God's anointed. If one accepts that, he could also accept that the king has some special, God-given wisdom. However most statists in the U.S. today seem to deny that God should have any voice in government. With few exceptions, U.S. citizens will reject the divine right of kings, and with it any divine wisdom or integrity for government officials.

2. The second possible source of special governmental wisdom is the wisdom of the majority. If we believe that the majority is always right or at least right more often than the average person, then we can believe that leaders elected by the majority are wiser than that average person. However, the beliefs of the majority will inevitably be the beliefs of the average person. Majority rule is, after all, essentially an averaging process.

Integrity is even worse. Majority integrity suffers from a mob effect. People will do as a group things they would not think of doing as individuals. People who agree theft is wrong may think it is somehow just fine to vote themselves benefits at the expense of others.

One of the more pernicious aspects of statism is its tendency to turn social theory and personal preference into law. Be it the old official state church or modern political correctness, this tendency leads to silliness at best and institutionalized idiocy at worst. For example, the mayor of Portland, Oregon once proposed outlawing "snout houses," houses on which the garage projects out in front. What business did she have forcing her architectural preferences on everybody else? If people want to avoid those houses they can buy a different style. They can even live in neighborhoods where voluntary covenants prohibit them. However it is a serious infringement on liberal freedom for government to decide what kind of house everybody should live in.

Clearly there are problems with classic liberalism and freedom. However those problems are not nearly as serious as those we cause when we allow a statist government to rule our lives, whether we call that government "progressive," "positive," "modern" or anything else. Freedom leads to more production and more goods for everyone. Statism leads to less for everyone except the ruling class.

The goal should not be elimination of inequality but enhancing life for everyone, even if the rich still have more than the poor

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Saturday, November 6, 2010

I Am a Liberal

If you've been reading my blog for a while here's some surprising information for you. I am a liberal. Yes it's true. Have been for years, not even realizing it for many of those years.

Now before you faint you might ask just what kind of liberal I am. After all, I have criticized many today who call themselves liberal. The answer is that I am a classic liberal which is almost the polar opposite of what passes for a liberal today.

I believe in liberty and individual responsibility. Furthermore I believe our liberty is a God-given right, not something government doles out to us. I believe strongly in the principles set out in the Declaration of Independence. “We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness. — That to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed...”

Now if each of us has inalienable rights it follows that government should not take away those rights. That is true if government is a monarchy, a democracy, or a republic. Even if 99% of the people want to restrict the rights of the other 1%, they have no justification to do so.

That is liberalism in its true sense. It is the historic meaning of the term. Any political philosophy that unduly restricts liberty is not liberal, it is statist. The appropriation of the word by today's statists is Orwellian newspeak, a triumph of public relations but a detriment to our supposedly free society. Some call themselves “modern liberals,” “positive liberals,” “progressives,” etc. but the fact remains that they want increased government and less individual freedom. They are statists.

Sadly, the real liberals did not step up and point out the fact that "positive liberalism" is in many ways the opposite of true liberalism. Rather than being "progressive," it is in fact a regression to the days when government was regarded as having divine wisdom to which the people should defer.

One example happened recently in Oregon. A farm in the eastern part of the state hosted a wedding. I confess that I fail to see who was harmed by that event. My liberal attitude says that we should allow them to use their property as they see fit. It is their property after all. However the statists who call themselves liberals have created a law that governs how people use property. Farmland must be used for farming until the government blesses some other use. The owners of that farm had to pay a fine for their horrible crime.

The whole thing is reminiscent of the children's game, “Mother May I” in which each child must do exactly as instructed by the child playing the part of the mother. However in this case I would call it “Big Brother May I.” The statist attitude is that Big Brother, that is government, knows best and we all better obey. If we want to do something out of the ordinary we darn well better ask permission first. That is the opposite of the liberal attitude that allows us freedom to do whatever does not infringe on the rights of others.

This newspeak also creates confusion when we read literature written before it came about. I've recently read Hayek's book, “The Road to Serfdom” written during World War II. He continually talks about liberal ideas as opposed to various forms of socialism. What he means by liberal is freedom and individualism. However today's “liberals” tend towards exactly the socialism he was opposing.

We should not fall for the linguistic tricks of the statists. Instead any discussion of the topic should focus on the ideas themselves and how effective they are in benefiting humanity. A start is to use correct language which means we must insist that they are properly called statists. Webster defines statism as, "The principle or policy of concentrating extensive economic, political and related controls in the state at the cost of individual liberty." That obviously fits today's "liberals." In fact it fits many politicians of either party in the U.S., though the parties differ in how they apply their statist ideas.

Today's “liberals” are illiberal statists, not liberals. Our “progressives” are regressive statists, not progressives. They believe in big government, not freedom and individual responsibility. Let's call them what they are.

Next time I plan to discuss some of the problems statism creates.

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Monday, November 1, 2010

Help Small Business?

You've seen the political ads. “I will help small business” is scattered over the airwaves and the mail you receive. Most every candidate wants voters to believe he or she will be the salvation of small business. However that raises two questions for those candidates:

1. How will you help small business?, and
2. Why only small business?

Let's deal with the second question first. Why should we only worry about small business? The answer is that we should worry about all business in this country. They are all interconnected. Take for example the small businesses near my home. There are restaurants. There are contractors who do plumbing, electrical work, painting, carpentry etc. There are clothing stores and other small retail establishments. They employ lots of people though in the current economic climate many have had to reduce employment.

What allows them to employ those people? In many cases it is big business, especially Intel which has several major facilities in the area. Intel directly hires many contractors. Intel employees eat at local restaurants and shop at the small retail establishments. Then the net spreads outward. The electrician who wires an Intel facility also eats at the restaurant and his wife shops at the clothing store. The restaurant and clothing store employees eat and shop locally providing yet more jobs, and on and on and on.

Nor is Intel the only such big business in the area. Several other major businesses provide employment not only for their own employees but for contractors, retailers, eateries etc. In some cases they even buy components from small businesses.

The small and big businesses are all interconnected. If big business were to vanish, most of the small businesses would soon disappear also.

We might also look at employees. Why is it better to work at a small business than at a big business? In most cases it is not. Some small businesses are great places to work, but so are some big businesses. The same can be said of bad places to work, some are small, some are huge.

We need both large and small business to provide employment for the people.

How about how the politicians plan to help? It's easy to say “I will help small business” but rather more difficult to actually do it. Most political ads are thin on how the candidate intends to help. The most I've heard is a promise to make loans available. In some cases that would help but banks already have money available. They are not lending because of uncertainty in the political climate.

That uncertainty harms business in two ways. First, entrepreneurs are reluctant to start businesses if they fear that changes in regulation will affect those businesses. Second, even if someone wants to start a business, banks are reluctant to loan money for the same reason.

For example, suppose Bill wants to start a plumbing business. He knows how much it will cost to get a business license, buy equipment, and hire plumbers. However his jurisdiction is considering changes. If those changes take effect he will need different equipment. They may increase the cost of a business license as well as permits for any work he does. They may require expensive benefits for his employees. Will Bill start his business under that uncertainty? Probably not. Even if he wants to go ahead, will the bank loan him the money he needs to buy equipment that may soon become obsolete? Again probably not.

The best thing our politicians could do for small business, indeed any business, is to reduce unnecessary regulation and to make the business climate predictable. And they should not concentrate only on small business. Instead they should treat business as the interconnected entity it is.

Friday, October 29, 2010

Get Out the Vote?

It's that time again. News commentators, politicians and others are urging people to get out and vote. After the election many will bemoan a low voter turnout. They claim it is a civic duty to vote. In that they miss the mark – badly. They seem to think that just getting people to vote is somehow good. Clearly that is not the case and low voter turnout is more of a symptom of a problem than it is a problem itself.

The real problem is apathy. Too many don't bother to vote because they haven't bothered to learn about the candidates and issues. The “don't care” crowd does cause bad statistics on voter turnout but those statistics are harmless. In fact I would claim that those who fail to inform themselves have a civic duty not to vote. We don't need apathetic and uninformed voters. We need voters who have studied the issues, thought carefully about them and who then vote as wisely as they are able.

Consider what happens when an informed and wise voter goes to the polls. He will know not only what the candidates promise but the cost of those promises if fulfilled. He will know the record of the incumbent. He will have thought carefully about who is likely to be good for the state or country, not just who promises the most goodies. While there will always be some unknowns he will reduce that problem to the best of his ability. It will be difficult for a demagogue to fool him because he looks below the surface.

Now consider the apathetic voter at the polls. How will he vote? He cannot vote wisely because he lacks the knowledge required to do so. That means he will vote on the basis of name familiarity, charisma, looks or other irrelevant factors. His vote will dilute the votes of wiser voters. He is easy prey for the demagogue because he never looks below the surface or the promises. In fact he is likely to fall for the most impossible claims. He is the demagogue's best friend – to the detriment of himself and other citizens.

Everybody should study the issues and candidates. We should be at least as careful as a company is about hiring employees. We are hiring employees who have a great deal of power over our lives.

No, we should not urge people to vote just to get them out to vote. Instead we should urge them to inform themselves and to think carefully about the issues. In fact we should urge the apathetic and uninformed to avoid voting. "If you don't care enough to inform yourself and to think, do us all a favor and stay home on election day."

Saturday, October 23, 2010

The Devil at My Doorstep, Book Review

Book Review, The Devil at My Doorstep, by David A. Bego, 185pp, David Bego, 2009

This book is Mr. Bego's account of his battle with the SEIU (Service Employees International Union). The battle had lasted over three years when the book was written with Mr. Bego's Executive Management Services (EMS) winning though the SEIU continues to fight.

This is a worthwhile book, one every voter should read since our congress is considering passing the poorly named EFCA (Employee Free Choice Act). That proposed law would be better called the Employee Slavery Act since it would deprive workers of the right to a secret election if a union wants to organize them. Mr. Bego describes how the SEIU lied, threatened him, his customers, and his employees in order to force them into that union. He also describes many of the bad features of the EFCA as well as how and why he fought for the rights of his employees.

Unfortunately Bego could have used a good editor. The book has all too many problems that should have been fixed. For example he describes a concept that “alluded” some of the people he was talking to. Of course he meant that it eluded them. Mr. Bego is also a bit heavy on tooting his own horn. However it is well worth wading through the problems in the book to get the information. I congratulate him for telling a story that badly needed to be told, even apparently publishing it himself.

The story starts when the SEIU decided to organize cleaning firms in Mr. Bego's area. They had no intention of giving workers any choice but instead demanded that those companies sign “neutrality” agreements. That meant that the company would not be allowed to present its side to the employees but that if over half the workers signed cards asking for it, all employees would become union members. They then proceeded to put pressure on employees to sign, including both veiled and direct threats.

The SEIU also promised to get workers a big raise though other companies whose workers were in that union were actually paying less than were EMS employees. Mr. Bego claims that this was a consistent pattern with that union, make big promises but then not deliver once they had the union dues.

That union also filed a great number of false accusations against EMU, showed up at employee’s homes and committed other acts that threatened harm or interfered with people’s lives.

To be clear, the author claims not to be anti-union. In fact in the first part of the book he points out that unions have done good things in many cases. He is, however, against the kind of heavy-handed tactics the SEIU is known for. He is also against the EFCA. In that he is justified.

In spite of its problems this book is what I would consider a must read. Many in congress are pushing the EFCA which would deny employees the right to a secret election. The effect would be to allow union pressure and in many cases the employer would not even have the opportunity to present his side.

Monday, October 18, 2010

Being Offended

In Grand Junction, Colorado a billboard showing images of President Obama in an unfavorable light was taken down after the owner apparently received threats of violence. Now to be clear about it, I think that billboard was over the top. It did nothing to advance reasonable dialogue and in fact probably aided those who support the president. Though I oppose Obama I think it was counterproductive. However that is not the real issue here. The issue is freedom of speech vs. what some people seem to perceive as a right not to be offended. In fact one opponent of the billboard said, "If it offends people, you do have a certain obligation to take it down...”

Even a little thought should show the fallacy of such a criterion. It implies that people have the right not to be offended. That makes the issue one of how people react rather than of the actions taken by the alleged offender. It gives the “offended” person complete control over what is not allowed. I could say that they way you comb your hair offends me so you better change that. Or I could claim to be offended by the color of your car. I may be offended by advertising for politicians I don't like. Note that those complaints are based on my reaction, not on anything the “guilty” party has done.

Imagine a world in which guilt is based not on the actions of the accused but on how people react to those actions. How might you manage your life so as to avoid trouble in such a world? You cannot, no matter what you do someone may claim it offends him. Even worse, you cannot know how they will react before you take the action. There will always be someone who can claim to be offended. That has the effect of an ex post facto law. You might do something you consider quite reasonable such as planting a vegetable garden. You might even ask your neighbors what they think of the idea and they might agree before you plant it. Then when it starts to grow a neighbor decides he really doesn't like the sight of corn and you should have planted flowers. He is offended and you are guilty of causing offense, even though you could not know beforehand he that would be offended.

In fact, taken to the extreme this could create the equivalent of a bill of attainder. Someone may decide that he doesn't like you and is offended by the sight of you. He is offended by your person, not your actions. You are guilty based on who you are, not on what you do.

This gets even worse. If you are accused of offending someone how can you defend yourself? There is no external evidence available. If the accuser claims you stole his grocery money the courts will ask for evidence. However what if you are accused of offending him what evidence might be considered? I could claim that you offend me and who is to say if I am telling the truth or lying? I might just be trying to get back at you or to gain some advantage for myself.

People have a right to their feelings and if they feel offended that is also their right. However they should not use that feeling to accuse others or as cause for legal action. They may complain about what someone did or said but their feelings are their own, unverifiable and not useable as a basis for action by anyone else.

There is yet more to this however. Some people seem to be professionally offended. They make a career out of it, either by constant complaining to get what they want or sometimes even by making money from being offended. Jesse Jackson is one that I suspect falls in this category. If there is even a chance a black person has been discriminated against he likes to show up to offer his advice and stir up demonstrators. He seems to do that based on the assumption that racism is involved, ignoring other possible causes for the perceived offense.

For example Jackson (and many others) was professionally offended in 2006 when three Duke Lacrosse players were accused of raping a black woman. He jumped in with complaints about spoiled white boys abusing minorities. I don't know how much his Rainbow/PUSH coalition collected by fund raising as a result but in that case his being offended was the result of a rush to judgment. It turned out that the accused were not guilty. Two of them had solid alibis and the “victim's” story had more holes than a chunk of Swiss cheese. Worse, as an indication of how professionally offended some people were, the taxi driver who provided the alibi was excoriated for telling the truth – and he was a black man. Jackson and others were offended before learning the facts. The result was a suspension of the entire team, heightened racial tension, and several young men having their reputations sullied, all without factual justification. Had the “offended” simply waited for the facts that could have been prevented.

Of course not everybody who is professionally offended gets money for it, at least not directly. Some only get sympathy, others get preferential treatment in hiring, school admission etc. That leads to discrimination, extra costs and other problems for society.

We should look at facts, evidence, and sound logic. And we should never base action only on someone being offended. In fact we should ignore the professionally offended until such time as they present evidence of bad action by their accused offenders.

Monday, October 4, 2010

The Race Card

My favorite football team, the BYU Cougars, just fired Jaime Hill. Mr. Hill had coached the defensive backfield, then was promoted to defensive coordinator. He had that job for a couple of years before being fired. Now he happened to be a black man at a mostly white university so I'm sure you can guess what some people are saying. To Hill's credit he has not played the race card, at least as far as I know. However others have, accusing BYU of picking on the minority coordinator.

In thus playing the race card those accusers ignore a few facts. First, BYU is off to a 1-4 start, its worst in many years and the defense has given up way too many points. Then there are the comments from former BYU defensive players. According to them, Hill was a great position coach before being promoted to coordinator. However he seemed out of his depth in the coordinator position. This seems to be a manifestation of the Peter Principle, he was apparently promoted to a job he could not do well. His play calling was suspect at best. Worse, his volatile personality drove several players to quit the team and others nearly left. He simply was not a good fit for that particular job.

I'm sure Mr. Hill will get another job soon and I wish him well there (unless he's coaching against BYU). However the reports I've seen lead me to believe that it was wise to dismiss him from the BYU program. I doubt the color of his skin had anything to do with that dismissal. In sports, coaches who don't get good results are fired regularly.

Hill’s firing is only one manifestation of the tendency of many in the media and elsewhere to play the race card. Any time someone from a minority group or a woman is fired, some people assume that it was because of race or sex. The examples are myriad. Van Jones left the Obama administration after his communist background and blaming of Bush for the 9-11 attacks came to light. However Jones is black and many assume he was targeted for his skin color. Even more common is the tendency to call anyone who opposes Obama's programs racist. It is common for Obama supporters to overlook the fact that some people just don't like his czars, his profligate spending, his increasing of government power, etc.

There are many reasons people oppose Obama. While some do not like his skin color, there are many more who don't like his politics. Playing the race card may score political points but it is simply wrong unless there is actual evidence of racism.

Illegal aliens are another issue often creating false accusations of racism. Surely there are some who want to keep out specific races. However there are many others who want border control because of the number of gang members and drug dealers entering the country illegally, or because of the jobs illegal aliens take away from citizens. Opposition to illegal aliens is not automatically racist.

How effective is playing the race card in politics? Unquestionably it does get people riled up. However it is not at all clear that it changes votes. The people who get riled up probably already oppose the alleged racist. Meanwhile the supporters of that target will also get energized. And I think voters are getting wiser in this regard. The undecideds seem to be becoming skeptical about the race card. It has been overused and is wearing thin. The leftist news media and others still swallow it but they are becoming isolated in that regard. That is a positive sign.

I hope we can all continue to regard accusations of racism with skepticism. While racism does exist so do false accusations of racism. We must ask for solid evidence and look to see if there are other explanations for events that may appear racist.

Thursday, September 30, 2010

How Much is He Worth? Part 2

“It is a serious thing to live in a society of possible gods and goddesses, to remember that the dullest and most uninteresting person you talk to may one day be a creature which, if you saw it now, you would be strongly tempted to worship, or else a horror and a corruption such as you now meet, if at all, only in a nightmare. All day long we are, in some degree, helping each other to one or other of these destinations.”* Those words from Christian thinker C.S. Lewis give some idea of the real value of human beings.

I agree with most of Lewis' words above (though I do reject the idea that dull and uninteresting persons are likely to become horrors and corruptions). The idea that people can become something we might be tempted to worship has a solid foundation in the Bible as well as additional scriptures that I accept.

What does such a statement say about the worth of a man (or woman)? If we can become something that marvelous is it not rather silly to try to measure us in terms of mere money? Indeed my own church teaches, “Remember the worth of souls is great in the sight of God; For, behold, the Lord your Redeemer suffered death in the flesh; wherefore he suffered the pain of all men, that all men might repent and come unto him.”** If the Son of God did that for us what are we really worth? Indeed the difference between the world's wealthiest man and the pauper becomes insignificant in an eternal sense. Likewise why should we worry about the difference between the queen of England and the ordinary citizen? Earthly titles are insignificant compared to our eternal potential.

Now I hope non-Christian readers are not put off by my references to Christianity, I can only speak from my own beliefs. If you belong to a different religion I hope you will consider what your own religion says in this regard though of course it might be quite different from what I'm describing.

In any case, for those of us who believe in eternal life, human value must be considered in terms of that life. What is our eternal purpose? Again my religion gives a hint, “men are that they might have joy.”***

There you have it. Our purpose is joyous living and that is what makes life invaluable, both here and hereafter. Note that joy is different from fun or even from a life of ease and comfort. I've known many people who lived joyfully in spite of handicaps I would hate. To them life is precious and they live it to the full.

Those people and others who really know how to live find joy in their work, their families, Nature and every other aspect of their lives. They have made a habit of looking for what they can enjoy and by so doing they add value to their lives and to the lives of those with whom they associate.

If there is a true measure of a man (or woman) it is the joy he provides to himself and to his fellow beings. That doesn't take money; it doesn't even take good health. It takes a joyful attitude. It takes realizing who we are and what we should become. Another statement from the same lecture by Lewis helps understand this.

“There are no ordinary people. You have never talked to a mere mortal. Nations, cultures, arts, civilization—these are mortal, and their life is to ours as the life of a gnat. But it is immortals whom we joke with, work with, marry, snub, and exploit—immortal horrors or everlasting splendours.”

Lewis continues with some practical advice on joy,

“This does not mean that we are to be perpetually solemn. We must play. But our merriment must be of that kind (and it is, in fact, the merriest kind) which exists between people who have, from the outset, taken each other seriously—no flippancy, no superiority, no presumption. And our charity must be a real and costly love, with deep feeling for the sins in spite of which we love the sinner—no mere tolerance or indulgence which parodies love as flippancy parodies merriment.”

What he is describing is an added value way of living, both for ourselves and others. The value we thus add will apply both to this life and to the next. If we combine Lewis' suggestions with the other aspects of true charity we will add immeasurable value to our own lives and the lives of others. Our already immeasurable worth will increase even further. We will live fuller, happier lives. And not incidentally we will concentrate on building up what is good rather than expecting government to give us what we have not earned.

(Note: True charity is far more than giving to the poor, though that is included. As described in scripture it is a deep love for God and man.)

*From C.S. Lewis' lecture entitled “The Weight of Glory.” That lecture is available on the web and it is worth reading the entire text.

Doctrine and Covenants, 18:10-11. For those unfamiliar with that book, the Doctrine and Covenants is one of the books of scripture accepted by the Church of Jesus Christ of Latter-day Saints, also known as the Mormons.

***Book of Mormon, 2 Nephi 2:25

Wednesday, September 29, 2010

How Much is He Worth, Part 1

At the funeral of a wealthy person we often hear the question, “How much was he worth?” I submit that the answer will inevitably be wrong and in fact the question is impossible to answer adequately. There are at least two reasons for this:

First, the answer is usually given in dollars, claiming that the person is worth $10 million, or a billion etc. That assumes that men are to be measured in money.

Second, the “worth” so defined considers only how much the person has at a given moment. What he has earned and spent or given away is neglected.

Consider for example Jon Huntsman, once ranked as the 47th richest man alive. After his death someone might ask what he was worth and the answer might be zero, nothing, zilch. Huntsman's ambition is to donate his fortune to the effort to eradicate cancer and to die broke. If he achieves that he will have no money at all. Would he really be worth nothing?

A much better measure of a man is described in the book Co-opetition.* The authors use the term “added value” to describe the worth of any person or company in any endeavor (which they call a game since the book is about applying game theory to business). Added value is the value of the endeavor with the person or company in the “game” minus the value of the endeavor without the person or company.

If we consider Mr. Huntsman in that manner we might look at the value he has added to our society by his efforts to eradicate a terrible disease. Could we assign a dollar figure to that? I doubt it. We might be able to determine how many dollars he has given but not the result of those gifts. How many lives has he saved? We cannot know. It is impossible to calculate what Mr. Huntsman has been worth to society.

Even if we could put a dollar figure on people like Jon Huntsman, is that adequate? I would say that it is not. Money is necessary in our society but not the only thing people desire. In fact money itself is good only for what it can do in terms of other values. The person who hoards money for its own sake is called a miser and usually lives a miserable life. (In fact I wonder if it is coincidence that “miserable” sounds so much like “miser.”) No, money is not the measure of a person's worth

That confusion is the source of much mischief in our society. Too often we think of the job that pays a lot of money as more important than one paying little. We regard physicians as of more value than plumbers even though plumbers do more for our health than do physicians. We regard the person working for money as of more value than the mother who stays home and raises great children, though our society depends on the nurture of children for its continued existence. A mother's work, important though it is, cannot be measured in dollars so we tend to value it less than its immeasurable worth.

That also leads to pressure for people to pursue endeavors measurable in money instead of satisfaction or other values. I once helped interview a young woman for an engineering job. She was smart and did reasonably well in her studies. However it was apparent that her real interest was not in electrical engineering but in homemaking. She had apparently been persuaded that she owed it to the world to pursue the more lucrative job instead of what she really wanted to do.

We also see government edicts based on the false assumption that everyone should pursue lucrative careers. The EEOC goals assume that women will seek the same type of jobs and career advancement as men. If a company fails to hire and promote the right proportion of women it is automatically considered guilty of discrimination. There is no allowance for the fact that many women want to be mothers and homemakers first and that jobs take lower priority in their lives. Yet the satisfaction a woman receives from her family is likely to exceed that that which a CEO receives from his career. Furthermore, her added value can exceed that of any CEO.

The added value from a CEO is not the value he brings to the company. It is the difference between that and what someone else would have brought had he been CEO. If he were not running the company, someone else would do it, and do probably a similar job. Since there are usually several highly qualified candidates for a CEO position, the difference in value is generally small. In fact the CEO may have added no value at all.

However the added value from a good parent is immeasurable. Should the parent not be there even the most dedicated substitute caretaker is unlikely to provide the same nurturing and teaching as the parent would. And no substitute caretaker can fill the hole left behind if a parent dies or is otherwise removed from the scene. We cannot measure the added value of parents in dollars. However that value is immense, both to society and to the children they raise.

No, neither the worth nor the added value of a human can be measured in dollars. We must think of people in other terms, and that is just for their value to society.

Next time I plan to discuss human worth from a different angle.

*Co-opetition, A revolutionary Mindset that combines competition and cooperation, The Game Theory Strategy that's Changing the Game of Business. Adam M. Brandenburger and Barry J. Nalebuff, Currency Doubleday, 1996

Thursday, September 16, 2010

When Will the Party End?

Are we about to have a major change in political power in the United States? It's too early to say, but so far the Tea Party backed candidates have done better than anyone could have expected. The general election is yet to be held but it is clear that many are no longer regarding them as a fringe to be ignored. A measure of that can be found in Russ Feingold's claim to Tea Party backing. Nobody would accuse Feingold of being right wing but he sees political advantage in claiming association with them.

This is a major shift from just a couple of weeks ago when most politicians were trying to ignore the Tea Party. They claimed it was out of the mainstream, a fringe group, a passing fad. Of course it remains to be seen if that movement really has staying power, but both politicians and the news have now been forced to take it seriously. They have defeated several establishment candidates in primary elections and it would be surprising if they do not win at least a few congressional seats in the general election. If congress ends up narrowly divided that could give Tea Party people the swing vote on many issues.

Furthermore, the Tea Party's natural audience is growing. A large majority of voters no longer trust their government and want it pared back. People are upset about big government, high taxes, Obamacare and other issues. Voters favoring Tea Party candidates and other mavericks are much more enthusiastic about voting than are other voters.

What will be the outcome? Prophecy is dangerous so I am reluctant to make firm predictions. However I believe the Tea Party will be able to influence the next congress, either by controlling swing votes or by public pressure on representatives. If exercised wisely that power could slow or even reverse the trend toward ever bigger and more powerful government in this country.

The next question is if those people will have staying power. I remember the Republican “Contract With America” and how it put Republicans in charge of congress during the Clinton Administration. It was a well thought out plan which grabbed the attention and support of voters. As a result the Republicans took over Congress and promptly shot themselves in the foot. They started acting in an arrogant manner, several being caught in major scandals. They also continued to support pork barrel projects, changing only the beneficiaries. The result was that they quickly lost what they had gained. Should the Tea Party supporters duplicate those actions we can expect them to also duplicate the quick exit from power of the Contract With America Republicans. They need to do better.

In case they are listening, here are my suggestions for any Tea Party candidates who get elected:

1. Stay humble. Put something on your mirror to remind you to avoid arrogance. That should be where you cannot miss it every time you shave or put on make-up. If you ever become arrogant it will be all over for you. Remember that you are fallible and the voters are your boss.

2. Institute a zero tolerance policy toward any behavior that could lead to scandal. If one of your people is unfaithful to a spouse, engaged in financially questionable activities, or anything else of that nature, give him the boot. Make it publicly known that he is no longer in good standing with the Tea Party movement. I mean immediately, once the evidence is in treat him like an outcast. I don't care how important you think he is to the movement, you cannot afford a scandal.

3. Do all you can to block pork-barrel projects, earmarks etc. That includes those any of your own people propose. Publicize those wasteful expenditures and how much they are costing the taxpayers.

4. Articulate constitutional principles and why they are important. Refuse to support any appointee or project that is even questionable constitutionally.

5. Avoid any taint of racism and be religious about rooting out anything that appears racist. Pay attention to both real Tea Party people and the agents provocateurs your enemies will try to insert into the movement.

If the Tea Party people will do that I believe they can provide a lasting influence for the better on our politics. If they fail in any of those areas they will be a short-lived phenomenon.

Monday, August 30, 2010

Privacy Rights

Do you have a right to privacy? That depends on if you are a member of a protected group or if the government wants information you consider private. You might be surprised at what is now regarded as information that should be available, at least to government employees.

Did you think your child's every move should be tracked? I thought not, but both the federal and California governments disagree with you. According to the Silicon Valley Mercury News Online, preschoolers in Contra Costa County are going to be wearing radio tracking devices while at school. They will be tracked everywhere they go, class, play area, cafeteria, even the bathroom. Big Brother will be watching. Can any thinking person believe such tracking will stop with preschoolers?

Other government proposals are also invasive. Some states are proposing to equip all cars with GPS tracking devices. Their excuse is that they will use the information to determine how many miles the car travels and use that to send a tax bill to fund roads. If you believe it will stop there I'm sure you will be interested in a good deal on this bridge in Brooklyn I've heard about. The fact is that we already have a good way to tax vehicles. It's called the fuel tax. Fuel consumption is closely related to distance driven and vehicle weight so fuel taxes are nearly proportional to the wear and tear each vehicle causes on the roads. In fact heavy trucks often pay a weight-mile tax.

Of course electric vehicles avoid the fuel tax, but the solution is still quite simple and need not involve GPS tracking. Every car is equipped with an odometer that records miles driven. It would be easy to tax electric vehicles based on odometer reading.

It is clear that many want to increase how much government can know about our private lives. That is one side of the coin but there is another side.

What if you know something that might be useful to someone? For example you know that an EMT responding to an accident was exposed to hepatitis. Would you tell him? You better not, at least if you are in the medical profession. That would violate HIPAA, the Health Insurance Privacy and Accountability Act. If a hospital discovers that a patient has a communicable disease it is prohibited from telling anyone about it without specific permission. That makes sense in some cases; you don't want your private information becoming public (though it is questionable from a first amendment standpoint). However it makes no sense to not give that information to those who might need it. If a patient has hepatitis and someone has been exposed, that someone should have a right to know about it.

This can be taken to ridiculous extremes. A while back a man with amnesia was in a Portland hospital. He could not remember his name or any other identifying characteristics. Nobody knew who he was. Simple solution, just put his picture in news so friends or relatives could see it. Simple but illegal, HIPAA prohibited that.

There is an even worse use of privacy laws. Too often they are used to protect the guilty, especially government employees. A misbehaving school teacher may have his identity protected or a government agency may be prohibited from responding to public charges to protect the privacy of the accuser. Let's get real; if the accuser goes public, the accused has a right to do so as well. Of course this prohibition cuts both ways. Sometimes it prohibits the accused from giving a good public response. However I fear that it often serves to help the accused hide misbehavior which ought to be public.

Our privacy laws need a serious rethinking. That should be done from the point of view of wisdom, not what government officials want.

Saturday, August 14, 2010

A Hero?

By now Jet Blue flight attendant Steven Slater has become widely known for his actions toward a passenger. Though details are somewhat sketchy it appears that Slater got upset about her carry-on luggage, used foul language toward her and other passengers, then activated an emergency escape chute and left the plane, taking along some beer.

What I find disturbing about this is that many are making Mr. Slater into a hero. While his actions may or may not have had some justification, I see nothing heroic about them. I believe there are three requirements for heroes:

First, the hero must face a bad situation, one out of the ordinary and requiring appropriate action. That may have been the case though there are conflicting reports. If a passenger was really causing trouble that may have created such a situation. Mr. Slater may have been in such a situation but that alone is not enough to justify calling him a hero. People regularly face such situations. Some become heroes, others fail miserably. The situation provides the opportunity for heroism but does not make heroism automatic.

Second, the hero must take appropriate action beyond what a normal human would do. He must risk himself or otherwise go well out of what most of us would find to be a natural reaction to that situation. In this Mr. Slater fails miserably. His actions were nothing more than a tantrum, an animal-like reaction. Any two-year-old can throw a tantrum.

Third, his action must be effective in helping others or resolving the problem. Again Mr. Slater fails. His actions did nothing to make anything better. In fact he disturbed other passengers, cost his employer a large sum of money, and may have made prosecution of the passenger difficult or impossible. If that passenger was causing major problems she could have been prosecuted on federal charges of interference with a flight crew. Mr. Slater confused things to the point that effective prosecution may not be possible. He did not make things better but instead made them worse.

Just because someone does something we'd like to do does not make that action heroic. Nor should we encourage such intemperate actions by lionizing people like Mr. Slater.

How often are such people made into heroes when they are not? I don't know but I do know that it happens. Several years ago a snowboarder got lost on the route from the Timberline Ski Area on Mount Hood down to Government camp. He did act rather sensibly after becoming lost, dug a snow cave and took care of himself. However it would have been much better had he simply acted responsibly and either not taken that route or first prepared himself by learning how to navigate in the conditions he would face. Instead he caused many searchers to have to go look for him, disrupting their lives and costing the county in overtime for sheriff's deputies.

What was the result? He was treated as a hero and several businesses even gave him some nice, new snowboarding and outdoor gear. He was rewarded for his mistake. We cannot know if his treatment as a hero had anything to do with this next, but during the next three weeks two other snowboarders got in trouble taking the same route he took and getting lost in the same way.

There are real heroes in this world and they deserve our respect. However we should be careful to avoid treating people as heroes when they just do something stupid. Let's not encourage bad or dumb behavior.

Wednesday, August 11, 2010

Perception vs. Reality, Part 3

Related to fearing the wrong things is the mistake of giving unwarranted influence to the wrong things. When Gerald Ford was president of the United States he went skiing a few times. Sometimes he fell while skiing. Reporters and comedians, many of whom probably couldn't ski a bunny slope, made a big deal about how his “lack of coordination” made him a poor president. One late night comedian got a lot of mileage out of a claim that Ford could not walk and chew gum at the same time.

Nobody mentioned exactly how President Ford's alleged coordination problems interfered with his ability to make good decisions as president. Would the ability to walk and chew gum at the same time have solved the country's economic problems? Reduced crime? If the ability to walk and chew gum at the same time was so important, how did a president who could not walk at all get us through most of World War II? (In fact, Ford was a former college football player and one of the more athletic presidents in U.S. history. His falls while skiing would not have been unusual for most skiers.)

Ford's alleged clumsiness had nothing to do with the characteristics needed in a good president. The people paying attention to that were allowing emphatic trifles to distract them from the real issues.

Physical appearance is another characteristic given too much influence in our society. Starting with the 1960 presidential elections, television has played a major role in United States politics, and with that came an emphasis on appearance. Kennedy was good looking and defeated Nixon. Then later Nixon, to win the presidency shaved twice a day since his heavy beard gave a bad appearance on TV. There is, as far as I know, no connection between good looks and good judgment. Yet the better-looking candidate has an advantage in our elections, at least if he is a man. People often think of a man's looks as reflective of his ability. The opposite may be true among female candidates since many people think of beautiful women as mindless. Both perceptions are wrong. We should try to judge politicians on their honesty and ability, not on their looks.

Finding reality in spite of our perception can be difficult. I have touched only on some of the more obvious problems. Other perceptual difficulties can be more subtle. We've all seen optical illusions such as the Mueller-Lyer figure which has two lines of identical length. The only difference is the figures on the ends of the lines. One line looks longer than the other. You can look it up if you're not familiar with this, sorry I can't get a good representation to appear in this blog.

We also have mental illusions that cause poor perception. These are just as prevalent as the optical illusions. For example, suppose you are tossing a coin. It is a fair coin and you are tossing it fairly. You know that the probability of heads on any given toss is 50%. It has just come up heads four times in a row. What is the probability that it will come up tails next toss? We have a natural inclination to expect a string of tails to balance out the number of times it has come up heads. That is wrong and is known as the “gambler's fallacy.” In fact the probability of heads is 50%, regardless of previous results. There is no cosmic law forcing it to come up heads and tails an equal number of times. It is a normal statistical fluctuation to occasionally get several heads in a row. In fact there is a 12.5% chance of getting the same result four times in a row with a fair coin toss! Put another way, if a large number of people each toss a fair coin four times, about 12.5% of them will get the same result all four times.

Cognitive scientists have been studying such mental illusions for several years now. What they have learned can be helpful as we try to overcome our perceptual problems. One book on the subject is Inevitable illusions by Massimo Piattelli-Palmarini.1

Impressions can be wrong. The wise person will make decisions based on reality, not perception and external appearance. We will serve ourselves well in all aspects of life if we just take a little time and ask ourselves, “Am I looking at what is important, or am I allowing spectacular trivialities to divert my attention from the less obvious but more important issues? Does my perception of this situation really reflect reality, or is there something important I’m missing?”

1Massimo Piattelli-Palmarini, Inevitable Illusions, How Mistakes of Reason Rule our Minds, John Wiley & Sons, Inc. New York, 1994 Be aware that there are some mathematical errors in the book. I consider the chapter on Bayes law to be particularly bad.

Monday, August 9, 2010

Perception vs. Reality, Part 2

Last time I described a case in which a young woman received treatment for her obvious injuries while her boyfriend died because his injuries were not obvious. The perception was that she needed medical attention while he did not. That erroneous perception cost his life. Most perception problems are not so severe but still cause trouble.

We have a tendency to fear the relatively benign. Mice, spiders, air travel, public speaking, tight places. All these and more can generate fears out of proportion to any danger they present. Appropriate caution is good, but we should avoid devitalizing our lives by overreaction to less significant dangers. How many people avoid visiting relatives because it's too far to drive and they fear flying, even though flying is much safer? How many miss the joy of visiting natural sites for fear of harmless animals? Overcoming those fears can make life more fulfilling and enjoyable.

Likewise, we often tend to fear the unfamiliar, people from a different culture, strange places, new technology, etc. That causes us to miss the enjoyment we might have if we learn of those cultures or technologies and partake of the best aspects of them. Worse, such fears lead to bigotry and class or racial warfare. That is also one reason for the widespread fear of anything “nuclear” or involving “radiation.” While radiation can be harmful, the general reaction to it is all out of proportion to the actual danger. In fact “nuclear” and “radiation” are witch words, (cf

Of course these fears reside in the emotional part of the brain and it is not always easy to allow reason to overrule emotion and normal fears. This is especially true when reason tells us we can do something unnatural such as jumping out of an airplane. OK, I admit it. I used to jump out of perfectly good airplanes. Back when I wore Uncle Sam’s funny green clothes I was a paratrooper. It was fun and gave me extra pay.

My non-airborne friends used to claim I was crazy to do such a thing. The brigade commander, also a paratrooper, said something similar. He said we had to have something different about our minds to allow us to perform such an unnatural act...

I suspect our commander was right, we did have something different in our mentalities. If so, such a difference is not all bad. It allowed us to do something unnatural but not really dangerous. Most of us knew that the real danger was the trip to the airport, then back from the drop zone. For that we had to travel on the highway with cars and trucks whizzing by in the other direction. However, for humans, highway travel is an extension of our natural travel on land. Jumping out of airplanes is quite unnatural. What I did as a paratrooper was allow my intellect to overrule my intuitive fear. I knew that the parachute jump itself was statistically very safe. In fact, in all the jumps I did, many of which involved hundreds of paratroopers, I am not aware of any serious injuries, much less deaths.

We skew our thinking if we insist on classifying the natural as safe and the unnatural as dangerous. Hemlock is natural, and so are death cap mushrooms.

This problem cuts both ways. First we can overlook some real dangers in such things as food and medical products. Second, we deny ourselves, and sometimes others, the opportunity to do things that appear dangerous but in fact are relatively safe.

A friend once lost a family member to this skewed thinking. His father was a private pilot and often flew the family on vacations. The problem was that my friend’s mother did not like to fly high; she felt safer close to the ground. She insisted that her husband stay as low as he could. While such a feeling may be natural, that perception is quite wrong. The reality is that flying higher allows a pilot more time to recover if anything goes wrong. Something did go wrong over Wyoming’s Wind River Range. With no time to recover, the plane went down, killing one and seriously injuring two more. The forth person aboard was in also injured but was able to make it out and notify authorities.

That is of course an extreme example, but people make such inappropriate decisions regularly. Occasionally it costs lives; more often it costs time or enjoyment. It is common for people to drive to their destination in order to avoid flying, even though air travel is much safer than driving. The perception that flying is dangerous comes from the fact that we can’t do it naturally, and from the spectacular aspect of an airplane crash. Even the crash of a small plane will generate more news coverage than an automobile accident with the same number of casualties.

The type of misperception mentioned above tends to be widely shared. Most people tend to think of snipers as more dangerous than traffic and airplanes as more dangerous than cars. However there are individual misperceptions as well, many of which develop into phobias. The woman who wanted her airplane to stay low may have been suffering from acrophobia. Phobias are characterized by unreasonable fears, either fearing something harmless, or excessive fear of something that is a potential danger. The subject of phobias is generally beyond the scope of this article; their treatment is the province of certified therapists. However I would like to mention that those who suffer from phobias should be careful not to impose the same fears on their children. This takes effort, but no good parent wants to interfere with a fulfilling life for his or her children. If necessary, the parent should work with a therapist to avoid passing a phobia on to the children.

If we match our perspective to reality we will have safer, more enjoyable lives.

Saturday, August 7, 2010

Perception vs. Reality, Part 1

We must never become so busy slapping at mosquitoes that we walk into the quicksand.
Richard L. Evans

The young woman was a bloody mess, writhing and screaming in agony. She had been riding behind her boyfriend on a motorcycle, wearing a bikini when the bike crashed. Her legs, arms and torso were covered with scrapes, scratches and ground in dirt. Bystanders, urged on by the distraught boyfriend, tried to help. The young man appeared fine; he had been wearing protective clothing.

At the hospital emergency room workers cleansed, disinfected and bandaged her wounds. They did a good job and she recovered completely... In fact she was able to attend the funeral of her boyfriend. The accident ruptured his spleen and he died from internal bleeding. His injury was neither obvious nor particularly painful. It was only fatal.

It is a fact of life: The attention we pay to an event is seldom related to its importance. The young woman’s wounds were dramatic; her boyfriend’s unseen injury was deadly. Spectacular events, celebrities, and scare-mongering distract us from less noticeable but more important issues. Modern life conspires to focus our attention on the trivial. We are constantly faced with the equivalent of an obnoxious male mosquito buzzing around our ears. While he distracts us, the female quietly sneaks in for a sip of blood.

Focusing on the spectacular hurts us two ways:

1. Distracted by the trivial, we ignore the important.

2. Fearing the benign, we devitalize our lives.

Residents of the Washington, D.C. area of the United States will long remember October 2002. For nearly a month they lived in fear as a sniper shot thirteen people, apparently at random. Adults, children, Blacks, Whites, men, women. Nobody was immune. News reports across the country and around the world trumpeted the danger. School recesses were held indoors. Football games were moved to secret locations with no spectators. Shoppers hurried through parking lots, looking over their shoulders. Nobody felt safe.

Finally two suspects were caught and the reign of terror ended. Children again played outdoors, much to the relief of parents and teachers. Everybody felt much safer. That “increased safety” was a misperception. While the danger from the snipers was gone, traffic accidents, street crime etc. continued to kill and injure people. The difference was that the press paid little attention to accidents and street crime.

Snipers are big news; they get a lot of media attention. However in any large metropolitan area accidents and street crime kill and injure people every day, drawing little if any press attention. Yet the risk of being shot by a sniper was insignificant compared to the risks we all run in our daily lives.

The terror those snipers created is an example of an all too human tendency. We fear spectacular but unlikely dangers but give no thought to common, often worse, hazards. Yes, the criminals did murder at least eleven people and wounded two others. However, the chance of them shooting any one person out of the millions living in that area was miniscule. In fact, the death rate from all causes probably dropped during their reign of terror. People were staying home, not exposing themselves to traffic accidents and other hazards. Common hazards kill and injure many more people than the snipers ever did.

At times the whole world seems to be in conspiracy to importune you with emphatic trifles.
Ralph Waldo Emerson

News outlets in particular distort our perception by emphasizing the spectacular and unusual. Unless a celebrity is involved, it really isn’t very big news when a traffic accident kills a driver, or a drug overdose kills an addict. A sniper or an airplane crash has much greater news value. Because of this, our perception of danger is often warped.

Snipers, airplane crashes, terrorist threats all get our attention even though any one of us has almost no chance of becoming a victim of those dangers. Meanwhile, we continue to travel on our roads without a second thought, often even driving when we are tired or under the influence of intoxicants. Warped perceptions both blind us to the real dangers of what we may think of as safe, and cause us to fear things that are not really very dangerous. Only by using our intellect to decide what's really important can we overcome this problem.

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Friday, July 16, 2010

Fool's Gold Words

“We practice cutting edge medicine.” That was what the doctor told my wife my wife as he described a course of treatment. We did not find that reassuring. Neither of us cares a whit about if a treatment is cutting edge or if it has existed since before Hippocrates, what we care about is if the treatment is effective.

That physician's attempt at reassurance is an example of fool's gold words (or phrases). Like witch words* they are words that short-circuit thinking, though fool's gold words have an opposite effect. While witch words make us think something is automatically bad, fool's gold words make us think it is automatically good. Both however interfere with critical thinking. If you accept that something is good or bad without examining the evidence you will be frequently misled.

I first encountered the term “Fool's Gold Words” in John Chamberlain's introduction to the 1944 American edition of Hayek's The Road to Serfdom though I do not know if the term was original with him. He applied it to concepts such as full employment, economic pump priming, the good of the whole, the greatest good for the greatest number etc. However it also fits many buzz-words today.

The “cutting edge” phrase is only one of the fool's gold words infesting the world. Business, advertising, politics etc. all have words and phrases that mislead. Those words tend to be nebulous enough that it is difficult to pin down exactly what they mean. The phrase “cutting edge” of medicine, for example, tells us nothing about exactly what treatment is proposed nor about any evidence of its effectiveness or side effects.

In business I remember when “inventory reduction” became a fool's gold phrase. Everybody wanted to reduce inventory. In some cases that made sense but doing it uncritically caused problems. Many companies discovered that they needed the inventory they had discarded. However business at least has some effective feedback that often mitigates the problem. Companies that follow fool's gold words blindly tend to fail, allowing smarter companies to prosper. Not so in the political arena.

In politics fool's gold words and phrases abound. One often used is “for the children,” generally employed in the attempt to get higher taxes supposedly to benefit the children. However the effect of the fool's gold phrase is to convince people that they must do anything for the children, at any cost. That leads to uncritical actions at the expense of other parts of society. In fact it is often at the expense of the children themselves as their parents face heavy financial burdens.

Another fool's gold phrase is “a living wage.” The term is undefined but people who use it seem to think that everybody is entitled to wages far beyond what most people in this world receive. Most receive much less than what is commonly called a living wage – yet they live on it. Critical examination of the concept and how divorced it is from reality should show how meaningless the term is.

One current political fool's gold word is “stimulus.” Politicians want to use tax money and borrowed money to stimulate the economy. That sounds good but does it work? Evidence from history and economics indicates that it does not. Our economic problems were short-lived until Hoover and FDR decided to intervene. That led to the worst depression in history, yet our current leaders seem determined to repeat the actions that worsened the problems of the past.

Like witch words, fool's gold words will mislead us unless we are careful. We must learn to recognize and counteract them. Whenever a word or phrase short-circuits critical thinking we should be careful. When we recognize fool's gold words we should delve into their implications and see if there is evidence for those implications.