Archive for April, 2009

More on Boone Pickens and power regulation in Texas: in which I test whether Rob Bradley/Master Resource is still blocking my posts

April 25th, 2009 No comments

Here`s Bradley`s post, A Texas-Sized Energy Problem: Republicans, Democrats, and ‘Baptists & Bootleggers’ Running Wild in the Lone Star State (Obama sends his thanks).  I left a short note wondering how Bradley could have made it through a generally observant post without referring to all of the sweet deals that Boone Pickens managed to buy from the thoroughly Republican Texas legislature; it`s also a puzzle why he didn`t call for public utility deregulation.

Rob banned me from his blog 6 weeks back; I`m checking to see if he`s reconsidered.

Here`s the comment I left:

TokyoTom { 04.25.09 at 1:43 pm }

Rob, why not go the extra step and identify Boone Pickens as the chief bootlegger, and the shameful way that the Republican legislature let him buy rights of eminent domain?

Steve Milloy has also written astutely on this.

Your comment is awaiting moderation.

Categories: Pickens, Rob Bradley Tags:

A note to the American Conservative Union on "Obama’s Political Prosecutions of Opponents"

April 25th, 2009 No comments

Although Pres. Obama had earlier indicated he had no intention or interest in pursuing criminal or other public investigations into possible criminal wrong-doing in connection with acts of torture auuthorized by the Bush administration, Obama is now (as the NYT and GlennGreenwald report), after being forced by a lawsuit under the Freedom of Information Act to release four “top secret” torture memos, finding himself under pressure from public opinion and some Congressional Democrats to allow such investigations to proceed.

As I found out in my email Inbox, this is producing conniptions from the so-called American Conservative Union, which, in an unashamedly breathless, hyperbolic and truthless missive, alleges that (1) Obama has condoned show trials against heroes who have safeguarded us from terroism and (2) in the process has undermined our national security by telling the terrorists and the world that America is weak.

Who knew that considering whether the people serving within U.S. government are subject to the rule of law could itself threaten our national security?

The email from the ACU is quoted further below; here is a copy of my direct reply [caution: obvious snark ahead]:

from TokyoTom <[email protected]>
to Dennis Whitfield <[email protected]>
date Sat, Apr 25, 2009 at 1:45 PM
subject Re: Tokyo Obama’s Political Prosecutions of Opponents
Dennis, I’m with you in insisting that we are a country of men, not laws.

Heaven forbid Congress should ever review the legality of actions by the executive branch, much prosecutors seek to try to get a jury to convict for actual violations.
At least, that`s what “conservatives” these days think, right?  Have you gotten Bob Barr and Bruce Fein to sign on?
Tom“The first principle is that you must not fool yourself – and you are the easiest person to fool.”
Richard Feynman

For those who can stomach it, here`s the actual email I received from the ACU (emphasis in original):
from Dennis Whitfield <[email protected]>
reply-to Dennis Whitfield <[email protected]>
to Tokyo Tom <[email protected]>
date Sat, Apr 25, 2009 at 12:31 AM
subject Tokyo Obama’s Political Prosecutions of Opponents
Dear Tokyo,

President Obama wants to prosecute the Bush administration… or at least leave the door open to prosecuting Bush White House attorneys.This is what we have come to: an elected President of the United States hinting that he will criminally prosecute the previous occupants of the White House for working to protect the United States from terrorists.

You would think we were in a third-world country.

However, this is the United States of America and we now have a President who believes he can spread his ideas of weakness and appeasement toward America’s enemies back into a political prosecution of a previous administration to further increase his standing among liberals in the United States and in the world.

President Obama wants to prosecute the Bush administration for prosecuting the fight against terrorism.

We need to stand up and say it is wrong.

Sign the new ACU petition against Obama’s political prosecutions here.

Obama bowed in front of a Saudi King.  Obama stood on French soil and called United States actions arrogant.  He has smiled while shaking hands with Hugo Chavez.

Now Obama wants to send another message to liberals around the world by opening up to the political prosecution of Bush administration officials.

The prosecution would be based on his administration re-defining the terms of terrorist interrogations.  He wants to re-define the questioning of terrorists who come from a tradition of blowing up buildings, suicide bombings and unbridled attacks on civilians.

Obama wants to re-define the interrogations of terrorists whose goal is to eliminate our society and replace it with one like the Taliban where “honor killings” are conducted against women who do not ascribe to pre-arranged marriages, where public expression is banned, television is outlawed and we told what clothing to wear.

The Obama administration would re-define the interrogations that took place of terrorists who wanted us to die just because of our basic traditions and beliefs so they can politically prosecute their predecessors.

Sign the new ACU petition against Obama’s political prosecutions here.

When did Obama decide to open up to prosecutions of the Bush – Cheney administration?

As ABC News reported, “President Barack Obama has opened the possibility of prosecuting Bush-era lawyers who authorized torturing terror suspects and suggested Congress might order a full investigation. Less than a week after declaring it was time to move on, the President is now describing what might be done next to investigate.”

But did Obama plan to prosecute Bush officials all along?

During the campaign Newsweek noted in an article last November that Obama advisor Eric Holder who is now our Attorney General called the Bush policies “unlawful.”

Holder said in testimony just this week that he will provide more “transparency” in releasing more previously held military top secret documents on interrogations… building a liberal public cause toward prosecution.

So when the President’s Press Secretary and his Chief of Staff told the press that the President was looking forward and not looking back – that he wasn’t looking to prosecute – one has to wonder if it was a ploy to get members of the liberal media and the far left to call on him to prosecute – to raise their voices to call for the prosecutions.

Sign the new ACU petition against Obama’s political prosecutions here.

Obama said as early as October 2007, during the campaign that, “We won’t work in secret to avoid honoring our laws and Constitution.” … hinting at his political prosecutions to come.

It was then-Senator Barack Obama who was one of the first to start the effort toward defining violent terrorist’s interrogations as so-called torture.  

In that same October 2007 campaign statement Obama alternated between the terms, “interrogation techniques,” “brutal interrogations,” and then “torture.”  He said, “No more … methods like simulated drowning.”

Simulated actions – i.e. fake actions – became torture to the media and the far left under the tutelage of Barack Obama.

Fake activities that Vice President Cheney said gave us valuable intelligence to protect American lives.

These fake tactics were allegedly used against Khalid Sheikh Mohammed the mastermind behind the September 11, 2001 terrorist attacks that produced the killings of thousands of United States citizens.  The killings were real.


We have seen the real torture of American citizens – beatings and even beheading.  In 1993 Americans saw images of U.S. Soldiers bodies being dragged through the streets of Somalia after a fight with militants.  A British government document, PBS reported, said that Al Qaeda trained militants there.  Osama Bin Laden later praised the fighters.The Obama administration is seeking to find a legal justification to prosecute Bush administration officials by making the case that fake drowning is equal to real torture.

If they succeed they might even seek to prosecute Vice President Cheney himself, a political prosecution like those seen in third-world countries.

Sign the new ACU petition against Obama’s political prosecutions here.

Obama’s supposed push toward prosecutions is coming from liberals like Senator Diane Feinstein.

You may have seen Senator Feinstein on TV this week calling for the possibility of prosecutions. This is the same Diane Feinstein who served as a leader in bringing Barack Obama and Hillary Clinton together after the Democrat primary last year.

This is the same Senator Feinstein who found herself at the center of an ethics controversy this week when it was disclosed her husband’s real estate firm received a lucrative federal government contract to sell foreclosed properties – after she asked for $25 billion in federal money for the agency that gave him the contract.

So while Feinstein was deflecting questions on her ethical problems, she was promoting the torture debate.

Feinstein led the call to urge Obama to “reserve judgment” about prosecutions.

She was joined by other liberals including House Speaker Nancy Pelosi who is trying to deflect criticism from the left that she knew about and approved the techniques before she started calling them torture.  In fact she was even given a personal tour of the interrogation facilities when she was briefed before the questioning took place.

Sign the new ACU petition against Obama’s political prosecutions here.

This is a dangerous precedent for the President of the United States.

Even in the days following Watergate, where an illegal break-in became the impetus for bringing down a Presidency, then President Ford took the politically painful step of pardoning the former President.  This new President seems to be tearing out that page from history and trashing it to look for a justification to prosecute the previous staff and potentially the Vice President or President themselves.

These actions might leave the door open to prosecutions against those who were working to keep our nation safe from brutal terrorists.

We need to stand up against Mr. Obama’s actions.  They are not only dangerous in the political precedent but dangerous in sending the message to our enemies that we are weakening in our efforts to protect our homeland.

Sign the new ACU petition against Obama’s political prosecutions here.

Just today we awoke to stories that another suicide bomber killed scores of people in Iraq.  These terrorists know no bounds.  They are brutal and vicious in killing innocent people.

The men and women who went to work at the World Trade Center on September 1, 2001 and the men and women who put on their fire, police or EMS uniforms were not suiting up for war; they were going to work to feed their families.

The terrorists are brutal.  They know no bounds and they will do whatever it takes to promote their warped ideology and end our freedoms and way of life.

Let’s not send a message that our nation is weak or that our leaders will criminally prosecute their predecessors for political disagreements.  That is not democracy… and it is allowing the terrorists to win in destroying our democracy and therefore our way of life.

Sign the new ACU petition against Obama’s political prosecutions here.

Thank you for all you do for ACU and for America.

Dennis Whitfield
Executive Vice President

P.S.  We should not allow only the voices of the left to be heard in the White House or in the media.  We must speak up and fight back.  Thank you for signing the petition and supporting ACU’s efforts here.

The American Conservative Union

In which I applaud another balanced, productive post by Dr. Reisman, and draw attention to a post by Lew Rockwell on the need for more power competition

April 23rd, 2009 11 comments

[Snark Factor:  Ridiculously High]

In honor of Earth Day, yesterday Dr. George Reisman, Professor Emeritus of Economics at Pepperdine University and author of Capitalism: A Treatise on Economics, put up a fun little post that mocks the full-employment arguments made by President Obama on behalf of environmentalists and investors in the wind and solar power industries.

On the comment thread, I couldn`t resist expressing my appreciation, while introducing newer readers to the deeper challenge to which Dr. Reisman invites his readers:

I too have enjoyed another delightful article from Dr. Reisman; bravo!

But Dr. Reisman`s style does seem to present problems of
interpretation for some readers, whom do not seem to understand that
while Dr. Reisman appears to simply be bashing environmentalists or
environmentalism generally (by focussing on the most absurd arguments
that some of them offer), he is in fact challenging his readers to do
precisely what he has studiously avoided.

That is, far from simply pulling the wings off of flies as he might
seem to some, Dr. Reisman is actually suggesting that serious students
of economics and libertarian approaches to society should diligently:

  • – seek to engage others productively and with sympathy, in a manner
    carefully designed to improve the functioning of markets and ancillary
    institutions that enhance plan formation across society;

    – note that there are many important, valuable open-access/unowed
    resources and government-owned resources – in which property rights and
    pricing mechanisms are working poorly at best;

    – acknowledge that while proposed “solutions” offered by
    environmentalists may be misguided, enviros have legitimate preferences
    as to how such resources should be protected, managed and distributed;

    – recognize that the concerns of enviros frequently arise in
    response to government interventions have clearly benefitted powerful
    insiders, including wealthy investors and large enterprises, while
    shifting costs and risks more broadly.

    As a result, Dr. Reisman`s tongue-in-cheek posts are in fact searing
    of the status quo and tbe fat cats who are using government
    to stifle open competition, consumer choice and innovation, while
    frequently generating large external costs. Unlike some who spoil the
    fun by engaging in the pedestrian task of spelling out the problems
    with the status quo that enviros are right to be dissatisfied with, Dr.
    Reisman treats his readers as adults by bracingly challenging them to
    use their thinking caps and to clear their own heads.

    For those for whom this task is too difficult, perhaps this piece by Lew Rockwell might be a good start:

    “Just who is in charge of getting electricity to residents? A
    public utility, which, in the absurd American lexicon, means
    “state-run” and “state-managed,” perhaps with a veneer of private
    trappings. If you look at the electrical grid on a map, it is organized
    by region. If you look at the jurisdiction of management, it is
    organized by political boundaries.

    “In other ways, the provision of power is organized precisely as
    a central planner of the old school might plan something: not according
    to economics but according to some textbook idea of how to be
    “organized.” It is “organized” the same way the Soviets organized grain
    production or the New Deal organized bridge building.

    “All of centralization and cartelization began nearly a century
    ago, as Robert Bradley points out in Energy: The Master Resource, when
    industry leaders obtained what was known as a regulatory covenant. They
    received franchise protection from market competition in exchange for
    which they agreed to price controls based on a cost-plus formula — a
    formula that survives to this day.

    “Then the economists got involved ex post and declared that
    electrical power is a “public good,” under the belief that private
    enterprise is not up to the job of providing the essentials of life.

    “What industry leaders received from this pact with the devil was
    a certain level of cartel-like protection, the same type that the
    English crown granted tea or the US government grants first-class
    postal mail. It is a government privilege that subjects them to
    regulation and immunizes companies from business failure. It’s great
    for a handful of producers, but not so great for everyone else.

    “There are many costs. Customers are not in charge. They are
    courted only for political reasons but they are not the first concern
    of the production process. Entrepreneurial development is hindered. Our
    current system of electrical provision is stuck in time. Meanwhile,
    sectors that provide DSL and other forms of internet and
    telecommunication services are expanded and advancing day by day — not
    with perfect results but at least with the desire to serve consumers.

    “How New York and California consumers would adore a setting in
    which power companies were begging for their business and encouraging
    them to turn down their thermostats to the coldest point. Competition
    would lead to price reductions, innovation, and an ever greater variety
    of services — the same as we find in the computer industry.

    “What we are learning in our times is that no essential sector of
    life can be entrusted to the state. Energy is far too important to the
    very core of life to be administered by a bureaucracy that lacks the
    economic means to provide for the public. How it should be organized we
    can’t say in advance: it should be left to the markets. Whatever the
    result, you can bet the grid would not look like it does today, nor
    would its management be dependent on the whims of political

    What we need today is full, radical, complete, uncompromised
    deregulation and privatization. We need competition. That doesn’t mean
    that we need two or more companies serving every market (though that
    was common up through the 1960s). What we need is the absence of legal
    barriers to enter the market.

    Thanks, again, Dr. Reisman, for challenging us, and not pandering to the dullest and laziest among us, the way Lew Rockwell does!

    Your admiring pupil (and fellow enviro-hater),


  • Published: April 23, 2009 5:32 AM


For those who think that Dr. Reisman is being serious in his one-sided attack on enviros while ignoring the problems of ongoing rent-seeking by entrenched statist corporations, I would be pleased to refer to other posts in which he is clearly posting tongue-in-cheek and intends no rancor or imbalance.  A good example would be his light-hearted post in March 2007, Global Warming: Environmentalism’s Threat of Hell on Earth, in which Dr. Reisman appeared to seriously argue that

there is a case for considering
the possible detonation, on uninhabited land north of 70° latitude,
say, of a limited number of hydrogen bombs. … This is certainly
something that should be seriously considered by everyone who is
concerned with global warming and who also desires to preserve modern
industrial civilization and retain and increase its amenities.
there really is any possibility of global warming so great as to cause
major disturbances, this kind of solution should be studied and
perfected. Atomic testing should be resumed for the purpose of empirically testing its feasibility.

While apparently serious, how could this possibly be a libertarian, nonstatist proposal?  The answer clearly MUST be – since Dr. Reisman is a lover of freedom and markets, and not of big government, goverment-run mega projects or statist corporate rent-seeking  – that Dr. Reisman was NOT being serious.  Instead, in his usual playful manner, he was simply inviting his readers to see through his words, and to productively engage those who are concerned with climate or other commons issues, on the basis of a cool consideration of libertarian and market principles.

Inquiring minds might like to note that I have remarked on Dr. Reisman`s  productive and insightful playfulness on a number of other occasions, on top of comments on his environment-related posts,  which have been fertilizing the LVMI pages since the 2005 Earth Day.


Rot at the Core: Dan Ariely on financial crisis & psycho-social aspects of cheating

April 3rd, 2009 2 comments

I just ran across an interesting speech and related commentary provided last month at TED by behavioral economist Dan Ariely, professor at MIT and author of Predictably Irrational.  Both the speech and the commentary are worth a look.

Ariely’s speech, billed as “Why we think it’s OK to cheat and steal (sometimes),” discusses how we fail to test our often-wrong intuitions, and focusses on the cognitive and social aspects of cheating behavior.  The Carnegie Council (which has a sidebar with other resources on cheating and corruption) summarizes Ariely’s speech as follows:

Ariely finds that in most situations a lot of people cheat a little, and that there are predictable ways to influence honesty.  When test subjects are reminded of morality, cheating drops. When subjects are distanced from the object of reward—for example, by replacing money with redeemable tokens—cheating increases. When other members of your social group cheat, you are more likely to cheat as well.

TED also asked Ariely for his thoughts on the Bernie Madoff scandal; these are a short read (about a page), but allow me to present a “readers’ digest” here:

Madoff’s massive Ponzi scheme was horrific on many levels. But while we watch the next phase of the scandal, it’s important to ask: What lessons are we going to learn from this? I can see three lessons that relate to my work studying human irrationality — and in particular, some non-useful lessons we might [unintentionally] learn.

One lesson that individuals and foundations are likely to take from the Madoff scandal is that in addition to diversifying their portfolio across several investments (stock, bonds, equity, cash), they also need to diversify their investments among several advisors. … You will need a whole new level of coordination among them so they can have the right amount of cash, bonds, stocks etc., across all of your assets.

And I think that people will begin to over-diversify across investors. Why? Because when we have one large and salient instance in our minds, it can be so powerful that we overemphasize it. …  In general, what we find when there’s one single vivid event is that people overweight it — we focus on it too much. So that’s the first lesson: We’re going to learn from the Madoff scandal, but we are going to overdo it.

Another non-useful lesson that I think we will adopt is to start searching with more vigor for other bad apples. On one hand, it is clearly important to prevent more Madoffs, but at the same time I worry that as a consequence of searching for bad apples, we won’t pay enough attention to other financial behavior that might not be as badly wrong but that can actually have larger financial consequences.

In our research on dishonesty, we found that when we give people the opportunity to cheat, many of them cheat by a little bit, while very few cheat by a lot. In our experiments, we lost about $100 to the few people who cheated a lot — but lost thousands of dollars to the many people who each cheated by a bit. I suspect that this is a good reflection of cheating in the stock market, where the real financial cost of the egregious cheating by Madoff is actually a tiny fraction of all the “small” cheating carried out by “good” bankers.

The risk here is that if we pay too much attention to chasing bad apples, we might pay too little attention to the situations where the small dishonesties of many people can have large consequences (such as paying slightly higher salaries to cronies, making small changes to financial reports, doctoring documents, being slightly dishonest about mortgage terms), and in the process neglect the real economic source of the trouble we are in. (emphasis added)

A third bad lesson that I think people will take from this concerns the way we define acceptable levels of cheating. In a study that may parallel Madoff’s egregious dishonesty, we … [found] that when someone who is part of our own social group cheats, we find it more acceptable to cheat, but when people who are not part of our social group cheat, we want to distance ourselves from these people and cheat less. (emphasis added)

Madoff was part of the financial elite — part of an in-group of our financial leaders. Think of all these people who were in his house, who knew him well. So now, when other people in this circle see him cheating, think about the long-term consequences: Would these other people in this financial industry now be more likely to take the immoral path? It doesn’t have to be another Ponzi scheme. It just means that, now that they have been exposed to this extreme level of dishonesty, they might adopt slightly lower moral scruples.  … I don’t think that those in his circle will necessarily become more Madoff-like people, but I do suspect that they will get a substantial relief from their moral shackles. Sadly, that’s his legacy.

So, Chapter One of the Madoff scandal is over, but I worry that the negative downstream consequences of this experience are just starting …

I share Ariely’s concern that we are likely to be distracted by a focus on big “bad apples” that may satisfy our needs to string someone up, but that will ignore the rot at the core – the systemic cheating that, in the American system, is very much related to the institution of state-granted “limited liability” to corporate investors/shareholders.  This grant (1) frees investors from the downsides of losses suffered and borne by third parties as a result of corporate actions, (2) limits investor incentives – and abilities – to monitor and control risks faced by and generated by executives, managers and other employees, (3) thus incentivizing risky behavior and providing greater freedom of action to executives and managers – including freedom of action to seek favors from government , (4) leaving executives and managers freer to loot their companies by taking large bonuses, which shifting downside risks to shareholders and taxpayers, and (5) fuelling pressures by consumers and others adversely affected by corporations to seek to use legislative, regulatory and judicial mechanisms to check corporate behavior.  In sum, limited investor liability has proven to lie at the core of the moral hazards which have produced the Great American Ponzi scheme that our fearless leaders are now struggling mightily to patch together and profit from.

Did I leave anything out?  (Ah, maybe how various firms, investors and their political handlers profit while socializing climate change risks?)

Anyone game for exploring ways to reduce the destructive gaming and rampant cheating in the American system?