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A happy, merry tide of plugged ears and closed minds?

December 24th, 2009 2 comments

A short tale of woe, if I may.

During the Bush/Cheney administration I was booted from a few echo chambers more interested in group self-righteousness than thinking, and certainly unwilling to listen to a small government, green-minded conservative (I simply HAD to be an evil or block-headed Liberal!): RedState (twice!), Free Republic and NewsBusters. I`ve also had my share of frosty and occasionally uncivil receptions at LvMI, but have found some limited tolerance over the years, if not a “warming” welcome (forgive the pun, of not the punner).

I`ve pondered over what brings this on, and think I`ve figured out some of the factors that lead to closed minds. But my point here is simply to note that I still find it profoundly disappointing; not only does it hinder the exploration needed to bind societies and solve real problems, but it simply ain`t fun to be on the receiving end of a slammed door.

A couple of recent, and differing, examples come to mind:

Rob Bradley`s banning me from discussions of energy and environmental policy on his MasterResource blog, not because my comments were rude or unsubstantive, but because l questioned how truly “free market” his blog is, and its refusal to note that there is more than one side to rent-seeking battles (blog discussions there never examine the behavior of coal and other fossil fuel interests in such battles);

– a de facto banning by another libertarian who didn`t really want to hear my thoughts on his thesis that there is an “objective” moral order permeating the universe;

– a group on the LvMI forums, where my suggestions that libertarians see the concerns of others about possible climate change as an opportunity to deregulate were met with bristling hostility by some;

– this past week I booted, without warning or the courtesy of explanation, from the Libertarian Forum Google group, after I had responded to another member who noted as “boring” my comments to Lew Rockwell on the Left and global warming;  and

– on the Left, several (five at last count) interesting commenters on Twitter wthin whom I share a concern about indigenous rights and climate change issues have “blocked” me, apparently because I noted that a lack of property rights lies at the core of indigenous rights problems AND of poor development on reservations, and that it might not actually aid poor nations adapt to climate change or to protect tropical forests if Western governments take money from their taxpayers and give it to elites in poor nations blocking means I can`t follow them, so it is difficult to see what they are saying; whether someone chooses to “follow” and listen to me is a different matter).

No doubt to those whom I offend I seem like the Devil incarnate, but it still hurts. I take some solace in the perhaps self-deluded thought that since I encounter this problem across the political spectrum, I must be doing something right. But then again, maybe George Reisman and Gene Callahan have it right, and I`m a “misanthrope” or maladjusted grouch of one kind or another.

But I don`t think so – a misfit, to be sure, like the elf in Santa`s workshop who wanted to be a dentist – but not a misanthrope.

Christmas and holidays cheers to those of you who are still listening to (and challenging) me, and to those who have supported my disruptive presence here at LvMI!

 

 

 

Categories: cognition, denial, group, rent-seeking Tags:

[New & Improved links] Welcome to Big Brother III: More on the "Financial Stability Board"

December 24th, 2009 No comments

Please note my preceding posts, about the establishment of global financial governance, which has astonishingly thin coverage given its importance and implications. Has everyone been distracted?

Here is some background and discussion that may be useful, in chronological order:

G-20 Shapes New World Order With Lesser Role for U.S., Markets“, Rich Miller and Simon Kennedy, Bloomberg, April 3, 2009

Financial Stability Board Portends Economic Global Governance“, Jim Kelly (Director of International Affairs for the Federalist Society for Law and Public Policy Studies and Co-Director of Global Governance Watch), Global Governance Watch, April 21, 2009

The End of America’s Financial Independence?” Gary D. Halbert, InvestorsInsight.com, April 28, 2009

The Bloodless Coup of the Global Financial Stability Board: From Guidelines to Rules“,  Ellen Brown (author, “Web of Debt”) HuffPo, June 24, 2009

WORLD GLOBALIZATION OF THE BANKING & REGULATORY STRUCTURE” , Joan Veon, NewsWithViews.com June 29, 2009

Financial Stability Body Could Co-ordinate Global Banking – FSA“, Reuters, Oct 14, 2009

Global banking body may be needed-FSA“, Huw Jones, informationliberation.com, October 19, 2009

The proposed European Systemic Risk Board is overweight central bankers“,  Wlillem Buiter, Maverecon blog, Financial Times, October 28, 2009 (re: similar proposal to consolidate regulation in the EU)

“Thirty financial groups on systemic risk list“, Patrick Jenkins and Paul J Davies, Financial Times, November 29 2009

“Regulators list systemic risk institutions -FT“, Reuters, November 29, 2010

The Financial Stability Board Lists Thirty Systemic Risk Institutions“,  WallStreetPit.com, Nov 30, 2009

Regulators Resist Volcker Wandering Warning of Too-Big-to-Fail “, Gadi Dechter and Alan Katz, Bloomberg, December 4, 2009

“Volcker
is leading a chorus arguing for restricting the size or primary
functions of financial institutions. … Volcker, who heads President Barack Obama’s Economic
Recovery Advisory Board
, told Kentucky’s Georgetown College
students “we need to produce more, finance less””

What international experience tells us about financial stability regulatory reforms“, Michael Pomerleano, ft.com/economists forum, December 21, 2009

Finally, here is a link to the publications of the Financial Stability Board itself.

 

Here is a useful excerpt from Gary Halbert`s piece (The End of America’s Financial Independence):

“What follows are verbatim excerpts from the G-20 Communiqué that
pertain to the new Financial Stability Board (be sure to read the
bullet points below).

QUOTE

Major
failures in the financial sector and in financial regulation and
supervision were fundamental causes of the crisis. Confidence will not
be restored until we rebuild trust in our financial system. We will
take action to build a stronger, more globally consistent, supervisory
and regulatory framework for the future financial sector, which will
support sustainable global growth and serve the needs of business and
citizens.

We each agree to ensure our domestic
regulatory systems are strong. But we also agree to establish the much
greater consistency and systematic cooperation between countries, and
the framework of internationally agreed high standards, that a global
financial system requires. Strengthened regulation and supervision must
promote propriety, integrity and transparency; guard against risk
across the financial system; dampen rather than amplify the financial
and economic cycle; reduce reliance on inappropriately risky sources of
financing; and discourage excessive risk-taking. Regulators and
supervisors must protect consumers and investors, support market
discipline, avoid adverse impacts on other countries, reduce the scope
for regulatory arbitrage, support competition and dynamism, and keep
pace with innovation in the marketplace.

To this end we
are implementing the Action Plan agreed at our last meeting, as set out
in the attached progress report. We have today also issued a
Declaration, Strengthening the Financial System. In particular we agree:

  • to
    establish a new Financial Stability Board (FSB) with a strengthened
    mandate, as a successor to the Financial Stability Forum (FSF),
    including all G20 countries, FSF members, Spain, and the European
    Commission;
  • that the FSB should
    collaborate with the IMF to provide early warning of macroeconomic and
    financial risks and the actions needed to address them;
  • to reshape our regulatory systems so that our authorities are able to identify and take account of macro-prudential risks;
  • to extend regulation and oversight to all
    systemically important financial institutions, instruments and markets.
    This will include, for the first time, systemically important hedge
    funds;
    [emphasis added]
  • to endorse and
    implement the FSF’s tough new principles on pay and compensation and to
    support sustainable compensation schemes and the corporate social
    responsibility of all firms;
    [emphasis added]
  • to
    take action, once recovery is assured, to improve the quality,
    quantity, and international consistency of capital in the banking
    system. In future, regulation must prevent excessive leverage and
    require buffers of resources to be built up in good times;
  • to
    take action against non-cooperative jurisdictions, including tax
    havens. We stand ready to deploy sanctions to protect our public
    finances and financial systems. The era of banking secrecy is over. We
    note that the OECD has today published a list of countries assessed by
    the Global Forum against the international standard for exchange of tax
    information;
  • to call on the accounting
    standard setters to work urgently with supervisors and regulators to
    improve standards on valuation and provisioning and achieve a single
    set of high-quality global accounting standards; and
  • to
    extend regulatory oversight and registration to Credit Rating Agencies
    to ensure they meet the international code of good practice,
    particularly to prevent unacceptable conflicts of interest.

We
instruct our Finance Ministers to complete the implementation of these
decisions in line with the timetable set out in the Action Plan. We
have asked the FSB and the IMF to monitor progress, working with the
Financial Action Taskforce and other relevant bodies, and to provide a
report to the next meeting of our Finance Ministers in Scotland in
November.

END QUOTE

You noticed that I highlighted the key word “all” in
the bullet points above from the G-20 Communiqué. If the FSB, in its
international wisdom, considers a financial institution or company or a
hedge fund “systemically important,” it may regulate and oversee it.
This provision extends and internationalizes the recent proposals by
Treasury Secretary Geithner and the Obama administration to regulate all firms that are deemed to be “too big to fail,” in whatever sectors of the economy they so choose.”

I see NO coverage of the FSB at ANY libertarian institution (based on a quick Google; if they have, I appreciate if it is brought to my attention).

I also note that the following is relevant to a portion of the FSB agenda: Reducing Interference with Accounting Standards and Devising Securities to Price Moral Hazard, Statement No. 277, Shadow Financial Regulatory Committee, AEI, September 14, 2009

Welcome to Big Brother II: WSJ brings us "The Future of Finance"

December 23rd, 2009 No comments

Further to my prior post, I decided to take a whack at laying out the WSJ`s online report and describing some of its contents.

The master page is here – is not outlined as clearly as the Asian print edition, which is in the following order, which I`ve linked to corresponding section of the online version:

Fixing Global Finance (intro)

A Call to Action (“A ranking of the 20 recommendations at The Wall Street Journal’s Future
of Finance Initiative, aimed at rebuilding the global financial system.”) Participants were divided into four groups, each one looking at a specific aspect of the future of finance:

• How to deal with financial institutions deemed too big to fail.

• How national regulatory authorities can effectively oversee global institutions.

• How to deal with financial institutions at the regulatory frontier that act like banks but aren’t regulated as banks.

• How to address complex, innovative products, like credit-default swaps and collateralized debt obligations.

Each group came up with five top priorities for how to rebuild its area of the financial system. All participants then voted on the order of prirority.

It is useful to actually review the four groups’ discussions, which are here:

Too Big to Fail

International Regulation

Financial Innovation

Regulatory Frontier

Paul Volker: Think More Boldly

Other articles that are linked at the main page do not appear in the print edition; I will look at them later.

The top 20 priorities identified are these (my emphasis, identification of buzz words & comments):

1) Higher Capital Requirements

Financial institutions whose “systemic importancerequires national
authorities to underwrite them if they fail
[they are apparently the institutions identified here] should be required to hold
more capital.
This should include increasing risk weightings,
asset/liability limits based on the business model rather than on
simple capital ratios, as well as “contingent capital” [a form of debt that converts to equity whenthe bank is in trouble] and “dynamic
provisioning”. [“Too big to fail” has been formally identified globally!]

2) Empower the 
The Financial Stability Board [created by the G-20 in April to “address vulnerabilities and to develop and
implement strong regulatory, supervisory and other policies in the
interest of financial stability
” and supported by a secreariat in the BIS; national member organizations are here] should be empowered to define and seek
agreement on broad-based principles that national regulators should try
to make operational in consultation with market participants. [This is our new global financial overlord]

3) Promote Risk Management

Boards
should be required to demonstrate a full understanding of risks
inherent in new products.
Elevate risk managers to at least the same
level as product makers and give them adequate representation at board
level
. Create globally recognized qualifications for risk managers, and
implement standard certification through a risk “driving test.”

4) Improve Regulator Resources

Ensure that regulators are high quality and have deep knowledge of the
industries and institutions they oversee. Regulator compensation should
be competitive with compensation in regulated industries. Industry
should “second” senior people to support the Financial Stability Board
and regulatory bodies. [Too big to fail firms, are required to place senior execs within the regulator.]

5)
Better Governance

Hold systemically important institutions to “higher standards of
governance”. Chief risk officers should report to the board and not the
chief executive
. “Achieve greater transparency”.[Hard to see if any of this is meaningful; in any event, firms should be governing themselves, not adding governance structures to please the state.]

6)
Avoid Regulatory Arbitrage

To make global co-operation feasible and promote a level playing field,
regulations should be of an achievable scope. Financial activities of
similar substance and economic reality should be regulated in the same
way from country to country. [Regulation has been foisted on the industry only because governments have taken control of money supply, and insure deposits. Surely we should be talking abot restoring markets, not beefing up government. Coordination of regulation may spread systemic risk, and make larger^scale gaming possible.]

7)
Overhaul Rating Agencies

Restore investor confidence in rating agencies by eliminating conflicts
of interest between agencies and issuers, returning to an
“investor-pays” model, distinguishing between ratings of corporate debt
and structured financial products, and promoting new entrants to the
credit-rating business. [So rating agencies are further regulated? Why not scale back deposit insurance, and end the “investment grade” requirements that banks only cared about in a check-the-box kind of way? That there is little competition among rating agencies is also due to federal fiat.]

8)
Market Infrastructure

Create a market structure to facilitate orderly unwinding of failed
financial institutions, including greater use of central clearing. [Maybe a development that makes sense on its own, if market participants want such clearing houses. But this will be forced on every Too Big bank, and smaller institutions will likey have to follow suit.]

9
) Countries Should Follow the Financial Stability Board

G-20 countries should commit to implement in their jurisdictions the
regulatory provisions put to them by the FSB, without significant
amendment or supplementation. [Big Brother replaces national legislatures!]

10)
New-Product Transparency

Improve structural and price transparency of new products, using
modeling and stress testing to ensure that downside scenarios are as
visible as upside scenarios. [Transparency is a concern that should be one left entirely to market participants; governments are simply imposing new requirements on top of those that led to gaming, profits, opacity and market freeze-up. Since when has it become the job of government to help everyone make credit decisions?”]

11)
Regulators Adopt Priorities

Global regulators over the next 18 months should achieve agreement on
the adoption of accounting standards set by the International Financial
Reporting Standards and “appropriate capital and liquidity standards”. [Accounting standards should also be entirely private; they became public as a result of government decisions to regulate stock markets, and the reporting of “public” companies.]

12)
Effective Enforcement

The consequences of bad actions must include real “wallet harm” in
order to be effective, and enforcement must be consistent across
national boundaries. {Big Brother controls the stick everywhere.]

13)
Global Imbalance Focus

The G-20 should focus on resolving global economic imbalances and
integrate that process with discussions on financial stability.

14)
Rebuild Responsibility

Regulation alone is not the cure. The financial-services industry must
show cultural leadership and promote responsible behavior by all
practitioners. [Sure, but by strengthening regulation, market self-discipline is necessarily weakened. Does siimply mouthing the words make the moral hazard of the past decades go away? The KEY problem in fuelling government intervention has been the limited liability – and loosening control – of owners, leading to risk-shifting to the public and greater internal freedom of managers.]

15)
Strengthen Infrastructure

Ensure financial infrastructure is “commensurate with the innovation” it supports, both at the firm and the market level. [Um, isn`t this a concern solely of a firm`s owners? Why is further regulating innovation the job of regulators? Aah, “systemic risk” introduced by deposit insurance and reserve regulation! Why not step back from underlying causes?]

16)
Resist Over-regulation
Because financial innovation is central to growth and critical to a
speedy recovery, the G-20 and successors should recognize that new
rules and protocols should not thwart innovation, and the cost of
regulation must be balanced against the benefits.[Empty words. Who is to resist, and who will have the ability to do so, in the face of a global regulator?]

17)
Regulatory Mandate
Regulators should have a clear and strong mandate for financial
stability, and should cooperate across borders and maintain a level
playing field.

18)
Living Wills
Systemically important banks should present regulators with living
wills demonstrating how they would wind down business in the event of
unsustainable losses. Cross-border arrangements should provide for
burden-sharing in the event of failure. [Window-dressing to reassure taxpayers that Too Big to fail doesn`t mean Too Big to fail, and bailouts.]

19)
Don’t Regulate Borrowers
Regulators should focus on the source of credit, not on borrowers,
using [bank] capital requirements to restrict excessive leverage among
borrowers, including alternative-asset managers. [This means that Big Brother will determine how much lending goes to ther unregulated financial sector!]

20)
Clarify IMF Role

The International Monetary Fund should focus on global imbalances and
defer to the Financial Stability Board on financial-stability
principles while continuing to have surveillance responsibilities. IMF
quotas should be revised to reflect global economic realities. [Division of labor withing Big Brother.]

 

As I noted previously, Paul Volker seems to have noticed that our financial system has become an enormous drag on the economy, but while he comments that the regulated need to be bolder, and that they haven`t gone far enough in addressing moral hazard, he seems completely oblivious to the role of government in aiding and abetting the moral hazard.

More than a little wrong-headed and disturbing.

That`s it from me for now. Looks like 1984 is coming in 2010.

 

 

 

So, what happened at Copenhagen?

December 23rd, 2009 No comments

Briefly, Obama succeeded in getting China and India to agree that they need not simply to improve efficiency as they grow, but to make verifiable cuts in emissions.

This is a major accomplishment, as it addresses the chief reason why Clinton and Bush refused to submit the Kyoto Protocol to the Senate. It also clearly indicates that these and other developing nations view the climate threat very seriously, and that Obama has done an effective job in gaining the trust and confidence of their leaders.

As this provides assurance that any action by the US will be reciprocated to some degree by China and others, and thus may actually be meaningful rather than simply driving jobs from our economy to theirs, this may be the hand-writing on the wall for the passage of climate legislation by Congress (though the acrimony over health care, economic woes and the mid-term elections may weigh in the opposition direction).

But by coming in on the penuitimate day, working directly with China, India, South Africa and Brazil, and then leaving behind a bare-bones “Accord” that didn`t fit into the prior negotiation framework, Obama ruffled the feathers of smaller nations, and left poorer and island nations (which wanted to see firm mitigation and funding commitments) and indigenous groups (which hoped to be acknowledge as the recipients of offsets funnding that would help them preserve their forests) very upset.

Further, logistics for thousands of accredited NGOs and other observers who had planned side events were apparently very screwed up, so many people were apparently locked out in the cold for a day or two and are now steaming.

The result will no doubt be revitailzed pressure on political leaders over the coming year, in preparation for a climate summit in Mexico City in 2010.

Robert Stavins, Director of the Harvard Environmental Economics Program, has here the most useful and readable summary that I`ve seen.

I note that in September, Stavins participated in a debate with AEI`s Steven Hayward in the Wall Street Journal on the question of whether countries cut carbon emissions without hurting economic growth. Stavins provides links to the discussions here.

 

Wall Street Journal organizes financial industry’s plan to destroy market discipline, take over regulation globally – hello?

December 23rd, 2009 No comments

[Update: My follow-up post outlines the WSJ`s report and chief recommendations.]

I thought I’d elevate what was a side and closing comment on Stephan Kinsella’s Avatar thread, about an appalling group of articles at the Wall Street Journal, which seems to have absolutely no clue about how the financial crisis stems from a chain of   government interventions, was fuelled by a government-inflated bubble and was “intermediated” by a financial industry rife with moral hazard.

The WSJ is great at drumming up fears about a world-wide climate change cabal, consisting of everyone one who showed up at Copenhagen, blogged about it or thought about it (fears of regulatory over-reach are perfectly understandable, but nary a cui bono question about the “skeptics” industry), but just what in the heck are they trying to pull here – help to CREATE world government, directed by the same firms and regulators who brought us market opacity, arbitraged investment and capital requirements intended to backstop deposit insurance, rampant profit-taking, financial meltdown and tremendous risk-shifting (to shareholders & taxpayers)? Is the WSJ really so naive about rent-seeking, moral hazard and mission creep?

I urge everyone to take a very close look at the WSJ’s “Future of Finance Initiative” and their recent “Fixing Global Finance” report.

Here’s a copy of my comment, as noted in my prior blog post (with some bracketed additions and changes to order):

What happens abroad at the “Avatar” is pretty basic, but the same
nonsense, with taxpayers, investors and consumers playing the role of
victim, can be seen at home. Has anybody seen the jaw-droppingly
appalling report that the WSJ has run on “Fixing Global Finance”, based
on their “Future of Finance Initiative”, in which they cheerlead a
bunch of financial firms in their efforts to abandon free markets and
to structure global regulation and regulators, to be staffed by a
revolving door of themselves?

[I think I’m being fair to see this as posing a threat to markets and
freedom at least as great as what others see in the more multi-faceted
climate change muddle.]

Even Paul Volker was appalled, not at
their willingness to create more regulation, but at their unwillingness
to confront the moral hazard problems (tied to regulation of public
corporations and the financial sector) that lie at the core of the
financial meltdown. [Volker seems to overlooked the crucial role of
government in driving and feeding the moral hazard problems.] Here’s the link, for those of you who missed it:
http://online.wsj.com/public/page/future-of-finance-121409.html Property rights, corporations and government-complicit theft? Hmm.

[Sounds familiar. Maybe some of those who want to battle corporate
excesses might not be so crazy after all, even if they neglect to
understand the risks of negative consequences of seeking help from
government. And maybe someday libertarians will get a little more
serious about addressing the festering
concatenation of corporate-linked problems that are generating so much
rot at the core of our government and public company/financial company
sector
.]

Corporations have very unfortunately been inescapably tainted
with statism from the get-go, in ways that play out negatively both
abroad and at home. I’ve devoted a fair amount of time to examining the
entanglement of corporations and government: http://mises.org/Community/blogs/tokyotom/search.aspx?q=limited

Our state governments were wrong to get into competition with each
other to grant corporate status to investor-owned enterprises, in
exchange for fees and later taxes. Corporate status freed investors
from down-side risk, by limiting liability to the amount of capital
contributed. This incentivized investors to encourage corporations to
embark on risky activities that shifted costs to innocent third
parties; the concentration of wealth in corporations (that now have
unlimited lives and purposes, subject to survival in the market); the
corruption of the court system that once protected third parties from
damages caused by others (by replacing strict liability with balancing
tests); and the ensuing battle over legislatures and courts to check
corporate abuses.

I will try to come back later and provide more details of the WSJ initiative/report, but for now let me note that I have relevant discussion at some of my posts on limited liability (see link above) and on “Rot at the Core“.

Thoughts of an envirofacist avatar on "Avatar"; or Resources, Property Rights, Corporations & Government-Enabled Theft

December 22nd, 2009 1 comment

My pal Stephan Kinsella has a remarkably enviro-friendly post (“Avatar Is Great and Libertarian”) up regarding the new movie “Avatar”; his remarks and others on the thread prompted me to leave a few comments, which I copy below (in furtherance of my nefarious and/or insanely misguided agenda .

Many thanks to Stephan for aiding and abetting this. Ive added a bit of emphasis, fixed a typo or two, and a few additional comments, in brackets.

Published: December 22, 2009 2:38 PM

TokyoTom

Stephan, I welcome you to the dark, enviro-facist side!

– “you have to fight for and use might to protect your rights”

I see you are starting to buy into my real-world view of property rights, that “principles” and force are just two different ways we seek to protect what we consider ours, with the first being most efficacious within a community [and recourse to the later perhaps being necessary]. As I noted on a previous thread of yours,

“The deep roots of “property” are not in principle but in simple competition, physical defense of assets valuable enough to make the effort worthwhile, and in the grudging recognition by others – more willingly offered by those who share bonds of community – that yielding to others’ claims may be more productive than challenging them. This is as true for rest of creation as it is for man. While we have developed property to a very sophisticated degree, at its core property remains very much about the Darwinian struggle to survive and prosper, violence, theft and calculations as to when challenging control over an asset is not worth the effort.”

http://tokyotom.freecapitalists.org/2009/12/21/quot-property-quot-weird-thoughts-evolution-society-quot-property-rights-quot-quot-intellectual-property-quot-principles-structure-justify/

Sounds like this struggle over resources is at the core of Avatar, along with a boatload of Western guilt over our historical theft of land and assets from indigenous peoples, whom of course have also been involved for eons in bloody battles for resources with other tribes.

Far from being simply a dead relic of the past, however, the often violent struggle to take resources from indigenous peoples continues in many places, though out of sight from most of us (not simply those who are trying hard not to see) – oil & gas, minerals, timber, ranching, soybeans, oil palms, World Bank-funded dams and roads, fisheries – you name it, a violent conflict that the natives are losing to kleptocratic governments & elites can be found.

Western corporations are often in the thick of such conflicts, but even where not, modern technology (and growing consumer markets) provide the key tools and incentives for such conflicts, in which natives may be more or less hapless. Local governments typically either “nationalize” the resource or turn a blind eye, with the result that resource exploitation frequently takes on the appearance of a tragedy of the commons.

Western liberals sometimes exacerbate these problems – not simply by seeing “greed” and capitalism as the problem, and not kleptocratic regimes (often supported by the West and by aid money) or the lack of enforceable property rights – but also by demanding misguided policies such as “biofuels” incentives, which lie behind tropical forest destruction in much of SE Asia.

Libertarians should be familiar with these problems, which are a large part of the dynamics in petroleum-cursed nations and elsewhere. Such problems are also linked generally to “aid” efforts and to other centrally-directed development schemes. Elinor Ostrom was awarded the Nobel Prize in part for her work in showing that local communities, if their rights are respected, can generally do a good job of managing their own resources [and how government efforts frequently go astray].

I’ve commented on these issues a number of times, but here are a couple of links for those who might care to scratch the surface:

http://mises.org/Community/blogs/tokyotom/archive/2007/09/28/too-many-or-too-few-people-does-the-market-provide-an-answer.aspx

http://mises.org/Community/blogs/tokyotom/archive/2007/12/16/bison-markets-the-tragedy-of-the-commons-and-the-indian-war.aspx

http://mises.org/Community/blogs/tokyotom/archive/2009/11/26/theft-and-the-tragedy-of-the-commons-mother-jones-ponders-quot-conservation-indigenous-people-s-enemy-no-1-quot.aspx

http://mises.org/Community/blogs/tokyotom/archive/2009/05/24/capitalism-the-destructive-exploitation-of-the-amazon-and-the-tragedy-of-the-government-owned-commons.aspx

http://mises.org/Community/blogs/tokyotom/archive/2009/01/07/somali-piracy-flows-from-the-greater-and-continuing-western-theft-and-abuse-of-somali-marine-resources.aspx

http://mises.org/Community/blogs/tokyotom/archive/2008/06/02/environmental-damage-as-theft-report-by-prominent-enviros-quot-highlights-the-need-for-secure-ownership-of-wildlife-resources-by-poor-people-quot.aspx

http://mises.org/Community/blogs/tokyotom/archive/2007/10/12/libertarian-reticience-other-than-to-bash-enviros.aspx

Stephan, if youve made it this far, let me remind you of our conversations about corporations [most recently here], which have very unfortunately been inescapably tainted with statism from the get-go, in ways that play out negatively both abroad and at home. Ive devoted a fair amount of time to examining the entanglement of corporations and government: http://mises.org/Community/blogs/tokyotom/search.aspx?q=limited

  • Our state governments were wrong to get into competition with each other to grant corporate status to investor-owned enterprises, in exchange for fees and later taxes. Corporate status freed owners from down-side risk, by limiting liability to the amount of capital contributed. This incentivized investors to encourage corporations to embark on risky activities that shifted costs to innocent third parties; the concentration of wealth in corporations (that now have unlimited lives and purposes, subject to survival in the market); the corruption of the court system that once protected third parties from damages caused by others (by replacing strict liability with balancing tests); and the ensuing battle over legislatures and courts to check corporate abuses.What happens abroad at the “Avatar” is pretty basic, but the same nonsense, with taxpayers, investors and consumers playing the role of victim, can be seen at home. Has anybody seen the jaw-droppingly appalling report that the WSJ has run on “Fixing Global Finance”, based on their “Future of Finance Initiative”, in which they cheerlead a bunch of financial firms in their efforts to abandon free markets and to structure global regulation and regulators, to be staffed by a revolving door of themselves? [I think Im being fair to see this as posing a threat to markets and freedom at least as great as what others see in the more multi-faceted climate change muddle.] Even Paul Volker was appalled, not at their willingness to create more regulation, but at their unwillingness to confront the moral hazard problems (tied to regulation of public corporations and the financial sector) that lie at the core of the financial meltdown. [Volker seems to overlooked the crucial role of government in driving and feeding the moral hazard problems.]Heres the link, for those of you who missed it:
    http://online.wsj.com/public/page/future-of-finance-121409.html

 

Property rights, corporations and government-complicit theft? Hmm. [Sounds familiar. Maybe some of those who want to battle corporate excesses might not be so crazy after all, even if they neglect to understand the risks of negative consequences of seeking help from government. And maybe someday libertarians will get a little more serious about addressing the festering concatenation of corporate-linked problems that are generating so much rot at the core of our government and public company/financial company sector.]

 

Oh, I almost forgot to remind everyone for the need for group holiday cheer (as alternative to productive engagement on a libertarian, Austrian-based climate agenda):

http://mises.org/Community/blogs/tokyotom/archive/2007/12/16/holiday-joy-quot-watermelons-quot-roasting-on-an-open-pyre.aspx

 

Plant behavior: More evidence of an "objective moral code" infusing the universe?

December 22nd, 2009 No comments

Gene Callahan has posted a link to an interesting article describing how plants respond to signals from other plants in their enviroment and alternatively cooperate or compete with neighboring plants, depending on degree of kinship.

Strange But True IV: NOAA proves govt CAN learn – and seeks to end tragedy of commons in fisheries by implementing "catch share" quasi-property rights!

December 21st, 2009 No comments

Fellow libertarians, O Cynical Ones, you might be surprised to note that, at least in some cases, it MAY be possible to educate thick-headed and corrupt government bureaucrats and political appointees about the reasons for policy failures, and the government MIGHT even actually decide to cean up  its act. While the task may be difficult, it is apparently NOT impossible; there is a silver lining; and persistence may pay off in greater local authority.

The case in point? Signs of hope that the US government is learning from the painful lesson of many disastrously managed fisheries, and is starting to empower fishermen to self-manage that the resources on which they rely, by setting policies that favor “catch share” programs. (I have blogged on the fisheries “tragedy of the commons” a number of times; serious problems continue.) “Free-market” enviro-libertarians have been making the case for such changes for thirty-odd years or so.

(BTW, this is exactly the point that Elinor Ostrom has been making for years, and why she was awarded the Nobel prize in economics. Further, as I have previously noted, even mainline enviro groups – those enviro-facists – have been specifically calling for “catch share” programs as a way to slow the disastrous tragedy of the ocean commons.)

Here are excerpts from a December 10 online release bu the , “NOAA Encourages Use of Catch Shares to End Overfishing, Rebuild Fisheries and Fishing Communities”: (emphasis added)

NOAA released today for public comment a draft national policy
encouraging the use of catch shares, a fishery management tool that
aims to end overfishing and rebuild and sustain fishing jobs and
fishing communities
. In doing so, NOAA recognized that catch shares are
not a panacea or one-size-fits-all solution, but are a proven way to
promote sustainable fishing when designed properly at the fishing
community level.

“We have made great progress in rebuilding many fisheries, but more
than 20 percent of our fish stocks have not been rebuilt, and even
larger proportion of our fisheries are not meeting their full economic
potential for the nation,” Secretary of Commerce Gary Locke said.
“Catch shares is a tool that can help us realize the full economic and
biological benefits of rebuilt fisheries.”

Catch share
programs, which include Limited Access Privilege programs and
individual fishing quotas, have been used in the U.S. since 1990 and
are now used in 13 different commercial fisheries. Four new programs
will begin over the next year. 
NOAA estimates that rebuilding U.S.
fish stocks would increase annual commercial dockside values by an
estimated $2.2 billion, a 54-percent increase over current dockside
values of $4.1 billion, and help support jobs in the seafood industry
and across the broader economy.

“From Florida to Alaska, catch share programs help fishing communities
provide good jobs while rebuilding and sustaining healthy fisheries and
ocean ecosystems,”
said Dr. Jane Lubchenco, under secretary of commerce
for oceans and atmosphere and NOAA administrator. “Although this is a
national policy, our emphasis is on local consideration and design of
catch shares that take into consideration commercial and recreational
fishing interests.”

A catch share program differs from traditional fishery management by
dividing up the total allowable catch in a fishery into shares. These
shares are typically allocated based on historical participation in the
fishery. They may be assigned to individuals, cooperatives, communities
or other entities, who would be allowed to fish up to their assigned
limit.
Catch share participants also agree to stop fishing when they
have caught as much as they are allowed.

Under traditional
management programs, fishermen compete for a total allowable catch.
This has lead to fishermen racing each other to catch as many fish as
they can before the total catch limit is reached. This results in more
boats and gear than necessary, quotas being exceeded, increasingly
shorter fishing seasons, unsafe fishing and high levels of bycatch. It
also may result in too many fish brought to market at once, reducing
their market value to fishermen and coastal communities.

“Catch shares allow fishermen to plan their businesses better and be
more selective about when and how they catch their allotment, because
they know their share of the fishery is secure,”
said Dr. Jim Balsiger,
acting administrator of NOAA’s Fisheries Service.
“They can plan their fishing schedules in response to weather, market,
and individual business conditions. Catch share programs help eliminate
the race to fish, reduce overcapacity and bycatch, enhance the safety
of fishermen and their vessels, and improve economic efficiency. They
also help ensure fishermen adhere to annual catch limits because the
value of their share is directly linked to the overall health of the
fish stock and its habitat.”

While catch shares are not
always universally embraced when they are first introduced, their
benefits have been well proven. “We fought against the program right up
until the time it passed,” said Alaska fisherman Rob Wurm, referring to
the halibut and sablefish catch share program, which began in 1995.
”But to my surprise, it really has worked well. It has created a lot of
stability, stopped the race for fish and changed the fishing
environment in ways that have made it safer and allowed us to avoid
bycatch.” …

Members of NOAA’s Catch Shares Policy Task Force, which includes
participants from each of the eight councils as well as NOAA experts,
provided significant input on the draft policy.

Among the policy’s components:

  • Development
    of a catch share program is voluntary. NOAA will not mandate the use of
    catch shares in any commercial, recreational, or subsistence fishery.
  • The
    individual fishery management councils will consult fishing communities
    to evaluate the data, effects, and enforceability of any potential
    catch share program before moving forward. In some cases, councils may
    find catch shares not to be the most appropriate management option.
  • NOAA
    will provide leadership and resources and work in partnership with
    fishery management councils, states and members of the public to help
    with the implementation of catch shares. This includes assisting
    fishing communities as they make the transition, and conducting
    regional workshops, online seminars, and other educational and outreach
    programs.
  • Well
    thought-out and developed catch share programs will promote sustainable
    fishing communities by supporting good jobs, and promoting preservation
    of wharfs, processing facilities, and fuel and ice suppliers.
  • Catch
    share programs can be designed to set aside shares to allow new
    participants into the fishery, including new generations of fishermen,
    small businesses, or others.

NOAA encourages
those councils adopting catch shares to consider a royalty system to
support science, research and management as fisheries become more
profitable under the program. NOAA will also seek appropriated funds to
supplement what may be collected through cost recovery and royalties to
assist in the design, transition period and operation of catch share
programs.

Readers may note very close parallels between NOAA`s approach and the common principles for sucesssful management of open-access resources that Ostrom has identified.

Let`s hope that the US and other nations can use similar approaches to begin to manage any number of fisheries that are crashing or are under severe pressure around the world – due both to government-instigated commons problems and to races to catch fish in pelagic regions not subject to meaningful government control. We could use approaches that actually empower the fishermen, and end both government mismanagement and politicization and chaotic systems of widespread, roving and destructive “fish raiders”. The alternatives of fisheries that have crash and been placed under bans (under the CITES convention) and politicized deadlocks that we see for whales under the IWC are not very attractive.

So, we ARE making some progress.  Forgive me for suggesting that similar efforts by libertarians to play a productive role regarding energy policy might also eventually pay off?

What IS "property"? A few weird thoughts on evolution, society, "property rights" and "intellectual property", and the "principles" we structure to justify them

December 21st, 2009 2 comments

I copy here some thoughts I posted on two linked threads by Jeffrey Tucker and Stephan Kinsella in November [2009] regarding problems with intellectual property, as well as some relevant parts of the comment thread by Stephan and others:

My own view has come around to the idea that state-created IP is abusive and has been hijacked by rent-seeking. Firms and individuals that want to maintain information as property should do so without state grants, other than the use of courts in providing remedies for theft.

But that the idea of IP itself as “property” does not seem absurd to me in the least; the prevalence of the idea is an example of the way that communities adopt and internalize rules and apply them rather reflexively (and feel them morally) and is a testament to the capacity of humans to minimize tragedy of the commons situations (as Yandle and Ostrom have noted). The problem is simply that IP has slipped its moorings and become abusive to the point that we need to start working (via legislation, no?) to lessen the evident parasitism and abuse.
Published: November 19, 2009 7:57 AM

Stephan Kinsella:
TokyoTizzom:
These comments have an odd air to them–state created IP is “abusive”? It’s been “hijacked”? Libertarians talk about just and unjust, rights and rights violations. And IP was not hijacked by the state any more than taxing power or regulation of wage and working hour or outlawing cocaine was hijacked by the state. It’s not as if these things would occur in a free market.
Yes, let’s just work with the state to decree more unjust fake “laws” …. that’ll work.
Published: November 19, 2009 9:36 AM

TT:
“And IP was not hijacked by the state any more than taxing power or regulation of wage and working hour or outlawing cocaine was hijacked by the state. It’s not as if these things would occur in a free market.”

I’m not sure why you want to drum up disagreements; is it because I agree with you as a practical matter, rather than delving into principle? If we change anything here, it will not be so much as a result of principle as getting others, as a practical matter, to agree that IP has gotten out of hand.

In any event, I was referring to abuse by rent-seekers, not by the state.

Further, while I don’t see how we can possibly conclude that communities cannot, without use of a state, derive the equivalent of taxes, wage regulations or outlawing cocaine, how is this even relevant to a discussion of the legitimacy of IP?

Care to clarify the following?
me: “The problem is simply that IP has slipped its moorings and become abusive to the point that we need to start working (via legislation, no?) to lessen the evident parasitism and abuse.”
You: “Yes, let’s just work with the state to decree more unjust fake “laws” …. that’ll work.”
I’m not following you – what is YOUR proposed course of action for rolling back IP? Are you expecting everyone to simply ignore the state and IP laws? Seriously, I’m missing something.
Tizzy Tom
Published: November 20, 2009 2:06 AM

TT:
It seems to me that Stephan – as most libertarians who focus on principles – fails to ground his fine edifice on or link it into what we understand of the continual saga of competition and cooperation in Nature for acquiring, using and protecting scarce resources, and man’s ascendant path.

Basically, “property” is simply the name we give to the resources that we are able personally to protect, as well as those which – via sophisticated shared mechanisms that continue to be developed within communities over time – we can protect, plus our recognized share of common assets.

In a state of nature, very little is secure, as most life forms have limited means of securing or maintaining exclusive control over assets. What one predator catches, another often soon steals. Different species have developed different ways of coping with the ongoing struggle, utilizing varying degrees of cunning, speed, strength and cooperation.

Humans have triumphed over the rest of nature because we have found sophisticated ways of balancing individual initiative and moderating intra-group struggle with cooperation, and devised methods to acquire, use and defend resources.

Property has been a key tool, but we can readily see that our “property” has its roots in the ways that our cousin creatures invest energy in marking out territory, fighting (individually or in groups) to protect their young, and growling over bones. At the same time, we can see that animals treat each other as dinner, make calculated decisions as to when to “steal” resources that others are guarding, and as well find advantage in cooperating, both with relatives of their kind and with others.

Our need to defend property from other groups has fed our inbred mutual suspicions of “others”, and our ongoing battles, both for dominance within groups and to acquire the resources held by rival groups, – and has led directly to states.

Bruce Yandle has addressed the ascendance of man through methods such as property to facilitate cooperation and to abate ruinous conflicts over resources; he has an interesting short piece I’ve excerpted here: http://mises.org/Community/blogs/tokyotom/archive/2009/11/20/bruce-yandle-on-the-tragedy-of-the-commons-the-evolution-of-cooperation-and-property.aspx

To tie this in more closely with Stephan’s battle with libertarians and others over IP, I note I have further discussed the ways that groups have, in order to strengthen group cohesion and dampen conflict, of developing and inculcating mores; formal religions are obviously just one branch of this tree:

– see my discussion with “fundamentalist” here: http://mises.org/Community/blogs/tokyotom/archive/2009/08/30/a-few-simple-thoughts-on-the-evolution-of-moral-codes-and-why-we-fight-over-them-and-religion-liberty-and-the-state.aspx

– and my discussions with Gene Callahan and Bob Murphy on whether there are “objective” moral truths, or simply a felt need on their part to find some: http://mises.org/Community/blogs/tokyotom/search.aspx?q=callahan+moral

These are relevant because they explore not property per se, but our related need to make our property rules stick, by tying them to “sacred postulates” of one kind or another. The problem with this, of course, is that it makes us difficult to abandon what we all pretty much assumed was sacred, like IP. (Of course it also makes even discussing property quite difficult at times.)

TT
Published: November 20, 2009 9:13 AM

• Lord Buzungulus, Bringer of the Purple Light
TokyoTom’s latest post is, frankly, bizarre, and I fail to see that it has anything do with the issues of property rights and IP.
Published: November 20, 2009 9:19 AM

• Stephan Kinsella
Lord B– re TokyoTizzom — I kind of agree.
Tom: I really am not sure what you are asking. You seem to be rambling in a sort of New Age libertarian “we’re all practical moderates can’t we just get along Rodney king” kind of way, “can’t we just have incremental improvement, kumbaya”.

Maybe I’m misreading you. I just can’t follow this amorphous way of thinking.
Published: November 20, 2009 10:43 AM

• TokyoTom
LBBPL & Stephan:
Sure, it’s a bolt from the blue and kinda past my bedtime, but it’s not so hard:

The deep roots of “property” are not in principle but in simple competition, physical defense of assets valuable enough to make the effort worthwhile, and in the grudging recognition by others – more willingly offered by those who share bonds of community – that yielding to others’ claims may be more productive than challenging them.

This is as true for rest of creation as it is for man. While we have developed property to a a very sophisticated degree, at its core property remains very much about the Darwinian struggle to survive and prosper, violence, theft and calculations as to when challenging control over an asset is not worth the effort.

To the extent we’re past that, which is quite a ways indeed, property is a social construct that is flexible (though rigidified in various ways, including legislation) and based primarily on practical considerations as to what parameters best engender wealth and respond to shared purposes by minimizing free-for-alls, externalities, free-riding & rent-seeking and facilitating voluntary transactions.

Elinor Ostrom has spent alot of time documenting sophisticated local community property rights, all of which at the end of the day all supported by threats of sanctions and violence against rule breakers and outsiders. http://bit.ly/2caqUr

It’s natural that we feel strongly about what we consider to be ours, but this feeling is a gut one that is not in essence grounded on principles deeper than our sense of fair play and just desserts in a community to which we feel we have bonds of common purpose.

And we have a natural tendency to dress up our shared institutions – such as property rights – in moral precepts.
But we always remain subject to problems of theft, especially so as our bonds of community and shared purpose loosen. Libertarians are absolutely right to keep shining a spotlight on how the state has become an instrument of theft.

As for IP, as specialized knowledge can be quite valuable, it seems quite possible for me to imagine a society that developed IP and enforced it mutually, as a way to minimize high costs for protecting trade secrets.But such rules would not be enforceable against other societies, unless resort is made to government. And it seems clear to me that there are substantial rent-seeking costs now associated with state-granted IP.

To roll things back, just the argument that things are out of control and IP is now grossly abused and counterproductive is good enough for me, but I wish you luck in wielding arguments of principle. That’s the great thing about being a pragmatist.
TT
Published: November 20, 2009 11:54 AM

A note to Lew Rockwell regarding the reflexive irrelevancy of libertarians on the climate/big government morass

December 20th, 2009 4 comments

Lew Rockwell has a post up on the Mises Economics Blog – “The Left Fell into the Climate Morass” – that has just come to my attention. I`m not from the left, but as a right-leaning, free-market enviro, I offered Lew a few comments, which I copy below:

Lew, I think most of your criticism of the left and of environmentalists is apt, but “libertarians” have only to look in the mirror to see someone to blame for the lack of productive discourse on environmental and regulatory issues, and the reason why libertarians are being marginalized in the confused debate over the legitimate role of the state.

Libertarians in general continue to:

– ignore the opportunities created by widespread concerns about climate change risks to partner with both left and right to seek to undo counterproductive state/federal regulation:
http://mises.org/Community/blogs/tokyotom/archive/2009/11/03/a-libertarian-immodestly-makes-a-few-modest-climate-policy-proposals.aspx

– refuse to follow-up on their own analyses to dig more deeply to see that the roots of the disastrous cycle of regulation (and snowballing fights over the wheel of government) lie in the grant of limited liability to corporate investors, and the resulting externalization of risk and undermining of common law property protections:
http://mises.org/Community/blogs/tokyotom/search.aspx?q=limited+liability

– as Ed Dolan suggested, continue to act as the “conservatives” that Hayek despised by refusing to question the legitimacy of the favors provided to statist enterprises under the status quo, and turn a blind eye to the direct role that “libertarians” play in the gamesmanship such enterprises continue (such questions of motives being “ad homs” except when addressed to alarmists, in whch case it is “cui bono”):
http://mises.org/Community/blogs/tokyotom/archive/2008/02/13/edwin-dolan-applying-the-lockean-framework-to-climate-change.aspx
http://mises.org/Community/blogs/tokyotom/archive/2009/10/07/ad-homs-r-not-us-discussions-over-rent-seeking-necessitate-painful-wrestling-with-slippery-quot-cui-bono-quot-demons.aspx

– instead of acknowledging the legitimacy of concerns over man`s onslaught on nature and local communities (arising both from a lack of property rights problem and from the hand of kleptocratic governments) prefer a self-comforting irrelevancy, both on climate and on resource issues generally:
http://mises.org/Community/blogs/tokyotom/archive/2009/10/30/the-road-not-taken-ii-austrians-strive-for-a-self-comforting-irrelevancy-on-climate-change-the-greatest-commons-problem-rent-seeking-game-of-our-age.aspx
http://mises.org/Community/blogs/tokyotom/archive/2009/11/04/for-climate-fever-take-two-open-air-atom-bombs-amp-call-me-in-the-morning-quot-serious-quot-suggestions-from-kinsella-amp-reisman.aspx

– rather than honest engagement, prefer a tribal hatred of misanthropic “watermelons” and a smug love of strawmen and ad-homs:
http://mises.org/Community/blogs/tokyotom/archive/2009/11/05/the-road-not-taken-v-libertarian-hatred-of-misanthropic-quot-watermelons-quot-and-the-productive-love-of-aloof-ad-homs.aspx

Time once again for some self-satisfied, but ultimately empty tribal holiday cheer?

http://mises.org/Community/blogs/tokyotom/archive/2007/12/16/holiday-joy-quot-watermelons-quot-roasting-on-an-open-pyre.aspx

Sincerely,

Tom