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Strange Days, Indeed: While leading Austrians feel sorry for megacorps & pretend limited liability is inconsequential, Harvard Bus. Review calls for "Rethinking Capitalism"

February 27th, 2011 No comments

Readers may recall my ongoing criticisms of Lew RockwellStephan Kinsella and many others over their sympathy for and defense of statist mega-corporations like BP , their preference for confused attacks on “abstractions” like “the environment” (shared common or publicly-owned resources not under effective privatre control) while ignoring the role that “abstractions” like corporations playing in resolving or aggravating problems of human plan formation and conflict resolution, and for pretending that the unjustifiable state grant of limited liability to shareholders is inconsequential and has nothing to do with rapidly growing endemic/systemic corporate statism, so-called corporate “agency problems” (the struggles among, shareholders, executives, employees, and citizens groups/lawyers for control when clear owners are absent and costs/risks are externalized) and management failures in the financial industries and elsewhere?.

Clearly, the state grant of limited liability corporate status cannot be justified under libertarian principles; it was also an anathema to our Founding Fathers, who hated corporations (unlike their mistaken willingness to embed patents and copyright in the Constitution). It has long been crucial to investors choosing to incorporate (as opposed to accepting shared liability with their partners for the acts of their agents), and has had far-reaching consequences even greater than state-granted IP. Why, then, are libertarians defending ANY grants of limited liability? There are other forms of business organization available; such as sole proprietorships, classic, common-law contract-based partnerships, and “unlimited liability” corporations (American Express was an “unlimited liability” corporation for much of its history), firms whose capital is not “fully paid-in” (so that the company has a right to require shareholders to contribute more capital should existing capital be insufficient to pay debts).

In each of these cases, since shareholders have not been excused by government from potential personal liability for corporate acts (only people act, of course, but corporations have muddled all of this and become massive buck-passing machines), they retain a large tail of potential liaibility and so are all relatively incentivized to control risks that their agents may create. More exposure to risk will lead to more responsible behavior, and will abate call for more government interference. States all retain rights under the 14th Amendment to regulate different forms of business orgaizations differently, so they as well as federal regulators could lower regulatory barriers for unlimited liability corporations. 

But will capitalism collapse if voters and legislators end or disfavor limited liability corporations? Hardly: entrepreneurs, investors and shareholders might willingly choose forms of organization that do not need to be as heaviliy regulated by governments, and insurance and rating agencies would surely step into the breach with respect to the increased risk borne by shareholders – at cost of course, a cost that represents the risks that would otherwise be shifted to society as a whole. One effect would surely be a reduction in the calls by citizens groups for “corporate social responsibility” legislation.

But enough of prologue — did any readers see the rather startling – and in my mind  also rather mis-guided – piece in the January Harvard Business Review by Michael Porter (a professor at Harvard Business School) and Mark R. Kramer (a senior fellow at Harvard’s Kennedy Schoo of Government)? Entitled “The Big Idea: Creating Shared Value“, it is accompanied by an interview of Michael Porter entiled “Rethinking Capitalism“. Both are worth a review and head-scratching by LvMI and other readers.

It seems to me that Porter’s core points are the following:

The capitalist system is under siege. In recent years business increasingly has been viewed as a major cause of social, environmental, and economic problems. Companies are widely perceived to be prospering at the expense of the broader community.

Even worse, the more business has begun to embrace corporate responsibility, the more it has been blamed for society’s failures. The legitimacy of business has fallen to levels not seen in recent history. This diminished trust in business leads political leaders to set policies that undermine competitiveness and sap economic growth. Business is caught in a vicious circle.

A big part of the problem lies with companies themselves, which remain trapped in an outdated approach to value creation that has emerged over the past few decades. They continue to view value creation narrowly, optimizing short-term financial performance in a bubble while missing the most important customer needs and ignoring the broader influences that determine their longer-term success. How else could companies overlook the well-being of their customers, the depletion of natural resources vital to their businesses, the viability of key suppliers, or the economic distress of the communities in which they produce and sell? How else could companies think that simply shifting activities to locations with ever lower wages was a sustainable “solution” to competitive challenges? Government and civil society have often exacerbated the problem by attempting to address social weaknesses at the expense of business. The presumed trade-offs between economic efficiency and social progress have been institutionalized in decades of policy choices.

Companies must take the lead in bringing business and society back together. The recognition is there among sophisticated business and thought leaders, and promising elements of a new model are emerging. Yet we still lack an overall framework for guiding these efforts, and most companies remain stuck in a “social responsibility” mind-set in which societal issues are at the periphery, not the core.

The solution lies in the principle of shared value, which involves creating economic value in a way that also creates value for society by addressing its needs and challenges. Businesses must reconnect company success with social progress. Shared value is not social responsibility, philanthropy, or even sustainability, but a new way to achieve economic success. It is not on the margin of what companies do but at the center. We believe that it can give rise to the next major transformation of business thinking. ….

The purpose of the corporation must be redefined as creating shared value, not just profit per se. This will drive the next wave of innovation and productivity growth in the global economy. It will also reshape capitalism and its relationship to society. Perhaps most important of all, learning how to create shared value is our best chance to legitimize business again.

An article (nay, essentially a press release) by a Harvard-related commenter at BNET (the CBS Interactive Business Netwrok) says the folllowing (emphasis added):

Few people are as associated with modern capitalism as Harvard Business School professor Michael Porter, whose theories on strategy and competitiveness have shaped the direction of countless corporations.

So his latest article in Harvard Business Review comes as a shocker. Porter… argues that companies are locked in an “outdated” approach to creating value, focused on short-term profit while forgetting what they can do to benefit society–investments, by the way, that would pay off by ensuring long-term success.

One result: People have justifiably lost trust in business and are even questioning the very notion of capitalism.

… The idea that business has sold its soul in the pursuit of quick profit is nothing new, of course. But Porter and Kramer bring to the party a wealth of knowledge on the mutual benefits derived from a linking of economic and social goals.

And they create a new vision of how to get it done, a framework they call the “principle of shared value.”

The solution “involves creating economic value in a way that also creates value for society by addressing its needs and challenges. Businesses must reconnect company success with social progress. Shared value is not social responsibility, philanthropy, or even sustainability, but a new way to achieve economic success. It is not on the margin of what companies do but at the center. We believe that it can give rise to the next major transformation of business thinking.”

Some of the other highlights:

New skills required. Leaders and managers must develop skills and knowledge that give them a keen appreciation of societal needs, the ability to work across profit/nonprofit boundaries, and a deep understanding of how business productivity serves more than shareholders.

Government’s role re-conceived. Regulators must create policies, regulations and laws in ways that support shared value rather than work against it.

Broaden the role of capitalism. Companies have taken too narrow a definition of capitalism. We should be looking to business to help solve the world’s great problems, the authors argue. “The moment for a new conception of capitalism is now; society’s needs are large and growing, while customers, employees, and a new generation of young people are asking business to step up.”

The full article is …is bound to be one of the most debated and discussed thought pieces in 2011, you’ll want to check it out.

Some argue that business has no obligation beyond serving customers, creating jobs and, yes, making a profit for stakeholders. Isn’t it enough that companies already bankroll the health benefits of millions of Americans? Are you one of these capitalism minimalists? Or does business have broader mission to improve the society in which it operates?

Anybody wanna tell Mr. Porter that we can “fix capitalism” simply by ending limited liability – leaving owners to replace society and governments as the parties most interested in making sure that corporate managers are not creating too much risk? 

Far from needing new principles, we need a revival of OLD ones – of self-responsibility, rather than government-enabled risk-shifting.

Here’s the 15-minute video:

[View:http://www.youtube.com/watch?v=LrsjLA2NGTU:550:0]

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More dialogue on "Rethinking IP": does property arise because it helps people in societies to solve problems, or because thinkers come up with "principles"?

February 24th, 2011 No comments

Further to my previous post (Rethinking “Rethinking IP”, or, if we step away from statism, will societies not find ways to protect ideas?), allow me to note here some conversations from the comment thread to Stephan Kinsella‘s Rethinking IP post.

My key point is that it is cooperating individuals in societies with shared values, mores and customs who come up with “property rights” in the form of agreed practices that they find mutually suitable, not thinkers who are coming up with “principles”, and using them to tell others how stupid they are.

Societes of cooperating individuals are the sine qua non of ALL property. Those who focus on the “principles” but ignore the need to build community are trying to grow trees at the risk of damaging the  forest.

I’ ve corrected a few typos and added emphasis:

 

Stephan Kinsella February 16, 2011 at 12:51 pm

I don’t ignore the fact that ideas are valuable. This is incorrect. On your blog you say

Stephan Kinsella has another post up at the Mises Daily on “Rethinking IP”; while I share Stephan’s mission of ending state-sponsored IP – which has morphed into gross corporate-statist corruption, oppression and profound waste – as usual Stephan’s aggressive approach has generated as much heat as light in the comments section.

Rather than reaching a shared understanding of how damaging IP has become (there are real frightening aspects to the current situation) and putting heads together as to whether private alternatives are acceptable or likely or already exist, we have proponents and opponents of IP largely arguing past each other; one seems to assume that if there IS a “principled” basis for IP, then a state role must be accepted, while the other seems to assume that if there is NO “principled” basis for IP, then all IP is theft, so that those who produce useful or appreciated ideas, technologies, music, art and literature will go unrewarded.

How sad that even libertarians forget the role of private efforts and of communities in protecting valued resources and productivity!

I disagree that I “forget” this. And I disagree that we have to be consequentialists without principle. If we have a reason to oppose IP on principle, there is nothing wrong wtih communicating and explaning this.

Reply

TokyoTom February 16, 2011 at 10:46 pm

Stephan, you’ve acknowledged ideas are valuable, so then why you do this weird thing of assuming away the question of whether a free society would protect ideas – and ignoring the growing array of non-statist alternatives (since even state-created and -enforced IP is leaky)?

Widely agreed libertarian principles of no state coercion does not translate into a principle that free individuals, organizations and societies can’t evolve ways to afford protection for ideas – nor is such an effort needed to fight the IP/corporate-statism that concerns us all.

 

Peter Surda February 16, 2011 at 9:46 am

Tokyo Tom,

Stephan, in your eagerness to find a strong “principled” basis to reject IP, you ignore the fact that, like physical substances/resources that we find valuable and worth protecting (which protection our society acknowledges as appropriate via the term “property”), many ideas are valuable, take time to develop and may be worth defending.

In general, I can actually agree with this. If someone said that in his opinion, IP is more valuable than physical property, and therefore takes precedence, that would destroy my most important objection!

However, doing this requires admitting that you are a utilitarian. I guess a typical IP proponent has a big problem with this, so he prefers not to do it.

Reply

TokyoTom February 16, 2011 at 10:31 pm

Peter, isn’t it clear that is the IDEAS men have about how to use resources that makes them valuable?

While we must have food, water and shelter to survive, in an advanced economy all ‘property’ is a manifestation of an idea and the intellectual component is the primary value. The sand that goes into fiber optics and computer chips is dirt cheap.

Ideas are clearly as important as physical property — the question is simply whether those who want to protect either are justified in using the state to do so.

Afraid I don’t follow you on utilitarianism ….

TT

Reply

Peter Surda February 17, 2011 at 2:33 am

Tokyo Tom,

my argument is that immaterial goods are an interpretation of the material goods, rather than a separate phenomenon. If I was wrong, it would be possible to show an immaterial good which does not contain a material good, or how to interact with an immaterial good without using the material world, or how to act without changing the physical world.

I don’t object to the claim that ideas have values. However, if we assigned property rights to them, we would need to sacrifice a proportional amount of physical property right. If you, in general, accept the concept of physical property rights (which all of IP proponents I debated so far do), then your only defence of IP can be that the rights you are gaining are more important than those that you are losing (= utilitarianism).

Reply

TokyoTom February 17, 2011 at 9:31 am

Peter, I’m afraid we may have different understandings of what ‘property’ is; my rather pragmatic concept is here:

http://mises.org/Community/blogs/tokyotom/archive/2009/12/20/what-is-quot-property-quot-a-few-weird-thoughts-on-evolution-society-quot-property-rights-quot-and-quot-intellectual-property-quot-and-the-principles-we-structure-to-justify-them.aspx

Seems to me that humans and the societies they live in have rather flexible views of what is ‘property’, and it is easy to understand the choices in a [personal] utilitarian light; that is, resources that are given protection are those that are relatively more important and relatively more easily protected [by the people involved]. What can be easily defended personally (and by relatives or employees) may be ‘personal’ property, while other property that requires cooperation may be community property or property in which individuals have limited personal rights and corresponding responsibilities, but in all cases people carry a shared sense of what is ‘right’ and ‘wrong’ — that is, a shared sense of what is ‘property’, whom it belongs to and what that means in terms of rights and obligations.

Intellectual property and physical property are not very different in these regards in our own society, and both would be likely to arise and exist in one form or another even without a state. In cases of both physical property and IP, what is considered property will be based on the relative values placed on those who control such resources and those who wish to be able to make use of them – that is, on the purely utilitarian considerations of the people involved. If those generating ideas wish to control their use by others and others find such ideas valuable, then they will come to mutually agreeable terms of use – such as a contract as to whether a book may be duplicated or shared, or the terms under which manufacturing know-how will be made available. No express social ‘utilitarian’ agreements are needed, though general/widely-accepted norms may of course arise.

Is this something that makes sense to you?

FWIW, my own view is that largely it is the material goods that are an interpretation of the immaterial ones (viz., people’s values and ideas) rather than the other way around.

TT

Reply

Peter Surda February 17, 2011 at 10:05 am

Tokyo Tom,

I am afraid that you still do not address my objection. The objection is indifferent to the exact definition of property. It merely points out that no matter what your assumptions are, if they are contradictory with respect to each other, your position is wrong. Even if you change the assumptions, as long as they continue to contradict each other, you remain in error.

I’m sorry but I don’t have the time to read your whole article, so I’ll just make a summary based on what I think it says. Please correct me with I’m wrong. You are saying that as society evolves, people create rules of conduct and some of them are mandated by the use of force. Because there is a demand for “IP”, it is possible that people will include “IP” in these rules.

I have no problem with this construct. But it goes too far ahead of the argument. First of all, it does not address the problem that no matter how the rules are constructed, as long as they are self-contradictory, they cannot be based on correct reasoning. It also does not address my second objection (which I mentioned elsewhere) in that it does not actually explain what IP is.

TokyoTom February 18, 2011 at 1:22 am

Peter, thanks for your further observations. I think you still misunderstand my position about how ‘property’ arises. Property has its roots in competition over resources, and in the choices we faces as to what resources we devote our limited energies in securing and defending. In human societies, this is a process reflecting both competition and cooperation. This piece by Bruce Yandle is useful in illustrating how property arises:

http://www.thefreemanonline.org/featured/the-commons-tragedy-or-triumph/

Now, to address your specific points:

no matter what your assumptions are, if they are contradictory with respect to each other, your position is wrong.

Okay, but what ‘assumptions’ of mine are you referring to?

You are saying that as society evolves, people create rules of conduct and some of them are mandated by the use of force. Because there is a demand for “IP”, it is possible that people will include “IP” in these rules.

A nuance: the underpinnings of property are not deliberately created rules at all, but evolved and shared viscerally felt understandings, as well as culture. It is on this foundation that some members of society may consciously build rules that the rest of scoiety may adopt – in which case, our senses of right and wrong kick in.

no matter how the rules are constructed, as long as they are self-contradictory, they cannot be based on correct reasoning.

My position is that most ‘property’ is not consciously constructed at all. There are some deliberate choices involving one or more persons, in which case they rely on the respective preferences of the people involved, not MY assumptions. But yes, some (many!) deliberately made rules can be based on incorrect reasoning – in which case the rules ultimately fail.

It … does not actually explain what IP is.

In my view, IP encompasses various ways that societies protect ideas – from simple personal private protection of them to agreed protection among company employees, to agreed protection by contracting users, to devices/techniques that restrict copying, to feelings and community morals that copying is wrong without permission, to various types of sanctions, such as being expelled from a particular community and other moral sanction.

‘IP’ does NOT require a state.

Does this help?

TT

TokyoTom February 16, 2011 at 11:05 pm

Wildberry, I believe that ‘the real boogie man is the State, not the principles of IP’, and that Stephan’s arguments about the illegitimacy of IP are needlessly turning friends who also share a desire for freer societies into enemies.

I am confident that even if we had no states but free societies, we would have a wide variety of IP, all grounded both on a shared sense of what is right and wrong, and on the value of the information and cost of protection.

And yes, we ought to be able to discussa this civilly AND find many points of mutual agreement. We should all be allies in a community with a shared objective of creating more freedom from state-backed kleptocracy.

TT

TokyoTom February 18, 2011 at 2:23 am

Wildberry, allow me a few thoughts on your comments above: http://blog.mises.org/15633/rethinking-ip/comment-page-1/#comment-759516

Mises called property a “human device”, and I have been repeating that here in support of the notion that humans agree what property is in order to facilitate the goal of cooperation, which is the very definition of society. The ways we choose, if rational, are designed to achieve goals which we seek to achieve. By “we”, I am referring to humans bound together in a society.

Except that Austrians would point out that ‘we’ don’t choose as a whole, individuals make their own choices, typically based on building blocks constructed by others but also including subconscious and cultural ones.

a “good” economic theory leads us effectively to the outcomes we desire.Therefore the operation of property rights and the economic policies employed to achieve desirable social goals should align.

I think that in the Austrian view, a ‘good’ economic theory is simply one that accurately reflects actual huiman behavior, and notes how states often frustrate problem-solving while enabling the creaming of common resources and other one-sided practices by elites.

 

The Austrian/libertarian view is that governments shouldn’t be consciously striving to employ any ‘economic policies’ to achieve any ‘desirable social goals”, as these are the objective of differening individuals all with differing preferences, and that the state mainly just gets in the way, enabling kleptocracy and incompetence and creating rigidities.

Identifying those areas where the operation of laws and government conflict with the preferred system of economic policies is one way (a very good way) to navigate among the myriad of legal and political issues that most who post here agree are not producing the outcomes we desire.

An Austrian/libertarian would agree only in the limited sense that ‘the preferred system of economic policies’ is to get government out of the way. People of more limited ambition like me would say that we should focus first on rolling back the most destructive and outrageous (reflecting a shared social sense that too much ‘theft’ and disruption is ‘too much’!) government interventions. Such an effort requires building a community of people who have shared purposes – even if the shared purposes may not share precisely the same ‘principles’.

Change, reform, revolution, whatever form of change one advocates, is best aimed at those specific conflicts. This ongoing debate about IP is simply a vehicle that is useful in the analysis of these conflicts.

Austrians oppose coercive state interventions that favor some while stifling others. While some want to do away with the state entirely, I believe it is more productive to focus on the most significant state interventions.

I would certainly agree with Stephan that IP is one the state’s significant and now increaasingly counterproductive interventions. In this sense, State-created IP is far more than simply ‘simply a vehicle that is useful in the analysis of these conflicts.’

I criticize SK and many of his followers about not granting a fair reading of IP laws in stating their opposition. As a result of this practice, much confusion results about what IP is, why it is tied to the same ethical principles, and in the same way, as any other legitimate agreement between cooperating humans. This in turn results in a non-productive debate, and little progress towards the obvious goal of coming together here on what and how to target desired change.

Let me disagree slightly: while we DO have an unproductive debate, Stephan and others are very right to point to ways that current state IP is extremely abusive and wasteful, and that the problem is growing. Yes, some may exaggerate.

But the REAL problem is that Stephan wrongly seems to feel that he has to attack ALL IP in order to round up opposition to STATE IP. But the two are entirely different; Austrians should not insist that, without state IP, there will be no free-market mechanisms and institutions that will arise to protect ideas. or that any such mecahisms, voluntarily agreed, would be ‘unprincipled’. Far from arguing with people’s rather visceral senses of what is right and wrong, Austrians should be directing such impulses to protect ideas into voluntary and non-statist avenues.

This makes us pretty ineffective agents for change. This is one explanation for why the libertarian political movement is so ineffective, in my view.

Sadly, I think you have a point. That is why I trouble Stephan by commenting here — I expect and hope for more from this particular community of libertarians.

Not sure how long you’ve been commenting here, but you’re certainly welcome, from my point of view.

TT

Wildberry February 18, 2011 at 1:00 pm

@TokyoTom February 18, 2011 at 2:32 am

Thank you for your thoughtful response. I have just a few comments:

“Austrians oppose coercive state interventions that favor some while stifling others. While some want to do away with the state entirely, I believe it is more productive to focus on the most significant state interventions.”

I think that ancaps and minarchists could cooperate in this regard. It seems a choice between doing nothing (i.e. even opposition to voting) because the whole government structure is going to collapse anyway, or doing something now. If we decided to do something, it seems rational to pick on the most egregious State interventions first. If we were really intelligent about it, we would identify those issues which have a low threshold to change while making a truly significant difference, or a high threshold for change that are game-changers, like real banking reform for example. If it got down to a point where we had accomplished minarchism and ancaps wanted to keep going, we could part company then. Before that point, it seems unnessary to be adversaries.

“I would certainly agree with Stephan that IP is one the state’s significant and now increasingly counterproductive interventions. In this sense, State-created IP is far more than simply ‘simply a vehicle that is useful in the analysis of these conflicts.’”

You are reading a little too much in my comment. I am saying the discussions here at mises.org are a vehicle for understanding principles upon which we may oppose harmful state interventions. Mercantile/State collusion is harmful and should be eliminated.

“Let me disagree slightly: while we DO have an unproductive debate, Stephan and others are very right to point to ways that current state IP is extremely abusive and wasteful, and that the problem is growing. Yes, some may exaggerate.”

Yes, it is always appropriate to give examples that support one’s position. However, if your examples support a position that is based on an inaccurate or unfair reading of the law, then it creates confusion among those who take SK at his word, given his expertise as an IP lawyer. It seems to me that if the examples are representative of some abuse, then that argument is not diminished by being honest about what the existing law actually is and how it operates.

As an example, it is common here to base an anti-IP argument on the premise that “ideas are free”, while as SK knows, both copyright and patent laws explicitly exclude ideas from protection. To even imply otherwise fosters confusion and undermines real understanding of the problem.

“Far from arguing with people’s rather visceral senses of what is right and wrong, Austrians should be directing such impulses to protect ideas into voluntary and non-statist avenues.”

Exactly. I really like your view about how principles of property rights arise as a result of the human need to cooperate with one another. That is why people HAVE a visceral objection to the assertion that there are no IP rights. It grates against a common-sense understanding of right and wrong. This point is articulated beautifully in a paper (and book) by Kathleen Touchstone. Are you familiar with her?

“Sadly, I think you have a point. That is why I trouble Stephan by commenting here — I expect and hope for more from this particular community of libertarians.”

Likewise, although I have noticed lately that more voices are coming to the fore in support of IP, perhaps because the are seeing that there is no reason to be intimidated by rude behavior.

“Not sure how long you’ve been commenting here, but you’re certainly welcome, from my point of view.”

About a year or so. It’s a pleasure corresponding with you. Thank you.

TokyoTom February 20, 2011 at 9:48 am

“IP is antithetical to capitalism and the free market.”

Stephan, isn’t this more than a bit of an overstatement? Is IP impossible in a free-market? Is it antithetical to capitalism to invest in protecting ideas?

“Typical of IP advocates. They are either stupid or dishonest.”

I am tempted to say something flip by mirroring you, but I’ll bite my tongue, and simply say that this is utterly unhelpful, and that I hope you fell at least a little chagrin that you damage our community and your cause in this way.

Yours in striking at the root,

Tom

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Welcome to Rancho Mirage: Why, when we need John Galt, do we end up with the rent-seeking Koch brothers, who are ‘now at the heart of GOP power’?

February 21st, 2011 No comments

I can understand the desire to protect one’s business from new government carbon mandates and from noxious new regulations over all derivatives hedging purposes (seriously I can understand it, even as many on the left now harbor deep suspicions of business), but doesn’t buying control over government through the GOP kind of cut against the libertarian, free-markets message?

Koch Brothers Roundup (major news reporting on Rancho Mirage gathering)

Why can’t our supposedly adamantly libertarian billionaire Koch brothers put their money where their ideals are, say by establishing partnerships and other organizations that DON’T require government-granted legal entity/ limited liability privileges? (Simply creating obstensibly libertarian pressure groups like Cato that refuse to criticise corporate statism doesn’t count.)

Where are our leading libertarians who are forming:

It’s not as if government:

(I feel increasingly grateful for the individuals who so generously devote their time and resources to LvMI! Jeffrey Tucker, are we trumpeting our own funders loudly enough? They deserve our thanks AND patronage!)

The Middle East gets its popular revolts, but we just have more elites stirring up and hiding behind decidedly partisan animosity (hello, George Soros!). Alas, our tribal nature makes it difficult for us to perceive our real enemies, and inclines us to internecine warfare over the wheel of government to the hard work of building community.

For those of you who haven’t seen it, the LA Times February 6 article Koch brothers now at heart of GOP power is worth a gander and some pondering — and just a start at looking at billionaire brothers David and Charles Koch. Useful charts on vote-buying by the Kochs are here and here. I’m not an opponent of any industry, per se, or of the Tea Party movement, but there’s far too much uncomfortable truth to the Left’s criticisms of the Kochs. Why can’t they publicly criticize government and corporate rent-seeking, or work publicly to build community? The secrecy itself is poisoning the cause they profess to believe in (see more links below).

See Jane Mayer’s New Yorker piece, Covert Operations: The billionaire brothers who are waging a war against Obama.

Koch Billionaire Bros. and Wealthy Meet to Usurp Democracy, Greenpeace Sends Message, others Arrested

Uncloaking the Koch Brothers Trillion & Billionaire Oil Regime

 

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Rethinking "Rethinking IP", or, if we step away from statism, will societies not find ways to protect ideas?

February 16th, 2011 No comments

Stephan Kinsella has another post up at the Mises Daily on “Rethinking IP“; while I share Stephan’s mission of ending state-sponsored IP – which has morphed into gross corporate-statist corruption, oppression and profound waste – as usual Stephan’s aggressive approach has generated as much heat as light in the comments section.

Rather than reaching a shared understanding of how damaging IP has become (there are real frightening aspects to the current situation) and putting heads together as to whether private alternatives are acceptable or likely or already exist, we have proponents and opponents of IP largely arguing past each other; one seems to assume that IF there IS a “principled” basis for IP, then a state role must be accepted, while the other seems to assume that IF there is NO “principled” basis for STATE-CREATED IP, then all IP is theft, so that those who produce useful or appreciated ideas, technologies, music, art and literature will go unrewarded.

How sad that even libertarians forget the role of private efforts and of communities in protecting valued resources and productivity!

I left the following comment (in moderation as a result of my immoderate use of links):

TokyoTom February 16, 2011 at 4:16 am

Your comment is awaiting moderation.

Stephan, in your eagerness to find a strong “principled” basis to reject IP, you ignore the fact that, like physical substances/resources that we find valuable and worth protecting (which protection our society acknowledges as appropriate via the term “property”), many ideas are valuable, take time to develop and may be worth defending.

Just as people and societies would protect physical property in the absence of a state, so too are they likely to try to protect some ideas, via concepts akin to present-day IP law. If we get rid of IP law, we will not get rid of IP — we will simply push it further into the non-state realm, where private institutions and mores (that’s mine! stealing is evil!) that protect valuable ideas will surely bloom.

It seems to me that many libertarians who disagree with you about the concept of IP can be convinced that the current statist IP regime is corrupt and should be abandoned.

Accordingly, isn’t there ample room for common cause in building opposition to statist IP, and for enlisting help in constructing and understanding free-market alternatives?

Or must every victory be a Pyrrhic one?

Regards,

Tom

PS: For other readers, I’ve gathered some of my previous related comments here:

http://mises.org/Community/blogs/tokyotom/archive/2010/10/05/mises-on-copyrights-by-bettina-bien-greaves-his-student-translator-editor-and-bibliographer.aspx

http://mises.org/Community/blogs/tokyotom/archive/2010/07/23/libertarians-and-ip-shall-we-replace-the-state-with-quot-principled-quot-thoughtlessness.aspx

http://mises.org/Community/blogs/tokyotom/archive/2010/07/20/charitable-discussions-of-ip.aspx

http://mises.org/Community/blogs/tokyotom/archive/2010/07/15/ip-flamewars-community-and-principles-a-few-thoughts-to-stephan-on-quot-the-l-neil-smith-freetalklive-copyright-dispute-quot.aspx

http://mises.org/Community/blogs/tokyotom/archive/2009/12/20/what-is-quot-property-quot-a-few-weird-thoughts-on-evolution-society-quot-property-rights-quot-and-quot-intellectual-property-quot-and-the-principles-we-structure-to-justify-them.aspx

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Marc Faber has only harsh words about dishonesty by Obama, Bernanke and elites at Davos

February 12th, 2011 No comments

Prostities, liars, fraud, abuse …. but nice – and absurd – words about George Bush. 

See http://www.zerohedge.com/article/marc-fabers-most-provocative-interview-ever-compares-obama-prostitute-goes-long-treasurys.

YouTube clip here:

[View:http://www.youtube.com/watch?v=aiTu9RfJ1Ns:550:0]

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A liberal's take: Obamacare shows government "is totally corrupted by corporate and other special interests"

February 12th, 2011 No comments

Here’s another post of the quoted title by Joel Hirschhorn that I thought worthy of your attenton (emphasis mine): 

Everything wrong, rotten and evil with the political system surfaces in the current health care reform bills in the Senate and House. It should make Americans sick and furious that their elected representatives are selling them out, providing benefits to corporate interests and making national finances even worse than they are already. Members of Congress have been bought by corporate money and have made deals so that they can get reelected.

It is not merely that the government is dysfunctional and inefficient. The real tragedy is that it is totally corrupted by corporate and other special interests. The concept of a republic with representative government has been made meaningless. To apply the concept of a democracy to the US is plain stupid. Only delusional people support a delusional democracy.

In the end, President Obama and Congress will congratulate themselves and tell Americans that they will benefit from whatever bill is signed into law. But as many trustworthy analysts have already revealed, lobbyists have succeeded in ensuring that the seemingly few benefits to the public are heavily outweighed by the financial benefits to the health insurance and pharmaceutical industries, for example. Huge amounts of money will be transferred from taxpayers to corporate interests, placing the nation in even worse financial shape in decades to come.

In a sane and true democracy a revolution would be brewing to overturn such a corrupt government. But Americans remain distracted, hopeless, and disinterested. The two-party plutocracy run by rich and powerful interests continues to successfully control and manipulate the public with the help of corporate news media.

I keep meeting Americans and those from other countries who see all these dismal truths, but clearly the vast majority of Americans have lost the revolutionary spirit upon which their country was founded. British tyranny was so easily seen. Today’s tyranny by the plutocracy that greatly harms at least one third of the population remains victorious.

Despite millions of Americans that go hungry, homeless and jobless without access to health care, and with too little energy to become political rebels, the greater number of those in better financial shape seems more than willing to ignore the decay of a once great nation.

When the health care reform bill is sign by a grinning President Obama it should not trigger happiness. It should spark major riots in the streets by Americans willing to fight for a true democracy.

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An honest view of the rotted State of the Union: "Egyptians Ready, Americans Unready"

February 12th, 2011 No comments

Joel Hirschhorn, author of a clear-sighted post of the above title, gave me permission to cross-post it here. More about Hirschhorn, an evil lefty enviro technocrat professorial egghead type who is the Chair of the Independent Party of Maryland and co-founder of the“Friends of the Article V Convention” (a movement to amend the Constitution to constrain the President and Congress) here and here.

The emphasis is mine:

As I am glued to cable stations showing the street battles in Egypt all I keep thinking about is how Egyptians have mustered the courage to fight their government’s tyranny while Americans remain unready to revolt against the peculiar American brand of tyranny.

Of course, the dictatorship in Egypt is far different than what the vast majority of Americans face. Despite liberty and freedom, our tyranny exists within an electoral, constitutional republic. But with a two-party plutocracy thoroughly corrupted by corporate and wealthy interests most Americans are victims of a dysfunctional, inefficient and unfair democracy. How ironic that in the nation with monumental gun ownership among its citizens there is no hint of people giving up on meaningless elections and taking to the streets in massive numbers to protest their corrupt government.

Just this week to the new report by the U.S. Department of Agriculture, a new report documented this: Nearly a year and a half into the economic recovery, some b, just another result of stubborn high unemployment and low incomes among the employed. According to the new report by the U.S. Department of Agriculture , compared to a year ago the number of people receiving food stamps was up 14.2 percent. Many other Americans are getting food at various kinds of charities and food banks. Add to this real unemployment approaching 20 percent in most areas and huge numbers of Americans going homeless and facing home foreclosure. Does this sound like the best country on Earth that politicians like to jabber about? Of course not. [Hirschhorn misses that food stamps and unemployment insurance themselves hinder job creation.]

The US is in terrible shape, but President Obama lied in his recent state of the union address. It was not his first time, nor will it be his last time. But it was one of the biggest possible lies. The state of union is absolutely not strong. Anyone with a smidgen of intelligence and critical thinking capability knows that in almost every conceivable way the US is in awful shape for a large fraction of its citizens.

Imagine if the President of the USA stood up in front of Congress, the whole nation and the world with the courage to tell the truth: the state of the union is terrible, about the worst in over 100 years. And that is why Americans have to wake up, pay attention, sacrifice and join together in rebellion to make things much, much better and the hell with conventional politics driven by the worst special interests and the rich.

By telling the lie that the state of the union is strong, Obama removed the necessary motivation for Americans to get their distracted and delusional minds oriented in the right direction. The nation needs to shift into revolution mode. Watching the Superbowl will not improve our government.

What Americans must face is the ugly truth that China and other nations are beating the crap out of the US and nothing the US is currently doing has the ability to change this situation and win the global competition. In just about every objective way that nations can be judged the US is losing the present. Our educational system for children is a joke; data keep showing that American children are far behind those in many other countries. Our industrial sector has lost an incredible amount of manufacturing and most large companies now make more money from foreign operations and invest money abroad for that reason. That explains a huge loss of jobs with no reversal possible. Our financial sector is awash with corruption, greed and dishonesty. Our health care system no longer produces healthy citizens, compared to many other nations, despite costing much, much more. Our physical infrastructure is a disgrace, crumbling and threatening public health and safety. Upward mobility has largely disappeared and the middle class continues to sink into a lower class. Economic inequality has skyrocketed with the rich becoming richer and everyone else suffering more and more. The large number of homeless, hungry, poor and imprisoned Americans defines a nation that has lost its glory.

Just as Americans have watched once great companies disappear (Remember Polaroid?), they need to wake up to the downfall of their own country. All the talk about jobs is just another monumental deception, because there is no way that millions of new, good paying jobs will be created for many years. Even more and more Americans face hunger and homelessness as well as joining the working poor.

In stark contrast to the empty rhetoric of Obama, at about the same time a remarkably honest report by the Financial Crisis Inquiry Commission that provides incredibly honest criticisms and explanation of exactly what caused the economic meltdown that millions of Americans are still suffering from. If President Obama respected its findings, he would use them as the basis for detailing his actions against the entities responsible for the Great Recession. Here is a sample of the report’s important views:

The crisis was the result of human action and inaction, not of Mother Nature or computer models gone haywire. The captains of finance and the public stewards of our financial system ignored warnings and failed to question, understand and manage evolving risks within a system essential to the well-being of the American public. Theirs was a big miss, not a stumble.”

The financial industry has gotten away with murder and ended up profiting enormously. No mystery because it and groups affiliated with it spent more than $3.7 billion on lobbying and campaign contributions from 1999 to 2008.

And imagine if the President would have had the guts to talk openly about the incredibly awful financial predicament of most states! Many more people will lose their jobs as governments cut spending.

Nothing defines our delusional democracy more than a president providing delusional thinking to mostly delusional citizens. Make no mistake; this is an epidemic of bipartisan delusion. This is what makes America exceptional. A once great nation is sliding down the toilet and most everyone, especially politicians, are lying endlessly as it does, as if the nation’s decay should be ignored rather than honestly combated by its citizens.

Obama said “We do big things.” Once, the country did big things, but not now. The best is behind us, the worst is now with us. The US is stuck in a quicksand of corrupt politics that has been killing the middle class as the elite and rich upper class gets more and more wealth and power. Republicans like to talk about US exceptionalism; it is a farce. There is no longer anything exceptional in a positive sense. That is a terribly bitter and painful truth to acknowledge, but if we do not do so, then how can we possibly fix the many things that are broken? We cannot. We are in a massive national state of delusion, hanging on to the fantasy that the nation is still great. Yes, we need to do big things to restore greatness to the nation, but for that to happen we must first admit the ugly truth and fight American tyranny.

Winning the future, the hot new slogan from Obama, only has meaning if he acknowledges that the nation is losing the present. Yet Americans remain unready to revolt. And the Tea Party movement puts its faith in Republicans! What a disgrace, especially for a nation built on revolution.

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More curious blindness to corporate statism, or, fun with Bob Murphy's paid energy/enviro policy posts

February 11th, 2011 No comments

 I like Bob Murphy, and think he’s doing very important work in fighting nonsense from the Fed and from Keynesians.

But I am deeply disappointed with his ongoing shallow, partisan and decidedly non-libertarian work that he does for pay for the fossil fuel lobby. It’s not quite Dr. Jekyll versus Mr. Hyde, but it’s very clearly Bob Murphy/libertarian morphing into Bob Murphy/hired-gun-for-rent-seekers. I’ve got to admit that, as a hired gun, Bob still comes off well, even if not convincing to libertarians; the fossil fuel interests are getting their money’s worth!

Bob has a post up on his Free Advice blog  – EPA Will Destroy Jobs, Not Make Them – that excerpts a post of the same name that is now the lead item at the “free market” fossil-fuel lobbying outfit “Institute for Energy Research“(no comments allowed there, of course).

IER was started by fellow rent-seeking “libertarian” Rob Bradley (IER is now in DC; Bradley is CEO but has turned over operations to lobbyists; Bradley now focusses on the “Master Resource” “free market” for-pay fossil fuel think tank that features Bob and a host of other paid apologists for rent-seekers (Rob blocks dissenting libertarians like me).

I couldn’t resist making a few comments at Bob’s (emphasis added) 

TokyoTom says: Your comment is awaiting moderation.

Bob, WHY must you “press on” with your thin and one-sided analysis on environmental issues? Because you’re being paid by polluters to do so?

It pains me to see that the nuanced, libertarian Bob whom we see explaining what’s wrong with the Keynesians and the Fed always takes a leave of absence, and sends in his poor substitute, the utilitarian It-Grows-Jobs-And-Makes-Us-Wealthy-To-Destroy-Commons Bob.

Yes, CERES’/PERI’s argument that regulations create jobs ignores jobs likely to be lost by mandating investments in pollution controls, their overall argument is not as simple or as obviously stupid as you make it out to be. From the executive summary:

“Clean air safeguards have benefitted the United States tremendously. Enacted in
1970, and amended in 1990, the Clean Air Act (“CA”) has delivered cleaner air,
better public health, new jobs and an impressive return on investment—providing $4
to $8 in benefits for every $1 spent on compliance
.1″

“History has proven that clean air and strong economic growth are mutually reinforcing. Since
1990, the CAA has reduced emissions of the most common air pollutants
41 percent while Gross Domestic Product increased 64 percent.2″

“Focusing on 36 states3 in the eastern half of the United States, this report evaluates
the employment impacts of the electric sector’s transformation to a cleaner, modern
fleet through investment in pollution controls and new generation capacity and
through retirement of older, less efficient generating facilities. In particular, we assess
the impacts from two CAA regulations expected to be issued in 2011: the Clean Air
Transport Rule (“Transport Rule”) governing sulfur dioxide (SO2) and nitrogen oxide
(NOx) emissions from targeted states in the eastern half of the U.S.; and the National
Emissions Standards for Hazardous Air Pollutants for Utility Boilers (“Utility MACT”)
rule which will, for the first time, set federal limits for hazardous air pollutants such as
mercury, lead, dioxin, and arsenic. Although our analysis considers only employment-related
impacts under the new air regulations, the reality is these new standards will
yield numerous other concrete economic benefits, including better public health from
cleaner air, increased competitiveness from developing innovative technologies and
mitigation of climate change
.”

Given the externalities involved, you are wrong to assume that the new jobs are all costs and do not represent wealth-creating activity. If we junked the EPA and environmental laws and regulations altogether and replaced them with a strict enforcement of property rights (Block points out that we lost this because corporations bought off judges), THEN would the jobs created as people scrambled to sue and businesses scrambled to reduce pollution be wealth-creating? Surely such policies also would “stimulate productive investment and job creation”, right?

Why, then, do you consistently drop your libertarian principles when it comes to energy and environmental matters and adopt a shallow assumption than only corporations producing “desired goods” is a “productive purpose”? Why instead of a recognition of external effects/catallaxy problems, we get suggestions that government should help “the economy” via policies such as – surprise! – “lift[ing] arbitrary restrictions on domestic energy production” that would “stimulate productive investment and job creation.” (Um, remember BP, the Gulf of Mexico and all of the “wealth creation” and great new jobs that just got “created” down there?).

Why, indeed, if you’re still an honorable man? You’re better than this, Bob.

http://mises.org/Community/blogs/tokyotom/archive/2009/08/25/fun-with-self-deception-and-rent-seeking-bob-murphy-s-quot-man-in-the-mirror-quot.aspx

http://mises.org/Community/blogs/tokyotom/archive/2009/10/28/bob-murphy-rob-bradley-and-the-austrian-road-not-taken-on-climate.aspx

http://mises.org/Community/blogs/tokyotom/archive/2009/12/19/bob-murphy-speculates-on-quot-the-benefits-of-procrastination-the-economics-of-geo-engineering-quot-cui-bono.aspx

I’m sorry to be pushing meta-issues, but one of the reasons why the Left doesn’t listen to libertarians and ‘free market’ criticisms is that these criticisms seldom are acknowledge, much less directed at, the major impersonal corporate rent-seekers who REALLY are behind government and whom the Left rightly distrust.

Best,

Tom 

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Bob and I

February 11th, 2011 No comments

 

 

 

http://mises.org/Community/blogs/tokyotom/archive/2009/12/07/bob-murphy-implicit-apologist-for-coal-misconstrues-the-real-debate-amp-lessons-from-quot-climategate-quot.aspx

 http://mises.org/Community/blogs/tokyotom/archive/2009/12/05/quot-the-climes-they-are-a-changin-quot-or-dylan-does-copenhagen.aspx

http://mises.org/Community/blogs/tokyotom/archive/2009/10/29/bob-murphy-rob-bradley-and-the-austrian-road-not-taken-on-climate.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

http://mises.org/Community/blogs/tokyotom/archive/2009/10/02/bob-murphy-spins-quot-blockbuster-study-quot-by-coal-lobby-on-cap-and-trade-bill.aspx

http://mises.org/Community/blogs/tokyotom/archive/2009/10/02/bob-murphy-on-climate-change-at-antiwar-radio-a-puppet-for-the-quot-king-coal-quot-hand-that-feeds-him.aspx

http://mises.org/Community/blogs/tokyotom/archive/2009/09/04/confirmation-bias-rent-seeking-and-the-rush-to-print-the-latest-climate-science-quot-sccop-quot.aspx

http://mises.org/Community/blogs/tokyotom/archive/2009/08/27/more-on-self-deception-mirror-positions-and-libertarian-reticence-on-climate-policy.aspx

http://mises.org/Community/blogs/tokyotom/archive/2009/07/15/bob-murphy-on-james-hansen-and-the-quot-civil-war-on-the-left-quot-over-waxman-markey-where-is-criticism-of-pork-for-coal.aspx 

http://mises.org/Community/blogs/tokyotom/archive/2009/07/06/bob-murphy-rob-bradley-s-quot-ier-calls-for-end-to-all-energy-subsidies-quot-not.aspx

http://mises.org/Community/blogs/tokyotom/archive/2009/05/22/question-at-bob-murphy-s-can-ending-a-tragedy-of-the-commons-create-jobs-enhance-wealth.aspx

ttp://mises.org/Community/blogs/tokyotom/archive/2009/05/11/in-which-i-try-to-help-bob-murphy-figure-out-just-what-the-heck-i-m-talking-about-when-i-explain-why-he-s-part-of-a-partisan-rent-seeking-game.aspx

http://mises.org/Community/blogs/tokyotom/archive/2009/05/08/bob-murphy-the-heritage-foundation-and-quot-green-jobs-quot-ignore-coal-we-only-pay-attention-to-rent-seeking-from-greens-the-left.aspx

 http://mises.org/Community/blogs/tokyotom/archive/2008/11/19/bob-murphy-in-forbes-no-to-quot-green-quot-jobs-but-otherwise-no-advice.aspx

 http://mises.org/Community/blogs/tokyotom/archive/2008/11/03/bob-murphy-acknowledges-that-implicit-carbon-pricing-may-reflect-genuine-economic-scarcity.aspx

http://mises.org/Community/blogs/tokyotom/archive/2008/06/05/bob-murphy-plays-with-dice-calls-nordhaus-reluctant-advocacy-for-a-gradualist-carbon-tax-over-eager.aspx

 

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Times are a-changin'?! 'The American Conservative' runs Sheldon Richman's sympathetic view of the "Libertarian Left"

February 11th, 2011 1 comment

Wow — The American Conservative is now running a sympathetic overview by Sheldon Richman on the “Libertarian Left” (subheading, Free-market anti-capitalism, the unknown ideal).

Have conservatives lost their senses, or have they come to realize that the statist rot at the core of American “capitalism” is growing out of control?

Even libertarians who don’t consider themselves on the left (FWIW, I consider myself as a screwed-up RIGHT-leaning libertarian) will find the piece thought-provoking and insightful.

But it strikes me as funny that, if I judge from Sheldon’s piece, Left-Libertarians have not quite focussed on how the state grant of limited liability to shareholders – something that cannot be obtained merely by voluntary transactions) has set in motion and greatly fuelled the growth of the state and battles over the wheel of government — battles in which insider elites, generally acting through corporations, have the overwhelming advantage.

I have posted extensively on limited liability; for the interested reader perhaps this post will be a quick introduction:

The Cliff Notes version of my stilted enviro-fascist view of corporations and government

For those of you who prefer to not let their fingers do the walking, as I have noted elsewhere: “I am NOT arguing FOR a general rule that shareholders SHOULD be liable for corporate torts; rather, I have:

(1) pointed out that limited liability itself has served to muddle the question of whom, exactly, should be responsible for the very real harms that corporatons frequently cause,

(2) noted that the limited-liability corporate form has enabled risk-generation and -shifting on a massive scale, with innocent third parties frequently being stuck holding the bag (not solely when liabilities exceed assets, but more generally since the cycle of escalating government interventions to rein in corporations perversely ends up raising barriers to entry and giving corporations “rights to pollute” that curtail recourse even when sufficient assets are available),

(3) argued that libertarians should reconsider the grant of limited liability for torts (as opposed to limited liability as to those who contract with the corporation on a voluntary basis) not simply because it is clearly non-libertarian to begin with, but because it has had profound consequences – consequences at a serious enough level that state-loving libertarians concede simply by troubling themselves to argue against curtailing limited liability,

(4) noted that the most efficiacious way to roll back the regulatory state lie in the direction of shifting ultimate responsibility fpr managing risks to enterprise owners (and ending the counterproductive regulatory risk-management experiment), and

(5) noted that a curtailment of limited liability for torts could be hedged by shareholders via insurance, and could be achieved by state governments and the federal government offering more lenient regulation to busness enterprises that operate as partnerships, unlimited liability corporations, or in cases where shares are not fully paid up so that calls for signifcant additional capital could be made against shareholders if needed to pay claims.

IOW, the insistence by Kinsella . . . that one must “provide a theory of liability that coherently distinguishes shareholders from any other patron of the company” BEFORE one can examine the justifications FOR and the consequences of the state grant of limited liability is both sadly non-libertarian and dangerously blind and shallow.”

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