TT's Lost in Tokyo — by TokyoTom

Bill Gates – who clearly must have a screw loose (because all of us smarter people are absolutely sure that puny man can’t possibly affect climate, unless we’re trying intentionally, of course) – continues to invest in geoengineering projects that might be helpful to dampen climate change.

His latest venture? According to a report in Times Online

Bill Gates, the Microsoft billionaire, is funding research into machines to suck up ten tonnes of seawater every second and spray it upwards. This would seed vast banks of white clouds to reflect the Sun’s rays away from Earth.

The British and American scientists involved do not intend to wait for international rules on technology that deliberately alters the climate. They believe that the weak outcome of December’s climate summit in Copenhagen means that emissions will continue to rise unchecked and that the world urgently needs an alternative strategy to protect itself from global warming.

Many methods of cooling the planet, collectively known as geoengineering, have been proposed. They include rockets to deploy millions of mirrors in the stratosphere and artificial trees to suck carbon dioxide from the air. Most would be prohibitively expensive and could not be deployed for decades.

However, a study last year calculated that a fleet of 1,900 ships costing £5 billion could arrest the rise in temperature by criss-crossing the oceans and spraying seawater from tall funnels to whiten clouds and increase their reflectivity.

Silver Lining, a research body in San Francisco, has received $300,000 (£204,000) from Mr Gates. It will develop machines to convert seawater into microscopic particles capable of being blown up to the cloud level of 1,000 metres. This would whiten clouds by increasing the number of nuclei. The trial would involve ten ships and 10,000sq km (3,800sq miles) of ocean. Armand Neukermanns, who is leading the research, said that whitening clouds was “the most benign form of engineering” because, while it might alter rainfall, the effects would cease soon after the machines were switched off.

To the extent that he’s investing his own money and not twisting anyone else’s arms, I imagine that good libertarians and conservatives are cheering. I mean, hasn’t Gates embarked precisely on the type of bold, we-can-fix-it type of course that George Reisman and Stephan Kinsella have envisioned? And there’s still hope that Gates might finally invest in the pet idea of Dr. Reisman and Stephan of open-air “nuclear winter” testing!

I pulled out my peashooter the other day and levelled a few criticisms (“Risk-shifting, BP and those nasty enviros“) at  Lew Rockwell‘s Feel Sorry for BP?.  I don’t imagine that Lew noticed, but my buddy Stephan Kinsella did.

I have long noted the reflexive defense of corporations by prominent Austrians and the stubborn unwillingness to closely examine the role that the special grants to corporate investors that lie at the core of the problem of snowballing corporate statism, spiralling politicized rent-seeking battles, incompetent government and concupiscient and grand-standing politicians. So Stephan’s comments come as no surprise:

1.  Stephan chooses to set the stage with a bunch of labels –  “enviro-global-warming anti-corporation libertarian”. Whatever makes you happy, Stephan. I know you and others have a hard time resisting the urge, which is why I often playfully sign off as the resident friendly enviro fascist! Nah, couldn’t possibly be a “real” libertarian.

On corporations, the “environment”, and climate – as on central banking, fiat currency and the whole mess of banking and capital markets regulation – I’m simply anti-un-contracted-for-risk-shifting-and-government-enabled-moral-hazard and arguments against rent-seeking that ignore existing special deals.

But if it’s easier, just keep calling me”anti-corporation” and continue to lump me in with “enviro-fascists”.

 2.  I had wondered: 

Even if one concedes that some criticisms of BP will be unfair, how can BP possibly be cast [by Lew] as the LEADING victim – as opposed to all of the others whose livelihoods or property are drastically affected by this incident, which they had no control over whatsoever?

Stephan’s lame response?

BP is a victim in the sense that a terrible tragedy just happened to it, and it’s gonna cost it dearly. It’s the leading victim assuming the others damaged are going to be compensated from BP. The point is it’s a bad thing that’s happened to it.Why not feel sorry for them?

Really, Stephan?  BP deliberately measures and takes risks as part of its business; no one else who has been or maybe injured had a clear concept of such risks or either assumed them or had any ability to control them. Clearly, BP is the one that has interfered with others’ use and enjoyment of their own property, of common property and of government-owned property; in law, we call them “tort-feasors”.  They are not a “victim” in any sense that we commonly apply in situations like this. Empty word games like yours turn reality in its head. Right, Toyota is a victim when its cars’ brakes have problems, TVA is a “victim” when its coal fly ash dams break, and so are others who “unintentionally” injure the health or damage the property of others – when latent risks materialize or they are caught at it and suffer some economic loss as a result.

It’s hard to believe you want to further support Lew’s absurd claim that BP is the leading victim now – we simply have assume that in the future, BP or someone else will throw some compensation at all of those other unworthy, insignificant passive victims. Nice.

Sure, it’s too bad that this happened, all around. BP gambled (heroically?) to make money; everyone has lost. Poor BP!

3. Lew: “The incident is a tragedy for BP and all the subcontractors involved. It will probably wreck the company”

Me: 

The incident will certainly be costly for the firms involved, but the firms will survive the death of employees, and there is certainly very little risk indeed that BP will be “wrecked” by the spill. Far from it; it is unlikely that BP will even bear the principal costs of cleanup efforts, much less the economic damages to third parties that federal law apparently caps at $75 million.

Have you not heard of “INSURANCE”? A little thinking (and Googling) would tell you that BP (and its subcontractors) has plenty of it. To the extent BP is NOT insured, it has ample capability to self-insure, unlike all of the fishermen, oystermen and those in the tourist industry who are feeling significant impacts. Insurers will bear the primary burden, not BP.

Stephan:

Obama has threatened BP and they have caved in, agreeing to pay above the $75M cap. And the cap was in exchange for a tax on oil companies to be put into the Oil Spill Liability Trust Fund for such emergencies–do you think that BP will be able to get that tax refunded? Naah.

Sounds like you’re agreeing that this incident is unlikely to “wreck”BP, given insurance, self-insurance and the $1.6 billion Oil Spill Fund. But it sounds like you also are suggesting that BP has every right to negotiate with government for liability caps. Interesting.

4. Lew:   “we might ask who is happy about the disaster: 1. the environmentalists, with their fear mongering and hatred of modern life”

Me:

Sorry, but this is perverse: enviros might feel that they have been proven right – and you might be annoyed that they can make such a claim – but they certainly aren’t “happy” with any of the loss of life, damage to property or livelihoods of the little guy (or of bigger property owners), or to a more pristine marine environment that they value.

Stephan: 

Aren’t happy? Have you seen, say, Spill Baby Spill, Boycott BP! ? And another tolerant, caring liberal on Slate’s Political Gabfest Facebook page said, “I don’t get the calls for pity. Boohoo another oil giant might have bankrupted itself.” These misanthropic sickos oppose nuclear power, which makes fossil fuels necessary. They act like they hate BP. Why? For making a mistake? Mistakes are inevitable. For drilling for oil? Why? We need oil.

Let me repeat: some might feel vindicated and be eager to use this incident to bash BP, etc. – people/firms certainly are fighting over government – but that doesn’t make them “happy” that disaster has occurred.

You apparently missed it, but there were plenty of “misanthropic sickos” on Lew’s comment thread who expressed thoughts similar to “I don’t get the calls for pity. Boohoo another oil giant might have bankrupted itself.”

The rest of this is also packed with nonsense.  Funny that Austrians fail to overlook that enviro opposition to nukes and to other fossil fuels is more than a little related to government’s dirty role in the industries, including liability caps like those present here. Do Austrians “hate” banks, securities firms and AIG for making “mistakes”? But aren’t mistakes “inevitable”? And don’t we need lenders and insurers? And a domestic auto industry?

Just what do these utilitarian arguments have to do with libertarian principles, anyway?

5.   Me:

[Lew’s] projection of happiness at damages to common resources/private property and hatred of modern life is especially perverse, given your own explicit recognition that government ownership/mismanagement of commons, and setting of limits on liability both skew the incentives BP faces to avoid damage, and limit the ability of others (resource users and evil enviros) to directly protect or negotiate their own interests. Why is the negative role played by government any reason to bash others who use or care about the “commons”?

Stephan: No libertarian is in favor of liability caps. What is he talking about?

Simple, Stephan. Lew explicitly recognizes that government has screwed up  the ability of enviros and others who have conflicting preferences about the use of resources to engage in voluntary transactions that would advance mutual welfare – yet he chooses to bash those whose preferences are frustrated by government, while feeling sorry for those whose preferences are favored. What is remotely even-handed – or Austrian – about this imbalance? Is it simply that it’s okay for those who make omelets to take eggs from others, since the omelet “makers” are being “productive”?

6.  Me:

We have seen Austrians – sympathetic to the costs to real people in the rest of the economy – rightly call for an end to a fiat currency, central banking and to moral-hazard-enabling deposit insurance and oversight of banks. In an April 9 post by Kevin Dowd on the financial crisis, we even had a call “to remove limited liability: we should abolish the limited-liability statutes and give the bankers the strongest possible incentives to look after our money properly” – but Dowd’s comments simply echoed in the Sounds of Silence. Why do you and others refuse to look at the risk-shifting and moral hazard that is implicit in the very grant of a limited liability corporate charter – not only in banking, but in oil exploration and other parts of the economy?

Stephan:

Removing artificial caps on liability has nothing to do with the limited liability of passive shareholders in a corporation. Their liability is limited simply because they are not causally responsible for the torts of employees of the company in which they hold shares.

I suspect this is the key reason why Stephan troubled himself to respond, but surely he can see it is not only counterfactual, but dodges any consideration of the consequences of limited liability in terms of fuelling industrialization and fights over using government to check corporate excesses. Investors then and now deliberately choose to conduct business activities through corporations precisely because government absolves owners from any liability in excess of enterprise assets.  While it is possible for voluntary counterparties (employees, lenders and others doing business with the firm) to agree in advance to limit their resources solely to enterprise assets, those who are injured by acts of companies or their employees and agents do not in advance choose the nature of the those who are responsible for harming them. Accordingly, the broad blanket grant of limited liability to corporations is clearly anti-libertarian.

Accordingly, dividends received by shareholders from risky activities are not clawed back if risks are realized and claims exceed corporate assets. Further, shareholders are given disincentives from too closely directing manage risk (for fear of claims that they have direct responsibility for torts). When combined with other corporate attributes (unlimited life & purposes, relative anonymity of ownership, remoteness of owners from communities in which the firms operate, and ability of powerful firms and wealthy investors to influence judges, legislators, bureaucrats and other officials), we have seen a steady erosion of common law and growth in the regulatory state – as citizens fight to limit the risks and costs that corporations impose on individuals and communities. Is Stephan unaware of the central role of corporations in rent-seeking battles? In the perversion of the 14th Amendment – designed to protect emancipated slaves and Chinese coolies – into a weapon to elevate corporations over the states, and to permanently shift power to the Federal government?

Just as most commentators overlook the massive moral hazard and risk-shifting that is part and parcel of the federal oversight of banking (necessitated by deposit insurance and fractional banking), so do Stephan and Lew insist on keeping their eyes closed to the legacy of risk-shifting, statism and escalating fights over increasingly incompetent and corrupt government. Why?

[I that note my subsequent BP posts can be found here]

I refer to Lew Rockwell‘s May 5, 2010 piece, “Feel Sorry for BP?”

http://mises.org/daily/4331

Lew, I largely agree with your criticism of government but some of your piece is simply confused.

1. “It should be obvious that BP is by far the leading victim, but I’ve yet to see a single expression of sadness for the company and its losses.”

BP is the leading “victim”? Victim of what/who? Sure, they’re a target (1) for all manner of evil people whose livelihoods or enjoyment of their property or common property are directly or indirectly affected by the spill, (2) for evil enviro groups (relatively well-off citizens who profess to care about how well/poorly government manages the use of “common resources” by resource extraction industries), and (3) for evil governments and politicians looking to enhance their own authority/careers. But these are all a consequence of the accident, and not a cause of it. Has BP been defrauded, tricked or strong-armed into drilling anywhere? Is BP the “victim” of its own choices?

Even if one concedes that some criticisms of BP will be unfair, how can BP possibly be cast as the LEADING victim – as opposed to all of the others whose livelihoods or property are drastically affected by this incident, which they had no control over whatsoever?

2. “The incident is a tragedy for BP and all the subcontractors involved. It will probably wreck the company”

The incident will certainly be costly for the firms involved, but the firms will survive the death of employees, and there is certainly very little risk indeed that BP will be “wrecked” by the spill. Far from it; it is unlikely that BP will even bear the principal costs of cleanup efforts, much less the economic damages to third parties that federal law apparently caps at $75 million.

Have you not heard of “INSURANCE”? A little thinking (and Googling) would tell you that BP (and its subcontractors) has plenty of it. To the extent BP is NOT insured, it has ample capability to self-insure, unlike all of the fishermen, oystermen and those in the tourist industry who are feeling significant impacts. Insurers will bear the primary burdemn, not BP.

3. “we might ask who is happy about the disaster: 1. the environmentalists, with their fear mongering and hatred of modern life”

Sorry, but this is perverse: enviros might feel that they have been proven right – and you might be annoyed that they can make such a claim – but they certainly aren’t “happy” with any of the loss of life, damage to property or livelihoods of the little guy (or of bigger property owners), or to a more pristine marine environment that they value.

“Hatred of modern life”? Surely any clear-thinking Austrian can see that, just as Austrians hate our modern kleptocratic, incompetent and moral-hazard-enabling government, many enviros are relatively well-off people who dislike how “modern life” seems to take for granted the way government-ordered “capitalism” enables a systemic shifting of risks from manufacturers to those downwind and downstream, and to all who enjoy what remains of commons or government-owned property.

Haven’t Walter Block, Roy Cordato, Murray Rothbard and others written about this? Or do “good” Austrians these days simply hate government, but love big corporations and banks, and the way government enables them to shift risks to the rest of us?

Your projection of happiness at damages to common resources/private property and hatred of modern life is especially perverse, given your own explicit recognition that government ownership/mismanagement of commons, and setting of limits on liability, both skew the incentives BP faces to avoid damage, and limit the ability of others (resource users and evil enviros) to directly protect or negotiate their own interests. Why is the negative role played by government any reason to bash others who use or care about the “commons”?

We have seen Austrians – sympathetic to the costs to real people in the rest of the economy – rightly call for an end to a fiat currency, central banking and to moral-hazard-enabling deposit insurance and oversight of banks. In an April 9 post by Kevin Dowd on the financial crisis, we even had a call “to remove limited liability: we should abolish the limited-liability statutes and give the bankers the strongest possible incentives to look after our money properly” – but Dowd’s comments simply echoed in the Sounds of Silence. Why do you and others refuse to look at the risk-shifting and moral hazard that is implicit in the very grant of a limited liability corporate charter – not only in banking, but in oil exploration and other parts of the economy?

http://bit.ly/atelEr

4. “The abstraction called the “ecosystem” — which never seems to include mankind or civilization — has done far less for us than the oil industry, and the factories, planes, trains, and automobiles it fuels.”

Frankly, this is nonsense. Austrians understand that focussing on the “ecosystem” is often an unhelpful abstraction and distraction from the fact that there are competing and conflicting interests held by people in resources that are not effectively owned or managed. The Austrian focus is on how to enable those with conflicting desires to coordinate their planning, not to engage in some muddle-headed balancing of collective “utility” that says one powerful group of users is “right”, so other claimants should be scoffed at and chased away.

And the “ecosystem” is what gives us air to breathe, water, food and a host of other things. Do you really mean to say these are relatively unimportant?

5. “the environmentalists went nuts yet again, using the occasion to flail a private corporation and wail about the plight of the “ecosystem,” which somehow managed to survive and thrive after the Exxon debacle.”

Seems to me your “facts” about the damage done by Exxon Valdez to the “environment” – including the small segments used by by man – and recovery/compensation are basically counterfactual:

http://en.wikipedia.org/wiki/Exxon_Valdez_oil_spill

http://www.alternet.org/environment/22260

Further, it seems you don’t have any real clue as to the escalating damage that man is doing to our shared ocean “commons”. These two TED talks might help open your eyes:

http://www.ted.com/talks/jeremy_jackson.html

http://www.ted.com/talks/sylvia_earle_s_ted_prize_wish_to_protect_our_oceans.html

6. Finally, like BP, you have understated the degree of the oil leakage; BP initially estimated 1000 bpd, but later agreed with estimates by others that the leak is at least about 25,000 bpd, with risks of an even larger blowout.

Here’s to hoping for greater insight and more productive engagement from LvMI.

A lurking hater of mankind 😉

TokyoTom

My goodness! Another Frumming at NRO!

So Jim Manzi, a conservative/libertarian and a reasoned critic of cap and trade – who has been retained by NRO and is on the National Review board of trustees – has, by criticizing poor climate science arguments by neocon polemicist Mark Levin, become Public Enemy No. 1!! Could the right do a better job of illustrating Julian Sanchez’s point about the right-wing circle-?

The pirana feeding is on; enjoy the show!

Says Andrew Sullivan:

April 22nd, 2010 @ 04 12
Jim Manzi Is A “Global Warming Zealot”?!
Yes, Jim Manzi, one of the most effective, data-driven critics of cap and trade is described thus on Mark Levin’s Facebook page and all Levin’s fans congratulate him for smacking down a “liberal” and an “eco-Marxist”!

So there you have it. When someone like Manzi is a left-wing zealot, then the right has simply ceased to be in any way rational. The circle has closed.

David Frum:

How wonderful to return to a free country, I thought as I stepped off the plane from Beijing at Washington Dulles. No more censorship, no more official lies, no more kowtowing to high officials who gained power by their mindless repetition of party dogma…

Then alas I opened my browser and read the dump-on-Manzi comments on NRO’s The Corner. Manzi had deviated from the One Correct Way of Mark Levin Thought, and all his former colleagues had been summoned together to Denounce and Struggle Against Him.

Not one stood up to be counted in Manzi’s defense, not even colleagues whom Manzi might have had reason to regard as close personal friends. (Take a second to notice whose bylines are missing from yesterday’s discussions.)

What makes this episode all the more remarkable is that Manzi is actually a member of NR’s board of trustees – i.e., somebody who might claim a little more scope to speak his mind. But even for trustees, there are limits, and Manzi crossed them.

It’s important to understand what exactly the limit is.

Manzi could have safely disputed Levin’s claims on global warming if he had observed a couple of conditions. First, acknowledge Liberty and Tyranny as a good and important book. Second, acknowledge Levin’s “service” (i.e., leadership) of the conservative cause. Third, isolate criticisms to one particular finite point – avoid drawing any larger conclusions – and be sure to wrap any criticisms in a blanket of compliments. Just because one particular chapter happens to be slovenly, ignorant, and hysterical should not lead you to question the intellectual merit of the book as a whole.

Blogsearch

David Frumhttp://www.theatlanticwire.com/opinions/view/opinion/National-Review-Embroiled-in-Full-On-Civil-War-333

Last week at the NYT, Ross Douthat, himself stirred by Julian Sanchez’s recent perception of a problem of “epistemic closure” (an ideologically sealed news and thought echochamber) on the Right , and threw down a gauntlet to conservative intellectuals:

“Conservative domestic policy would be in better shape if conservative magazines and conservative columnists were more willing to call out Republican politicians (and, to a lesser extent, conservative entertainers) for offering bromides instead of substance, and for pandering instead of grappling with real policy questions.”

In response, an astonishing thing happened: Jim Manzi, a relatively informed and sophisticated commentator on climate policies at Cato (who I’ve disagreed with a number of times and whom Douthat referred to as one of the Right’s “impressive younger thinkers”), took up the challenge and – at NRO’s The Corner – in the heart of “Planet Gore” country, produced an April 21 post that pulled no punches in dismantling the climate change discussion in Mark Levin’s bestselling Liberty and Tyranny. Manzi had the effrontery to refer to Levin’s science discussion as “awful” and “wingnuttery“!

Readers beware, a liberal serving of graphic excerpts of Manzi’s piece follows (emphasis added):

“I’m not expert on many topics the book addresses, so I flipped to its treatment of a subject that I’ve spent some time studying — global warming — in order to see how it treated a controversy in which I’m at least familiar with the various viewpoints and some of the technical detail.

“It was awful. It was so bad that it was like the proverbial clock that chimes 13 times — not only is it obviously wrong, but it is so wrong that it leads you to question every other piece of information it has ever provided.

“Levin argues that human-caused global warming is nothing to worry about, and merely an excuse for the Enviro-Statists (capitalization in the original) to seize more power. It reads like a bunch of pasted-together quotes and stories based on some quick Google searches by somebody who knows very little about the topic, and can’t be bothered to learn. After pages d\evoted to talking about prior global cooling fears, and some ridiculous or cynical comments by advocates for emissions restrictions (and one quote from Richard Lindzen, a very serious climate scientist who disputes the estimated magnitude of the greenhouse effect, but not its existence), he gets to the key question on page 184 (eBook edition):

“‘[D]oes carbon dioxide actually affect temperature levels?’

“Levin does not attempt to answer this question by making a fundamental argument that proceeds from evidence available for common inspection through a defined line of logic to a scientific view. Instead, he argues from authority by citing experts who believe that the answer to this question is pretty much no. Who are they? An associate professor of astrophysics, a geologist, and an astronaut.

“But he says that these are just examples:

“‘There are so many experts who reject the notion of man-made global warming and the historical claims about carbon dioxide they are too numerous to list here.’

“He goes on to cite a petition “rejecting the theory of human-caused global warming” sponsored by the Oregon Institute of Science and Medicine and signed by more than 31,000 scientists. There are a few problems with this survey that Levin doesn’t mention. More than 20,000 of these “scientists” lack PhDs in any field. There was very little quality control: At least one person signed it as Spice Girl Geri Halliwell. Scientific American did the hard work of actually contacting a sample of individual signatories, and estimated that there are about 200 climate scientists who agree with the statement in the petition among the signatories. And most important by far, the text of the petition is not close to Levin’s claim of rejecting the notion of man-made global warming. In the key sentence it says that signatories do not believe that there is compelling scientific evidence that human release of greenhouse gases will cause catastrophic heating and disruption of the earth’s climate. Depending on the definition of “catastrophic,” I could agree to that. Yet I don’t reject the notion of man-made global warming.

“On one side of the scale of Levin’s argument from authority, then, we have three scientists speaking outside their areas of central expertise, plus a dodgy petition. What’s on the other side of the scale that Levin doesn’t mention to his readers?

“Among the organizations that don’t reject the notion of man-made global warming are: the U.S. National Academy of Sciences; The Royal Society; the national science academies of Australia, Belgium, Brazil, Canada, China, France, Germany, Ireland, Italy, India, Japan, Mexico, New Zealand. Russia, South Africa, and Sweden; the U.S. National Research Council; the American Association for the Advancement of Science; the American Chemical Society; the American Physical Society; the American Geophysical Union; and the World Meteorological Organization. That is, Levin’s argument from authority is empty.

“Of course, this roll call could be arbitrarily long and illustrious, and that does not make them right. Groupthink or corruption is always possible, and maybe the entire global scientific establishment is wrong. Does he think that these various scientists are somehow unaware that Newsweek had an article on global cooling in the 1970s? Or are they aware of the evidence in his book, but are too trapped by their assumptions to be able to incorporate this data rationally? Or does he believe that the whole thing is a con in which thousands of scientists have colluded across decades and continents to fool such gullible naifs as the U.S. Congressional Budget Office, numerous White House science advisors, Margaret Thatcher, and so on? Are the Queen of England and the Trilateral Commission in on it too?

“But what evidence does Levin present for any of this amazing incompetence or conspiracy beyond that already cited? None. He simply moves on to criticisms of proposed solutions. This is wingnuttery.

“[D]espite what intellectuals will often claim, most people (including me) don’t really want their assumptions challenged most of the time (e.g., the most intense readers of automobile ads are people who have just bought the advertised car, because they want to validate their already-made decision). I get that people often want comfort food when they read. Fair enough. But if you’re someone who read this book in order to help you form an honest opinion about global warming, then you were suckered. Liberty and Tyranny does not present a reasoned overview of the global warming debate; it doesn’t even present a reasoned argument for a specific point of view, other than that of willful ignorance. This section of the book is an almost perfect example of epistemic closure.”

Manzi’s piece brought a quick and flabbergasted reactions by NRO neocons Andy McCarthy, Kathryn Jean Lopez and Chris Horner, as noted by Julian Sanchez, Daniel Larison at American Conservative,
and others:

http://www.ordinary-gentlemen.com/2010/04/i-know-mark-levin-and-you-sir-are-no-mark-levin/

http://www.anonymousliberal.com/2010/04/adventures-in-bubble-world.html

Said Larison:

“Jim Manzi made the mistake of taking up this challenge and applying intellectual rigor and honesty to a prominent conservative radio host’s book on a subject he understands fairly well. The inevitable circling-of-the-wagons that has followed illustrates perfectly the problem Manzi was trying to address in Levin’s work. Not only do Manzi’s colleagues automatically defend Levin’s sub-par arguments, but they regard it as horribly bad form to dare criticize those arguments with the vehemence that their poor quality would seem to merit.”

To be honest, I was surprised by Manzi’s bad form as well. That, if not his ideologically weak climate science views, ought certainly to exclude him from commenting at LvMI. On climate science, Hayek be darned: we want conservatives – nay – neocons! – on climate science.

Well done!

[View:hhttp://www.youtube.com/v/kBO5dh9qrIQ:650:0]

[It looks like I’m having formatting problems; sorry, readers!]

I left the following comment on Kevin Dowd’s excellent April 9 Mises Daily piece, “The Current Financial Crisis – and After”, a transcript of a talk he apparently made at the Paris Freedom Fest on September 13, 2009 (emphasis added):

TokyoTom April 22, 2010 at 8:27 am

Kevin, many thanks for this lucid, spot-on and frightening piece.

No one else has mentioned it, so allow me to focus on a piece of your essay that I think has very wide implications that our leading lights at LvMI have been doing their best to ignore: the moral hazard and risk-shifting generation that is INHERENT in the state grant of LIMITED LIABILITY to corporate shareholders, and that has helped to encourage irresponsible behavior and increasing (and ultimately unsuccessful) regulation in the banking sector. It has also fuelled the cycles of corporate regulation, rent-seeking and political corruption.

I couldn’t agree more strongly with what you said here:

“the financial-services industry needs serious reform. Hard to believe as it might be, there was once a time when the industry was conservative and respected, when it focused on providing straightforward financial “products” to its customers and did so well. We have got to get back to that. No more financial hydrogen bombs blowing up the financial system.

“The key to this is corporate-governance reform. I am talking, not about tinkering with the number of nonexecutive directors or a new Sarbanes-Oxley, but radical reform to make the banks accountable and to rein in the moral hazards that have run rampant. And the key to good corporate governance is to remove limited liability: we should abolish the limited-liability statutes and give the bankers the strongest possible incentives to look after our money properly.”

I believe that, as argued by James Glassman and William Nolan in a Wall Street Journal op-ed last February that referred to von Hayek, unless and until owners and executives have “more skin in the game” – like the conservatively managed private partnership Brown Brothers Harriman, we will continue to ride a tiger of selfish risk-shifting, moral hazard, and ever more disruptive government regulation.

I have argued in a series of posts, starting with my review of Huebert and Block’s criticisms of Long, the state grant of limited liability to shareholders (in particular the grant vis-a-vis those injured by corporate acts and involuntary creditors, which is a pure grant from the state and cannot be contracted for) has led to a number of perverse results, which can be fairly clearly seen in the financial crisis.

I hope your post will contribute to a much more serious examination by Austrians of the role played by the state grant of limited liability to corporate shareholders in facilitating flawed and irresponsible risk-taking by executives and traders, as well as in perversely fuelling a vicious cycle of rent-seeking and further counterproductive regulation, both within and outside the financial sector.

[But I’m not holding my breath.]

Sincerely,

TT

And now a public service market  announcement (with the captioned title) from your friendly local mankind-hating envirofascist, courtesy of Dave Schwab of Green Change, who is apparently the author of the following missive that found its way into my email inbox:

Case in point is Kate Sheppard, reporter on energy and environmental politics in Mother Jones‘ Washington bureau (previously political reporter for Grist.org and a writing fellow at The American Prospect), who has an interesting but shallow piece up called “Most Credible Climate Skeptic Not So Credible After All” (Fri Feb. 26, 2010), which digs into climate scientist/policy-peddler Patrick Michaels, who –  as I have previously noted – acts as a paid mouthpiece for fossil fuel interests.

Sheppard’s piece is fair enough, as far as it goes. That THERE BE RENT-SEEKERS trying to win favors from government surely ought not to be a surprise to any libertarians following the Climate Wars, even though most tend naturally to fall into a partisan camp that makes them acutely aware of the Other Bad Guys while ignoring the self-seeking among the fossil fuel interests and other Well-Intentioned People who are on their own side of the fence.

The climate worriers also have blinders on, and frequently fail to engage in criticisms of the motives and self-seeking in climate change champions (like Gore) and their climate alliance business supporters (though some, like climate scientist Jim Hansen and Greenpeace strongly criticize the porkiness of legislative actions). They also ignore that they, too – like fossil fuel firms – are members of interest groups trying to influence government (on this, I think it is clear that fossil fuel firms, which are seeking to defend existing business turf, are much more powerful, sophisticated and effective than the climate coalitions).

While I have noted that cui bono arguments are fair and unavoidable (and have made a number of them myself), I do regret that the way people fall into partisan camps continues to get in the way of them noticing the very wide area of common ground, which if addressed would bring benefits to both sides.

But if libertarians – who know very well how government ownership and management of resources frustrates private deal-making and leads to politicized battles – cannot themselves break away from politicized battles to try to work for common ground, how can we expect those who think that Big Government is the only solution to the problems created by Big, Bad Corporations (which after all, do benefit from the very unlibertarian grant of limited liability) to do so?

Elinor Ostrom was awarded the Nobel Prize in economics for explicating that trust and communication are key elements by which communities can effectively manage common resources and common problems. Yet it seems that the past few Administrations (and Congress and the Supreme Court) have done a great job of destroying mutual trust and trust In federal government in general. In this climate, the effort to enlist a bulky federal government in climate regulation efforts has provided even further fuel to hose who benefit from polarization.

Is either communication or trust still possible on climate and energy? Maybe, but people have to start seeing that there are reasons to  cooperate. A shared future and ample middle ground seems like good reasons to me.

Readers might have heard that Republican conservatives – who hope to retake control of Congress and the White House, head off/engulf TeaParty reformers, and thence to further drive the federal government into the ground – have joined together in announcing the “Mount Vernon Statement”. Daniel Larison at The American Conservative rightly notes that the Statement surely would have had Washington rolling in his grave.

As an alternative, I bring readers’ attention the more clear-sighted principles enumerated by the Campaign for Liberty. One wishes only that this statement paid a little more attention to (1) federalism and states rights as a check on the federal government, and (2) the need for states – which have been busy transferring power to the limited liability corporations that in turn desire a central pork/influence machine in Washington, DC – to start exercising their authority to limit limited liability and so to end the great moral hazard machines that corpoations have become.

Here are the Campaign for Liberty’s Principles; I hope readers will visit and register at the site:

Americans inherit from our ancestors a glorious tradition of freedom
and resistance to oppression.  Our country has long been admired by the
rest of the world for her great example of liberty and prosperity—a
light shining in the darkness of tyranny.

But many Americans today are frustrated.  The political choices they
are offered give them no real choice at all.  For all their talk of
“change,” neither major political party as presently constituted
challenges the status quo in any serious way.  Neither treats the
Constitution with anything but contempt.  Neither offers any kind of
change in monetary policy.  Neither wants to make the reductions in
government that our crushing debt burden demands.  Neither talks about
bringing American troops home not just from Iraq but from around the
world.  Our country is going bankrupt, and none of these sensible
proposals are even on the table.

This destructive bipartisan consensus has suffocated American political
life for many years.  Anyone who tries to ask fundamental questions
instead of cosmetic ones is ridiculed or ignored.

That is why the Campaign for Liberty was established: to highlight the
neglected but common-sense principles we champion and reinsert them
into the American political conversation.

The U.S. Constitution is at the heart of what the Campaign for Liberty
stands for, since the very least we can demand of our government is
fidelity to its own governing document.  Claims that our Constitution
was meant to be a “living document” that judges may interpret as they
please are fraudulent, incompatible with republican government, and
without foundation in the constitutional text or the thinking of the
Framers.  Thomas Jefferson spoke of binding our rulers down from
mischief by the chains of the Constitution, and we are proud to follow
in his distinguished lineage.

With our Founding Fathers, we also believe in a noninterventionist
foreign policy.  Inspired by the old Robert Taft wing of the Republican
Party, we are convinced that the American people cannot remain free and
prosperous with 700 military bases around the world, troops in 130
countries, and a steady diet of war propaganda.  Our military
overstretch is undermining our national defense and bankrupting our
country.

We believe that the free market, reviled by people who do not
understand it, is the most just and humane economic system and the
greatest engine of prosperity the world has ever known.

We believe with Ludwig von Mises, Henry Hazlitt, and F.A. Hayek that
central banking distorts economic decisionmaking and misleads
entrepreneurs into making unsound investments.  Hayek won the Nobel
Prize for showing how central banks’ interference with interest rates
sets the stage for economic downturns.  And the central bank’s ability
to create money out of thin air transfers wealth from the most
vulnerable to those with political pull, since it is the latter who
receive the new money before the price increases it brings in its wake
have yet occurred.  For economic and moral reasons, therefore, we join
the great twentieth-century economists in opposing the Federal Reserve
System, which has reduced the value of the dollar by 95 percent since
it began in 1913.

We oppose the dehumanizing assumption that all issues that divide us
must be settled at the federal level and forced on every American
community, whether by activist judges, a power-hungry executive, or a
meddling Congress.  We believe in the humane alternative of local
self-government, as called for in our Constitution.

We oppose the transfer of American sovereignty to supranational
organizations in which the American people possess no elected
representatives.  Such compromises of our country’s independence run
counter to the principles of the American Revolution, which was fought
on behalf of self-government and local control.  Most of these
organizations have a terrible track record even on their own terms: how
much poverty have the World Bank and the International Monetary Fund
actually alleviated, for example?  The peoples of the world can
interact with each other just fine in the absence of bureaucratic
intermediaries that undermine their sovereignty.

We believe that freedom is an indivisible whole, and that it includes
not only economic liberty but civil liberties and privacy rights as
well, all of which are historic rights that our civilization has
cherished from time immemorial.

Our stances on other issues can be deduced from these general principles.

Our country is ailing.  That is the bad news.  The good news is that
the remedy is so simple and attractive: a return to the principles our
Founders taught us.  Respect for the Constitution, the rule of law,
individual liberty, sound money, and a noninterventionist foreign
policy constitute the foundation of the Campaign for Liberty.

Will you join us? Click here to sign up!