Morphology

A favorite theme of mine is the idea that every organizational regime contains elements of its own destruction, and that no regime is free of this. Put in a loosely mathematical description, let's say that a schema is represented by A. Imperfections in A are addressed by the addition of institutions or changes in the by-laws, and this new schema is A'. These changes don't quite create perfection, or they introduce new, unintended results, so new changes are made, resulting in A''. This goes on until we have A''', A'''', A^n' or A'''...''', which is functionally equivalent to a completely different schema, B. But B is known also to be not perfect, so adjustments are made resulting in B'. You see where this is going: eventually B morphs into C, or perhaps it morphs all the way back to A.

Given organizational schema A, which is made more efficient by adjusting it to A':

efficiency(A) < efficiency(A') < efficiency(A'')
A'''->B [note that this -> is an arrow, not a "greater than"]
B'''->C
...
Z'''->A?

I believe that this is the fundamental fallacy with the technocratic state and is the analytical blind spot for policy wonks. They seem to believe that any imperfection may be corrected with precise policy adjustments. But at every step, they "discover" new problems. In the environmental movement, technocratic arrogance of this sort is known as "parachuting cats" after a real world incident.

As part of anti-malarial campaign in the northern states of the island of Borneo in the late 1950's, the World Health Organization sprayed DDT and other insecticides to kill the mosquito vector for malaria. During this campaign, DDT was sprayed in large amounts on the inside walls and ceilings of the large "long houses" that housed an entire village in these areas. As a consequence of this effort, the incidence of malaria in the region fell dramatically. However, there were two unintended consequences of this action. There was an increase in the rate of decay of the thatched roofs covering the long houses because a moth caterpillar that ingests the thatch avoided the DDT but their parasite, the larvae of a small wasp, did not. Also, the domestic cats roaming through the houses were poisoned by the DDT as a consequence of rubbing against the walls and then licking the insecticide off their fur. In some villages, the loss of cats allowed rats to enter, which raised concerns of rodent-related diseases such as typhus and the plague. To rectify this problem in one remote village, several dozen cats were collected in coastal towns and parachuted by the Royal Air Force in a special container to replace those killed by the insecticides.

Another favorite example of mine concerns a confluence of well-meaning government schemes: First, it was observed that Florida was filled with disease-carrying swamps, so they (the Army Corps of Engineers) drained the swamps and damned the rivers to create productive farmland. Then people began raising sugar cane, and as they faced stiffer competition from throughout the Carribean, they instituted price controls. But then the cane industry came to be dominated by about 5 families who controlled legislators very tightly. Meanwhile, ADM and the corn farmers achieved control over their legislative concerns and, with the development of High Fructose Corn Syrup (HFCS), they found themselves in competition with the sugar farmers. Fortunately, they found that by also supporting the sugar price controls, HFCS was both more competitively priced and more profitable. So the price controls were universally favored, leading to the continued overuse of swampland to the detriment of the ecosystem (and to Carribean farmers). As this was gradually accepted to be counterproductive, the Clinton Administration proposed changes to restore ecological balance. The solution announced by Al Gore? Clearly, to tax sugar and use the revenues to restore the Everglades. Duh, that's what you thought, too, right? No?! You thought ... what? Maybe abandon the sugar price supports, let the farms go fallow, tear down the damns (saving the annual maintenance costs), and let it all go back to nature? Or perhaps it would have been better to let farmers drain their own land in the first place? Heh, you'll never make it as a bureaucrat.

Each displacement to an equilibrium will cause at least one change in the equilibrium. At least one adjustment needs to be made to restore the equilibrium to efficiency. This is Second Best theory at its simplest. However, few analysts go beyond that and recognize that each of the secondary disturbances, the "corrections", will also create disequilibria that must be adjusted with 3rd and 4th order corrections. In their analysis, somehow, the original disturbance -- the market failure -- must be corrected, but the secondary disturbance -- regulation -- is perfect? Maybe in a one or two dimensional model, but the real world is not one or two dimensional.

So I submit that not only do "ideal" regulations create the need for higher order corrections, but real world regulations create the need for an ever expanding regulatory bureaucracy. It is self-propagating myth and self-justification for bureaucrats. It was this that I reacted to when Megan non-McArdle made the claim that bureaucrats always act to balance competing interests: that may be true in a superficial sense, it may be their rationalization and their intent, but in reality, bureaucrats act to justify their own continuing existence and employment without consciously realizing or intending that. And when one band-aid requires two more, and those each require two more, well, pretty soon bureaucracy is not just surviving, it's thriving and we're parachuting cats. The problem changes from one of individual menaces acting in a freewheeling marketplace where the potential damage is limited to one in which large menaces act in a closely regulated, highly leveraged state-capitalist machine, where the potential damage is vastly larger.

I offer this as background for what will come.

Save 'em all!

I know of Bjorn Lomborg, but haven't read his books. That being said, there was nothing controversial about his interview here on NPR. Or should I say, there should be nothing controversial? Shorter Lomborg: Resources are scarce, we should use them wisely.

But then David Kestenbaum felt the need to rebut him with a rhetorical question (rhetorical in the richest sense), "What is the economic value of the world's last polar bear?" Lomborg's response was clumsy, to say the least. And then, just to make sure he was properly rebutted, Kestenbaum interviewed a very emotional but confused woman, a Ms. Tasmin Aesop. She apparently believes that resources are unlimited and we should tackle all issues at once -- which, when you think about it, means that she should have no problem with Mr. Lomborg's advocacy for spending on disease and poverty, since with unlimited resources we will also be able to spend on megafauna like polar bears.

We keep hearing that traditional reporters, unlike bloggers and Fox correspondents, are unbiased. But no rebuttal for Ms. Tasmin Aesop was forthcoming. A proper rebuttal could have been, "How many poor people should be allowed to die of disease in order to save the last polar bear?"

Random thoughts

On Limbaugh who was ranting the other day about the "global warming hoax": He said that temperatures were said to be going up, but they have been declining, and that storms were said to be increasing, but they have actually been declining. Um, if both of those are true, it does not refute the assertion that storm frequency increases with rising temperature.
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On war:

I am the Commander-in-Chief of a nation in the midst of two wars. One of these wars is winding down. The other is a conflict that America did not seek; one in which we are joined by 43 other countries -- including Norway -- in an effort to defend ourselves and all nations from further attacks.
...
We must begin by acknowledging the hard truth that we will not eradicate violent conflict in our lifetimes. There will be times when nations -- acting individually or in concert -- will find the use of force not only necessary but morally justified.
...
But as a head of state sworn to protect and defend my nation, I cannot be guided by their examples alone. I face the world as it is, and cannot stand idle in the face of threats to the American people. For make no mistake: Evil does exist in the world. A nonviolent movement could not have halted Hitler's armies. Negotiations cannot convince al-Qaidas leaders to lay down their arms. To say that force is sometimes necessary is not a call to cynicism -- it is a recognition of history, the imperfections of man and the limits of reason.

While it seems like just another one of his speeches, I have to commend President Bush on the vast improvement in enunciation and cadence. Seriously, try reading that passage in his old speaking voice and see if it doesn't sound one bit different than what he has been saying for the past 8 years.
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Regarding the Tiger Woods thing: really, is there not a single "energy" drink who will step up to fill the gap left by Gatorade? Think of it: "Monster: Gives Tiger his Wood."
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According to Dan Ariely, students in an experiment who are told they are wearing fake merchandise are more likely to cheat than people who are told they are wearing the real deal. Apparently, if you are told that you are a cheat, or if you know that your peers are cheaters, you are more apt to cheat. It got me to thinking about an opinion poll I read about years ago in the WSJ. Some bar association had been tracking the number of corporate lawyers who thought that their corporations were breaking laws without being aware of it, and the percentage was tipping past 60% (a result of the increasing complexity of the regulatory environment). It got me to thinking: if you are more likely to cheat if find out that you are already cheating (whether you intended to or not), and most lawyers think their clients are accidentally cheating, what percentage of those have thrown in the towel and just stopped the pretense?

Interesting counterpoint to Ariely's research: consumers who buy fakes eventually buy the real thing. This doesn't mean that they return to morality, but it does suggest that people make different decisions in different time horizons.
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Happy Hannukah!

Investing in failure

We've been hearing for months that we need to "invest" in energy security, energy efficiency (y'know, to stop global warming), etc., and that this will require massive re-tooling of the automobile industry. Then, a few days ago, we learned that we had to bail out the existing auto parts industry but no concessions from them or the existing auto makers were required. Today, I learned that bailing out other businesses does cause Dr. Krugman anxiety. The difference? I can't figure it: both seem to be built on unsound business models and don't seem to want to change. Here's to hoping that Krugman salvages his intellectual credibility and remains at least as critical of this administration as the last.

And, I note that I heard on talk radio last week a union member asking why AIG execs should be allowed to keep their bonuses (their property! they had a contract!) but union members should not (what about their property, their contract?). The host was predictably perplexed and evaded the question. I do have to say that most of the neocons I know have at least been equally critical of both the UAW and the AIG execs, but since both have been manufactured crises, they have been largely ignored. XKCD understands.

What the mutualist world looks like

Without introduction:


From here. I'm particularly interested in her discussion of open-ended toys. Hard to believe kids played before branding.

While you're watching this, keep in mind that what she is doing is going to be a criminal activity next month. By criminal, I mean fines of $100,000 per violation up to a total of $15,000,000 and incarceration of up to 5 years.

Also, these are amusing:



and



I don't know of any evidence to support his claims that Big Box retailers were behind this, but se non vero e ben trovato (even if it is not true, it is well conceived). From what I can find, this legislation was passed on the recommendation of US PIRG, Public Citizen, Fear, and Shameless Pandering. If Walmart is the bootlegger to that Baptist cabal, well, all the more shame to be heaped on the Naderites' heads. It works out for those larger companies and retailers in much the same way that the large meatpackers were aided by the moral cover provided by Upton Sinclair's The Jungle and the resulting meatpacker's competition reduction act Meat Inspection Act. It makes it more expensive for small producers, and turns potential torts against retailers into a federal law enforcement problem. The costs are socialized, dispersed, and hard to see; they consist of unemployed small producers and their employees, fewer selections for consumers, and higher prices. The gains are privatized, concentrated, easily seen; they consist of higher profits for mass producers. The professed goal -- greater safety for children -- is probably nonexistent and possibly thwarted, since this works to increase the market share of the same mass producers who were responsible for the problems in the first place.

The products recalled in 2007 were already out of bounds of the Federal Hazardous Substances Act, so rather than enforce that law, we made a new one that grants lots more power to the state. To think that the people behind this drew votes away from Al Gore ....

Road conditions

A recent article on NPR stated that it would take $2 billion over the next decade to repair roads in Maine and "[t]he congressionally appointed National Surface Transportation Policy and Revenue Study Commission estimates that the cost of needed repairs is $220 billion -- at a minimum -- per year" to repair all of the nation's roads. This is seen as a crisis that requires federal subsidization and massive increases in federal and state funding. They are therefore starting to look at increasing gasoline taxes.

The last substantial increase in federal gasoline taxes took place in 1993. Given that we "only" used about 142 billion gallons of gasoline in 2006 (and similarly for 2007; high prices have caused a stagnation of fuel consumption), that means the federal government "only" collected about $26 billion. Given that the aggregate state collection is similar (state fuel taxes vary considerably, but average right around $0.18 as I recall), then "only" about $50 billion or so of the $220 billion is being collected. Your fuel taxes therefore need to climb from a combination of around $0.36 per gallon to something more in the neighborhood of $1.62, an increase of $1.26 per gallon.

May I suggest something else? What about supporting tolls? Though perhaps not very practical for intracity driving, they are eminently practical for freeway and bridge traffic. But first, there is a substantial obstacle to overcome: the belief, widely held in the US, that driving cars is a right and that roads should always be free. Clearly, we understand that roads and bridges are not really free, but the costs are hidden rather than explicit [1]. Tolls are a way of making those costs explicit.

As an exercise in noting how bad the anti-toll and especially anti-private infrastructure bias is, I will cite the Forbes article cited recently in the comments at MR as an example. The Ambassador Bridge is a privately built, privately owned bridge from Canada to the US near Detroit. It is the most popular bridge in the Great Lakes region: 3.3 million cross on the Ambassador vs. 3.6 million on the other four bridges combined. On 9/11, local government officials closed off the nearby car tunnel, and traffic subsequently backed up on the Ambassador. Truck wait times went to 12 hours because of the lack of border Patrol and Customs inspectors.

The tone of the article is as follows: Because some private person had the foresight to build a bridge at that location 75 years ago, and because it is the most popular truck crossing today, and because the state has not built a competing bridge nearby, somehow the owner is a bad guy. And because 9/11 brought about panic and security precautions that caused backups, the owner is a bad guy. And most of all, because he doubled toll rates for trucks and quadrupled them for cars in the past 25 years, he is a bad guy. Bottom line: private infrastructure is bad [2].

The point about toll raises is misleading. If there are four hour weight times at rush hour, this is a sure signal that the tolls are not high enough; perhaps they should consider higher tolls during the rush hour, the same way commuter trains do. If cars are Teh Bad because of pollution and AGW, then tolls should be higher everywhere, not just at the bridge (that's essentially what a carbon tax is). Here's the Environmental Defense Fund on the subject. Furthermore, bridge and road tolls have increased nearly everywhere in the past few years, not just on this private bridge. The tolls on the publicly operated San Francisco Bay Bridge were $1 in 1988, but are currently $4. That's a quadrupling in twenty years, quicker than the cited period of 25 years for the Ambassador. And London has famously begun charging congestion tolls to enter the gridlocked inner zones.

I think we can all agree that we rely on the transportation infrastructure and that we would like for it to be properly maintained. That is essentially a public good (not a pure public good, though). Every unavoidable pot-hole creates potential additional maintenance for the car owner. We would also like to see traffic reduced to the point that we don't experience delays and frustration. But fuel taxes are just one of several responses. Tolls that are reinvested in the roads are a better way of both directing the money to the most used infrastructure and directing the traffic to the best infrastructure. For example, if you had to raise tolls on a freeway to keep up the maintenance due to heavy truck usage to the point that shippers began shifting more of their traffic to more efficient railroads, that would be a good thing, no?

Oh, you did remember that railroads in the US are (for the most part) privately operated and maintained, didn't you?


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[1] Note the parallel to education: we all know that school buildings, teachers, and books cost money, but the phrase "free education" is used without irony. May I also suggest a small, means-tested toll at public schools? You can call it whatever you want -- "tuition" or "user fee" -- so long as you collect it.

[2] Don't tell the people who believe that private infrastructure is impossible. They prefer the impossibility theorem to the malevolence theorem, but will fall back to the latter when it suits them.

Resurrecting the Granary of Rome

It was such a good book title, I had to use it as a post title (link).

Although this isn't what I would normally consider "my" kind of book, I'm glad I picked it up. Mainly, the initial appeal was that I went to high school with the author, though I can't claim to have known her well.

The book has a certain amount of resonance with me, having just completed Tim Egan's The Worst Hard Times, a book about farmers in the Dust Bowl. Diana's [ahem] Dr. Davis' thesis in RtGoR is that the French colonists created a narrative in which Algeria was once a vast green sea of forests and grain, but that the nomads (read: barbaric Arabs) had ruined it with their primitive farming and especially herding methods. This "declensionist narrative" was used to justify the obvious outcome: the French were morally obligated to re-civilise Algeria and restore the region to its former glory.

The trouble was that it wasn't true.

There were three topics in the book that intrigued me. The first was the discussion of various types of property recognized by the indigenous Algerians, including communal property used to rotate grazing animals to allow for leaving some land fallow. The second was the interrelationship between deforestation and dessicationist [1] theories that instructed 19th century environmentalism and their foundation in Christian mythology. The third was the idea of environmentalism as social control.

The first is interesting to me as an example of alternative social organization. Davis describes briefly the concepts of melk, achaba, habous, and arsh [2]. The first is private property, the second is a "pasture contract" exchanging grazing rights for labor, and the third is land reserved for religious insttitutions. The fourth, the idea of communal property (mostly pasture but some cultivation) is curious: if the system is stable, it challenges my notions of the sustainability of commons found in narratives such as this description of the pilgrims' attempts to establish communal agriculture. Perhaps the tragedy is not as inevitable as Hardin would have us believe. Under some circumstances -- perhaps only those of small, nomadic, strictly religious tribes -- communal property may be sustainable and productive.

The second theme is interesting to me because of an embarrassing moment I suffered shortly after university. I had a friend there who was into environmental issues, and he preached that North America had once been entirely covered in forest [3]. I remember the look of bemused disbelief when I professed this at work one day, and realized how silly it was. It is one of the most striking memories I have about how I had acquired what I thought was knowledge, only to discover that it was pseudo-knowledge I had bought hook, line, and sinker based on no more than the strength of conviction of the source. On another occasion, I ran into a co-worker who believed that England had recently been completely barren of forests, the mirror image of my error. It would have been awfully difficult to build half-timbered houses, hide in the Sherwood forest, build pipes out of wood [4], build the world's most fearsome navy in the 19th century, or any number of other things if there were no trees on the island.

Indeed, both ideas are born of the same myth, the idea that the world was once covered in forests (Eden), but since man's fall from grace, the forest has gradually given way to hot deserts (reminiscent of what biblical location?). Because they contribute to this decline through their use of fire as an agricultural tool, natives (Algerians, North American Indians) must be deprived of their traditional ways of life and, not incidentally, of their property. Call them reservations, cantonments, or concentration camps, nomadic peoples must be controlled, "attached" to the land, and turned into farmers if possible and imprisoned if not. In Algeria, they also forced them to use money by forcing them to pay taxes in cash rather than in kind. Having deprived them of their traditional, nomadic, pastoral ways, and having also forced them out of barter and into the cash system, many had no choice but to enter the workforce as a laborer for the new French masters. That is my synopsis of Davis' thesis on environmentalism as social control; I related similar arguments earlier under this post.

The parallels between those conservation-as-state-expansion efforts and the intent of modern Global Warming enthusiasts are too obvious to overlook. Of course environmentalism is about social control. Although there are thoughtful believers who would like to see genuine threats to our future existence mitigated, there are others who latch onto any fad as a means of advancing state power. Sometimes called "watermelons" -- Green on the outside, Red on the inside -- such people move from one cause to another in hopes of finding the magic lever for bringing about a technocratic utopia. It seems to escape their notice that their causes are frequently the cover story for the simultaneous expansion of state-capitalism (which Davis rightly identifies by its simpler name, capitalism). Algeria went from a land of traditional herding and farming to a colony of small farmers to a corporation-dominated extension of France. Likewise, the American Plains transitioned from the land of the buffalo to a land of small land-grant farmers to ADM's central production facility. Both changes happened under cover of conservationist narratives - as it happens, those providing moral cover with a Christian-fall-from-Eden myth were almost literally Baptists to the corporate-colonial Bootleggers.

This revisionist history seems to me to be a great companion to recent responses to Jared Diamond's version of the Rapa Nui myth. Diamond claimed that the decline of Rapa Nui (Easter Island) was due to stupid and greedy human tendencies to destroy their own environment. In his version, they cut down all of their trees in a fit of one-upsmanship, with devastating consequences. The revisionists are finding two alternatives to the story: one is that rats caused the deforestation and that there was no long period of stability followed by collapse. Of course, the rats probably arrived at the island with the natives, but at least the humans intentional actions are off the hook. A second version (pdf) points out that the first Europeans verified trees on the island, were greeted by natives bearing palm leaves, and saw natives living in palm-thatched huts. Shortly after their arrival, the trees disappeared and the natives went into decline; Benny Peiser argues that this was no coincidence. His version, sometimes called The Rape of Rapa Nui, is a direct, though compressed, version of the Algerian story.




----------------------------
[1] Despite Dr. Davis' dissection of the dessicationist theory, I am under the impression that recent research has indeed shown a relationship between deforestation in the Amazon and decreasing rainfall. Without pulling up lots of research and trying to figure out which findings are most reliable, all I can do is point out that (a) her reference was old (though she cited more recent research on the dessicationist narrative, I think the only physical science paper cited in refutation of the dessicationist theory was from 1982), and (b) her argument still seems correct. That is, I don't believe that the nomads destroyed so much vegetation that they created the Sahara; it seems rather more likely that they adapted to an existing fact. In a future edition, I would like to see her present and then answer stronger versions of the dessicationist theory.

[2] She also notes beylick and mokhzen, properties of the Ottoman state, and muwat, unproductive land that could be cleared, cultivated, and claimed.

[3] It's still a tempting myth given misleading maps like these - what does "virgin" mean? A recent National Geographic described in detail the number of modifications the natives had been making to their environment before the European arrival. The map creators are either unaware of natives' use of fire or unconcerned by it. The latter is consistent with the Noble Savage myth. It is perhaps notable that Rousseau was a popularizer of the myth, and Frenchmen would have been familiar with it even as they conquered the savages in Algeria. In fact, could this explain why they favored the sedate Berbers over the nomadic Arabs?

[4] This is a reference to something I recall reading in T. S. Ashton in which the poor were supposedly confined to neighborhoods where greedy developers couldn't even be bothered to use iron pipe. Ashton found that developers' greed wasn't the problem. It seemed that the neighborhoods in question had been built in the early 19th century, when England was busy fighting someone named Bonaparte. Iron was scarce and expensive, so the inhabitant-builders used wood for their own sewer pipes.

[5] As I noted in the review of Egan's book, Roosevelt's pet conservation method was to introduce forests to the Plains. Not only did that not work, but it made things worse as the trees soaked up what little groundwater there was. The Algerian experience was similar: in the 1870s, Francois Trottier tried to introduce eucalyptus trees throughout the country. The trees interfered with natural springs and soon enough they were removed and forgotten. The first repetition is tragedy, the second is farce.

Bookends

I have been reading Timothy Egan's The Worst Hard Times: The Untold Story of Those Who Survived the Great American Dust Bowl, a book about life in the Dust Bowl. It has been a nice bookend to other information I have read on the Depression. This includes Howard Zinn's People's History of the United States, John T. Flynn's The Roosevelt Myth, Jim Powell's FDR's Folly, and Friedman & Schwartz' A Monetary History of the United States. Egan's book provides a human perspective on momentous times.

My own personal theory, to which I have seen allusions but not the definitive book (surely someone has written it) is that the Depression was the effect of society absorbing the final shift from the agrarian economy. Putting a plow behind an internal combustion engine-driven machine meant you didn't need all those people working on farms. But neither were they finding employment in the cities.

Although Egan alludes to the state's complicity in the conditions that produced those hard times, and at the end acknowledges the bad long term effects of FDR's intervention, FDR, Hugh Bennett, and farm policy are definitely the heroes of the story.

The state's complicity lies in first running the natives out, then establishing incentives to farm the land rather than use it for grazing. The long term effect has been to establish farm subsidies which are detrimental. On the one hand, price supports result in the overproduction of commodities such as cotton, which the government then buys and dumps, further depressing world markets, and further impoverishing African farmers. On the other hand, other convoluted policies such as sugar price supports, ethanol incentives, and ethanol import tariffs, are intended to support corn prices, further impoverishing Mexican peasants. It is a sad reflection on people who worship FDR's policies as the salvation of impoverished American farmers while ignoring the ill effect of those policies on the impoverished farmers in the rest of the world.

Some anarchists claim that defense is the tough problem; I doubt it. I think that The Depression is a tougher problem. The benefit of Egan's book is that it highlights the real stories of real people. In the context of those times, when it seemed reasonable for the state to encourage homesteading and farming prior to the closing of the West, when the prospect of prolonged drought seemed dim prior to 1932, when the invoice for the social cost of their actions was not yet due, what happens to those people in the absence of the New Deal?

Still, one cannot help but think that Egan has absorbed just a little too much of the high school version of those events. The high school version is that the farmers were too dumb to know what they were doing, so FDR hired some smart men who invented and taught contour plowing and the use of trees for windbreaks, and then they paid the farmers to let some fields go fallow. It is an unusually common myth, as seen in this example:

In response to the urgent need for soil and water conservation programs to halt farmland destruction, the Soil Conservation Service was established in 1935. SCS employees set up demonstration plots and taught methods such as contour plowing, terracing, and strip-cropping to retain water on the fields and reduce runoff and erosion. Windbreaks were planted to break the force of the prairie winds, tillage methods were changed to reduce exposed soils, and vegetation or stubble was retained on the fields after the growing season to provide protective cover. With these methods, damaged lands were reclaimed and the dust storms were brought under control.

Also, in the free market banking system of the day, banks ripped everyone off, so FDR instituted banking reforms and federal deposit insurance. The truth? It's a little more complex.

First, the New Deal: FDR ran on the New Deal platform, which was to undo all of the Hoover Administration errors. According to FDR, those consisted of deficit spending, excessively high taxation, and too much government (Flynn). When he actually took office, the first thing they did, of course, was to raise taxes, increase spending, and run a deficit just like Dr. Keynes said they should.

Despite similar conditions in Canada, not a single bank failed there (Powell). In fact, prior to the Federal Reserve Act, the US weathered several similar periods with almost no bank defaults. The FRA was supposed to have made the government the lender of last resort, but the act was truly established to serve the needs of the bankers (Kolko).

Another Hoover policy which FDR had vowed to overturn but then repeated was the destruction of food supplies in the farming states even while people starved in the cities (Flynn and Powell). It is a question of that which is seen (starving farmers helped by the payments) and that which is not seen (starving city dwellers and destroyed crops): the former have much more impact in an era when newspaper photos and newsreels hold sway.

Today, the collective effect of those actions is an agriculture policy which enriches large corporations, leads to a substantial amount of water overuse and water pollution, reduces the quality of our food, and impoverishes poor farmers around the world who have to compete with subsidized American farmers.

Second, there is the problem that conservation measures had been around long before FDR took office. Contour plowing in particular had been around since at least ancient times

Contour farming was practiced by the ancient Phoenicians, and is known to be effective for slopes between two and ten percent. Contour plowing can increase crop yields from 10 to 50 percent, partially as a result from greater soil retention.

Or at least nearly the birth of the Republic

In 1808, Jefferson transmitted a refinement of his design to a Monsieur Sylvestre in France, for the benefit of the Society of the Seine.

The deep tillage could heavily erode the steep terrain of Jefferson's plantations, though, and he discovered that contour plowing around the curvature of the hills, rather than cutting furrows straight down-slope toward neighboring streams greatly reduced erosion.

He wrote to Tristam Dalton in May 1817 about his son-in-law Col. T.M. Randolph’s development of this method, laying off the plow lines in advance using a (wooden) rafter to measure and strokes of a hoe to mark the contours.

Plowing across slope on hilly terrain put a severe strain on the plowman and Col. Randolph modified the plow, fusing two separate shares against their flat sides at a right angle.

Plowing one way with the sod thrown down slope around the hill to the end of a furrow, the plowman would flip over the plow bottom and head back in the other direction with that sod thrown down slope as well. This eventually developed into a widely used "hillside plow."

Jefferson sent Dalton "a bit of paper cut in the form of the double share, which being opened at the fold to a right angle will give an idea of its general principle."

Jefferson's farms, including Monticello, had been losing soil into Chesapeake rivers for years and these new methods resulted in substantial improvements: "Let me beseech you" Jefferson wrote to others, "to make a trial of this method."

These techniques were not unknown to moderns:

As he had always been a voice for the working class, Villa would continue in this facet as the owner of a large piece of land. He attempted tremendous agrarian reform on his land. First, he studied the new, American techniques of contour plowing and crop rotation. His agrarian reform went one step further to include not only the crops, but also the people who tended the crops. Villa remembered the unfair economics used by the hacienda owners and made refreshing changes.

Pancho Villa died in 1923, less than a decade before Egan's story begins.

Egan relies on an article, "Small Farms, Externalities and the Dust Bowl of the 1930s" by Zeynep K. Hansen and Gary D. Libecap, published by the NBER. Among other things, the article discusses erosion as an example of several kinds of externality. In one, suspension, fine particles are blown into and then suspended in the air. To the farmer, this was an internal cost, but the fine particles in the air caused health problems to humans and livestock. Saltation and creep are externalities in which the topsoil from one farm is deposited on another farm, not only killing the wheat but also burying the downwind farm's erosion control stubble. In the article, they note that prior to the creation of the SCS,

The two leading erosion control methods in the 1930s were strip cropping with strip fallow and windbreaks of trees or brush. Both provided barriers to lower surface wind velocity and carrying capacity, but the former was more prevalent because trees could not be grown in many parts of the plains. Strip fallow also had the advantage of building up soil moisture and roughness, which reduced erodibility, whereas tree windbreaks actually absorbed moisture from surrounding ground.

This is interesting because it shows that (1) Dust Bowl farmers did practice conservation before FDR saved them, and (2) one of the fables from the high school version, FDR's commitment to using trees to block the wind, was not only a failure, but potentially could have worsened the situation. Egan also describes the tree idea as a failure.

Further in the article, they explain,

To completely combat regional erosion, all of the cultivated acreage in a topographical area of similarly erodible soil would have to be included in a "wind erosion unit" of 50,000 to 500,000 acres or more. The optimal farm sizes for addressing wind erosion and production, however, were not the same. Most estimates by agricultural economists and extension agents in the 1930s of appropriate production sizes for the region suggested two sections of land, 1,280 acres, depending on location in the plains. Few scale economies could be realized beyond that size. Nevertheless, in the 1930s, most farms were smaller than the prescribed levels for optimal production. The Great Plains was covered by hundreds of thousands of small farms. This condition was largely a legacy of the Homestead Act that limited claims to 160 to 320 acres when the region was settled between 1880 and 1925.

This is the same opinion reported by Egan of Hugh Bennett, the first director of the Soil Conservation Service. The area covered by Egan's story was formerly the domain of Plains Indians who thrived on grass-fed buffalo. The first whites to successfully live on the land ran the XIT cattle ranch. It was government policy to replace both with small claims farmers. According to their report written for Roosevelt,

"Mistaken public choices have been largely responsible for the situation," the report proclaimed. Specifically, "a mistaken homesteading policy, the stimulation of war time demands [World War I] which led to over cropping and over grazing, and encouragement of a system of agriculture which could not be both permanent and prosperous."
[...]
[Egan, continuing to quote from the report] "The Federal homestead policy, which kept land allotments low and required that a portion of each should be plowed, is now seen to have caused immeasurable harm. The Homestead Act of 1862, limiting an individual to 160 acres, was on the wesern plains almost an obligatory act of poverty."

Since the government subsequently wanted farms greater than 500 acres, and most farms of that period were smaller, Hansen and Libecap conclude that the farms were too small. This is consistent with other rationalization schemes of that era in which it was thought that efficiency required government-directed coordination.

Accordingly, collective action among farmers was necessary to address wind erosion. In commenting on strip cropping and recognizing the externalities involved, Charles Kellogg of the Bureau of Chemistry and Soils stated: "Such a practice, to be most effective, must be adopted on a community basis. Isolated farmers following this practice are not greatly benefited if the adjoining land is allowed to blow badly." The large number of small farms on the Great Plains, however, raised the costs of coordination. Indeed, Roland Renne of the Montana Agricultural Experiment Station (1935, 426-9) noted: "Dealing with thousands of different owners slows up the adoption of a planned land use program..."

They try to make a case that small farmers face different incentives than large farms:

Private motivation to invest in strip fallow was reduced when farmers did not internalize the externalities. The problem was accentuated for small farm owners. Each farmer had to consider the benefits of strip fallow with the opportunity costs of lost production. Because small farmers captured fewer of these leeward effects, they were less likely to have any fallow rotation, leaving their land in cultivation and their fields exposed to wind.

It might at first appear that there should be little difference in the proportion of land fallowed on a large or small farm since large farmers would face a correspondingly higher opportunity cost. However, a family faces about the same need for income (fixed cost) no matter how large the farm. Hansen and Libecap find that the proportion of land dedicated to conservation was proportionally larger on large farms.

Dissappointingly, they neglect to account for the possibility that adjoining farmers could coordinate through private mechanisms, in much the same way as the Animas Foundation and Malpai Borderlands Group pioneered the grassbank concept. They make passing references to "mixed incentives" to participate voluntarily and to transaction costs, but do not explain what those are. This could be the loss of reputation that might result from buying out a smaller, less profitable, and more harmful farm in a community where bidding in a bankruptcy auction brought threats of violence. Part of the problem may be that the Dust Bowl and the Depression occurred at the same time; had the Dust Bowl occurred separately, there might have been enough money to buy them out without the concurrent bankruptcy and bank failure problems.

I think this is a case in which there was little appreciation for the problem beforehand, and the immediate crisis was solved in conjunction with deep-pocketed and politically motivated politicians. Afterward, everyone is aware of the problem and at least several solutions, but now the state has become associated with the solution and becomes inseparable from it. Before: ignorance, no state. Afterward: knowledge, solution, and state.

Before	After
Ignorance	Knowledge
Problem	Solution
No state	State
Voluntary	Coercion

The frame then becomes that the state and the solution are one and the same when in fact the knowledge and the solution are independent of the state. We forget how often we have ignorance/no-state/before and knowledge/no-state/after, and also how often we have ignorance/state/before and ignorance/state/after. Celera's being the first to map the human genome is an example of the first (the state eventually joined the party), the S&L meltdown of the 1980s is an example of the second (the 1980 S&L Act signed by Carter precipitated the fiasco by expanding the federal insurance and then encouraging them to invest in local real estate (very non-diversified) and high-risk assets like art, creating a predictable problem), and most agriculture policy is an example of the third (nobody seems to know there is a problem or what to do about it).

As Egan describes the Dust Bowl era, farmers were ready for someone to show them a solution; if that happened to be a government agency that would also come in with money, they weren't going to turn it down. That doesn't seem to be the case: One telling fact that comes from the NBER paper is that the voluntary federal programs largely failed, while the coercive state programs succeeded.

Given the mixed incentives to participate in erosion control, the response to calls for voluntary collective action was limited. Indeed, the SCS noted a lack of voluntary farmer participation in the erosion control programs outlined in the demonstration projects.

Later,

More direct and coercive government intervention came in 1937 with inauguration of Soil Conservation Districts (SCDs) that had the authority to force farmer compliance and the resources (subsidies) to cover the costs of erosion control. The SCDs were local government units and required state legislation for establishment.

Oddly, according to Hansen and Libecap, "Kansas, Oklahoma, and Texas, at the center of the Dust Bowl, enacted wind erosion laws in 1935", but Egan fails to note those changes.

I am frequently accused of being too theoretical. For example, I think that this episode in America might have gone differently if the state had stayed out. People who favor state intervention will pooh-pooh the Malpai Borderlands grassbank initiative, inevitably pointing out that no private action did actually occur at that time, and that the farmers failed to join in the voluntary programs. I say that they are not going back far enough: what about leaving the ranchers and before them the Indians alone? Those are actual policies of the state that created the conditions for the environmental and social disaster. That is not a theoretical, paper claim: even Hugh Bennett agreed that the Homestead policy was a mistake. The Nature Conservancy and not the federal government pioneered the use of prescribed fire to maintain the health of the grasslands. Grass-fed buffalo are being reintroduced to the grass-fire-buffalo ecosystem as a sustainable food source. It turns out that laissez-faire would have been the best policy. But I am the theoretical one?

Coase is not magic; neither are agencies

Given that my original response to Megan included a very tepid mention of Coase -- and that not even a central argument -- and that I tried to calm the overenthusiastic commenters on the first MR post, I don't think her post "Coase is not magic..." was aimed at me specifically. However, it is worth noting what is wrong with it. She says,

Coase requires low transaction costs, which is a stumbling block between two multi-party resource users, but maybe not insurmountable. It also requires perfect information. That is harder. But the real problem is that farmers are not profit-maximizers along every variable that they manage.
...
If your first sentence doesn't overcome the problem that farmers are not profit-maximizers in water use, DO NOT write a second sentence explaining a theory that depends on that assumption.

1) I reject Megan's premise: Coasian bargaining does not require profit maximizing farmers. If we were to accept these conditions for the operation of incentives, then there are many more policies we should reject.

One of my favorite measures of whether energy is too expensive is to note the presence of Christmas lights in poor neighborhoods. When they are on all night, electricity must be cheap. Likewise, when the local high school parking lot is filled with gas guzzlers which they use to drive 500 yards to Sonic, gasoline must be cheap. The people engaging in these and other behaviors (e.g. failure to install CFLs) are clearly not profit maximizers by Megan's definition (they are rejecting free methods for saving money on energy like turning off Christmas lights at bedtime, or not hanging them in the first place). So what good will it do to promise them a little more money to install solar or buy a Prius? If the rise in gasoline prices by $2 in a few years won't change their habits, what good will a little carbon tax do?

I doubt that Megan or for that matter anyone else is going to accept the idea that those people won't change their habits in the face of a tax or subsidy. The point is that people will change their behavior on the margin if not on average. This has nothing to do with their ability to maximize along every variable. It has much to do with their response to incentives.

Incidentally, I'm not convinced that farmers are as hard-headed or superstitious as implied. We have evidence that farmers are capable of quite sophisticated maximization and bargaining. Steven Cheung ("Fable of the Bees: An Economic Investigation") and David Johnson ("Meade, Bees, and Externalities") reported in 1973 that it had been common practice for nearly a century for farmers to pay bee keepers for pollination when they needed those services (to enhance yield), but for the keepers to pay to put their bees in a field in order to promote honey production in other seasons. I have also read that some farmers engage in fairly sophisticated hedging in the commodities markets using Scholes-Black option-pricing schemes.

2) Nor does Coasian bargaining require zero transaction costs or perfect information. These may be requirements of the "Coase Theory" as popularized by Stigler in his textbook, but I find no such argument made by Coase in the original article to which these discussions refer, "The Problem of Social Cost".

As Alex correctly points out, such conditions are sufficient for Coasian bargaining to yield an efficient result, but they are not necessary conditions. I doubt whether there are any markets in which there are zero transaction costs or perfect information, yet markets in general seem to work well. The best treatment of this subject, once again, is David Friedman's from Law's Order, webbed here (you'll want Chapter 4). He divides the explanation up into three parts: Nothing works, Everything works, It all depends.

Nothing Works is the explanation of the world in which the allocation of rights seem to be handed out in an arbitrary manner despite the fact that it is the presence of both parties that causes the problem. The polluter is as responsible -- but not more -- than the people living downstream because if they didn't live there, it wouldn't be called pollution. Then Coase introduces the part which Megan and Barkley Rosser (see his comments here) seem to have in mind: in the absence of transaction costs, you could give the property rights to either party and it would be negotiated to an equitable outcome (Everything Works). However, this only covers about one-third of the original essay, because Coase then moves on to relax the assumption about transaction costs. In the presence of transaction costs (the real world), it all depends on initial allocation of rights and the relative magnitude and direction of the transaction costs (which are not symmetrical).

At its heart, Coase's point (as distinguished from the Coase Theory) is about (a) property rights and especially (b) transaction costs and their interaction with both disputes and the regulatory/judicial environment. One-third of the way into the essay, Coase points out,

The argument has proceeded up to this point on the assumption that there were no costs involved in carrying out market transactions. This is, of course, a very unrealistic assumption.
...
Once the costs of carrying out market transactions are taken into account it is clear that such a rearrangement of rights will only be undertaken when the increase in the value of production consequent upon the rearrangement is greater than the costs which would be involved in bringing it about. When it is less, the granting of an injunction (or the knowledge that it would be granted) or the liability to pay damages may result in an activity being discontinued (or may prevent its being started) which would be undertaken if market transactions were costless. In these conditions the initial delimitation of legal rights does have an effect on the efficiency with which the economic system operates.

That seems a far cry from "requiring no [or low] transaction costs". It says that the bargaining will depend on the relative costs and the initial allocation, but Coase himself is at this point emphasizing the effect of transaction costs, not assuming it away.

3) In my original response, I was reacting to Megan's table-banging defense of bureaucrats (something Bernard Yomtov seems to have overlooked) by pointing out that (1) the state had created the problem by forgetting earlier agreements, (2) that all attempts to "balance competing needs" had been all-or-nothing, winner-takes-all decisions that disregarded earlier settlements, (3) the logic of politics and bureaucracy drove those decisions and serves to perpetuate the bureaucracy rather than creating solutions, and that (4) contra the so-called libertarians commenting on Megan's site, a libertarian response would almost certainly not favor the farmers. I listed several interesting arrangements that would inform a truly balanced, dynamic solution. Without saying it, I was implying that the required balance might be achieved by allocating the property rights to the fishermen and/or tribe. For one thing, this has the intuitive appeal that it restores the rights to the initial holders. I believe it also holds some promise for the situation. Curiously, the "Coasian" initial rights allocation assumed by Megan and many other commenters including the Coase cheerleaders have all been the same, and opposite to those I implied.

Under farmers' water, I agree with Megan that the farmers may be too conservative in selling and the fishermen too uncertain about how much to buy and how high to value it. However, under fishermen's water, while the fishermen might also be too conservative in selling water (resulting in the extreme in the outcome ESA advocates defend), the farmers ought to be able to calculate fairly precisely how much water to buy and how much it is worth. In reading about corn, cotton, and soy, I have found that there are fairly well-known relationships between local conditions (temperature), water, and crop yield. Undoubtedly, many farmers would choose not to farm at all under conditions in which they have to buy water at market (and hopefully they would have to buy electricity at market, too). Some farmers would buy the water at market and probably squander some of it. And some farmers would choose to farm under conditions in which they would maximize yield from every drop: this gets Megan the agribusinesses with Cadillac water systems she prefers.

As I noted in my first response, there is historic precedent for this arrangement. As Richard Stroup reports in the article to which I linked but I doubt anyone read,

In England and Scotland, for example, unlike in the United States, the right to fish for sport and commerce is a privately owned, transferable right. This means that owners of fishing rights can obtain damages and injunctions against polluters of streams. Owners of these rights vigorously defend them, even though the owners are often small anglers' clubs whose members have modest means. They have formed an association that is ready to go to court when their fishing rights are violated by polluters.

Although the US is normally associated with strong property rights protections, I find it interesting that we don't have such arrangements. There is probably a historical curiosity involved, but why haven't our legislators or bureaucrats noted the benefits of the arrangement and taken action to import it?

(What follows is conjecture that is relevant, but perhaps not entirely clear.)

I believe this issue illustrates a common problem: bureaucrats are too unimaginative. They think that by weighing lots of opinions and arriving Solomon-like at a decision that they are "balancing the needs" and that this is very creative. This isn't substantively more creative than what teenagers would do in adjudicating a schoolyard fight between pre-teens by picking their favorite and enforcing it through threat of violence. A really creative solution would be to figure out how to strengthen existing self-governing institutions or establish new ones that don't require the constant attention of some state agency.

I have a house and a yard; people rarely trespass. It isn't just because of the threat of police action; professional criminals know how to get in and out without getting caught and random break-ins are rarely solved. Besides, simple trespass (walking across my yard) could be accomplished without even my knowledge. The secret is that everyone knows, understands, and accepts the difference between that which is their property and that which isn't. The idea is self-enforcing and scales rather well.

In David Friedman's "A Positive Account of Property Rights", he explains how bilateral agreements to behave civilly may be described as a series of Schelling Points (Schelling Points all the way down, so to speak). Among them is arguably private property rights. I have conjectured that policy decisions (regulations) are not only Schelling Points, but because they generate similar ideas about how to proceed, they are Schelling Means (I think the literature would probably still call them Points). Regulations are a Schelling Means that generate additional Schelling Points that strengthen the state without intending to do so. In common usage, people are quick to say, "There ought to be a law..." because force is the first solution that comes to mind and the state sanctions force through legislation. Few people are happy with the results when the state grows out of control (fascism/communism) or comes under the control of less-than-stellar politicians (corruptarchy), but this is what happens when we rely on agency-enforced regulations for every problem, perceived or real.

Contrast those results with the institutions of civil society that generate Schelling Points that strengthen society. These would include property, trade unions, family, banking, mutual aid societies, education, money, agriculture, and common law. These are obviously not easy to create from whole cloth and doing so is an act of immense creativity. Forming voluntary associations to create institutions to address problems was a characteristic of Tocquevillian America, abandoned in the Progressive Era. Our goal should be to build Civil rather than State Schelling Means; we can expect a fight from those most interested in preserving or extending the State Schelling Means.

Communal Property

I noticed in two recent, separate posts that libertarians are accused of not understanding the concept of communal goods (here*, via Radley, and in the comments of Megan's fromthearchives post). In the first, libertarians are also ridiculed for "not minding government funded roads". And in the comments to that post, they are also ridiculed for actually discussing private roads as an alternative to government funded roads.

Huh?

Now, I realize that people don't realize that not all libertarians agree, and nor is there agreement among all of the people with whom libertarians disagree. But still it shouldn't be that difficult to realize that some libertarians accept public roads and so therefore probably understand and accept that concept of communal property. Is it too much to put those two snipes together and realize, "oh yeah, nevermind"? It would only take a little deeper thought to realize that other libertarians understand something that only the Deep Green left seems to understand about communal property: it isn't always and everywhere good!

I probably need to back up and point out that many on the left (and right) who speak about "communal goods" with such pious tones probably mean "the type of property of which I approve", like parks and military power and such, but they probably haven't thought about it much further than that. There is a symmetry, with one side thinking "private property mostly good, communal property mostly bad" and the other the opposite. Neither of these strikes me as sophisticated analysis.

Deep greens and libertarians have recognized that communal property is frequently used for private gain. An old joke is that BLM stands for Bureau of Livestock and Mining; these were the guys who invented chaining, the act of dragging a chain between two bulldozers to clear out small trees and make land more amenable to cattle. The Forest Service is the federal agency within the Agriculture Department in charge of building roads used for transporting equipment and logs up and down mountains in order to clear cut enjoy our communal crop of old-growth. And the nation's roads are the communal property means by which we consume oil and produce air pollution, time-wasting congestion, and sprawl.

Sure, the oil-users pay road taxes at the pump, but you don't suppose that all of it goes to roads, do you? The last time I saw a figure (Gabriel Roth's Roads in a Market Economy), about half of fuel taxes intended for roads actually makes it to roads. But you don't suppose that means that we are short of roads, do you? Of course not; as M1EK points out for the Austin area (start at the bottom), large portions of the roads are supported by bonds that are repaid out of sales and property taxes.**

No quarter is given to libertarians on issues such as roads: use them, support the status quo, advocate change, it doesn't matter: you are either a hypocrite or a crackpot, no middle ground is given. I find that odd, given my ideal transportation system. I don't know what to say about Pandagon's commenters who defend public roads; they are being consistent with their support for public property, but inconsistent with almost every one of their other principles. Here I should think M1EK would join my team and wonder how in the world they can make statements such as "The US interstate highway system, warts and all, is a gem that most of the world envies."*** Maybe if you live in Afghanistan; Germany certainly doesn't. The French wouldn't admit to it even if they did envy it (which they probably don't). And even an American who has sat in rush hour traffic is probably doing the opposite of envy, even if they can't comprehend what a real alternative would look like.

One of the commenters makes a valiant attempt at claiming that roads are not a public good. Perhaps not a pure public good, but they meet most of the criteria. And like many communal goods, they show the signs of the tragedy of the commons. Most libertarians are familiar with the general idea that commons, including such diverse examples as National Parks and fish stocks, may give rise to a tragedy in which it is in no user's interest to conserve. The difference between the left and libertarians lies in their choices over what actions they prefer to avert the tragedy. Both private and state action may lead to unsatisfactory consequences: underdistribution on one hand and overdistribution on the other.

By that, I mean that privatization of a commons always has the problem that one person gets title to the good though it is not clear how that person and no other should get it. Because he is first? That seems arbitrary. Because he is mixing his labor? That seems slightly less arbitrary until you consider that his first arrival now prevents others who would mix their labor with the land if given the chance. But the other end of the spectrum, political control, results in overdistribution: too many people trying to do too many things with the property and none of them having full responsibility for the outcome. You can try to solve that problem with majoritarian rule, but that also seems arbitrary: first one to 50% + 1 wins!

I would tend to look for the approach most likely to lead to the least worst outcome in a dynamic environment. The worst outcome would be permanent assignment to the first arbitrary winner who happens to be particularly inept. The best outcome would be that use is shared among all users according to the utility they derive from the good, an admittedly utilitarian argument to which I would solicit Will Wilkinson's anti-utilitarian response. In my opinion, private institutions have proven more adept at seeking the optimum use. Megan's requirement that I prove that the average farmer be a profit maximizer is a red herring; all we need is for the marginal farmer to be attracted to selling his water rights. A job, especially for a farmer, is not only about income maximization; sometimes it's about doing things your own way, including choosing when and how to leave it. The average anyone is not a profit maximizer, and yet we find that supply and demand generally work; otherwise, things like CAFE, carbon taxes, and tax rebates are futile efforts in a world where people could choose Toyotas over SUVs and until recently have not.

*I only get one hit on that bingo card, so I guess I don't win the prize.

**Incidentally, M1EK writes interesting posts about transit and urban development issues, but his over-the-top, self-described "bile" interferes with the message. His case for hybrids over turbodiesels generally ends up in lots of arm-waving and glossed-over points while accusing his interlocutors of failing to compare fairly (i.e. claiming that the Golf is substantially smaller so doesn't compare to the Civic when the Civic is actually the smaller car in both passenger and cargo capacity, claiming that all tests that show the Jetta having higher mileage are unfair or outliers, claiming that the Prius is midsize and the Jetta is a compact, etc.). In my opinion, the entire debate is silly: it's like the musclehead "Camaro vs. Mustang" debates of yore. At the end of the day, we should simply be happy that consumers have choices for high mileage cars. His comments on Econbrowser and other places can be very snipey. And yet you get the idea from reading his blog that he's probably a nice guy in real life. Can we blame the vulgar libertarians for blurring issues so badly that M1EK is driven into such states?

***The rest of that comment is hillariouser: "The US military shows how socialized health care can be provided for large numbers of people at a reasonable cost. (It’s when the poor soldiers fall into the hands of the VA that the care - and my point - fall apart.)" (1) It is no different than any employer-provided healthcare, except perhaps in scale (and that not much more than the largest private employers). That is to say, it sucks. Quit the military and see how far it gets you. (2) Can you put "The US military shows how ... at a reasonable cost" in a sentence and keep a straight face? (3) Yes, the parenthetical portion pretty much summarizes it.

Student Government

UPDATE: Welcome fromthearchives and MR readers. Please note that nothing untoward was meant by the poor choice of words in the first sentence below. Second, please note that I have no reason to believe that Megan would not mind abuses of power that were aligned with her beliefs; I was throwing her in with lots of other partisans who do have that problem, it was unfair, and I have apologized.
-----------------------------------------------------------------------

I do not understand Tyler's attentions to Megan-non-McArdle. I had originally drafted a well-rounded criticism of both Megan and her anonymous, "libertarian" interlocutor, but in doing so I realized that what was really needed was a harsh rebuke of her impassioned but misguided defense of bureaucracy. Megan's position is that bureaucrats "BALANCE COMPETING NEEDS" [her overemphasis]. This is untrue, and belief in it is the stem of much wrongdoing.

1) Government employees created the problem in the first place.

According to this article, "Starting in the 1920s, the U.S. Bureau of Reclamation drained most of Tule and Lower Klamath lakes for agriculture and built an irrigation canal to send Upper Klamath Lake water to farms in the neighboring Tule Lake basin."

The government not only promised land to settlers, they promised water to them and water and fishing "rights" to the Native Americans before them. This article summarizes,

Yet according to some, the government had earlier also promised farmers irrigation water "forever" when it made Klamath Basin land grants between 1908 and the 1940s.

Further, in an 1864 treaty with the Klamath Native American tribes, the government guaranteed water and suckerfish fishing rights downriver in exchange for their land upriver. When making land grants, the government did not tell the farmers of the tribe's rights.

Politicians and bureaucrats, having "no dog in this fight" as Megan says, simply blow with the wind, giving "rights" away to anyone who petitions strongly enough. One doubts whether private property rights would have been so poorly protected, but then she basically says that she does not think people ought to be trusted with a role in resolving disputes because they will defend their own interests.

Then, those farmers got subsidized electricity. We know because of the furor set off when it was proposed that the subsidies be taken away:

Rates will go from 0.6 cents to more than 6 cents per kilowatt-hour - a tenfold increase. [and that's still less than I pay!]

The Tulelake Irrigation District in Northern California, for example, has been told that its annual power bill is expected to rise from about $70,000 in 2003 to $1.05 million in 2006, said Ed Danosky, general manager.

Farmers are screaming about economic disaster and broken promises.

"People are going to suffer," said Steve Kandra, president of the Klamath Water Users Association, who said he believes many will resort to more wasteful irrigation flooding that uses a lot less juice.

But others see market-based power rates for irrigators as the much-needed catalyst for resolving entrenched conflicts between agriculture and fish. The irony is that by leaving it to market forces rather than government, they say, fish and farmers could end up healthier.

Especially in the hillier portions of the basin in Oregon, where sprinkler irrigation is dominant and flood irrigation impractical, high power rates can be an incentive to forgo farming on marginal lands.

By first abrogating the rights granted to the Natives, then spending taxpayer money to "reclaim" the valley for agriculture, then encouraging people to move there, then subsidizing their electricity (and God knows what else), thus bringing many competing interests into the valley, bureaucrats established the conditions for conflict.

2. Megan is very adamant about the balance claim; her caps lock key frequently gets stuck when discussing it. Unfortunately, the idea of measuring and balancing needs is meaningless. It has great emotional appeal, but doesn't describe what is really happening. At best, bureaucrats are making judgments about relative costs, but there can be no doubt that they are applying their own standards for such things as discount rates, which constituencies to poll, and how much weight to attach to them. They are not measuring the needs of fishermen, farmers, or Natives and comparing them on a calibrated needs scale. As with the global warming debate, we seem to have lots of physical science experts looking at a problem and then making a social science policy recommendation.

Balance, in any meaningful sense, means that each side gives a little and gets a little. A balanced solution would have involved give and take, bargaining, and compromise; I propose private mechanisms for such below. However, from what I can tell, the recent sequence of decisions had anything except balance in that sense. First, the Fish & Wildlife Service's biological opinions and those of judges reviewing the case have been in favor of fish, Natives, and fishermen, full stop. Then, the reversal was in favor of farmers, full stop.

In this way, bureaucratic decisions don't solve conflicts, they create the conditions for eternal conflict. One side is in, the other is out, and the side left out has no recourse but to politics. This is the unstated goal of much public policy: simultaneously remove traditional decentralized mechanisms for problem solving while replacing them with a central mechanism which puts politicians and bureaucrats in the role of Solomon. That is exactly what Megan means when she says that people with a stake in the conflict should not be allowed to decide it: bargaining should be banned and replaced with a rational, technocratic authority.

3. My original draft defended Megan and her co-workers from the association with totalitarian bureaucrats, but I realized in researching the background of how the conflict came about that bureaucrats are in fact the source of the wrongdoing in question. They don't realize it; they actually believe their own propaganda about working for the common good. But as I have just argued, they create the conditions for conflict, then they "resolve" the conflict in such a way that it guarantees it will continue, and meanwhile they eradicate all of the mechanisms which would allow the conflict to be amicably resolved for everyone.

People worry incessantly about the problems of artificial monopolies in private markets, but don't seem to recognize the analogous process in the "market" for law, a market in which the main player is also the referee and league commissioner. Bureaucrats do have a dog in this fight: their existence must be justified. They have interests at stake just as much as the farmers or fishermen. And yet they claim to be honest brokers.

From her comments, Megan seems to be aware of Hannah Arendt's "banality of evil", but she does not seem to have absorbed it in a way that she can apply it. Although I'm sure there were good invoice inspectors and dam inspectors in every totalitarian regime, the pseudo-libertarian commenter was wrong to liken this particular office to one charged with the task of making sure work-camp trains were running on schedule, but that's really beside the point, isn't it? Megan makes a nice show of arguing how her particular office and the office in question in her original article are filled with people trying to do the right thing, but that is also beside the point.

The civil employees are working within a system in which the rules -- not the laws she cites, but the rules of the game -- are already set and their job is merely to be the agents of the people who set the rules.* Sure, there's a little slop in the system to let everyone believe this is a transparent democracy, but get real. Someone has already decided that your telemetry geek should measure this and not that; it serves an interest. The public meetings serve to give the public the impression that cheap talk is worth something; at the end of the day, you decide against one group and for another. Someone has dictated a long list of acquisition regulations that ensures that the invoice checker is only going to see certain kinds of invoices and look for certain kinds of data. But those are just the surface conditions.

The subsurface conditions have been in place for generations: promises were made, reclamation projects were funded, subsidies were provided. Megan makes no mention of those inconvenient facts or their implications. Second, note that the salmon industry has already gotten their settlement (here and here). Now, Megan is outraged that an elected official has the audacity to intervene on behalf of a constituency group? That is what politicians do. Note that I am not defending Cheney; doubtless what he did was as cynical as anything else this administration does. Jane's Law holds.

If ultimately successful at rationalizing all decision-making in this way, a central government will have completely displaced private institutions and made the populace entirely dependent on faceless but ostensibly well-meaning technocrats. That is the problem of progressive wonkism and centralization that I have written about. And while the Fish & Wildlife service is not as dangerous as the office of Communications Assistance for Law Enforcement, passive acceptance of centralization is part of a broader problem.**

4. Megan keeps using that word "libertarian": I do not think it means what she and her sympathetic commenters thinks it means. It certainly does not mean someone who does not understand communal goods (who are Eric S. Raymond and Jimbo Wales, what is the noosphere, and how would they be relevant to this discussion?). And I'm not sure I can think of a single libertarian who would automatically side with those farmers who were essentially benefiting from at least two previous government interventions.

In fact, a libertarian response to this would have covered at a minimum the following issues:

• native property rights (wouldn't the 1864 treaty have priority over everything else?)
  
• actual fishing rights which are defensible and transferable, as opposed to fishing licenses
  
• Groups like Trout Unlimited have been promoting the idea of in-stream rights for years. Many states have laws oriented towards farming or ranching that dictate that non-use or in-stream use of water rights results in the forfeit of those "rights". Where TU has been successful at changing the status quo, they can buy water rights and then leave the water in the river so their favorite game can flourish.
  
• Stop subsidizing the farmers' inputs such as electricity: see above.
  
• Bargaining between the fishermen and the farmers. Unfortunately, while I found several articles dealing with proposals to buy farmers out, I found none that discussed direct bargaining between the two groups. Buying the farmers out is something Richard Epstein, another quasi-libertarian, would get behind. Some sources claim that by buying out just the most marginal farms in Klamath, it might be possible to leave the remaining farms and restore enough water to the river to meet the needs of fishermen. Direct bargaining between the two groups is something in which Ronald Coase might be interested. However, contra several quasi-libertarian commenters who have joined the fray since the original post, there are large transaction costs problems to be sorted out, so the Coase Theorem does not "guarantee" an efficient solution regardless of who gets the rights. Sorry.
  

Interestingly, we don't seem to have any politicians or bureaucrats trying to figure out the best way to assign property to minimize transaction cost problems so that the conflict can be resolved by the actors themselves. Why do you suppose that is?

5. Megan claims to be upset by a rogue agent hijacking government agencies for his own agenda. I'll grant her that this seems to be just that. But as I noted in this post, the left is full of people who are currently upset that NASA is not headed by a rogue agent for their interests and that the ideological purity tests are not in their favor. Must I really spend time looking up and finding all the ways that other, non-Bush administrations have applied their own purity tests? Really?? And no, don't bore me with the anecdote about the token right-to-lifer picked by Clinton to be the Second Assistant Vice-Chair of the Office of the Undersecretary for Wilderness Area Parking Lot Stripe Paint Standards. You know that in general, on average, every president picks people who broadly agree with him.

C'mon, Megan. Your real problem here is that the rogue isn't working for your team; you would be perfectly happy with a fellow traveler rogue who uses all of the right catch-phrases and paeans to the correct totems. You will happily look the other way when they violate laws with which you happen to disagree; you may even defend their behavior. Elk Hills? Serbia? Mazen al-Najjar and Nasser Ahmed? Carnivore? Echelon? Jane's Law holds.

As you mature as a civil servant, you will learn to operate within those laws with which you agree, in opposition to those with which you disagree, and in complete ignorance of many more. Hayek's theory about information in society is far more relevant to this discussion than The Road to Serfdom. It would be better if politicians and civil servants actually learned about the former, had a little more humility about their own work, and tried to think of ways to decentralize decision-making by using some of the methods bulleted above instead of thinking of themselves as hard-working, enlightened, public-interested, unbiased, angelic promoters of sweetness and light. "Civil Servant" is a misleading title intended to frame our perception: "Government Employee" is probably better.

At the same time, it would be better if citizens spent more time thinking about how to pull power back from the central authorities, to resolve conflicts ourselves, and to build or rebuild local, community-based institutions rather than actively supporting powerful, central authorities who claim to be able to do these things for us.


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* Civil servants Government employees aren't entirely passive in the process: they also shape and interpret and the laws in order to preserve or expand their own authority. Megan defends the Endangered Species Act elsewhere with an ad populum argument. While popular among the voting public, it has been less so among technical experts. In this way, Megan lines up support for her favored policies no matter what: they are either popular with the public and must be kept and enforced despite the objections of technical experts, or they are popular with technical experts and must be kept and enforced despite the public outcry. This is just one of the many techniques she will perfect as she continues her career.

** Thanks to Arnold Kling, I rediscovered Unqualified Reservations and this excellent and relevant article. Sorry, Arnold, Bryan set me straight.

Energy roundup

1) News from Green Car Congress

• Hybrid sales are continuing to climb. According to the diligent folks at Green Car Congress, hybrids accounted for 3% of cars sold in May. It's weird, almost like there's some kind of incentive, perhaps something to do with the cost of fuel? Yet, the politicians tell us, the market will fail to bring us efficient cars unless we force them to do it via CAFE and hybrid subsidies. Hybrid subsidies might be a factor in their popularity, except that Toyota doesn't seem to be seeing much drop in demand after they hit the magic number that shuts off the subsidy every year.
• In another GCC article, we find that Honda is discontinuing the Accord hybrid. Apparently, "hybrid" does not equal "slam dunk". The Civic Hybrid works, the Accord Hybrid does not. Apparently, consumers haven't gone completely irrational over the "sexiness" of hybrids.
• Honda, Mercedes, and Bosch are exploring diesel-electric hybrids. Apparently they believe there may be a market in 70 mpg vehicles that can run on vegetable oil.
  

2) An NPR article on plug-in hybrids titled, "Corporations push Congress on Climate Policy" makes some fantastic-sounding claims:

A company called A123 Systems invented the battery pack. Les Goldman is the lawyer hired by the company to represent it in Washington. He has been bringing the Prius up to Capitol Hill, singing its praises to senators and staffers. He tells them it gets 100 to 170 miles per gallon — "and that includes charging the battery every 40 miles or so. And one charge, which takes about four hours, will cost you at the electricity rates in the Washington metropolitan area, at night at about 55 or 60 cents."

What A123 Systems wants is a tax break, not for itself, but for consumers. A decade ago, Congress approved tax credits worth up to $2,000, for buyers of new hybrids. It helped dealers sell thousands of the high-mileage cars. Now, Goldman asks the senators, why not do the same thing for these new battery packs?

Now, I assume you caught the fact that they want it for their consumers, not themselves, right? So they selflessly hired a lobbyist to point out that tax breaks helped Toyota sell "thousands of high-mileage cars". At no point does the reporter stop and ask if rising fuel prices were behind that increase rather than the tax breaks, nor does the reporter point out that A123 might perhaps benefit from those increased sales.

But let's go beyond that. Assuming the following:

• Approximately 65% of electricity energy is lost in transmission (see this great graphic). Thus, for each kW-h consumed, 3 must be generated.
• 1 kW-h of electricity is 3,600,000 Joules (3.6 MJ)
• A gallon of gasoline contains 132 MJ of energy
• Electricity costs about $0.10 per kW-h, so $0.55 to $0.60 worth of electricity is about 5.5 to 6.0 kW-h
  

That means that the plug-in hybrid is getting 40 miles per 5.5 kW-h or 40 miles per (5.5*3.6 MJ) = 2.02 miles/MJ. Inverting that, I get .495 MJ/mile, but that is for energy consumed, not energy generated. By multiplying by 3, I find that the vehicle used about 1.485 MJ of energy generated per mile. By inverting that number and multiplying by the 132 MJ/gallon of gas, I can calculate an equivalent mpg. The electricity is giving an equivalent of 267 miles per gallon for energy consumed, but about 89 mpg equivalent of energy generated because of transmission losses. Not bad.

It is also using gasoline at the rate of 170 miles per gallon. Using the higher figure, that's 170 miles per 132 MJ, or about .776 MJ/mile, roughly half the energy required to go one mile with electricity when accounting for transmission loss.

So for every mile it goes, it's consuming about .495 MJ of electricity used or 1.485 MJ of electricity generated and .776 MJ of gasoline. By adding those, I get the total average energy usage per mile. The combined efficiency -- accounting for transmission loss -- is about 58.5 mpg. That's not much more significant that what I can get in my car (50 mpg on the last tank).

Also, gasoline at $3.5/gallon is equal to $0.095 per kW-hr, or slightly cheaper than what I am using for the cost of electricity (diesel currently happens to be a much better deal at $2.70/gal).

So, instead of serving as a panacea, plug-in hybrids shift the fuel from oil to coal, natural gas, or nuclear, and shift the costs from your cheaper gasoline bill to your slightly more expensive electricity bill. Coal is reputed to be dirtier; it also happens to be burned somewhere other than in your own neighborhood. As you might guess, electric companies are behind some of these efforts to promote plug-ins.

Of course, if you were to install a wind or solar generator at the house, the electricity would be "free", but then again the sun and the wind usually aren't very effective at night when the car is parked. And, as I noted near the end of this article, some people are trying to get something for nothing by plugging their electric vehicles in at work. So here are two predictions/suggestions of what we may see in the next few years if fuel prices stay this high:

• Employers providing charging stations at worksite parking areas for charging employees' plug-ins. Install solar panels on the shelters and you increase your "green cred" while simultaneously providing shaded parking and "free" recharging. Sell extra power back to the grid (net metering) and make that unused space pay its own rent.
• Coin-op meters at large parking facilities for car charging. The coin-op serves as both parking fee and recharge fee. It would be nice if they would allow debit/credit/Paypal transactions, too.
  

3) Regarding the previous post on the news that Congress is considering a measure to block states from enacting more stringent measures: this poses a tactical problem for a decentralist. On the one hand, I'm against turning over all decision-making to a large and growing central decision-making bureaucracy and would much rather see local communities working to preserve their environment. On the other hand, opposing the federal/national Leviathan means protecting the paternalist busybody living next door. It puts you in the position of fighting for local decision-making, and then fighting against those decisions. Geez, I guess that's what Jefferson meant by, "The price of freedom is eternal vigilance." But at least I can meet my neighbors and reason through these issues. And when locals make decisions that help some and harm others, they know the score and can compensate them on the next go-round; when large nations make decisions, the far-flung citizens have little idea who is harmed or benefited, so they will remorselessly slam the same scapegoats in every round.

4) Department of Duh: The Worldwatch Institute claims that photovoltaic (PV) costs are set to decline 40% by 2010. Until just recently, as I noted back in July 2006, PV costs were rising. My guess is that consumer demand driven by both high fuel prices and worldwide government subsidization was driving the trend. Since then, the rise seems to have flattened out and even tipped the other way. If the WI predictions are correct, then Julian Simon should be calling WI founder and perpetual Malthusian doomsayer Lester Brown from the grave to say, "See? Told you so."

40% is a substantial reduction. As I noted in this post, PV is only economical under certain circumstances, but a 40% drop in prices certainly opens that up.

So why "duh"?

Well, if you know that the price is set to drop 40% in the next three years, why would you buy now? And if it is set to drop due to market supply and demand factors (which is arguable, see below), then why would you subsidize it? In fact, if many people would defer planned purchases just a little while, the over-production would create an inventory problem and drive prices down even faster.

Note from the WI report that the primary driver behind the supply increase is the money pouring into China from capital markets. Are they investing because they all believe in Peak Oil, in reducing carbon dioxide emissions, or in capturing some rents through programs like California's Million Solar Homes? If the latter, can this really be said to be a drop "due to market supply and demand factors"?

"Well, no matter" say the Big Government Greens, "whatever it takes to get there. As long as we get to screw Big Oil in the process."

How do you suppose Big Oil got that way? Hint: Among the biggest sellers of solar panels are little mom & pop companies like Shell and BP. Baptist, meet thy Bootlegger.

Centralizing to save you from your neighbors

I generally think that the California Air Resources Board (CARB) rules contain some pretty ignorant stuff, but that at least it only effects Californians. Well, and the other 6 or so states that have adopted them. But at least federalism is still gasping for breath. To people who want to be able to show those mean rotten Republican bastards in Washington that something can be done about global warming and air pollution without killing the consumerist economy, the CARB and other state standards are a great way to ... um ...

Hey! What the ... ?

According to the Green Car Congress, it looks like the Democrats running the US House Committee on Energy and Commerce are looking to pass an amendment to the Clean Air Act to "block states from establishing standards to limit the emission of greenhouse gases from automobiles."

But, Democrats don't do this, right?!

Geez, people, wake up. As noted in the comments on GCC's article, opensecrets.org shows that legislation author Rick Boucher (D-VA), Chair of the Subcommittee on Energy and Air Quality Chair, is heavily sponsored by the electric utilities.

Hope you enjoyed the Kool Aid.