Wal-Mart and sustainability

UPDATE: In response to some thoughtful criticism I got from a container shipping industry executive, I edited a portion below. I had said that the state helped break transport unions, but in reality they are still a force in the industry. It would be more accurate that the state forced them to accept change.

I got interested in some of the responses on this post on Environmental Economics. If Wal-Mart had claimed altruistic motives for some of their policies, that would properly be called "greenwashing". However, they weren't. Tim Haab was basically pointing out a truism: Wal-Mart's interest in sustainable measures (including hawking CFLs, incorporating passive solar for lighting and active solar for electricity, and so on) is done for selfish reasons: to make money. Like any post involving Wal-Mart and sustainability, it became a lightning rod for people with definite policy agendas. Given that I am likely to either defend or attack Wal-Mart and sustainability, depending on the context, I have an opinion but no definite laundry list of policies I'd like to see enacted.

You could summarize the many variables and value judgements in truth table format with about 27 variations (3^3) and assign each to an ideology. The variables are Wal-Mart, sustainability, and planning/government, each of which people may label as good, bad, or benign/irrelevant. Wal-Mart good, sustainability irrelevant, government bad is the default position for the vulgar libertarian. Wal-Mart bad, sustainability good, planning good is the default position for the Progressive. W-M bad, sustainability irrelevant, gov't good is the default for the populist/conservative. W-M good, sustainability bad, gov't benign is the evangelical right (she drives an SUV and has 6 kids).

I think my entry in the table would be "Wal-Mart benign, sustainability good, planning/government bad". Wal-Mart doesn't "drive" the system the way both the Progressives and the vulgar libertarians say that it does. Rather, the system created Wal-Mart. Going by Chandler's Visible Hand, people responded 100 years ago to the first department stores (Marshall Field's) and then to the mail-order stores (Sears, Woolworth's) the same way they do to Wal-Mart today: by claiming they would eat away at local businesses. Well, if it wasn't Wal-Mart, it would be someone else.

So I tried to point this out and emphasize the fact that it is state capitalism that creates the unsustainability, of which Wal-Mart is just a delivery boy. Our system looks like a giant vacuum cleaner that hoovers up resources in the developing world and kicks them out back here; Wal-Mart is the least fancy exhaust portal. We the people continue to support policies which produce "efficient" systems for delivering products to us. Those systems are a combination of transportation, energy, and credit subsystems that interact with cultural values to both create the demand and impose costs on the use of alternatives.

For example, we have national energy policies that ensure the profitability of large electrical monopolies who generate from coal and natural gas. This will be defended as efficient because it is highly engineered to look that way from the standpoint of the producer and the consumer. However, from other standpoints, there are externalities that are not accounted for. Those externalities include both the pollution and the intangibles, including the isomorphism around the chosen system. This is still something I'm working out, but the isomorphism includes high voltage AC-based transmission and distribution (which increases the cost of using alternatives, like LEDs, or introducing alternative sources, like solar[1]), an emphasis on greater supply (rather than demand-based solutions such as increased insulation or more efficient motors), centralization (rather than distributed generation), and isolation (rather than integral with the users so that the externalities fall on them). When the design was established 100 years ago, AC was a brilliant improvement over DC, regulated monopolies were promoted as the only viable alternative for generating and distributing AC power, and the accumulated engineering successes within that political framework have been impressive. But nothing is so impressive as the socio-political engineering, including a nearly invincible cloaking device and a strong superstructure made of an alloy of the Edison Institute, politicians, populist regulation cheerleaders, discount rate receiving electricity-based industries (like electrical steel furnaces), coal miners unions, dividend receiving widows and pension funds, and soccer moms worried by the so-called de-regulation that is nothing of the kind. Given a different political framework, the counterfactual engineering successes would be just as impressive, but the overall social efficiency (including the external costs) could be much better.

We furthermore have policies that promote and protect the use of petroleum, including "free" taxpayer-supported road systems and the Carter Doctrine. We have policies that promote and subsidize long distance shipping of goods, including eminent domain and taxpayer support of railroads (mostly as a historical fact, not current policy, though the pension plans still receive special tax recognition and grade crossings are your problem, not the railroads') and container ships. The container shipping history is more recent and includes several very interesting factors. Not only did the state (including the federal government) help break [force] the longshore unions who opposed [to accept] the shift to container ships, but the cities, states, and federal government paid for the infrastructure, including the highway systems, harbor improvements, and dock facilities (cranes, rails, etc.). Today, taxpayers foot the operational costs, including infrastructure maintenance (harbors and roads) and cargo inspections (thanks to our interventionist foreign policies, the great transportation system that brings goods from the world is also a potential Trojan Horse for WMDs), but the investments are promoted as tax-yielding investments rather than the revenue consuming corporate welfare programs that they are.

All of this infrastructure, what W. W. Rostow would call social overhead capital, was put in place in the 60s and 70s, long before Wal-Mart became a force. And yet, having taken advantage of it, Wal-Mart is seen by some as the bad guy. Those who hold that view are mostly self-designated Progressives, the same people who favor central planning for efficient management of the economy. This is the main reason why the two groups -- those who see the infrastructure as the pinnacle of efficient engineering, Wal-Mart as benign, and sustainability as irrelevant, and those who see globalization as the evidence of Western greed, Wal-Mart as the embodiment of evil, and sustainability as the new religion -- talk past each other. One looks only at the engineering and sees none of the underlying political structure that brought it about (and perhaps even opposes any government interference with this "free market" system), and the other refuses to admit that their policy preferences are simply the most recent incarnation of the same policies that got us into this mess in the first place. They want another patch on the binding on the dressing on the bandage on the abrasion caused by the crutches they promoted for a fit patient in the first place.

And to top it all off, we have the same social engineers looking to solve the sustainability problem by imposing unsustainable, modern, Western values onto the undeveloped countries whose citizens are the victims of this system. For them, the real problem in the world is not Western-style consumerism, it's those other people who breed like flies because they're ignorant and poor. This obviously plays into biases some have against swarthy "others", but does not necessarily spring from those motives. And it seems to have escaped the attention of the planners that such lifestyles, having been practiced for millennia, are inherently sustainable.

But no, we're going to retrain them rather than us. First, as the story goes, we have to promote growth. In a recent post, Dani Rodrik says,

"What kind of a growth strategy should this [developing] country follow? A strategy that focuses on expanding employment opportunities in the rural areas where most of the poor live? Should it consist of expanding their capabilities, by investing directly in education and health? Or should it focus on wherever the economic activities that will provide sustainable sources of income growth into the future lie, even if these may be in mostly urban areas and likely to foster greater inequality in the short-run?"

He concludes the latter. But he isn't the first: Rostow explicitly proposed that strategy in his Stages of Growth: increase the efficiency of farming to free up and feed a substantial labor pool that can move to urban areas and work in heavy industry. You can do this by subsidizing cash crops (for export) instead of traditional crops (for consumption) and by providing social overhead capital (transportation). Diana Davis' history of the French colonization of Algeria in Resurrecting the Granary of Rome shows that they accomplished the former by several means: confiscate public lands used by nomadic herders, outlaw traditional farming methods (like using fire to clear scrub), and ban the payment of taxes with in-kind payment (force a switch to a cash economy). People who suddenly couldn't sustain themselves by traditional means and now needed to raise money to pay taxes migrated to the cities to look for jobs with French employers. Note how the preferred policies of modern social engineers are remarkably similar to the policies of colonial powers in an unenlightened age.

After claiming that "The joint stock company owes its existance [sic] to [increasing returns], not so much to state (or other) promotion," in response to which I pointed out the above, one of the commenters on the Env-Econ post, Reason, listed his favored set of policies to reduce population growth:

1. Increasing the duration of education which increases the costs of having children
2. Providing social security which reduces the benefits of having children
3. Better public health so that people can be confident their children will survive
4. Peace (same reason as above)

Having selected government policies to solve a problem, he found no opportunities for anarchism to solve the same, as if he had actually searched for any. I'm not going to defend outright anarchy in a world unused to anything but increasingly active states where force is the first resort, but I should think it obvious that smaller states are generally not pugnacious, so he was wrong about his fourth point not being addressed by anarchism. [2] More importantly, though, he failed to explain how 1, 2, and 3 were going to be funded in a pre-takeoff, sustainable society of the type found in the undeveloped world.

Such societies are marked by their traditional, subsistence farming practices, and their children are a necessary source of labor and the primary retirement pension for their parents. Trade is frequently made by in-kind payment. For example, Diana Davis notes the achaba property arrangement in which herders exchanged their labor for pasture rights in Algeria. In order to introduce education and social security systems to take away the parents' labor and pension incentives, there must first be a system of taxation and management. These emphasize the state rather than the community as a central cultural institution and establish the state as central collection and dispensation authority in addition to, or perhaps in place of, its role as night watchman. More importantly, however, it forces the people to abandon traditional methods of trade and agriculture and to switch to crops and methods or other uses of their labor which are easily traded for cash. That means that they must switch to crops or labor of value to people who have cash, i.e. the developed world. The cash crops must have an export value, or the labor must be in an export industry.

Now, just where do they think The Gap, Nike, and Wal-Mart get their labor, sweatshop or otherwise? This is exactly the point made by Ellenita Muetze Hellmer (about which I wrote here).

Given that the greatest advances in public health are typically made by applications of civil engineering rather than medical science, Reason's third point is the step which usually gets the state involved first in sewage projects, then in national transportation infrastructure (roads, rails, ports), and then in "other" engineering projects (oil field development, power facilities, civil defense, air bases, nuclear fuel processing). I know that's a very unconvincing linkage, but I predict that you could draw these direct lines if you only knew enough of the underlying history. After all, if you have the spontaneous creation of private engineering capability and a weak or decentralized state, those engineers won't go looking to develop a military capability because the politicians and bureaus won't exist or have the means to pay for it. Compare the early US -- where military facilities like Ft. McHenry were still conceived as defensive structures; the design and construction were ad hoc, Golden Carrot-type contracts (award a prize to the best designer); and community-based (the federal government granted money to local communities and provided the construction design) -- to modern US military-industrial arrangements where contractors conceptualize, design, build, and endlessly refine offensive weapons while the spin-offs are touted as beneficial to the public (the internet from DARPA, Tang from NASA, etc.). Or consider the military pedigree of modern quality control theory.

When people in the developing world are employed by consumer-oriented industries, what values are transmitted? The employees at Nike factories in Viet Nam first bought bicycles (sustainable) and then motorbikes and now look forward to moving up the consumer ladder to a car. In China, cars (especially with "foreigner" plates) are a highly desired commodity and the sustainable bicycle culture is all but dead. The developing world, with encouragement from the social engineers in the developed world, is building a sketchy replica of the type of economic system whose money they wish to attract. They believe they can attract that money by feeding the West's insatiable maw with container ships full of cargo. I called this (tongue-in-cheek) a Cargo Cult (which seemed to offend odograph, though I don't understand why). Unlike the actual Cargo Cults, it may succeed in attracting the money. For some people, for a while. However, it is not the road to sustainability and it is unlikely that 9 billion people will succeed in enjoying the lifestyle currently enjoyed in the West. The problem lies with us and our chosen means, not them and theirs. The solution lies with change in our society, not with them choosing our existing means.[3]

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[1] Yeah, I know: where would the LEDs and solar cells come from absent the system that provided the R&D resources to discover them? This is perhaps not as strong of a counterargument as you might think: Einstein theorized the photoelectric effect long before the R&D resources were available, and perhaps more would have gone into searching for practical applications it if the political support for large, central, coal-fired generation had not been as successful. No legal monopoly means higher cost and more awareness of the externalities because nobody could afford to build large, centralized systems. That in turn means more searching for alternatives. Also, it would be more feasible today to install a small solar or wind system (like many farmers had before the REA) because you would only be replacing or plugging into a decentralized subsystem.

[2] It is at least arguable that an unstable anarchy is potentially very violent - even David Friedman admits as much in noting that Saga Iceland collapsed in a series of blood feuds, albeit after 300 years of stability. But a stable anarchy can't raise the money or army to go looking for a fight.

[3] Yes, I'm also concerned about population issues. But I think that a less important problem compared to that of Western consumerism. I also think it foolish to believe that a proper list of policies and a certain amount of money is going to solve the former, or a sudden majority of libertarian politicians the latter. Solutions to both problems require wholesale changes in cultural attitudes and values; politics and economics only take you so far. Sometimes the state can lead cultural change, but not always. And not always for the better. Saying self-evident things like, "education of women is important to control population growth" doesn't mean much in Islamic or other traditionalist societies where women are relegated to second class status. I doubt you could fund or force anything which would work. Creating change in those climates requires something that operates on a more personal level than a United Nations program, something that flies under the states' radars, something that cannot be denounced by Imams.

Local, Action: Association

In 1831, Alexis de Tocqueville and a French companion toured the 24 United States to investigate their jails in preparation for a reform of French prisons. What we got out of the deal was Democracy in America, a very comprehensive review of the state of the nation at that time, a glance at the country prior to the full onslaught of finance, managerial, and state capitalism (that and a kick-ass C-Span series). One of the more memorable themes of the book was the notion of Americans as association joiners:

Americans of all ages, all conditions, all minds constantly unite. Not only do they have commercial and industrial associations in which all take part, but they also have a thousand other kinds: religious, moral, grave, futile, very general and very particular, immense and very small; Americans use associations to give fetes, to found seminaries, to build inns, to raise churches, to distribute books, to send missionaries to the antipodes; in this manner they create hospitals, prisons, schools. Finally, if it is a question of bringing to light a truth or developing a sentiment with the support of a great example, they associate. Everywhere that, at the head of a new undertaking, you see the government in France and a great lord in England, count on it that you will perceive an association in the United States.

In America I encountered sorts of associations of which, I confess, I had no idea, and I often admired the infinite art with which the inhabitants of the United States managed to fix a common goal to the efforts of many men and to get them to advance to it freely.

This strikes me as the kind of society in which I would like to live. It is a society in which people form ad hoc associations to deal with problems as they arise, perhaps even creating new institutions for addressing the more serious institutional failures (I'm going to adopt Glen Whitman's semantics). That's a long way from the usual strawman offered as "what libertarians want", a strawman which is usually labeled "hyperindividualism" or "You're On Your Own".

Recently, I came across a Slate article critical of de Tocqueville written by Theda Skocpol. Actually, it's an article critical of people who look at that period as one free of what Skocpol might characterize as beneficial federal government influence. At first, I was intrigued since it seemed to support some of my suspicions, but upon reflection I decided that there were some problems with it.

First, she overlooks the reasons why government was involved in such things in the first place. Sure, the postal service and postal roads are explicitly mentioned in the Constitution (Article I, Section 8, "The Congress shall have Power To lay and collect Taxes...To establish Post Offices and post Roads"). However, it does not follow that because they could, they should. Nor does it follow that because you can plausibly argue that outcome X was the result of action Y that X was an actual and significant outcome of Y. Nor does it follow that Y was necessarily undertaken for X in the first place. Plausibility is not all.

With respect to the first of those objections, it should be pointed out that Thomas Jefferson argued (Virginia Protest, 1825) that federal road subsidies were an infringement of state sovereignty:

But the federal branch has assumed in some cases, and claimed in others, a right of enlarging its own powers by constructions, inferences, and indefinite deductions from those directly given, which this assembly does declare to be usurpations of the powers retained to the independent branches, mere interpolations into the compact, and direct infractions of it.

They claim, for example, and have commenced the exercise of a right to construct roads, open canals, and effect other internal improvements within the territories and jurisdictions exclusively belonging to the several States, which this assembly does declare has not been given to that branch by the constitutional compact, but remains to each State among its domestic and unalienated powers, exercisable within itself and by its domestic authorities alone.

If the state is capable of such things, what reason is there for the federal government to do them? If the state does not desire them, by what theory does the federal government prove the inhabitants are wrong? Not democracy.

With respect to the second objection (still on the first problem, that of why the federal government was involved), that the subsidization of coaches, mails, and newspapers was neither the "non-zero-sum" game nor the Congressionally-directed system that Skocpol describes, I think this seems naive. As Kelly Olds argues, the postal system in place at the time was an extensive patronage system.

Giving out the postage revenues to groups with political power became the Post Office's second function. Measured monetarily, it was the Post Office's primary function. Thomas Jefferson, suspicious of the Post Office, had written:

I view [the Post Office] as a source of boundless patronage to the executive, jobbing to members of Congress and their friends and a bottomless abyss of public money. You will begin by only appropriating the surplus of the post-office revenues; but other revenues will soon be called in to their aid and it will be a source of eternal scramble among the members, who can get the most money wasted in their states; and they will always get most who are meanest [Jefferson 1892-99: IX, 324-25].

The government resisted subsidizing the Post Office until the 1850s, partly out of fear of that which Jefferson prophesied.

The means by which the system was internally subsidized was that some routes were run at high profits and those were used to support the unprofitable routes. The activity was not directed by Congress, but a result of the way the USPS did business and therefore a benefit to the executive. The constituents favored by the system included coach companies and later railroads, newspapers (as Skocpol points out), representatives with franking privileges, rural voters, and the 1796-1804 Ezekiel Armstrong cycling teams. The reason for the patronage was not to bring general improvement to the country so that people like Alexis de Tocqueville would be amazed at the transportation and literacy in America; they were subsidized so that their purveyors could make money, privileges (jobs) could be handed out, and politicians could win votes. It was not so different then as now; the Halliburtons of that day had their Cheneys, too.

But given that mail, coaches, and newspapers were indirectly subsidized by the granted monopoly, does it follow that people were more informed or that travel was better as a result? More chartered mail coaches does not necessarily mean more or better passenger travel. More coaches who used shunpikes did not benefit turnpikes. More franked junk mail and speeches from congressmen does not mean a more informed populace (in fact, in an age devoid of alternative news sources, we could argue the opposite).

Olds also points out that the use of stamps and intra-city delivery were both originated by private mail companies and later copied by the USPS; for the favor, Congress forced many of them out of business during the 1839-1845 period in which the USPS was granted much of the extensive monopoly powers it protects today. To me those indicate that the system was overpriced and underserved compared to what it would have looked like in a competitive environment. If Congress really intended to increase rural travel and mails, those two things could be directly subsidized while the rest of the system ran privately and more efficiently. Today, I would argue that even the rural service is a red herring: a friend of mine once saw a UPS truck in Beaverhead, NM; you would be hard-pressed to find a place more rural.

The second problem with Skocpol's argument is that it overstates the magnitude of the federal government's involvement in the development of early roads, literacy, and associational tendencies. Skocpol's key claims are that the America De Tocqueville observed was largely the creation of a centralizing nation and the centralizing tendencies:

Social historian Richard D. Brown emphasizes that the Revolution, political struggles over the Constitution and the Bill of Rights, and deepening popular participation in national, state, and local elections served to spur associational life. So did religious and cultural ideals about self-improvement, and growing awareness of extralocal commercial and public affairs through widespread newspaper reading.
...
In retrospect, it is obvious that what social historian Mary P. Ryan has dubbed the pre-Civil War "era of association," from the 1820s to the 1840s, coincided with the spread of adult male suffrage and the emergence of competitive, mass-mobilizing parties: first the Jacksonian Democrats, then the Whigs, and finally, the Free Soilers and the Republicans.

Daniel Klein has written extensively about private roads in America (see this collection). Of the three periods (the turnpike era, the plank road era, and the western road era), the first is the most relevant to the subject at hand. I am citing from "The Voluntary Provision of Public Goods? The Turnpike Companies of Early America."

Not counting the land grants involved, only four states subsidized roads, and of them only Pennsylvania did so substantially. The charters were means for getting private capital to take over the maintenance of the roads because the municipal governments could not afford it. Tolls were sufficient to keep the roads up, but not enough to make the roads extravagantly profitable. Nevertheless, participation in stock purchasing was surprisingly widespread.

In fact, it seems that many of the roads were the results of the actions of ad hoc societies. As Klein explains it,

The town meeting was a central institution in which all important residents were expected to participate. Sly ... says that in the early 1800s "[t]he town meeting was ... at the highest point of development." The turnpike meetings were well attended and stock pledges were made publicly. For example, Wood ... says the Fifth Massachusetts Turnpike "was formally organized at a meeting held in the inn of Oliver Chapin, probably early in 1799, and sixteen hundred shares were issued with a par value of $100 each. Meetings with attendances of 50 and 100 people have been recorded [Connecticut Courant, March 19, 1798]....

Turnpike promoters relied of course on the most basic form of selective incentive, person-to-person solicitation. In an 1808 letter regarding the formation of the York and Conewago Canal Turnpike, the writer tells ..."

Further, putting to question the Skocpol's assertion that Jacksonian and Tocquevillian era newspapers were the result of mid-century federal investments in road building and post offices, Klein goes on to note newspaper campaigns conducted in 1798, 1804, and 1805. It appears that Skocpol had it backwards: voluntary associations and use of newspapers to convey information about private road companies pre-date the era she is citing as being a result of federal road-building and paper subsidization.

Rather than weakening de Tocqueville's observations, the existence of roads and the history of how they came to be financed reinforces them. Local townspeople noted the potential for the public benefits of a road (increased land value, incomes, access to cultural goods such as theatre, and buggy racing), so they formed organizations to obtain a state charter and raise funds. Despite or perhaps because of Virginia's objections, the federal involvement was extremely limited in those early years. Though the land grants and eminent domain provisions are troubling, this is much closer to the libertarian's understanding of how communal goods can be provided than the caricatures and strawmen normally offered.

A note on those land and eminent domain grants: the land granted was typically land already commonly used as a trail, path, or road. It probably had value for little else (that's why it was used for such). Granting it to a company for the purpose of improving it doesn't bother me much, especially when the company receiving the title is widely owned by the citizens who stand to benefit and who probably asked for the charter as townsman in the first place. The eminent domain powers were apparently not abused: they seem to have used them in conjunction with the voluntary fundraising efforts, i.e. persuasion and trade: "We'll give you stock in return for the title to this part of your land." That is a far cry from today, where a government merely announces they are going to take part of your land in exchange for a take-it-or-leave-it settlement, sometimes for the purpose of transferring it to someone who had the money to negotiate with you directly but didn't want to be bothered (and now that I think about it, I'd cut a break on the price of some land for the opportunity to not have to talk to Donald Trump). I think I'll have more to say on this in a future post on localism.

The Slate article also understates actual outcomes of the America described by de Tocqueville and tries to paint increasing centralization as either benign or beneficial. Mutual associations and the excludable goods associated with them, i.e. insurance benefits, are probably among the best-known examples (well, at least to me, an obviously biased sample). From Mancur Olson (The Logic of Collective Action), we would expect successful societies, i.e. the ones we have heard of, were able to provide something to the members (benefits, prestige, self esteem) that could be withheld from non-members. For this privilege, members would have had to contribute their money, time, and perhaps social capital. As David Beito shows in From Mutual Aid to the Welfare State, these societies continued to be vibrant and active until the government agencies took over the roles they served, i.e. the excludable goods lost their value.*

The penchant for association also worked into the managerial revolution described by Chandler (The Visible Hand). As they were beginning to recognize that rails and other businesses were no longer Mom & Pop operations carried on by partners and their sons, the various professional disciplines (managers, engineers, accountants, researchers) began to form professional associations. Among these, for example, were societies dedicated to promoting the ideas of Frederic Winslow Taylor with its rigidity and emphasis on central planning. These included the Efficiency, Scientism, and Technocracy movements, advocated the idea that all of man's problems could be solved "scientifically" by central planning and were taken seriously at the time both in the US and abroad. Lenin and Mussolini were fans, and many of the repealed provisions of the Second New Deal were an attempt to apply the theory.

Skocpol reads the period thusly:

In short, the early American civic vitality that so entranced Alexis de Tocqueville was closely tied up with the representative institutions and centrally directed activity of a very distinctive national state. The non-zero-sum nature of U.S. governmental and associational expansion becomes even more apparent when we consider that most of the big voluntary associations founded in the 19th century prospered well into the 20th, often building toward membership peaks reached only in the 1960s or 1970s and in full symbiosis with public social provision.

The Grand Army of the Republic spread in the wake of state and national benefits for Union veterans of the Civil War, for example. The Fraternal Order of Eagles was so active in promoting state and federal old-age pensions that the Grand Eagle himself received an official pen when FDR signed the Social Security Act of 1935.

The same mutual aid societies that brought health insurance, unemployment insurance, and pensions went into decline as a result of Social Security and other federal programs. To characterize them (by their association with the FOE) as prospering (as I'm sure many other organizations did) is surely misleading; at best, it was not the "non-zero-sum nature of U.S. governmental and associational expansion" asserted. Though some of the mutual associations themselves bought into the idea of using "free" money from the government to extend benefits universally, support for social legislation was not without internal controversy. Again, Beito is the better guide to the inner workings of mutual aid and service organizations:

There is reason to believe that a relationship existed between the emerging welfare state and the decline of fraternal services. Most notably, the first signs of benefit retrenchment began after 1935, the year the Social security Act became law. Officials of the homes for the elderly and orphans of the SBA cited Social Security and other welfare programs as justification not only for rejecting applications but for closing down entirely. In 1939, Malcolm R. Giles, the supreme secretary and comptroller of the Loyal Order of the Moose, urged the council to consider restricting sick benefits to members under age 65. As justification he stressed that these individuals were eligible for aid under the Social Security Act. The same year Norman G. Heyd, the chairmen of the Moosehaven Board of Governors, reported that Moosehaven had the smallest population since 1931. He asserted that the major reason "for this decrease is undoubtedly the operation of the old-age pensions in most of the states.
...
[M]any fraternalists still voiced opposition to the expanding welfare state, although they were far less influential than in the past.
...
Bina West of the WBA also condemned New Deal programs. ... West ridiculed suggestions that Social Security was just an expanded form of cooperative insurance or represented a culmination of fraternal principles. She charged that the trust fund was not a true reserve but instead a mere "bookkeeping entry." The premiums used to finance the program, she asserted, could be used by the government for "any purpose, good or bad." [>coughLBJcoughVietnamcough<] As with compulsory health insurance, West worried that Social Security would pose a threat to American practices of mutual aid. "Is there any beautiful ritualism or human tenderness in a government bureau?" ... Even fraternal supporters of Social Security, such as Giles, shared these concerns. While Giles praised Social Security as proof that "imitation is the sincerest flattery," he cautioned that government was incapable of approximating the warm handclasp from a fellow member or the "friendly visitation of fraternalists to a stricken brother."

Side note: It is also worth pointing out that unemployment benefits, popularly thought to be a creation of Progressive or New Deal eras, were actually a mutual aid benefit long before, and were also offered by states prior to federal involvement. The federal government was a johnny-come-lately, not providing substantially higher benefits at all. Also, lest it be supposed that fraternalism died as a result of the Depression, it should be noted that many societies had bounced back from early hard times and by some measures fraternalism actually showed an increase during the 1930s, but a rapid decrease after 1940. Given the second rapid expansion of the federal government in Johnson's Great Society, it seems perhaps significant that Skocpol chooses to select that as the period at which the big voluntary associations reached their zenith, having declined ever since.

It seems worthwhile to mention also the labor movements that achieved success prior to the period of federal involvement. Union involvement as a percentage of the workforce peaked in the 1950s and as an absolute number peaked in about 1972. Some would argue that unionism has been in decline because of rather than in spite of the NLRA: the purpose of government involvement was not to support the workers but to support the employers who wanted a union that was interested in form, contract negotiation, and business, not workers' rights. This is indeed a symbiosis, but not of the type Skocpol implies.

Skocpol also never notes the rise of mutualism and syndicalism elsewhere in world as the 19th century progressed. I'm only a novice student in this area, so I'll leave the heavy lifting in this area to people like Kevin Carson, Zhwazi, Shawn Wilbur, Joel Schlosberg, Wally Conger, and Brad Spangler. In any case, there was certainly a growing reaction - Le Chatelier-like - to the rise of the nation-state. In America, the nation-state grew out of both the European model and the town hall meeting, giving rise to a reaction that was highly individualist, i.e. Emerson, Thoreau, Spooner, and others. In Europe, the reaction placed more emphasis on class consciousness, the influence of both the experience with feudalism, its remnants (the aristocracy in England, the Junkers and monarch in Prussia, the remaining monarchs in Austria and Russia), and Marx, giving a reaction that was highly communitarian (Owenism, Fourierism, syndicalism). These are hardly supportive of a "civic vitality" that desired to be "closely tied up with the representative institutions and centrally directed activity of a very distinctive national state." If anything, these are movements that are interested in civic vitality but resistant to centralism and long-distance bureaucracy.

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* Hmm, that's interesting. Is a good provided by a fraternal organization with wide membership a "communal good" even though it is excludable?

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.
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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.

Local, action: Buying Whole Foods' local claims

In Kevin Carson's book chapter, "Decentralized Production Technology", he has this to say about my comment about Viking appliances and planned obsolescence:

Here I take issue, at least in part, with Husman's analysis. First of all, it's hard for me to understand why the average lifetime of an appliance, as determined by the durability of its components, should as a matter of strict definition be excluded as a matter of design choice. After all, Husman himself mentions Viking refrigerators as an example of a product specifically designed for longevity. Second, he seems to be defining "planned obsolescence" far too narrowly. Planned obsolescence refers not just to how soon or how frequently an appliance breaks down as a result of problems with individual parts, but also to how amenable it is to repair. Planned obsolescence, in this latter sense, includes 1) a deliberate choice among design alternatives in favor of a design that makes repair more costly, difficult, or complicated, and 2) the use of such expedients as patents to control the availability and pricing of replacement parts.

First, as I pointed out, the Viking appliances are expensive, on the order of $6,000 for a refrigerator. And the same is going to be true of many such things: a Mercedes or Lexus is going to last longer, all things being equal, than any economy car. So I'm not opposed to including longevity as a design criteria, but rather pointing out that the longest lasting items are going to utilize the latest and most expensive elements and techniques. On the other hand, a Toyota lasts longer than its similarly priced competitors and people desire that feature. Second, I'm going to definitely concede that Kevin has a good point about repair difficulty/ease being part of the equation. The original Model T was made to be easy for farmers to repair, and they loved it. The current generation of cars is ridiculously difficult for the shade-tree mechanic to do anything but change a tire.

But that's beside the point I'm after in this post. What I'm mostly after is the fact that moving to an economy that we might prefer is going to look expensive. I introduced this with the appliance debate, but I'm going to flog the "controversy" between Michael Pollan and John Mackey for the rest of the material.

I first happened to hear about Michael Pollan during this interview on Fresh Air; I have his book Omnivore's Dilemma on my get-around-to-reading list, but this interview will have to suffice for now. It supported most of the things I have come to believe about our diet, corn, and related issues. Note especially his comments after 29:00, in which he says,

To eat in a way that is healthy for you and healthy for the environment and doesn't use a lot of energy is more expensive. That's an issue we have to grapple with. A lot of this food is elitist food, and can be called elitist food, and often is -- usually by proponents of the industrial food system. Any situation where McDonalds is claiming the high moral ground, I'm a little dubious of and this is one of them. But I think we have to confront this.

There's several different ways to look at it. One is cheap food is not as cheap as it looks. The real cost of that $0.99 burger in terms of ... is charged to public health, is charged to the environment, is charged to your health. Even though it's cheap at the register, that is not the real cost of that food. That is an irresponsible price. I don't know that people want to buy irresponsibly.

Now some people don't have a choice. There are a percentage of people in this country who probably can't afford to eat organic or even to eat more sustainably 'cause organic is not the only answer. Let's not oppose organic to everything else; there are many more alternatives out there. Grass fed beef is not organic but it's better, I think, than organic.

If you go to the supermarket, it is true that -- and you're a rational actor, and you don't have a lot of money -- if you're basically buying energy for you're family -- that's to say calories -- the rational thing for you to do under the system we have is to patronize the center of the store, all the processed food. Because a dollar will get you 2500 calories of cookies, of snacks, of potato chips and if you go to the produce aisle, it will only get you 250 calories of carrots

So, y'know, we're programmed by evolution to seek the most energy with the least effort possible and the supermarket has created an environment where that forces people essentially to buy the least healthy calories. But that's not a function of the free market, that's not a function of nature, either. That is a function of policy. There's a reason that the least healthy calories in the supermarket are the cheapest, and that is essentially "policy": we subsidize the cheap calories. We subsidize ... those calories are calories that come from corn and all those calories -- all that high fructose corn syrup -- is subsidized by our taxpayer dollars, the carrots are not.

So it seems to me that for the people who are shopping this way, the challenge is to change the set of incentives and figure out a way to make the healthy food cheaper and to make the unhealthy food a little bit more expensive.

[transcript acquired the with old-fashioned method: listen and type. I hope it's accurate.]

From the interview, Pollan's point seems to be that we should be more careful about what we eat. For example, avoiding anything with HFCS is a good shorthand for not confusing "food products" with "food". He also differentiates between good and bad organic, where bad organic is the type where free range hens never actually get outside (apparently, they haven't checked their contracts). I believe that the use of petroleum as the major input to our food is a problem since one of petroleum's alternative uses is transportation and that means that the cost of food to our poor people is rapidly becoming impacted by the transportation choices of increasingly wealthier people in China and India.

And we thought we freed ourselves of such considerations when we shucked the gold standard.

So Pollan finally ends up endorsing something like the 100 mile diet described by Alisa Smith and J.B. MacKinnon in their book of the same name. He believes that eating local means that farmers will use better inputs (no pesticides or petroleum) and that local farming will inhibit sprawl. And since localism is the point of this post, I swear I will return to it after dealing with two asides.

First, I believe he could have selected better examples. For example, by having all of our farming concentrated in Iowa, they may have eliminated birds there, but we increase the potential for green space around our cities everywhere else. He is basically proposing that we replace the native species of plants around our cities with food stuffs, which only shifts the problems around a little, but does not eliminate them. Indeed, this is the argument of Nobel Peace Prize winner Norman Borlaug, the so-called father of the green revolution. In an article in The Economist, he argues

Thanks to synthetic fertilisers, Mr Borlaug points out, global cereal production tripled between 1950 and 2000, but the amount of land used increased by only 10%. Using traditional techniques such as crop rotation, compost and manure to supply the soil with nitrogen and other minerals would have required a tripling of the area under cultivation. The more intensively you farm, Mr Borlaug contends, the more room you have left for rainforest.

Granted, Borlaug and I are offering a false dilemma here*, but the point is that Pollan doesn't seem to have thought this far through the problem (perhaps he has and it didn't come out in the interview; I haven't read the book).

Second, Tyler Cowen's critique at Slate left me flat. Tyler points out that Pollan's approach neglects to value our time and other market signals. Tyler makes a good point when he says that we may respond to higher fuel prices by driving less or buying smaller cars, but that we probably won't start growing grapes in the back yard. However, I'm surprised that Tyler doesn't more strongly endorse Pollan's descriptions of the problems of subsidization. Neither does Tyler recognize a benefit in which I expect him to be most interested, which is the improvement in food quality that might arise from a more local, fresher supply of ingredients.

While Tyler mentions the problem with the corruption of the term "organic", and agrees with Pollan that shopping at Whole Foods is an insufficient response to the three problems in the industrial food system (our health, our environment, the treatment of animals), Whole Foods founder John Mackey responded much more vigorously in a series of blog posts and public forums. As a result, each has moved a little in the direction of the other, Pollan agreeing that the Whole Foods approach is not as bad as he thought and getting better, while Mackey conceded that some of their practices needed review and changing.**

Mackey's summary of his arguments can be found in this presentation. In slides 39-41, he mentions something that has bothered me for some time now. While writing about the theme of self-sufficiency in Kirkpatrick Sale's Human Scale, I told a story about driving out to a local chile farm to acquire the green ambrosia. Even in my high efficiency automobile (46-50 mpg), it probably required a quart or two of fuel to make the round trip. Most other vehicles would require more, and most of the city lives further away from Lujan Farms than I do. The fuel required per pound of a truckload of chile would probably be much lower when delivering to a market in the center of town, but people still have to get to the market. This is an optimization problem, so the least-energy solution will not necessarily be "don't shop at Wal-Mart". Given existing social circumstances, the optimal solution will probably depend on where you live and what you drive; "shop at Wal-Mart" may actually be the solution for many people.

That is only part of the issue. When you account for all of the inputs (soil, sun, water, etc.), the fact that some geographic regions are blessed with some of these in abundance while others are not, and that economies of scale can be realized when using railroads and ships, local may not be the answer for everything. Mackey's summary of this part was, "If you live in Berkeley, you will use less fossil fuel and produce less carbon dioxide by buying rice from Bangladesh than from California." I'm inclined to think that even if that particular claim is not correct, it will be true that some foods will be less energy intensive when grown and shipped from afar rather than locally.

But is Mackey sincere when he claims that Whole Foods' supply chain is not as bad as Pollan claims and getting better? I was originally going to post about an article in Forbes that I bookmarked some time ago (To Fight Rivals, Whole Foods Buys Local). Unfortunately, Forbes can no longer find the article on their own site. Fortunately, Google can find it elsewhere, so I excerpt it here without linking:

Dairy general manager Matt Lucas began bringing the glass bottles himself from the Morning Fresh farm in Bellevue, Colo., 60 miles north of Denver. Until then, Morning Fresh had long made its name on home deliveries.
Since his Whole Foods deliveries began in 2004, Lucas estimated, his dairy's sales have increased 20 percent. Morning Fresh now sells at least 1,000 gallons a week to supply a Whole Foods distribution center serving 10 stores.
"It's a breath of fresh air to get involved with a group like that. They were so excited to get our product in their stores," Lucas said.
By strengthening -- or, as some farmers say, returning to -- their commitment to local products, Austin, Texas-based Whole Foods and Boulder-based Wild Oats Markets Inc. are fending off big chains like Wal-Mart Stores Inc., Kroger Co. and Safeway Inc., which have expanded their own organic offerings and put pressure on the smaller "natural" grocers. "With Wal-Mart barging into the lower-end organic sales, this is a way these other retailers can differentiate from what Wal-Mart is doing," said Dan Hobbs, a cooperative development specialist with the Rocky Mountain Farmers Union.
...

Small local growers often cannot offer lower prices than large-scale operations that benefit from economies of scale and cheaper labor. But fuel costs for shipping food are less for shorter trips, which in turn often require less packaging to preserve food. Buying local also shortens the time it takes produce to get to market, preserving nutrients and freshness, ....
...
Whole Foods defines a local product as having traveled less than seven hours to get to the store.
It sells more than 200 produce and floral items from more than 60 local growers in the region covering Colorado, New Mexico, Kansas and Missouri. Overall, it does business with more than 2,400 independent farms.

Apparently, Whole Foods is looking at local foods (in the article, consumer interest in local food is credited in part to Pollan's book) as a competitive advantage over purveyors of "bad organic" such as Wal-Mart. If true, it means that Whole Foods' conscience and self-interest are aligned with those of their customers, suppliers, and (if you believe John Mackey's New Agey Manifesto) employees and stock holders. If true, that's pretty cool.

A few things can be pulled out of this.

• I think the struggle between Whole Foods and Wal-Mart leaves us all better off than Pollan does. I can't tell which paradigm will win, but I am certain that having them square off with two different formulas -- and having the local farmers market and small grocery stores as well -- means that my food supply is simultaneously more secure, less expensive, and of higher quality than if someone was to start mandating that their favorite approach should be the victor. Also, Wal-Mart is a big boy, so perhaps the merger of Whole Foods and Wild Oats creates a stronger competition between the two.
• Still, as Pollan points out, it is policy that the corn industry should be as large as it is. Frito-Lay and Coke need to occupy all that premium shelf space because they have products that need to be sold to keep the machine running. In that sense, Wal-Mart is a creation of both Sams: Uncle and Walton.
• Mass producers have genuine advantages over craft production. For one, their cash prices are lower. Amana is cheaper than Viking, Kraft is cheaper than the dairy farm down the road, Wal-Mart is cheaper than Whole Foods. If I'm on a limited budget, that's going to be important.
  
• However, there are hidden costs. Note that above I said, "moving to an economy that we might prefer is going to look expensive", not "be expensive". All things considered, and on average, cheaper appliances and vehicles are typically not as long lasting or efficient, cheaper food products are not as tasty or nutritious as organic and artisan foods, and mass production relies on a massively subsidized infrastructure. We taxpayers pay for agriculture subsidies and transportation subsidies, while we as people pay for the externalities (farm runoff, smog and soot).***
  
• The cost of transportation is a factor in whether local or mass produced is less expensive. The railroad ushered in the first age of mass production and broke down state and regional barriers and built a nation while the container and container ship ushered in the age of globalization. If we are entering an era of permanently higher fuel costs, those trends may reverse. That's not all bad.
  

I am interested in understanding how to reverse some of the policy decisions of the past 150 or so years without reverting socioeconomically to what existed then (grinding poverty, extreme inequality -- contra to what populist demagogues would have you believe about today being the worst of times in those regards). Employing lean production can build a local manufacturing base that produces high quality goods at low costs with little waste, benefiting both workers and consumers. Removing taxpayer supports shifts the advantage from ADM and Cargill toward local farmers. And local governance moves power out of distant capitals and bureaucracies into our hands.

In an upcoming post, I want to say something about local energy production.

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* You could combine localism and organic methods.

** Other takes on the Pollan/Mackey "smackdown turned lovefest":

• An Open Cupboard suggests that Whole Foods should be more diligent about teaching people to shop on a low income. Easy: vegetarian.
• Whole Foods blog: Points out that Whole Foods stock took a $2 billion dive after Pollan's book came out, but also notes that may be attributable to other problems.

*** Yes, it is literally true that the corresponding costs of obesity cost us money through Medicare/Medicaid. However, that also is a matter of policy and I am not going to start using that as a pretext for dictating other people's behavior and food choices.

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.

Running on glue and tar

My wife and I have been discussing where the world is going to go in the post-Peak Oil era. I for one am optimistic, but concerned about the transitional period. I think that we (humanity) will develop a variety of responses to the problem(s), and that we will be better off in the end, but I am concerned about the rate at which the transition will occur. There may be upheaval and pain in the interim, regardless of who is in the White House or what policies we follow to get there.

In the comments on Matthew Yglesias recent post on gouging, we see a response to higher fuel prices that I think is indicative of lazy, uncreative thinking. Simply keep piling on one supposed remedy after another. This is creative thinking in much the same way that fixing your mistakes after rushing through a job is productive work. (for my previous thoughts on gouging, see here, here, and here).

Some things seem to escape the attention of people who think like this. For example, the crimes committed by a gas station owner can be determined by looking at his prices compared to his competitors' as follows:

• higher: gouging
• lower: predatory intent
• equal: collusion

In this environment, it might be worthwhile to keep a lawyer on staff, nicht war? And since the laws are subject to change, a lobbyist might be useful. If everyone has to have lawyers and lobbyists, that creates a competitive advantage for larger businesses. I think I can assume that people who are against gouging are also against large businesses, so why don't they understand or acknowledge these problems?

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Then, I was reading about heterodoxy, Cowen, and Veblen, looked up Veblen, got side-tracked by Giffen Goods, and finally came across an essay in The Nation by Sasha Abramsky entitled, "Running on Fumes". He raises the idea that gasoline is a Giffen Good, one that poorer people will come to spend more on even as its price rises because they are locked into it.

Sasha says,

Indeed, the very fact that some commentators, such as the Cato Institute's Jerry Taylor, so glibly assume (or, at least, assumed pre-Katrina) that an oil price shock can be painlessly absorbed shows just how invisible the country's poor have become to much of its pundit class.

Since Taylor's offending comments are neither quoted nor referenced, I can only guess that Taylor said something like, "let the price mechanism work" in response to calls for price controls. The month prior to Abramsky's piece, Taylor wrote about fuel prices in NRO. I would recommend reading both before proceeding with the rest of this post.

Back?

It is of course debatable whether the price mechanism will work well with regards to energy. In the comments on James Hamilton's Peak Oil in America post, Stuart Staniford claims that recent empirical research indicates a short-term price elasticity of -0.05. An older survey indicates that the long term price elasticity is around -0.8 and the short term is around -0.2. In any case, this is for a general population, not the poor, so it is only indirectly relevant to the point. If these two articles can be taken as accurate, the indicated decrease in elasticity (magnitude) indicates that it will be harder to curtail gasoline use as price goes up than it was in 1979-1983; I would assume that it would be harder for the driving poor, but perhaps not so much for the urban poor who have access to other options. (I graph oil use vs. oil price here, but have not updated it since October 2005. Note how much reduction was achieved 1979-1983.)

Near his conclusion, Mr. Abramsky claims that the decline of the rural area about which he is writing is preventable, but

prevention involves the sort of innovation the Bush Administration, besotted as it is with laissez-faire triumphalism (not to mention oil-industry campaign cash), has been reluctant to embrace.

Did you just experience a self-administered lacto-nasal enema upon reading -- in a single sentence -- that the Bush Administration favors laissez-faire policies and that laissez-faire and oil-industry campaign cash are not mutually exclusive?

Indeed, this seems to be common in discussions of gouging, Peak Oil, current pricing, and related issues. Are Mr. Abramsky and the commenters on Matthew Yglesias' blog really claiming that the oil industry enjoys laissez-faire trade policy? That seems so absurd on its face that I cannot believe it needs rebuttal.

The oil industry came of age in the Progressive Era. Oil production had steadily increased and prices decreased for the entire history of the industry through the antitrust prosecution of Standard Oil. As the automobile caught on and demand heated up, Progressives were excited to be able to subsidize a competitor to railroads. Then, as the US got involved in World War I, businessmen eager to be freed from antitrust regulation jumped at the invitation to participate in the Commodities Section of the Petroleum War Services Committee and the Oil Division of the United States Fuel Administration. Dominick Armentano points out in Antitrust and Monopoly, that A. C. Bedford, president of Standard Oil of New Jersey, was appointed as chairman of the War Services Committee. Their experience of cooperation and "supervised competition", and the concurrent worldwide embrace of central planning (think about what was happening in Russia, Germany, Italy, and even England in the period between wars), paved the way to the corporative-creating National Industrial Recovery Act. When that was struck down, the Connally Hot Oil Act of 1935 was passed without hearings to maintain stability in the oil industry. It allocated state production quotas and provided a means to enforce restrictions on interstate transshipment in excess of those quotas.

The military has been tied in to oil production or at least the Middle East arguably since Eisenhower placed troops in Lebanon in 1958 and Kennedy defended Saudi interests in 1963. More recently, in 1980 Jimmy Carter announced the Carter Doctrine, stating that the US would defend its oil interests there. You have the obvious Bush wars since then, with Clinton lobbing a few bombs and establishing bases in Saudi Arabia in between.

In addition to regulatory and military support, we also have regulatory intervention and distortion. As James Hamilton has pointed out, one reason for the increase in gas prices during the tight markets in 2005 was the fact that the national market is segmented by EPA requirements and refineries cannot easily switch between the various boutique fuels favored by - you guessed it - Mr. Abramsky's fellow travelers. Finally, we have people who insist that we need to increase gas taxes so that we, like Eurotopia, will have gasoline prices near $10 per gallon.

Any guesses as to whether The Nation favors those higher fuel prices? I searched for "carbon tax" on their site and got 78 hits; the first one says, "A carbon tax would be simple --" The author goes on to add that

And as Charles Komanoff of the Carbon Tax Center argues, at least part of the proceeds of the tax could be rebated to poor and middle-income households through the income tax system, neutralizing any inequities. The unrebated balance could be used to subsidize alternative energy research and production. Given the historical successes of government funding of basic research in computing and medicine, there's every reason to believe the products of this work would be very promising.

Another two-fer: not only do we learn that the simple tax now has lots of other little simple ancillaries, like using the simple income tax system to rebate for gas, but we also discover that the government's funding of basic research has a proven track record. They don't explain exactly how we figure out the difference in rebates between subway-riding New Yorkers and rural Californians, so perhaps it is not as simple as they first insist. Nor do they actually compare the government's track record in conducting research to anything else, like privately funded applied research. Now, I think it's possible that government gives the private sector a good run in basic research, but recall that the human genome was first decoded by a private company in 1/10 the time and budget as that proposed by a government agency. But the private sector is much better at applied research, which is what was meant by "subsidize alternative energy research and production." So they call for applied research based on the government's track record in basic research? Nice sleight of hand.

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A greater protest must be registered over Mr. Abramsky's nearly complete silence on the century of other Progressive policies that have pushed the poor out of town and into the oil-based lifestyle. Once again, we can refer to Gabriel Kolko's Railroads and Regulation and The Triumph of Conservatism for an understanding of the politics underlying regulation in the Progressive Era. The tongue-in-cheek, short version is that competition was largely working for everyone except the capitalists themselves. Competition was forcing costs down so far that they were all headed for bankruptcy, so they tried cooperative arrangements. When those failed, they turned to the federal government to act as the cartelizing agent. Though Kolko doesn't specifically address it, it is easy to see that the electric power industry faced the same logic of high capital costs, low marginal production costs, and the resulting expansion, competition, system building, bankruptcy, and "need" for regulatory intervention. This eliminated the "destructive competition" in rails & utilities by constraining competition and innovation. The whole point of regulatory oversight was not consumer protection, as the unsophisticated, narcissistic state-worshipper would have you think, but rather stabilization for the industries so they could go back to peace, quiet, and regular dividends. That is why deregulation and people like Craig McCaw and Michael Milken were so upsetting to AT&T in the 1970s and 1980s, and why electric utilities are so resistant to deregulation today.

The same public who first wanted to give land grants and rights of way to railroads and canals in order to get rid of private turnpikes, and then wanted to constrain railroads because the average voter didn't understand the logic of the capital-intensive industry they had spawned, and now didn't like the fact that their regulations created a de jure cartel, wanted roads. They joined the Good Roads movement and fought for public subsidies for bicycles and then cars. When Louis Brandeis brought Harrington Emerson to the stand in the 1910 Eastern Freight Rate Cases to argue that every industry could be rationalized with and every consumer benefited by Taylor's Scientific Management, the public caught the bug for the Efficiency Movement and Technocracy Movement. They wanted to centrally manage everything. The goal was, as Herbert Croly put it, to produce "Jeffersonian ends with Hamiltonian means".

As outlined above, the Progressives in WWI and FDR's cabinet in the Depression and WWII supported a state-industrial oil policy to further rationalize oil production and distribution. In conjunction with the Good Roads and subsidization of the automobile (which gave rise to the Golden Age of manufacture and its corresponding anomie and unionism which many Progressives yearn for), the stage was set for moving out of high density urban areas and to the suburbs.

The push to suburbia has also been helped over the years with some uniquely Progressive policies. Rent control in New York City, for example (I once read that poverty-stricken Walter Cronkite lives in a rent-controlled building). The aforementioned utility subsidization, including the TVA and REA, which replaced farmer-owned windmills with investor-owner utilities. More recently, to "preserve their character" (a euphemism for "preserve their property values"), many cities (bastions of Right Wingerdom, like San Francisco) have banned urban development, forcing people out of town to find affordable housing. To pay for a wide variety of programs, some of which used to be privately provided by the working classes for themselves, cities have raised property and sales taxes (Santa Fe, for example: there's a reason you need to make $10/hour to live there, and it mostly has to do with California millionaires moving into the City Different; most of them are not exactly Goldwater Republicans). While the upper and middle classes were leaving the city to live in clean, quiet neighborhoods, these policies were all pushing the poor even further out of town.

In the specific case Mr. Abramsky addresses in his essay, the size of those towns probably needs to be smaller. They were dependent on mineral extraction and timber, both repeatedly attacked by people like Mr. Abramsky, but probably not by Jerry Taylor. Indeed, it's probably a safe bet that when people like Jerry Taylor raised the issue about the impact of stopping resource extraction on the workers, people like Mr. Abramsky glibly dismissed it, saying that the economy could easily absorb the jobs lost. But I will go further than either of them and point out something both should agree to (if they want to be logically consistent with their probable core values): continuing to live in a non-agricultural rural area is inherently energy intensive, and we should not continue to subsidize it if we really think Peak Oil is a concern.

I recently came across a site (probably something on Gristmill dealing with global warming) that claimed all of the skeptics of (Kyoto?) never provide any suggested solutions of their own. Does Mr. Abramsky offer a suggested solution for the poor people he exploits for his article? He offers a vague mention of mass transit, a system that works well in high density areas like Europe and the Northeast Corridor, but probably not in Northern California. He seems to imply that George Bush is personally responsible for the lack of mass transit despite the fact that ridership is higher than it was under Clinton.

Abramsky makes a quick offer to help them pay for oil, thus furthering the addiction that has them in this situation in the first place, and contributing to a 150 year legacy of trapping people in a state-underwritten prison. The latest insult in that legacy has been the ethanol subsidy, a Carter-era program with bipartisan support for all the wrong reasons: it reduces imports, it supports "family farmers", and it is "renewable". First used to replace lead (Pb) and reduce pollution, it actually increases certain types of pollution. The subsidies for "family" corn farmers mostly end up in the pockets of ADM. And the renewability, touted by Progressives, is having growing implications for poor people. As I noted in my review of Joshua Tickell's From the Fryer to the Fuel Tank, "Some bio-cheerleaders ... claim that a large scale shift to biofuels won't affect food prices, but that is almost certainly wrong. The amount of land required to make a dent into our petro-fuel usage would easily require both the fallow fields and some land currently used for food production. Demand up, price up, QED." Given recent headlines, I'm going to claim prescience, but I think every clear-headed person could figure this out on their own. Even Noam Chomsky figured it out in hindsight.

Finally, Abramsky also mentions the possibility of subsidizing efficient vehicles, something that has been going on for several years with mixed results*. In other words, we get some paeans to Progressive programs and a demonstration of how much good Mr. Abramsky can do with other people's money to prove that he cares. Some of his explanations are wrong, some suggested solutions are demonstrable failures, and one at least will probably make things worse (subsidizing oil? Really?!). At no time does Abramsky recognize or even seem to be aware of the contribution of his intellectual predecessors to the creation of the problems of today's poor. Instead, he turns the tables, claiming that those problems were caused by people like Jerry Taylor and policies like laissez faire and implying that anyone who doesn't accept his vaguely defined solutions is responsible for the misery and possibly death of the poor. "Laissez faire means you don't care."

Now, Mr. Abramsky is correct to question the effect on the poor, but he has come to exactly the wrong conclusion. His essay is nothing but rhetorical sleight of hand intended to impugn Jerry Taylor and anyone who dares suggest that the price mechanism is a better mechanism than any other so far identified to coordinate oil supply with oil demand. Mr. Abramsky is like George Washington's doctors who kept letting his blood, and upon remarking how sick he appeared -- probably the result of too much blood letting -- tried more blood letting.

Note that I did not say the price mechanism is the best means. Again, thinking negatively (what is that? perhaps not what you think), there may be a solution of which I have not heard yet, but until then the price mechanism is the least worst solution. Price controls are predicted by theory to create shortages, and the theory is confirmed by empirical data. A shorthand way of explaining this is the gas lines in the 70s and in Baghdad today. Surely, if the poor need gasoline, then some at high prices is better than none at any price? Ridiculing the least worst answer, or insulting the person who acknowledges it, is like accusing your doctor of murder for informing you that you will inevitably die.

Furthermore, Mr. Abramsky never seriously looks at the total effect of the price mechanism. It not only curtails demand, but it stimulates supply. Note the implications of this chart in The Economist, from the article "Venture Capitals". Furthermore, note an idea from this episode of Nova: "If you look at companies, like SunEdison, who are helping retailers put up solar panels on their roofs, you're suddenly seeing a linkage of the capital markets -- which have traditionally been very reluctant to get into solar energy -- with the retail sector. That's how you do things in America. You link the technology to the capital, and that's where the rubber hits the road." In America, the capital markets respond to a problem, while in other countries, the politicians respond. The former have to spend their own or their clients' money and are held accountable, the latter not so much.

"So what", you might say, "I don't care who produces the solution, so long as there is one. And so long as it benefits the least well off."

Well, here's so what. I'm vaguely familiar with the theory of functionalism. It says that institutions exist because a society needs them; institutions serve a purpose, a function. When I first heard of it, I immediately thought that it seems circular and lacks a mechanism to describe change; this appears to be an ongoing criticism of the theory. In any case, proponents of this theory use it to justify the existence of government agencies: obviously we must need them if they exist. If you evil bastard libertarians abolish some of those agencies, people will suffer.

That is true as far as it goes. It doesn't go far enough, though. There are two problems with it.

First, I have always believed that there are two problems faced by people who desire change: one is describing a desirable and reasonably realistic future. That is what I like about Kirkpatrick Sale. The second is to describe the path, how to get from here to there. The problem with simply saying "abolish such-and-such program" is that it doesn't describe what we reasonably expect to replace the functionality of that program