Category Archives: politics

Net Neutrality

Whenever government policies are implemented in the name of consumer protection, we can be sure that it is not consumers being protected, but rather crony industry incumbents. It is presented as a false alternative between government regulation or absence of regulation, when the strongest form of regulation with the greatest degree of consumer protection is the free market, where consumers decide how their dollars are spent. Good products from well-behaving businesses are rewarded. Bad products and ill-behaving businesses are punished, often to extinction. Moreover, when consumers are under-serviced, entrepreneurs enter the market to compete against under-performing incumbents by offering innovative new products and business practices to meet the demand for superior goods and services, often disrupting the status quo. Meanwhile, government regulations necessarily entrench the status quo. “Best practices” can only be best until innovations overtake them, at which time they become obsolete. Government regulations often continue to burden an industry with obsolete practices that prevent innovations from flourishing. Thus, incumbents are protected from agile upstarts.

Net Neutrality is promoted ostensibly to protect consumers from Internet Service Providers (ISPs) throttling traffic to disadvantage competitive “over the top” (OTT) content providers (e.g., Netflix) while favoring the ISP’s own content services (e.g., television in the case of a cable ISP). Another hypothetical straw man is for ISPs to charge customers to enable access to various information services. I would argue that no ISP would pursue such goals, because of the backlash and consequent mass-exodus of customers to the embrace of the ISP’s competition. ISPs would also want to avoid anti-trust concerns. Paranoia about ISP misbehavior disregards the lack of a business case. Net Neutrality was enacted in response to no ISPs actually implementing any anti-competitive traffic management on any significant scale.

Consumers want to preserve a “free and open Internet”—rightly so. ISPs have the practical capability to throttle traffic by origin (content provider), traffic type (e.g., video), or consumption (e.g., data limits for heavy users). They have no practical (cost-effective) mechanism to understand the meaning of the content to selectively filter it. ISPs have only blunt instruments to wield.

Unlike ISPs, content providers (e.g., Netflix, Google, Facebook, Twitter, Cloudflare, GoDaddy) are responsible for “information” services, which fall outside the scope of Net Neutrality for “transmission” by carriers. While ISPs have not attempted to damage a free and open Internet, we have already seen content providers behave very badly toward free speech, since they have the ability to understand the meaning of their content.

If a “free and open Internet” is what is desired, censorship, bans, de-platforming, and de-monetization by companies, who are the strongest advocates of Net Neutrality, are certainly antithetical to that aim. What is their real motive?

Content providers enjoy having their traffic delivered to customers worldwide. They only pay for the bandwidth to the networks they are directly connected to. They are not charged for their traffic transiting other networks, while routed to their end users. Content providers obviously like this arrangement, and they want to preserve this status quo (protecting their crony interests).

Without Net Neutrality, although ISPs may not have a business case for charging customers (end users) for differentiated services, they would have a strong business case for providing differentiated services (various levels of higher reliability, low latency, low jitter, and guaranteed bandwidth) to content providers. Improvements in high quality delivery (called “paid prioritization”) would be beneficial to innovative applications that may not be viable today. For example, remote surgery. With paid prioritization, this would motivate content providers to buy connectivity into an ISP’s network to provide higher quality service to their customers, who receive their Internet access from that ISP. Or to otherwise share revenue with the ISP for such favorable treatment of their traffic. The environment becomes much more competitive between content providers, while more revenue would be shared with the ISPs. ISPs would then be motivated to invest more heavily to improve their networks to capture more of this revenue opportunity. Consumers benefit from higher quality services, better networks, and increased competition (differentiation based on quality) among content providers.

climate change

While I am not a climate scientist and do not claim to have any special expertise in climate research, my interest is to analyze how a layman should organize his thoughts around this complex topic so that critical thinking can be applied to separate truth from propaganda and political posturing.

We have seen the media and leading voices on the topic of climate change promote the following ideas:

The term “denial” conflates healthy skepticism over extraordinary claims with the non-recognition of scientific facts that are largely beyond dispute. Extraordinary claims are certainly under dispute by experts in their fields, and the disingenuous label of “denial” is intended to chill skepticism, a hallmark of science, with authoritarian dogma (“settled science” is the antithesis of science). Here is a sampling of dissent:

The case being made by the climate change activists contains several elements:

  1. Global temperatures have been rising at an alarming rate since the beginning of the industrial revolution. This is where science investigates the facts through measurements that are indisputable except for accuracy, error, and methods to ensure that the data is true. Unfortunately, even at this fundamental level certain scientists have exhibited misbehavior (Climategate), such as data manipulation, lack of transparency of unaltered data sets, what those data alterations were, exclusion of participants from peer review, exclusion of participants from publications, and suppression of dissent. While such misbehavior undermines the credibility of the science, on net the evidence does support the position that global temperatures have risen 1.2°C since the pre-industrial era.
  2. Warming is predominantly caused by increased CO2 concentrations in the atmosphere. The strongest argument in favor of attributing the cause of warming to CO2, as opposed to solar activity and any number of variables that affect the phenomena under measurement (e.g., proxies to temperature such as tree rings are sensitive to many factors like sunlight, rainfall, soil conditions, nutrients, and pestilence which cannot be separated from the effects of temperature), is the observation that surface temperatures have risen as lower stratospheric temperatures have dropped, which is predicted if greenhouse warming due to CO2 is the cause.
  3. Warming is unprecedented and unnatural.  This is where science can provide insights into historical events and patterns. Articles such as Nature Unbound III: Holocene climate variability (Part A) and Part B give some perspective into natural trends over millennia that show large temperature variations and atmospheric CO2 levels that are natural and uncorrelated.
  4. Rising atmospheric CO2 levels are the result of emissions from burning fossil fuels, and therefore human activity is to blame. There can be little dispute that the post-industrial rise in atmospheric CO2 is primarily attributable to human activity.
  5. Elevated atmospheric CO2 levels and associated warming are bad. Melting glaciers, rising sea levels, increases in extreme weather events, disruptions of ocean currents, ocean acidification, and even mass extinctions are potential hazards that climate alarmists are warning of. These claims are strongly disputed [1] [2] [3] [4]. Measuring a global trend and determining the cause are problematic. On the other hand, there  is a fair amount of research that suggests that global warming has been beneficial.
  6. Rising atmospheric CO2 levels and warming trend will be catastrophic. Predictions of catastrophic levels of warming are based on climate models, which have had a very poor track record to date. Models have made predictions that do not comport with observations.
  7. Intervention is required to curtail human activity that emits CO2.
  8. Government policies are the proper means of intervention.
  9. The specific policies being advocated are the best solutions to prevent catastrophe and provide the best net benefit.

By the time we reach the final three claims about solutions, we must have already drawn conclusions from the previous six that global warming is catastrophic and predominantly caused by CO2  emissions from human activities. Any critical examination of the evidence would not support such a conclusion.  The case for climate alarmism falls apart at the third claim. The evidence favors the Lukewarmers, “those who argue that carbon dioxide indeed is warming surface temperatures, but that its effect is modest and that we are inadvertently adapting”. However, let’s roll with the “hotheads” to see where they want to lead us.

When exploring practical solutions, we move beyond scientific research into the realm of engineering, which is applied science. How to solve the problem can either be compatible with liberty – relying on voluntary action; or the solutions can rely on coercion and force through government action. This falls into the political realm.

When evaluating how best to deploy scarce resources (e.g., labor, factors of production, capital investment) among various alternative solutions, we move beyond the physical sciences into the realm of economics, which is a social science. Humans cannot be treated as inanimate objects without free will, rationality, and rights.

Government policies cannot be implemented without expecting people to resist, avoid, or bypass them. Policies cannot anticipate how human ingenuity and innovation can provide better solutions; or how policies may impair such solutions from being developed, as crony regulations that protect incumbents and government “picking winners”  have a tendency to do.

Government funding of scientific research has conflicts of interest. You tend to get the results that you pay for, because researchers understand that their funding will only continue if the government’s favored outcomes are achieved and their policy goals are supported.

Government funding of their preferred solutions results in cronyism. Let’s examine green energy subsidies. Here are some examples:

If climate change advocates cared about practical solutions to replacing CO2 emitting energy generation, they would support modern and future nuclear power technologies. This topic is explored in the article titled What are some policies that would improve millions of lives, but people still oppose?

What climate alarmists leave unsaid is their aim to scale back human activity to reduce the impact on the environment. It is a greater priority to preserve wilderness than to improve the standard of living for humans. People have no right to exist in their world view.

The popular movement against climate change is not primarily about science. Its main aim is political advocacy. That is, scientific arguments are used to support the political lobbying for government mandated economic solutions to future problems that are predicted by models based on the scientific explanations of physical phenomena that contribute to climate. In the realm of political debate and economics, the physical sciences are just a useful idiot, where cherry-picked results are used to promote the preferred policy goals. Popular opinion is driven by the desired political outcome, not by the truth of the science. Their goal is to shift power away from individuals seeking to improve their standard of living, and concentrating power in governments to implement collectivist policies that are used to implement cronyism and corruption.

Rights

This article is a derivation of the concept of rights from first principles. This is the notion of natural rights consistent with The Jeffersonian Perspective. Throughout this article, I shall use the term “man” to refer to a human being, not to gender.

Man exists as a being of a certain nature, which is distinctly different than other beings. Man is a living being with the unique ability to reason. Man relies on his ability to reason for survival.

For man to exist qua man, as a living reasoning being according to his nature, certain conditions must exist. Man’s rationality is conditional upon being free to think and act according to his reasoning mind. Freedom is the absence of coercion and force from other men. The mind is impotent when man is threatened or attacked with the force of violence.

Rights are based on the mutual recognition of man’s nature and the conditions required for man’s survival. Rights are the mutual respect for freedom of thought and action so that man can exist according to his nature.

Ignorance of the law

Ignorance of the law is no excuse. That is the principle we are expected to live by. If we embrace the full implication of this principle, it may merit being adopted as a Constitutional principle that places the most effective constraints on government overreach.

If ignorance of the law is not an allowable excuse, it is imperative for government to enact laws that people can read and comprehend to remain in compliance. Moreover, the laws for crimes and misdemeanors, as well as the regulations that every person must comply with must be readable and comprehensible in totality for the average person without requiring professional legal counsel. This requires that all crimes, misdemeanors, and regulations must not exceed a certain maximum number of words in their totality. That limit should be established to be what an average student can read and comprehend by investing one hour per day during four years of high school. The government is forbidden from writing laws and regulations that exceed this limit, so as not to instigate ignorance of the law.

 

 

Non-Aggression Principle

The Non-Aggression Principle (NAP) is the only criterion for libertarianism. One might expect libertarians to be contemplating deeply and writing the most scholarly articles on the topic. One might expect libertarians to be forming the most precise definition of aggression and non-aggression. Alas, a search of the most prominent libertarians yields only passing references on the topic. Libertarians believe that the NAP must be self-evident, despite the lack of agreement on the precise definition of what constitutes aggression and what does not.

This matters not only as an academic endeavor. More importantly, it is the libertarian position of non-intervention in foreign policy that depends on a clear understanding of what the principled libertarian view is on foreign aggression. Presidential candidate Ron Paul was perceived by many conservatives, who otherwise supported his libertarian positions, to be off putting for his foreign policy, not because they believed so much in US military intervention, but because the libertarian position of non-intervention is effectively silent on when it is appropriate to deploy military assets in the face of foreign aggression to defend American interests. A libertarian candidate for Commander-in-Chief cannot evade this essential topic, because it is the foremost qualification for the job. It is not enough to hand wave a general remark about supporting a strong national defense. Because of the libertarian position on non-intervention it is incumbent upon a libertarian candidate for POTUS to assure the citizens that with restraint also comes an impassioned intolerance for foreign aggression and no hesitation to deploy overwhelming military force and unspeakable violence in retaliation to any foreign power that initiates force against America. Non-intervention does not mean pacifism or appeasement or isolationism or weakness.

Now what exactly constitutes aggression? And what is the proper response to various acts of aggression? Silence on these questions is what is losing libertarians nominations, because a void in leadership on matters of defense is catastrophic to the preservation of liberty at home.

seventeenth amendment

The 17th amendment to the US Constitution establishes the direct election of United States Senators by popular vote. This amendment was ruinous, as it took away power from the States to appoint Senators to represent their own State’s interests. Instead, now Senators represent their national party’s interests.

I would repeal the 17th amendment.

I would amend the Constitution for the Senate to function primarily as the protector of the Constitution itself to limit the powers of the Federal government, and to preserve the power of the States and the People. This would be done by giving every State veto power, if both Senators from any State agree. This would force most legislation to be extremely narrow in scope. Virtually nothing could become law with any significant opposition from any part of the nation.

Furthermore, we need the process of repealing legislation and regulations to be far easier than the process for introducing them. Therefore, when both Senators from any State agree to repeal a law or regulation, it is done. This is equivalent to exercising a veto after a bill has become law. This makes perfect sense, because the real-world benefits, costs, and unintended consequences don’t become visible until a law has been in effect for some time.

second amendment

The Second Amendment to the US Constitution reads:

A well regulated militia being necessary to the security of a free state, the right of the people to keep and bear arms shall not be infringed.

The wording of this particular amendment is obviously poor as evidenced by the conflicting interpretations as to its original intent and meaning. However, regardless of the original meaning, there is a principle that is fundamental to the Constitution’s purpose, which is to protect individual rights. All rights are derived from and in support of the individual right to life.

The Second Amendment should have been focused on the right to self-defense and the defense of others, as well as the means upon which such defense relies. Because life cannot enjoy any liberty if its existence is threatened by force, the defense of life is necessarily a right. The means of marshalling a defense would include firearms, ammunition, and other things that are not sufficiently protected today, such as bullet-resistant vests, helmets, and armor. Even simunition (ammunition that is for paint marking of targets for training with realistic weapons) is restricted to law enforcement and military uses. A right to defense of life would properly protect such liberties from government bans and onerous regulation.

Perhaps something that reads more like:

Congress shall make no law abridging the right of self-defense or the defense of others; or the right of the people to pursue the means of achieving security from aggression and tyranny.

cabinet positions to eliminate

Here are the cabinet positions and what I would do with their departments.

Secretary of State – retain but eliminate all foreign aid.
Secretary of the Treasury – retain but eliminate all IRS agents associated with Obamacare tax enforcement.
Secretary of Defense – retain but close many foreign military bases.
Attorney General – retain but eliminate the Drug Enforcement Administration by shutting down the war on drugs. Pardon all prisoners who are incarcerated for nonviolent drug crimes.
Secretary of the Interior – eliminate and transfer ownership of federal lands to the states with private ownership being the ultimate goal.
Secretary of Agriculture – eliminate.
Secretary of Commerce – eliminate.
Secretary of Labor – eliminate.
Secretary of Health and Human Services – eliminate.
Secretary of Housing and Urban Development – eliminate.
Secretary of Transportation – eliminate.
Secretary of Energy – eliminate.
Secretary of Education – eliminate.
Secretary of Veterans’ Affairs – retain but transition all health care to private hospital systems.
Secretary of Homeland Security – eliminate.
Vice President of the United States – retain.
White House Chief of Staff – retain.
Director of the Office of Management and Budget – retain.
Administrator of the Environmental Protection Agency – eliminate.
Ambassador to the United Nations – eliminate and defund all UN activities aside from the security council.
Chair of the Council of Economic Advisors – eliminate.

A diverse set of strategies can be implemented to eliminate programs on a 1 to 8 year time line. This includes:

  • Transferring ownership of assets and transferring responsibility and funds for programs to the states.
  • Privatization of programs that should be run by the private sector through industry forums, joint ventures, or other forms of collaboration. Food, drug, and product safety fall under this category.
  • Immediate elimination of programs that engage in cronyism, protectionism, and other market distortions. This includes all agricultural and industrial subsidies. This includes housing, mortgages, and loans.
  • Gradual replacement of entitlement programs with state run and private programs.

Taxmageddon

In this article, I am going to attempt a praxeological (science of human action) explanation of the economic effects of the tax increases on high earners. I am doing this as an exercise to apply what I have been learning in my self-directed studies of the Austrian school of economics. I hope, as a baby Austrian, I do not embarrass myself too badly in this amateur attempt.

Obama is demanding that Bush era tax cuts end for high earners. This will raise the top tax rate from 35% to 39.6%. Dividend tax rates will go from 15% to 39.6%; actually to 43.4% to include the Medicare contribution tax added by Obamacare. Capital gains taxes go from 15% to 20% (actually 23.8% including Medicare contribution tax) or from 15% to 18% (actually 21.8%) if held for 5 years or more.

The immediate effect will be massive stock sales during the remainder of 2012 to take advantage of the significantly lower capital gains rate. Expect investors to favor holding their stocks and avoid profit-taking over the next 4 years in anticipation of a future reversal in tax policy.

Low (15%) capital gains tax rates and bad memories from the bursting of the dot com bubble resulted in corporate mergers and acquisitions being conducted in cash instead of stock. With high capital gains tax rates, expect that trend to reverse, as a conversion of stock does not incur any tax immediately. All of these responses mean that tax revenues from capital gains will fall significantly, as investors apply these tax avoidance strategies.

Low (15%) dividend tax rates resulted in corporations distributing profits to shareholders increasingly through dividends. Many corporations that never distributed dividends before began doing so to satisfy investor preferences due to this favorable tax treatment. With a return to high dividend tax rates, expect a return to much lower or zero dividend yields, as corporations respond to investor preferences to favor keeping retained earnings (already taxed at the corporate tax rate of 35% which is among the highest in the world) in the corporations’ coffers to hold those earnings as capital gains, which do not incur any taxes until shares are sold. Those who rely on high yielding stocks for income will shift to bonds or other forms of fixed income. In addition to Fed Quantitative Easing, which lowers interest rates while raising inflation rates, higher dividend tax rates will further hammer those who rely on fixed incomes like retirees. These responses mean that tax revenues from dividends will significantly decrease, returning to the historical trend prior to the 15% era.

Finally, there is the increase in tax rates on ordinary income in the upper bracket(s). Those who earn at these levels include business owners, corporate executives, and professionals like doctors and lawyers. Many of these high earners have some degree of control to adjust their compensation packages. Expect a greater proportion of compensation to be in the form of incentive stock options, so that tax on that income is deferred until the stock is sold. The modest marginal tax rate increase will have little effect. Those who have less control over their compensation will pay more, while those with greater control will pay less. This may end up being a wash or even a net reduction in tax revenues, if small business owners and professions work less and forego expansion due to reduced incentive. Reduction in the growth of businesses will result in a long period of economic stagnation and lack of new employment opportunities for workers.

Taking all of these effects together, it is pretty obvious that tax revenues from higher tax rates will significantly decrease. Investors avoid taxes by deferring stock sales. Investors avoid dividend taxes by influencing corporations to reduce dividends. High earners adjust compensation to defer taxes until they choose to sell stocks. Business owners and professionals forego growing due to reduced incentives. The economy will surely experience a 4 year period of slow or stagnant growth and persistently high unemployment.

Furthermore, continuing Fed QE and trillion dollar annual federal deficits funded >60% by Fed bond buying will stoke higher inflation. This adds insult to injury as real rates of return will be reduced, but capital gains taxes will be paid on fake gains from inflation. Inflated gains are fake because of the loss in purchasing power due to generally higher prices throughout the economy.

Fun times ahead.

checks and balances

The US Constitution established a Federal government with powers divided to provide checks and balances. Clearly this system of checks and balances has been largely eroded.

The laws passed by Congress have delegated its legislative responsibilities to the Executive branch. Laws are written that grant regulation writing power to the Executive. Laws are written that delegate the power to start offensive wars.

The Executive branch routinely issues executive orders and waivers that either nullify the enforcement of existing laws or rewrite them. Executive orders are often used to initiate the enforcement of rules that are in effect new laws that have not been passed by Congress.

The Supreme Court has been toothless in defending the Constitution by limiting the Federal government to the powers expressly granted. This raises the question, why would we even have an expectation that the Supreme Court should have jurisdiction to rule on matters of law for which the Federal government has not been granted any power. When all powers not expressly granted to the Federal government are reserved to the States and the People, it should be clear that the US Supreme Court should be similarly limited. Would it not make sense for State Supreme Courts to retain ultimate authority for all such matters instead of deferring to the US Supreme Court?

When the Executive branch oversteps its authority, what possible remedy is possible, when it requires a super-majority of Congress to impeach, and the US Supreme Court is largely deferential to Congress and the Executive?

We are left to resort to State nullification by the sovereign states and jury nullification by sovereign individuals. Through these means we can safeguard the powers that are reserved to the States and the People, when the Federal government has betrayed us and the Constitution to which they pledged to defend.