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Monday, January 26, 2004

Too Many Things On My Mind

As I'm struggling to find a job in ChevronTexaco, I haven't had much time to organize thoughts for the blog. My "final day," unless I manage to land a job, will be February 16. I'm still somewhat optimistic, although, as Samuel Johnson said, "Depend upon it, Sir, when a man knows he is to be hanged in a fortnight, it concentrates his mind wonderfully."

So, just a few comments here and there...

Regarding a previous claim of mine about the U.S. living beyond its means, I thought you might enjoy this article about record personal debt, record personal bankruptcies, and record low savings rates. Average credit card debt for those who do not pay off their bills monthly is $18,700. When interest rates go up, there will be a great deal of misery.

Regarding Bret's recent posting, there are some complicated issues here that are not easy to deal with briefly. But, let's consider his ideas in the context of system archetypes (a la the Peter Senge school of thought). One archetype is known as Tragedy of the Commons. The Commons in this phrase refers to the Boston Commons. The simplified concept is that if everyone acts at an individual level based on the natural incentives that exist, the Commons will be trashed because it is not in the interest of the individual to clean up after oneself, and there really is no incentive to clean up after others (since they will just trash even more indiscrimately in the future), so the Commons gradually spiral downward. It is this type of situation where regulation is often applied (i.e., in this case, fines for littering) because it is hard (although maybe not impossible) to create incentives for the individual. This can be generalized to many environmental issues. While nobody wants their water and air to be polluted, the individual polluting company quite naturally sees its contribution as small compared to the total level of pollution, and is incented by cost structure to pollute as much as everyone else rather than investing in expensive pollution-control equipment that won't make much difference at all if all the other companies are not using it.

Bret's assertion is that only those rights that are conveyed to individuals (whatever their source) can be conveyed from individuals to governments. I think I disagree with this. There really are two different constructs needed -- one for individual rights and one for collective needs (which, if they're well-structured, serve individuals). I think this is, in a way, what Hayek is arguing as well. The collective superstructure, which contains the economy and the economic activities of all individuals, has its own special set of rules and requirements that don't really have any relationship to morality-based rights of individuals. Whether these rules and practices arise through cultural evolution or through governments acting on behalf of the people, they are intended to provide an order that enables greater individual empowerment (at least if you can buy the idea that a government can act on behalf of people). But, all this is very tricky when it comes to government because there are fair arguments about how many resources should be devoted to these issues that address the collective good. Almost everyone agrees that national defense does, although you'd certainly get a lot of argument about the degree of expenditure to attain the desired ends.

Are there other things the government might manage on behalf of the collective? The environment? It certainly would be a stretch to say that individuals have a "right" to tell someone in another state that they can't release nitrogen or sulfur oxides as it would be nearly impossible to prove any direct "offense" (to use Locke's terms). How about infrastructure - highways, airports, shipping ports? I think one could make a theoretical case that this could all be done through private enterprise -- and, in fact, I think it might eventually work that way -- but I would contend that our economic superstructure is not yet sophisticated enough to have handled those kinds of decisions in a manner that would have yielded the great efficiencies that we now enjoy due to government investment in our infrastructure. Then there's safety nets, healthcare, child welfare. I think there are some reasonable arguments that the government should have had a role in these areas in the past, and I haven't yet seen an alternative system that has dealt well with these issues. In fact, the lack of such a system is why the government has stepped in.

The other day on NPR, during the Lehrer report, Kevin Phillips (who, admittedly, represents the liberal view), said something that resonates with me. The gist was that he thinks many Americans are insulted by the statement in Bush's State of the Union that the American people can spend the money better than the government, and that's why he (Bush) is so pleased about the tax cuts he pushed through (sorry, I don't have time at the moment to get the exact text off the internet). Kevin Phillips pointed out that it doesn't matter how much his taxes are cut, nor how much anyone else's are cut, this will not address the challenges that we face. No matter how much money he saves in taxes, Kevin Phillips will not be able to do anything about the environment, national defense, or the healthcare system. Purists, like Howie, might argue that there are private solutions for all those things (except maybe national defense) and all the private sector needs is resources and it will find them. I'm skeptical that the solutions can be found in a timeframe that is acceptable to anyone. In the meantime, we need the government solution, even as the government tries to formulate, with the private sector, an effective solution that backs the government out of the implementation role, even while maintaining the oversight/governance role.

There's a whole lot more to say on this, but no time now. Later.

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