Eleutherian

The publisher of the Las Vegas Review-Journal wrote a scathing editorial in the state's largest newspaper, seemingly discouraging Nevadans from reelecting Senator Harry Reid. Now, this blog will never endorse one candidate over another, but Nevada, your senator has abandoned you.

Last week, upon meeting the Review-Journal's director of advertising, Senator Reid shook his hand and said, "I hope you go out of business." A senator should never say this to a constituent - especially during a recession. Harry Reid has lost touch with his constituents.

As the newspaper's publisher, Sherman Frederick, wrote:

Such behavior cannot go unchallenged....it must be called what it was -- a full-on threat perpetrated by a bully who has forgotten that he was elected to office to protect Nevadans, not sound like he's shaking them down.

No citizen should expect this kind of behavior from a U.S. senator. It is certainly not becoming of a man who is the majority leader in the U.S. Senate. And it absolutely is not what anyone would expect from a man who now asks Nevadans to send him back to the Senate for a fifth term.

Nevadans, libertarians will not abandon you. Libertarianism is the ideology of environmentalists, of family values, of women's rights. Las Vegas was created for libertarianism, and Nevada will make a great western foothold.

The U.S. government apparently does not like the fact that they infringe on less civil liberties than the UK government. Last week, I posted on a British law, allowing the government to shut-off Internet access to private citizens if they are caught illegally downloading. I stated:

In the United States, state government can revoke a citizen's driver's license because driving is a privilege, offered by the state. The Internet is not a privilege. If the government does not provide Internet access, then it cannot revoke your access to it.

Senator Jay Rockefeller of West Virginia wants to change that with Senate Bill 773. The proposed bill will allow the President to disconnect private Internet connections - in cases of national security - of course.

Why should citizens be upset about trading civil liberties for security? After all, it's not like disconnecting private Internet connections will prevent Americans from receiving unbiased information from around the world or essentially shutdown our Internet-dependent economy.

It is a natural process for modernization to reduce the influence of traditional belief systems. Such a tradition hinders progress by favoring traditional practices over developing a system based on the rule of law, sacrificing individual freedom and self-interest. These points are supported by the thorough analysis by Ronald Inglehart and Christian Welzel in their book Modernization, Cultural Change, and Democracy:

The shift from traditional to secular-rational values becomes slower and stagnates, while another change becomes more powerful – the shift from survival to self-expression values, through which people place increasing emphasis on human choice, autonomy, and creativity.

The Confucian tradition fit China well for its stage of development when it was largely an agrarian society. Before agrarian societies reach proper levels of industrialization, farmers are at the mercy of nature (or in many societies, gods of the earth) for their existential security. Farmers in China found this sense of security in the Confucian tradition and trust in a strong central government.

Every society begins to shift away from traditional beliefs and practices once a certain point of industrialization is reached. Yes, it is a good thing that China has moved away from such a traditional system that hindered its growth and development. However, history has consistently shown that top-down reform movements orchestrated by the central government are not necessary to produce such a change. As a result of the infamous Cultural Revolution, economic growth stagnated or declined, the education system halted (with illiteracy reaching as high as 40% in some areas), priceless cultural artifacts were destroyed, and an estimated 400,000 to 3,000,000 people lost their lives. These atrocities could have been avoided had the natural course of modernization been followed.

The only beneficiaries of the Cultural Revolution were the Communist Party. According to Friedrich von Hayek, in The Road to Serfdom:

The most important change which extensive government control produces is a psychological change, an alteration in the character of the people.

As a result of the revolution, the Confucian tradition, which already valued a strong central government, was replaced by a more secular belief structure through the use of extensive government propaganda, reprogramming, and occasionally violence. It was risky to destroy a system that already favored authoritarian rule to institute a new, secular system. Inglehart and Welzel have stated:

But these secular beliefs are no less dogmatic than religious ones. Secular beliefs and doctrines do not necessarily challenge unlimited political authority; they usually legitimize it, as did fascist and communist ideologies.

The Cultural Revolution was only necessary as means for the Communist Party, specifically Mao Zedong, to further consolidate power over the people.

Of course, perhaps even Confucius would agree with this quote on the virtues of self-interest by the American environmental essayist Ralph Waldo Emerson:

It is one of the most beautiful compensations of life, that no man can sincerely try to help another without helping himself.

If not Confucius, then perhaps the leaders of the Han dynasty would agree with this statement, as is implied by the historical records of Sima Qian:

When all work willingly at their trade, just as water flows ceaselessly downhill day and night. Things will appear unsought and people will produce them without being asked. For clearly this accords with 'the Way' and is in keeping with nature.

I believe Emerson, who greatly appreciated environmental symbolism, would agree with this statement, as would the great free market economists of our times. This appears to be the Chinese historical equivalent of Adam Smith’s “invisible hand”.

However, I do wonder if perhaps Sima Qian, in writing “the Way” (note the capitalization), was not referring to market forces but rather to Daoism, which began during the Han dynasty. In fact, this passage from his historical account seems to conform to the Daoist concept of wuwei (无为). The forces of nature, like a river, work harmoniously with the world. Problems only arise when outside forces (such as government) exert its will against it, disrupting the harmony.

Venture capitalists are the backbone of private investment. However, the Obama administration wants to increase regulations, making their job more costly and less efficient. According to Steve Forbes:

Even though most venture capital outfits are relatively small and rarely, if ever, use debt, the Treasury wants to apply a bewildering array of rules similar to those for investment advisors and banks. Thus, instead of focusing on funding the next potential Apple, Microsoft, or Oracle, VCs will have to devote considerable time and resources to filling out disclosure and compliance forms. Treasury Chief Timothy Geithner's lame excuse is that since reform should cover the entire financial industry, leaving out venture capitalists would be a form of discrimination. Alas, there's more at work here than pigheaded logic.

This Administration truly believes that the private sector is a destructive, unguided missile that needs the constant and close supervision of Washington politicians. Without it we'd be subject to more disasters like the current financial crisis. In other words, Washington doesn't like the idea of venture capitalism because VCs and the entrepreneurs they fund create and do things without anyone's permission.

While Forbes may or may not be paranoid about the administration's intentions, the regulations will truly have a chilling effect on private investment. If the private sector cannot provide the investment in technology necessary to stimulate the economy or protect the environment, then the government will be forced to spend yet more taxpayer money.

Libertarian environmentalism is not a contradiction of terms - nor is free-market environmentalism (another good summary can be found here). Free-market environmentalism, however, is too focused on property rights and tort reform. While these are both highly productive and praiseworthy measures, I believe a broader approach is necessary. Simply put, libertarian environmentalism seeks to improve the environment without the use of force.

Many environmentalists today (I dare say a majority) rely too heavily on force to achieve their goals. They look to government to punish and coerce individuals to behave a certain way. The government often acts in accordance to their will, as the government has grown accustomed to using force to achieve other goals.

Environmentalists and the government justify their use of force by reason of market failure. To the contrary, it is the government's failure to allow the market to correctly function.

Rather than relying on force, libertarian environmentalism encourages environmentally-friendly actions through economic incentives. You could replace the Environmental Protection Agency (EPA) with the Environmental Incentive Agency (EIA), replacing negative reinforcement with positive reinforcement.

Critics of both libertarian and free-market environmentalism are quick to bring up global warming. While I am more inclined to believe in climate change over global warming, I made my feelings clear in yesterday's post on the topic:

If a cap-and-trade system (hereon more accurately referred to as a "carbon quota") were implemented in the United States, the level of emissions would be completely arbitrary. No scientist knows the level of carbon dioxide at which the atmosphere become irreversibly unstable. Without knowing the upper limit, any restriction in quantity will necessarily be made through guesswork (or, even worse, through politics - i.e. what sounds politically popular).

Do not allow the supporters of cap-and-trade ("carbon quota") mislead you by stating they are "creating a market" for carbon. They are using force to achieve an unscientifically-based goal.

I will not completely ignore the climate change issue. In a previous post on climate change in Africa, I stated:

I won't deny the existence of climate change. However, it is more a regional phenomenon than a global one. For example, many environmentalists cite the melting glaciers of Mt. Kilimanjaro as a sign of global warming. These people overlook basic science. The area surrounding Mt. Kilimanjaro has been largely deforested by the local population. Due to the deforestation, less water evaporates from the trees, providing less snowfall to replenish the glaciers each year on the mountain.

A 2006 study by Quan Li and Rafael Reuveny found that increased levels of political freedom have been shown to lower CO2 and NOx emissions, decrease rates of deforestation and land degradation, and reduce water pollution. If force was the appropriate means to achieve environmental goals, authoritarian countries like China would have spotless environmental records.

As I mentioned previously, factors such as deforestation are major contributers to climate change. Forcing a carbon tax or carbon quota on the economy is not the most efficient way to tackle problems like deforestation that directly contribute to climate change.

However, I will not deny the role of increased carbon emissions on climate change. I previously blogged on private sector solutions to this problem, including a group of UK and US scientists who plan to create wind-powered ships to increase cloud cover, reflecting the suns rays, without affecting regional weather patterns. The plan costs $9 billion to test and launch 1,900 ships (a cost of less than $5 million per ship). There's no need for the government to force individuals' behavior when private sector solutions are available.

I've been following the carbon abatement issue for a few years now, and in the debate between a carbon tax (tax on price) and cap-and-trade (tax on quantity), Terry Dinan, the Congressional Budget Office (CBO)'s Senior Advisor for Climate Policy, has been the clearest, most reasoned voice. This post will cover her finding in my favorite paper on the issue, available at the CBO website.

I will be speaking largely from the table below (click to enlarge):


If a cap-and-trade system (hereon more accurately referred to as a "carbon quota") were implemented in the United States, the level of emissions would be completely arbitrary. No scientist knows the level of carbon dioxide at which the atmosphere become irreversibly unstable. Without knowing the upper limit, any restriction in quantity will necessarily be made through guesswork (or, even worse, through politics - i.e. what sounds politically popular).

Having stated that, the CBO recognizes that if the government somehow managed to guess the correct carbon quota to match the actual cost of reducing the carbon, then there is zero difference between a carbon tax and a carbon quota (in terms of reduced emissions and cost). This is illustrated in the "Expected Outcomes" column on the table.

It is far more likely that the government will guess incorrectly. If the cost is higher than expected, a carbon tax will reduce less carbon than a carbon quota, but the carbon tax will provide the greater net benefit as the emission reductions were achieved at a lower total cost.

If the cost of reducing carbon is lower than expected, a carbon tax will reduce more carbon than a carbon quota and do so at a greater net benefit. This illustrates an obvious limitation of a carbon quota. Even if the price level would encourage greater reductions, a carbon quota will always reduce carbon by the same amount.

The British government has declared that they will begin to cut-off Internet access to people who illegally download movies and music. Despite claims by groups such as Open Rights Group that this decision limits free expression, the British Phonographic Industry openly supports it as a new tool to fight piracy. The movie and music industries would trample every personal liberty to fight piracy.

In the United States, state government can revoke a citizen's driver's license because driving is a privilege, offered by the state. The Internet is not a privilege. If the government does not provide Internet access, then it cannot revoke your access to it.