Question: When you see on the stock ticker that the price of a barrel of oil has gone up (or down), is that a good thing or a bad thing?

Answer:  I think this question is a whole lot more complicated than it first appears.

I bring this up because I’m watching one of the cable news channels and the talking head just said that the price of oil dropped $2 on the bad jobs report released this morning. Now normally, when the framing is gas prices, oil going down is a good thing. But in this case, the framing is “demand in the American economy,” which means that oil going down is bad because it’s an indicator that economic demand is stagnating.

But this is problematic, of course, because it means that no matter what direction oil goes — up or down — we can theoretically be pessimistic (or happy) about it.

Still, there are other angles too. Higher oil prices are good for oil companies, almost all of which are public entities, and most of which are blue-chip stocks that are owned significantly by public and private pension funds, and comprise significant portions of mainstream mutual funds.  So increased oil prices are probably good for your retirement portfolio, and your state governments balance sheet. Higher oil prices are also associated with a decrease in driving (hedged by a marginal decrease in government gas tax revenue ).

On the other hand, increases in oil prices tend to have systematic inflationary effects, since oil underpins the costs of all goods. Inflation is not great for anyone (except maybe the self-employed who have high capital debt, like farmers), and definitely not good for your pension fund. So that’s a factor. My sense is that there are also trade imbalance effects of oil, although I don’t know enough about international finance to say.

But I do think it’s safe to say that an increase (or decrease) in oil prices is not inherently good or bad for the average American. It fundamentally depends on your financial relationship to oil itself — how much do you drive, how much do you (or your retirement fund) have invested in oil-based equities, and what are the inflationary consequences.

You don’t have to be a bleeding-heart liberal to agree that that some proportion of one’s destiny in life is dictated by factors utterly beyond the control of the individual. In fact, my experience has been that despite some arguments to the contrary, conservatives and libertarians are just as willing as liberals to accept such a proposition. The difference, I think, is that conservatives and libertarians are at peace with the consequences, whereas many liberals have a general uneasiness with the idea that individual achievement is ultimately constrained, regardless of effort, by an unequal starting point.

But that’s a different topic.

The question here is simple: if you accept that there are three basic lotteries in life — a genetic one for the innate talents and capacities you possess, a geographic one for the society you happen to be born into, and a financial one for the resources you and your family control at your birth — how would you rank the relative importance of each, and what would you consider as you create your ranking?

More on this later this week. Continue reading →

The New York State legislature has just legalized gay marriage in New York.

For the libertarian reasons I’ve outlined here and here, I don’t think this is the optimal way to address the issue of marriage inequality; it takes a set of special government preferences (for heterosexual married couples) and extends those benefits to a wider group of people (heterosexual and homosexual married couples), while leaving enormous pools of people short of the benefits (single people, people who prefer polygamy, and the huge and growing group of long-term monogamous cohibatators).

It’s kind of like if the civil rights act had said “no discrimination against blacks” instead of “no discrimination on account of race.” Not a bad thing, by any means, but hardly a statement of universal equality on the issue of human sexual relationships. More after the jump. Continue reading →

It is absolutely breathtaking to watch a vigorous, bi-partisan debate on the floor of the House over the war powers of the President. Agree or disagree with the war in Libya, the War Powers Act, the global war on terrorism, or the contemporary reading of the Constitutional war powers of the President, this is fundamentally what the American legislature is supposed to do — have heated debates over declarations of war (not) requested by the executive — and too often does not.

Go Congress!

One of my biggest pet peeves in political discourse is the constant charge of hypocrisy, both explicit and implicit.  They take many forms, most of which you are probably familiar with, and all of which can be grouped into two categories. Continue reading →

I was just walking down South Capitol Street, and I saw a guy wearing a #37 Strasburg jersey.

An Expos jersey. Continue reading →

In my previous post, I suggested that one way of putting the breaks our tendency toward global empire would be to institutional dis-incentivize both the President and Congress from deploying and using the military except when absolutely necessary. Continue reading →

So I’ve been doing a lot of thinking about how to adjust the Constitution to de-incentivize the 20th and 21st century American tendency toward global military empire. And I came up with three broad goals:

1) Create institutional incentives that dissuade the President from deploying troops without congressional consent;

2) Create institutional incentives that dissuade Congress from granting that consent;

3) Create institutional incentives that dissuade the average citizen from supporting wars of choice.

Now, that’s the easy part. The hard part is coming up with such institutional incentives, and creating them in such a way as to not make a mockery of the whole thing or give rise to silly unintended consequences. Continue reading →

Last week, the Senate took four votes on four separate budget resolutions: the House-passed Ryan budget (failed, 40-57); the Toomey GOP alternative (failed, 42-55); the Rand Paul alternative (failed, 7-90); and the president’s budget proposal (failed, 0-97). What do we make of this? Continue reading →

If the world is going to end on Saturday as some folks are predicting, we’ve got a few things to discuss. Most importantly, rapture insurance is evidently being price gouged. Whoa.

Let’s unpack this from a libertarian perspective, one step at a time. Continue reading →

“Waste, fraud, and abuse.”

You won’t find a policy more despised in capital cities than this. The Obama White House hates it. Congressional committees  hate it. State governors hate it.  Watchdog groups hate it. Executive orders try to stop it. Bills in Congress try to prevent it. President Clinton battled it. Ronald Regan addressed the nation on it. Bloggers all roll their eyes when they hear about it.

Everyone hates waste, fraud, and abuse. But when, exactly, did we start talking about it? Continue reading →

Imagine a highly-selective liberal arts college. Say it’s in the Top 25 in the U.S. News and World Report Rankings for Liberal Arts Colleges, but not in the Top 10. Like Hamilton. Or Colgate. Or Washington and Lee. The kinds of schools that have a few thousand students, endowments in the $500 million range, solid campus facilities, and first-rate liberal arts faculties. Good enough to be top-flight liberal arts colleges, but also clearly not as well-regarded as the top liberal arts colleges (Williams, Amherst, etc.), or even close to the reputation and resources of the top undergraduate universities (Yale, Harvard, Princeton, etc.).

Now imagine a single alum was going to give this liberal arts college $5 billion, no strings attached.

Three questions:

1) What would be the most effective use of the money, if the goal is to improve the school (“improve” being used in the traditional sense — some combination of getting better students to choose the school, increasing the economic value of a degree from the school after graduation, and some amorphous academic quality, like making better people and/or improving the world)? That is, if you were going to devise a master plan for its long-term expenditure, what would the broad outline look like? Or, to put it another way, if you were the alum making the donation and wanted to put some general guidelines/restrictions on its use, what would you say?

2) Could that kind of money, properly maximized in its use, easily take a #18 ranked liberal arts college and catapult it to #1? How long would it take?

3) If the answer to question #2 is yes, would it also be possible to make said liberal arts college nationally competitive wit the elite universities? In effect, could you buy your way to being Princeton for $5 billion?

Continue reading →

Currently reading Last Call: The Rise and Fall of Prohibition.

The consequences of Prohibition are more or less common knowledge: enforcement was either difficult or impossible, and at any rate expensive; continued demand for alcohol gave rise to massive criminal syndicates; unregulated booze was a greater health hazard;  and the flouting of the law bled into a general disrespect for all law. And so on and so on. In retrospect, the whole ordeal seemed predestined to fail. And we don’t need a new history of the policy to tell us that.

What I did not realize about Prohibition is that, once you read the fact pattern of what happened in 1919, the whole business  seems obviously destined to fail even in the moment of its greatest triumph. And ground zero for that failure is the relationship between the 18th amendment and the Volstead Act. Continue reading →

Most of the media coverage of OBL’s demise has been, frankly, pretty boring. But I thought this picture was amazing: Continue reading →

I think most libertarians, if queried as to which amendment to the Constitution is most important, would answer “the 1st.” But a close second would be the 4th:

The right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated, and no Warrants shall issue, but upon probable cause, supported by Oath or affirmation, and particularly describing the place to be searched, and the persons or things to be seized.

I bring this up because driving home from vacation last night, I’m pretty sure my family and I ran into a 4th amendment violation. Here’s the fact pattern: Continue reading →

Music question: name a band or recording artist whose most acclaimed or best selling or most defining work is a live album. I can only think of two…

Continue reading →

It’s officially complete.

Somehow, it is now possible to intellectually marry war in the name neo-conservatism with war in the name of liberal humanaitarianism. I’m just going to call it neo-humanitarianism.

Now, I’m not a fan of neo-conservatism or humanitarian interventionism (although I’m not this negative on the latter). But I understand them as philosophical orientations to geo-political problems. And I suppose the backers of each ideology have always had some a few things in common, perhaps more than they were willing to admit: a sense of self-righteousness, an ignorance of the theory of unintended consequences, and a pair of rose-colored glasses.

But any attempt to describe an individual war of choice as somehow fulfilling the desires of both theories, that’s insane. Or the definitions have just become so vague as to be meaningless. Newspeak.

More interesting to me is the idea of public desensitization to war. Not to harp on Orwell, but the first thing I thought of on Friday was  how little of the public discussion space all of this was taking up. Think back to the Gulf War buildup, fall 1990 and winter 1991. Make that the origin point, with time going forward on the X axis and public discourse on the Y. This function not only has a negative slope, but the second derivative is negative, too, right?

Seriously, how much longer can it be until we are at war with Eastasia?

Once upon a time, I used to be mildly embarrassed to admit that my foreign policy ideology most closely resembled Quaker Pacifism, and consequently manifested itself as isolationism. But not anymore.  And I guess there’s a silver lining that more people must have woken up today than yesterday and fancied themselves foreign policy realists (a positive second derivative!). I’ll take that over this eight days a week.

But it’s cold comfort indeed.

I just switched over from C-SPAN to CBS to watch the first game of the tourney, and I swear this was the first line of audio after the broadcast started, courtesy of Ian Eagle:

“Welcome everyone, to Tampa, Florida,  for the second-round matchup of Temple and Clemson.”

They’re really going to go with it. Just kill me. I predict the 2012 tourney does not feature this nomenclature nonsense.

I’ve now had three different people, all quite intelligent by most standards, try to tell me that the earthquake in Japan may end up having a net positive economic effect on Japan’s economy, because of the stimulative effect of all the rebuilding.

This is completely insane.

It is almost, by definition, an example of the broken window fallacy. You cannot create wealth by destroying things. That is not an opinion, or a political argument. It’s not even a case-closed “theory” like evolution or gravity. It’s just true.

Destruction can proportionally re-allocate the total remaining wealth, post-destruction, which can produce relative and localized wealth booms (i.e. the U.S. after WW2, when the rest of the world lay in ruins and we were largely unscathed), but it cannot increase the aggregate size of the pie; the total amount of wealth in the world inherently goes down when things are destroyed. If this were not true, we could just pay people to build houses in the morning, and then pay other people to knock them down at night.  Voila, boom time!

Yes, production in Japan is probably going to go up soon, but it will be production that replaces lost wealth at the expense of the things that would have been created new, absent the earthquake. Maddeningly, the GDP statistic in Japan will also go up, because it does not capture the negative value of capital destruction.

As David Bernstein said in response to a Wall Street Journal piece that said the earthquake may lift the economy in Japan, “Sure, and instead of sending American aid, let’s follow up the earthquake with a few bombing runs over Tokyo. That will really ‘lift the economy.’ Geez.”