The Answer Is Liberty

Sunday, June 27, 2010

A Great Candidate for Governor of South Carolina

Nikki Haley is for term limits, the end of secret legislative voting and full disclosure of legislator income sources. All great first steps to better government.

http://www.nytimes.com/2010/06/23/us/politics/23elect.html

Sunday, June 20, 2010

Risks Socialized Once Again

Image via Wikipedia

I refer to what is probably the largest environmental disaster in US history, BP's gulf oil spill. The US has this crazy law limiting the liability from oil spills to $75 million.

Apparently, this was done to give oil companies the incentives to take on risky exploration and drilling.

And guess what? It worked!

But, as always, you create more of what you subsidize. More risk taking, with less concern about the consequences.

Of course, Obama is trying to change this limit RETROACTIVELY, which is a clear violation of the rule of law. You can't make a set of rules and then go back and change them after the fact. People can't violate rules that weren't in place when they made their decisions.

If that effort succeeds, we will have further eroded the rule of law. The government took on that liability when it passed that rule and now we're stuck with it.

Sunday, June 6, 2010

Can Democracy and Recreational Drug Use Coexist?

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More controversy in California about the legal sale of marijuana.

This is just one of many issues that affect quality of life in neighborhoods. What's the best way to make these sorts of decisions?

I think the real solution is letting each small area within cities decide for themselves what businesses or activities are permitted. Ideally, people should be able to buy property with the assurance that certain things won't be happening in the area, unless a high percentage of residents vote to allow it. And currently legal things cannot be made illegal without a similar high percentage.

Democracy is not always a good thing and having your rights changed by simple majority vote is often quite bad. Contracts on the other hand create a lot of stability and thats a good thing for neighborhoods. We need rules that can only be changed that can only be changed by 70, 80 or 90% of the voters in a neighborhood.

Or perhaps, how many people vote for a measure determines how quickly it is implemented. If 95% vote for it, a measure might be implemented right away. But if only 51% do, it might take effect in 5 years, giving people plenty of time to sell and move away.

We need more local control, micro-local really. Many different kinds of neighborhoods make a city interesting and give all kinds of people the space they need. Those who don't want to be around drug use and those who want to both need to be accommodated and this is one approach.

You can't even enforce a lot of laws like this without the cooperation of citizens anyway, so why not align the rules with the neighborhood instead of trying to do the opposite, which only produces soul-crushing uniformity?

The Libertarian Way to Create Jobs

Image by elycefeliz via Flickr

In any normal market, prices cause supply and demand to equalize. If demand is higher than supply, prices rise and both supply and demand react to the new price. Some buyers decide not to buy and/or some suppliers step up production.

But if prices are not free to change, if they are held too high or low, the market cannot react to changing conditions. One side of the transaction, either buyers or sellers, will not be able to buy or sell

If prices are held low, demand will be higher, of course, but suppliers won't invest more money to meet that higher demand. They may even get out of the business altogether if the low price causes them to lose money or they make more money in a different business.

The result? Shortages. Buyers spend all kinds of time and money compensating for the shortages, maybe even more than the artificial low price is saving them. For example, when the US government held natural gas prices down in the seventies, shortages developed, even though all of the natural gas back then came from the United States.

And when prices are held too high, demand is certainly curtailed. That's bad news for the lowest quality suppliers. For example, if all cars now had a minimum price of $50K, car makers focused on the low end of the market are screwed. The market will be buying fewer cars and the low end will suffer most.

This is precisely the problem with labor market in many countries right now. Minimum wage laws are keeping wages on the low end higher than buyers are willing to pay. Buyers were willing to pay those prices when the housing bubble was distorting demand for labor, but that's all over now.

These workers would like to sell their labor, but its too expensive for employers.

What can be done without unnecessarily hurting the workers making the least? Two things. First, eliminate the minimum wage. And, at the same time, cut taxes on those who make below the minimum wage, enough to compensate for any loss.

These actions will make low end workers more attractive to hire and enable employers to compete in the global market place.

Tax revenues will decline, but so will unemployment insurance costs and government job creation expenses.

Tuesday, April 20, 2010

Sometimes Even Regulators Need Competition

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This morning from a Wall Street Journal article entitled Economy of Lies:

"When government and business collude, it's called crony capitalism. Expect more of this from the financial reforms contemplated in Washington."

When something is regulated by the government, the nature of that regulation is subject to being influenced by the regulated.

If the regulator itself had competition and participation in the regulatory scheme was voluntary, there would be real pressure to honestly regulate.

The government could, instead of regulating companies itself, manage a system of competing regulatory regimes and let people decide which one they trust.

There could be a "Good Housekeeping Seal of Approval" for accounting competing with FASB, companies could pick one and then publish to investors which one they adhere to.

If investors find that they are consistently burned by companies governed by FASB, they would start to favor companies governed by the alternative.

There would be real pressure to perform honestly over the longterm that a monopoly is not subjected to.

I work in technology and we have all sorts of competing standards that live and die by how good the results are. Competition is a good thing and we need more of it, especially in government.