Tuesday, September 02, 2014

Leading Keynesian Economist Uses The “D” Word

Guest post by Hunter Lewis

Keynes graffiti cc

Most Keynesian economists do not want to admit that America and elsewhere is in another depression. They find the word painful.

They find it painful because it contradicts the idea that Keynesian economic ideas have ended depressions forever. It also contradicts the idea that the massive and continuing Keynesian stimulus applied by world governments since 2008 has worked. For this and other reasons, euphemisms such as the Great Recession have been embraced not only by Keynesian economists, but by their allies in government and in the mainstream press.

I argued that we were in a depression in a January article and again in April. Now Brad DeLong, one of the most prestigious Keynesians, a professor at Berkeley and former deputy assistant secretary of the Treasury under Clinton, says that he agrees. It really is a depression.

DeLong doesn’t blame Keynesianism; that would be too much to expect. But he does call the thing by its right name, which is a major departure from the usual Keynesian style.

These are after all the people who call the government creating money out of thin air “ quantitative easing,” “ bond buying,” and the like, all of which are parroted by the press. When Keynes did this, he was often being impish, as when he called newly created money “green cheese,” echoing the old nursery nonsense that “the moon is made of green cheese.” His acolytes have adopted the style of dissimulation, but without the slightest trace of a sense of humour.

Although we are in a depression, it is not a depression for everyone, as is by now well known. Even so, the full hit on the middle class and the poor relative to the affluent is not adequately understood. Consider these figures from Larry Lindsey, who served Bush 2 as chief economist at the beginning of the first term, only to be booted from the White House for too much truth telling:

US Household Net Worth 2007- 2013

Top 1% Up 1.9%
Next 9 % Up 3.4%
Next 15% Down 0.5%
Next 25% Down 16.7%
Bottom 50% Down 44.2%

None of the economic statistics we get from the government are reliable. Inflation is understated. Economic growth is overstated. Unemployment is understated. But this chart of net worth is about as reliable as we can expect to get.

It tells the story of a middle class in the process of being destroyed and of poor people who will never be able to get into it. It is also noteworthy that the nine percent below the top one percent have done best of all. Although a great many government employee households are in the top one percent, a larger number are in the next nine percent.

Sometimes the economic statistics are intentionally manipulated. It cannot be a coincidence that the method of calculating inflation changed so much under Bill Clinton. But keep in mind that the statistics also reflect Keynesian assumptions that do not make sense.

In Keynesian theory, it doesn’t matter whether money is spent or invested or what it is spent on or invested in. In this cockeyed view, spending more money to put people into Medicaid, paid for by borrowing from overseas or printing new money, is just as good as Apple investing in new jobs.

We saw an example of this in the recent Gross Domestic Product numbers released by the government. Most of the new spending in the first quarter of this year was for health care and most of that for Medicaid expansion. But it wasn’t even actual, documented spending. It was just a wild, finger-in-the-wind guess by the government.

As a result, the first quarter was initially reported with a minus 1% economic growth, then revised to minus 2.9%. One idea floating around is that the Commerce Department’s revision reflected a decision to make the first quarter look worse in order to move healthcare spending to the second quarter and thus make it look better. If so, why would the second quarter have been deemed more important? Because it is leading up the fall elections.

The destruction of common sense economics by Keynesianism is a major reason for what has happened to the American middle class and poor. But our governing elites and special interests do not just love Keynesianism for its own sake. They especially love the opportunity for crony capitalism that it affords. Keynes himself was not financially corrupt, and would have been appalled to see the corruption he unleashed.

Nor did our present problems arrive in 2007-08. They can be dated at least to the beginning of bubbles and busts during the Clinton administration and arguably even further back.

For example, if we look at what has happened to poor people since the War on Poverty began in the 1960’s, we see them earning less and less on their own and sinking even further into poverty, if we exclude growing welfare payments. Analyst John Goodman has calculated that economic growth cut the rate of poverty in half between the end of World War Two and 1964, when the War on Poverty was launched. Since then the percent of people poor would have increased, but for the extraordinary $15 trillion spent by the government, much of it with borrowed funds.

There are those among the top one and top ten percent of households who are working on this problem every day. They help the middle class and poor by working hard, saving, making wise investments, and hiring, or even by not investing or hiring until conditions are right. There are many others who make it steadily worse by feeding off a corrupt and swollen government and wasting trillions of borrowed or manufactured dollars.

Hunter LewisHunter Lewis is co-founder of AgainstCronyCapitalism.org. He is co-founder and former CEO of global investment firm Cambridge Associates, LLC and author of 9 books on moral philosophy, psychology, and economics, including the widely acclaimed Are the Rich Necessary? (“Highly provocative and highly pleasurable.”—New York Times).
     He has contributed to the New York Times, the Times of London, the Washing­ton Post, and the Atlantic Monthly, as well as numerous websites such as Breitbart.com, Forbes.com, Fox.com,RealClearMarkets.com, and Townhall.com. His most recent books are Crony Capitalism in America: 2008–2012, Free Prices Now! Fixing the Economy by Abolishing the Fed, and Where Keynes Went Wrong: And Why Governments Keep Creating Inflation, Bubbles, and Busts. He has served on boards and committees of fifteen leading not-for-profit organizations, including environmental, teaching, research, and cultural and global development organizations, as well as the World Bank.
    This post first appeared at his website, Against Crony Capitalism.

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Quote of the day: Happy birthday Maria Montessori

I’m a couple of days late, but never too late to pay tribute to this heroine. Anoop Verma chose this quote to do the job:

In her essay “The Comprachicos,” Ayn Rand lauded the Montessori Method as exactly what children needed to develop properly.
    “The purposeful, disciplined use of his intelligence is the highest achievement possible to man: it is that which makes him human.” “[the best development of intelligence is what] Dr. Montessori had in mind…when she wrote the following about her method: ‘The didactic material, in fact, does not offer to the child the ‘content’ of the mind, but the order for that ‘content.’…The mind has formed itself by a special exercise of attention, observing, comparing, and classifying…which leads them to become active and intelligent explorers instead of wandering wayfarers in an unknown land.’”

PS: If you want to help children become active and intelligent explorers instead of wandering wayfarers in an unknown land, there’s a Montessori training course starting in Auckland this summer

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No sympathy for murder

Astonishingly, the media commentary about the man who slaughtered two people in Ashburton in cold blood is sympathetic … to the murderer. “Suspect had returned to die,” says a puff piece by the ODT, for example.

Pity he didn’t do it quietly. I agree with Lindsay Mitchell.

I have no sympathy for him. He lost his mother while still at college. So he should know what it feels like. Yet he has probably robbed children of a mother; partners, sisters and brothers, parents, friends of someone who added enormous value and meaning to their lives. Someone who was everything to them….
   It is unforgivable whatever his circumstances are. Harsh? I don't think so. My compassion is directed towards those innocent people just going about their work. Trying, in fact, to help this man…
    No. I have no sympathy. It's just a shame he didn't finish himself off and avoid all the further suffering the friends and families will have to endure as he appears repeatedly before them on their TV screens if not in the flesh.

He did have a choice, and he made it; a choice to make others suffer and die. Had I met him, I may have felt sympathy for him 24 hours ago. I have zero sympathy for him now.

Mercy to the guilty is injustice to the innocent.


Smart green failure

_NOrmanI know nobody’s talking about them, but Russel Norman is still talking about “a smart, green economy” as if that were an actual thing.

The Green Party's plan for an innovative economy includes … $1 billion of new government funding over three years for research and development to kick-start a transformational shift in how our economy creates wealth.

What sort of transformational shift? One less “reliant on exporting commodities like milk powder, which is rapidly destroying our rivers and lakes, and leaving our economy increasingly vulnerable to the
fortunes of one market — China,” and more like the “alternative, and that is the Smart Green Economy.”

We can continue down the path of National’s short sighted Pollution Economy or we can change course and embrace a Smart Green Economy. The choice is ours.

Nice, but what exactly is it?

Apparently it’s an economy in which the government sets up “an expert innovation working group … to decide on the best way to deliver this step-change in innovation funding.” This step change being $1 billion in grants, and even more in tax credits, to companies heading in directions favoured by the expert working group – sorry, the expert innovation working group – “a key criterion for assessing all future industry grants” being a “focus” on “sustainability.”

Future governments will have to accept the inevitable failure that comes with investing in innovation along with sharing in the brilliant successes.

And so will future taxpayers.

This model is not new. It was one of Obama’s flagship “stimulus” projects in recent years, with billions being poured into the smart, sustainable new economy. As it happens, yesterday was the third anniversary of stimulus" benefactor Solyndra officially declaring bankruptcy.

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That was just one failure the American taxpayers had to accept. One among many, including:

    • Beacon Power Corp: Received $43 million in federal loan guaranteed in 2009 and also received $29 million in PA grantsBankrupt in October 2011
    • Ener1 (parent company of EnerDel): Received $118.5 million in federal loan guaranteesBankrupt in January 2012 – has since exited bankruptcy
    • Evergreen Solar: Received $58 million in MA loan guarantees (an undisclosed portion sourced from federal ARRA block grant)Bankrupt in August 2011 with $485.6 million in debt
    • SolyndraReceived $535 million in federal loan guarantees in 2009 and $25.1 million in CA tax creditBankrupt in August 2011
    • SpectraWattReceived $500,000 in federal loan guarantees in 2009Bankrupt in August 2011
    • Babcock and Brown: Received $178 million in federal grants in December 2009 (4 months after it went bust)Bankrupt in early 2009
    • Mountain Plaza Inc.: Received $424,000 in federal grants through TN Department of Transportation in 2009Bankrupt      in 2003 and again in June 2010
    • Solar Trust of America (parent company: Solar Millennium from Germany): Received $2.1  billion loan guarantee in April 2011Bankrupt in April 2012
    • A123: Received $300 million in federal grants and $135 million in MI grantsDeclining orders and  multiple layoffs
    • Amonix, Inc.: Received $5.9 million in federal tax credits in 2009 through  ARRALaid off 2/3 of work force
    • First Solar: Received $3 billion in federal loan guaranteesBiggest S&P loser in 2011, CEO fired
    • Fisker Automotive: $529 million in federal loan guaranteesMultiple 2012 sales prediction downgrades for first car release, delivery and cash flow troubles;Assembling cars in Finland
    • Johnson Controls: Received $299 million in federal grants in 2009Low demand caused cancellation of a new factory, operating at half capacity
    • Nevada Geothermal: Received $98.5 million in federal loan guarantees in 2009Defaulting on long-term debt obligations, 85% drop in stock value
    • Sun Power: Received $1.2 billion in federal loan guaranteesDebt exceeds assets; French oil company took over last fall
    • Abound Solar: Received $400 million in federal loans in 2012½ work force laid off
    • BrightSource Energy: $1.6 billion federal loan approved in April 2012 – loan obtained through political connections with the administration; absent the loan, Brightsource’s solar power purchase would have fallen through.

British taxpayers have been sucking up the same failures for years, with the push to “smart, green energy” raises the cost to consumers by £1.1billion; with every job created in the United Kingdom in “renewable energy” costing 3.7 jobs elsewhere; and with Britain’s forest of wind turbines consuming more power in winter (when they’re needed most)  than all the power it produces.

imageSo too have Spanish taxpayers, where 12 billion Euros were spent in 2009 alone, €571,138 to create each “green job,” and with each “green” megawatt installed destroying 5.28 jobs on average elsewhere in the Spanish economy.

So too in Germany, where even with subsidies 300% higher than conventional electricity generation consumers pay nearly ten percent more—and carbon abatement costs at $1,000 per ton for solar power are roughly fifty times the European price for carbon.

So too in the Netherlands, the home of the windmill, where after billions of euros of subsidies, most going outside the Netherlands, Prime Minister Mark Rutte now recognises today’s “windmills turn on subsidies.”

Dr Norman says “"smart, green economics" is the way to go because the international market for sustainable products and clean energy technology is growing rapidly.”

He is talking effluent. Despite all the rhetoric, Russel Norman’s new innovation economy is just another politician picking losers.

Pity then that the media, both new and old, is too busy to challenge him on it.

“Sustainable energy” is not sustainable—not even with subsidies. “Renewable energy” is not renewable—not even by  leaving the taxpayer on the hook for billions.

So, before you and I find ourselves on that hook, why does the media not challenge Russel Norman for continuing to pretend he owns the source to some economic magic bullet?

You tell me?

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Monday, September 01, 2014

The #1 reason for #dirtypolitics: the barrenness of the "centre-right"

The #DirtyPolitics saga saw the commentariat almost immediately begin comparing John Key to their favourite modern-day bogeyman, Richard Nixon.

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On the face of it, the link looks seriously overblown. Howard Hunt and Gordon Liddy led a shambolic dirty tricks team directly overseen by Nixon’s Attorney General that ran a series of lurid operations including luring political opponents with prostitutes, attempts to destroy political party conventions, and carrying out break-ins of journalists and political opponents.

Cameron Slater runs a blog.

If the commentariat can’t see the difference between a blog post and a break-in, we can only despair.

That said however,on a level deeper than the superficial non-similarities pointed to by the regular critics, with all their wild mud-slinging, there is a connection to which they are and will always remain blind.  The real connection is not so much dirty trick s or Judith Collins’s alleged enemies list; the real connection is ideology – or, to be precise, the lack of one.

If there is something that links Jason Ede, Cactus Kate, Cameron Slater, Carrick Graham and all the others exposed in (let’s not forget) Cameron’s stolen emails, it is the idea that ideas don’t matter. This exposure is apparent not just in the stolen emails, but in virtually every attack post Cameron and Cactus have ever published. It’s not a battle for ideas, but a battle for scalps. They don’t attack the ideas of their opponents, they attack their opponents themselves. Thus they are led not to attacking, say, outrages against individual rights committed right out in the open, but to looking for dirt, however risible, that may be found somewhere in the shadows. The triviality of the first, a bottle of wine in the case of Adam Feeley, reveals the level of the horizons of these folk trying to make the world safe for something they call the “centre-right.”

Part of the reason is that there is little ideologically that divides the so-called “centre-left” and “centre-right” – certainly not at this election, where either the two major parties could just as easily sign up to their opponents’ policies as their own, and when the ruling party has done precisely nothing in six years to overturn the flagship policies previously implemented by its opponents.

So when a battle of ideologies is out, what is left but a battle of attack dogs. Oblivious to the process by which people form ideas, they instead attack individuals scalps – ignoring that such attacks have no power, except with those who already share their intellectually barren worldview.

If there is something that links these people to Nixon and his White House Plumbers, it is this disinterest in ideas, and the consequent obsession with dirty tricks.

Both the President and all the President’s Men who fell with him were ideologically vacant – guided not by ideas but by range of the moment reactions.   This was a President who called for polls to decide whether or not to bomb Haiphong harbour, and then waited for the results while his minions worked to skew those very polls. A President whose chief domestic adviser confessed at the Watergate hearings that he should never be considered an “ideas man.”  Whose adviser’s lieutenant, John Haldeman, “looked upon himself not as an 'issues' man but as a technician and organiser."

For what use would ‘issues’ or ideas be to such people? For them, politics wasn’t  a battle of ideas at all: it was a battle of warring political tribes.

Ayn Rand explained Cameron and Cactus and these other entities some years ago

As a rule, it is an accident whether the smart young intellectual wheeler-dealers .. turn to the Left or to the Right [as they enter politics]…
    It is not a matter of political principles. What principles? Pragmatism has taught them that there are no such things.
    But the big dilemma for all the pragmatists of the Right, is: what are they to fight and by what means, if principles are inoperative? Politics is a field in which one deals with ideas and it requires the ability to argue, to discuss, to persuade. What does one do in politics if one has discarded the whole realm of ideas? One fights men.

Just as Team Key’s bloggers did, and just as Nixon’s young pragmatists did who bungled the burglary that exposed them all. All of them were all too happy to sign up to such a battle. 

Readers can get a sense of the stunted world-view of these entities by reading the autobiography of the man who “organised” the Watergate burglary, G. Gordon Lilly. (Called without irony, Will,  reviewers at the time called the book “a comedy masterpiece.” It’s that and much more, even if all the comedy was unintentional.)  Liddy and his fellow “soldiers” in the Committee to Re-Elect the President, a semi-autonomous organisation run out of their Commander-in-Chief’s White House and dubbed by its own troops CREEP, signed up not to an intellectual crusade, but to a battle they called  “rat-fucking”.

Such ‘technicians’ [observed Ayn Rand] would know that one is supposed to fight, at election time. What would be a pragmatist's idea of a fight? Ideas—he has been taught—are impractical, it is only immediate events that count; what is true today, may not be true tomorrow; rigid values are childish, cynical ‘flexibility is mature. People—he has concluded—don't think; people are not interested in ideas, only in scandal, they do not care about the good, only about some sensational exposé of somebody's evil.
    “Thus the younger, more impatient pragmatists would come to believe that bugging, spying, burglary, in pursuit of somebody's scandalous personal secrets, are more effective than years of speechmaking about ‘issues.’ Pragmatism is a philosophy of action, of the ‘now. The mentality of the activists of the Left, becomes, on the Right, the mentality of the Watergate conspirators.”

There is no evidence that Cameron and his “centre-right” comrades have used bugging, spying and burglary in the pursuit of their various political campaigns. The burglary by which their behaviour is being revealed comes from and on behalf of the lunatic left (about which their ideological allies in the commentariat are unremarkably silent).  But the mentality described above is shared by all these warriors of the so-called centre-right, whose intellectual barrenness is revealed in every attack post focussed not on the failed ideas of their opponents, but only on adding to their own trophy wall.

For them, politics isn’t  a battle of ideas; it is a battle of warring political tribes.

And tribalism, as an idea, is busted.



What creates wealth

Why are some countries rich and some countries poor?

Is it access to natural resources? Is it tax policy? A motivated work force? These are important, but not determinative. The answer is deceptively simple - it's what's in our heads: knowledge.
    Thus, the surest way to promote economic growth is to cultivate an environment that encourages the spread of knowledge.

Such an environment requires freedom, and intellectual property rights -- which is why the freest and most legally objective societies are the most prosperous. In five minutes, economist George Gilder explains why.

[Hat tip Dale Halling]

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You hear it all the time.

That’s fair /that’s not fair.

Life’s fair / life’s not fair / life’s good, but not fair at all.

So WTF does “fairness” actually mean, why is there so much confusion about it, and why is there so much politics that takes advantage of this confusion?

Philosopher Stephen Hicks analyses fairness, politics, ethics … and tennis.

Fairness is a key concept of ethics but if you ask three philosophers what it means, you will get four different answers. Many of our ongoing public policy debates turn on competing conceptions of what is and is not fair.

  • Insider trading: If the seller of a stock knows something the buyer doesn’t and couldn’t know, does that make the trade unfair?
  • Telecommunications and the “Fairness Doctrine”: If a radio station criticises a public figure, in the name of fairness should government regulators require the station to give airtime for the public figure’s response?
  • Campaign finance: If one political candidate raises significantly more funds than her competitor, will the election be fair?

But let’s use [a] tennis match to show how often we appeal to two very different standards in answering questions of fairness….


“Some of the most serious allegations I’ve seen…”

"These are some of the most serious allegations I’ve seen," said David Cunliffe this morning, about allegations that bloggers Whale Oil and Cactus Kate wrote “attack blogs” at the behest of a paying client and a justice minister “gunning for” a minion.

The Herald publishes a graphic calling a senior bureaucrat the “victim [their word] of a number of highly critical blogs.”

Are these people serious? The victim? What, off mob violence? Of a violent mugging? Of a drive-by shooting? No, of some “highly critical blogs.”

You. Have. Got. To. Be. Fucking. Kidding. Me.  Someone wrote some things about him online, and this bureaucrat is now a fricking victim?

This sort of silliness both overstates and understates the power of blogs – and vastly downplays some of the most seriously serious scandals of recent years. (Did Mr Cunliffe not see Helen Clark buying an election with $800,000 of taxpayer-funded pledge card, then retrospectively legislating to make it all legal?  Or the Winston Peters-Owen Glenn-Helen Clark debacle of 2008  – or Winston’s theft of $150,000 of taxpayer money? Or Don Brash dealing secretively with a small but well-funded religious cult to get around donor rules? Or, even, the blatant theft of emails and correspondence of your political opponents … )

I’m sorry, but if these are truly the most serious allegations he’s ever seen he seriously needs to get out more. (Maybe ask David Shearer about the sort of serious stuff that goes on in the world’s warzones, for example.) So a blogger wrote “attack blogs” about a bureaucrat.  How hurtful. How harmful. I’m amazed the poor fellow wasn’t hospitalised.  Just imagine, being attacked by a blogger!  (Maybe pay a visit to your friend and adviser Greg Presland’s home at the Double Standard, David, or Matt McCarten’s Bradbury Blog, to see how folk do this sort of thing just for sport?)

It rather overstates the effect of bloggers, don’t you think, to take this sort of silliness seriously. To get all sanctimonious about what amounts to a few colourfully-phrased blog posts. As blogger Ruth used to say, a blogger is a brain on a chair. He has a keyboard, not a gun. His influence is precisely as much as the degree to which his stories and smears are taken seriously.

This is basically an online flame war that’s spilled over into real life, and is somehow making headlines.

Is attack politics itself wrong?  Then where’s the condemnation of Trevor Mallard. Or Winston Peters.  Are baseless attacks out of order? Then talk to those two again, or every political blogger ever, everywhere. Are attacks on bureaucrats themselves wrong? Not as long as these pricks hold the power of life, death and penury over all of us.

You don’t like what a blog post says, then don’t read it. Move on. There’s plenty of others saying plenty different.

I’m not sorry Judith Collins resigned.  That was long overdue. Not for things she did in the shadows, but for the many and serious outrageous offences against taxpayers and individual liberty done right out in the open – for which she received and receives nary a condemnatory quip even from her political adversaries.

There is an insufferable whiff of sanctimony wafting over this whole sorry saga. It doesn’t just overstate the importance of this kind of attack blogging, the degree to which it is taken seriously demeans and disregards the real power that bloggers and politicians can wield.

Of that, more here.


Saturday, August 30, 2014

Crushed [updated]

Gutless, and gone?

UPDATE: Good riddance. A shame she wasn’t sacked for all her real offences.

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Friday, August 29, 2014

Friday Afternoon Ramble


Mencken called elections “an advance auction of stolen goods” -- in which politicians bribe you with your own money.
At least the Taxpayers’ Union is keeping track of the bribes.

Everybody’s favourite anti-semite, in the House?
Poll puts Minto into Parliament – Audrey Young, HERALD

International experts stating the obvious.
International expert says land supply is the reason for house inflation – KIWIBLOG

He just can’t keep his hand out of our wallets. 2.5 per cent and 3.5 per cent rises will be his minimum.
Len Brown details Super [sic] City's 10-year budget – HERALD

Explaining the super [sic] city: “The totality of mankind’s history is dominated by two common yet opposing desires … the fight to concentrate power and the corresponding fight against the concentration of that power.”
It Was Good While It Lasted – RIO NORTE LINE

“Russel Norman says he is more of a disciple of market forces than is the National Party.” This wouldn’t be hard. “‘Everyone says National doesn't pick winners,’ says Norman, ‘but if you look at what they're actually doing, they're not pro-market, they're Muldoonist.’” This too is true. But Russel?
Greens pro-market: Russel Norman – STUFF
Posts at NOT PC on Russel Norman's economics – NOT PC

You know, there’s no reason it should cost taxpayers a red cent to make housing more affordable.
ACT's plan to reduce the cost of new housing by $100,000 and it does not cost the taxpayer a cent – Jamie Whyte, ACT

“With an indication from this week's TV3 poll that the Conservative Party will be in the next parliament I am interested in their welfare policy. But I can't find one.”
Where or what is the Conservative's welfare policy? – LINDSAY MITCHELL

“Socrates was an early whistleblower. He exposed many leaders of ancient Athens as hot-air know-it-alls and was executed for his efforts.
Today, whistleblowers usually avoid execution, though the enemies of Edward Snowden would like to bring the death penalty back for him. Most whistleblowers are harassed, labeled as troublemakers and, perhaps, as unstable; they are demoted, fired, prevented from collecting unemployment insurance, blacklisted from obtaining new employment in the same field, and sometimes sent to prison.
    “This is the reward they get for exposing the sleazy, dishonest practices of their superiors in the political-power-laden bureaucratic management of government.”
The Whistleblowers: An Indictment of the Mixed Economy and Bureaucracy – JERRY KIRKPATRICK’S BLOG

“A "progressive" income tax means this: The
harder you work, the more you are punished.”

- Will Spencer

“Let’s be clear: Al Qaeda, the Islamic State in Iraq and Syria, Boko Haram, the Shabab and others are all violent Sunni Salafi groupings. For five decades, Saudi Arabia has been the official sponsor of Sunni Salafism across the globe.
Saudis Must Stop Exporting Extremism – Ed Husain, NEW YORK TIMES

“There is outrage in the press this morning about the sexual abuse of 1,400 girls by Asian gangs in Rotherham in the north of England…. The abuse scandal exposes the dangers of welfarism and multiculturalism.”
What Rotherham reveals about the corrosion of community life – Brendan O’Neill, SPIKED

Britain’s die-while-you-wait health system is at least even-handed.
Ex-NHS chief dies waiting for op at her own hospital – DAILY EXPRESS

“Have we reached “peak progressive”? You know, like “peak oil”, except dumber, less useful and more dangerous?”
Peak Progressive? – RIO NORTE LINE

Where the progressives come from: “A new book reveals the damage education schools have done to pedagogy.”
When the Instructors Need Instructing – Sol Stern, CITY JOURNAL

“Progressives often insist they are “on the right side of history,” but their ideas failed 100 years ago… Today, progressives have recently raised tax rates on entrepreneurs, on capital gains, and on dividends—and they are surprised to see economic stagnation and record debt levels. What didn’t work a century ago is also not working now.”
The Progressives Are On The Wrong Side Of History – BURT FOLSOM

“[B]lurring the lines between civilian policing and military action is dangerous, because soldiers and police have fundamentally different roles. . . . The people [police] are policing aren’t enemy combatants, but their fellow citizens—and, even more significantly, their employers.”
Reynolds on Militarised Police – RATIONAL BEACON

“It is what you read when you don't have to that
determines what you will be when you can't help it.”
- Oscar Wilde

“Global sea level rise a bit more than 1mm a year for last 50 years, no acceleration. Pretty constant for hundreds of years actually.”
Global sea level rise a bit more than 1mm a year for last 50 years, no acceleration – JO NOVA

“From the University of Washington  and the department of Trenberth’s missing heat comes a claim that we’ll have to wait another 15 years for global warming to resume. Sounds like a goalpost mover to me.”
Cause for ‘The Pause’ #38 – Cause of global warming hiatus found deep in the Atlantic Ocean – WATTS UP WITH THAT

The sound of unsettled science: The guesses just keep a’coming.
39 guesses (and counting) about the global warming pause – GLOBAL WARMING POLICY FOUNDATION
Excuses for the 18 year 'pause' of global warming take a quantum leap up to #52 – HOCKEY SCHTICK

“Among his messages Wednesday, the oil industry needs to do a better job of selling itself. And that, according to Alex Epstein, begins with the premise that using fossil fuels is a good thing. In fact, the more the merrier."
The moral case for fossil fuels – KTVQ.COM

"Nitish who was happy to see the metamorphosis of the village, with its houses and streets illuminated with the two-week old 100-kW micro-grid installed at a cost of Rs 3 crore, was met by village youngsters carrying placards demanding 'real source of energy', and 'not the fake solar powered' one."
Bihar village clamours for real electricity – INDIA TODAY

“What you owe yourself is to work for your living; what
you owe your neighbour is not to interfere with his work.”
- Ayn Rand

“Don't screw with the markets.”
The Venezuela Case Study In How Not To Help The Poor – Tim Worstall, FORBES

“The multitudes who splurged $21.99 apiece on the Kindle edition of French economist Thomas Piketty’s best-seller, Capital in the Twenty-First Century, also spent about 20 minutes reading it. Based on Kindle-generated data, most readers lost interest in the 600-page tome by page 26 … 
    “The majority, then, have formed an opinion by reading what others have written.…”
Piketty: A book more often purchased than read – Gene Epstein, LOCKER ROOM

If they’d read it, they might have realised Piketty shows inequality falling sharply during the capitalist era …
Forget Piketty: How Sweden combined wealth and equality through capitalism – Andreas Bergh, CITY A.M.

“It would seem that the rosy picture of the Fed fixing the economy does not look as rosy to central bankers themselves once they have supposedly fixed the economy!”
Trouble at Jackson Hole = CIRCLE BASTIAT

“Make no mistake with QE still going on …  combined with Japan, China, England and the ECB all providing loads of liquidity to the financial system, risk-taking is off the charts … and the entire financial system is setting itself up for another massive, deleveraging crash once again.”
Even Mainstream Academia Worried about Massive Bubbles in Markets – ZERO HEDGE

“The current bubble in financial assets -- in both equities and bonds of all grades and quality -- raging in every major market across the globe is no accident. It's a deliberate creation. An intentional result of policy.
    “Therefore, when it bursts, we shouldn't regard the resulting damage as some freak act of nature or other such outcome outside of our control…  Blame can and should be laid where it belongs: with the central banks.”
I Blame The Central Banks – Chris Martenson, PEAK PROSPERITY

“I haven't failed. I have just found
10,000 ways that didn't work.”
- Thomas A. Edison

“It is well-known that World War I was expensive for Britain.” Maybe twice as expensive, at least, as previously thought.
Walking wounded: The British economy in the aftermath of World War I – Nicholas Crafts, VOX

Just as Hoover was a gift to Roosevelt.
Bush's Gift to Obama and the American Left – Michael LaFerrara, PRINCIPLED PERSPECTIVES

“[Alleged] actor Leonardo DiCaprio has declared war on Western industrial civilisation by funding and narrating a series of short eco documentaries urging us all to leave fossil fuels in the ground, cripple our economies with carbon taxes and embrace bird-frying, bat-chomping renewable technologies such as solar and wind.
The first film in the series on Carbon – co-written by liberal activist cum talk radio host Thom Hartmann – is riddled with basic errors, extremely dubious propaganda claims, and flagrant politicking on behalf of the more left-wing elements in the Obama administration...”
Leo DiCaprio declares war on Western industrial civilization – BLAZING CAT FUR

Too many libertarians still ignorant about property rights.  “It is bewildering, for example, to find a libertarian think tank arguing that government projects are superior to private property rights as a means of directing resources to innovative activities.” This might help …
Intellectual property and economic prosperity: Friends or foes? - Adam Mossoff & Mark Schultz, TECHPOLICY DAILY
Intellectual Property, Innovation and Economic Growth: Mercatus Gets it Wrong – Adam Mossoff & Mark Schultz, CPIP BLOG

Poor boy still hasn’t grown a brain either.


“This 1,600-year-old Viking war game is still awesome."
Viking War Game – GEEK PRESS

“From Nero’s decadent Golden House in Rome to Charles Fourier’s orgiastic “courts of love”; public toilet glory holes to Eileen Gray’s sexy Mediterranean hideaway.”
Erotic architecture: the sexual history of great buildings – NEW STATESMAN

“One of the great things about medieval art and architecture is that people just went in and did things. They didn’t build models and scale them up, building great cathedrals and abbeys was a learning process as much as anything else. This means many of these apparently perfect aspirations to the Heavenly Jerusalem have some often quite comical mistakes, corrections and bodge-jobs that once you see, you can’t unnotice.”
Great Mistakes in English Mediaeval architecture – STAINED GLASS ATTITUDES

Dane Swan suggested plastic wrapped butter slices. But this is more awesome.
Butter Knife 2.0 – GEEK PRESS

Just in case you missed this earlier …

It’s the Holy Bibles 20th birthday this week. No, not that Holy Bible.

I was doubtful too, but this definitely grows on you.

Hey, Kristin Hersh is in town Sunday!

[Hat tips Alex Epstein, Lindsay Perigo, Rational Beacon, Richard Goode, Peter Linton, Carbon Dioxide, FOЯEVEЯ DELAYED, Alex S, Perspective Pictures, TakingHayekSeriously, Buddha Teachings, Timothy Sandefur, The GWPF, Old Whig, Famous-Quote.net, Archinect]

Thanks for reading, and have a great weekend.

PS: This weekend I’m tracking down some of NZ’s just awarded champion brewery, Townshend Brewery. There’s a hell of a lot to choose from.  Here’s a few other prizewinners to check out:

Champion New Zealand Brewery: Townshend Brewery
Champion New Zealand Manufacturer: Townshend Brewery
Champion International Brewery: Boston Beer Company
European Lager Styles: Emerson’s Brewery Gladiator Bock (Gold)
International Lager Styles: Monteith’s Black (Silver)
British Ale Styles: Wigram Brewing Company Tornado Strong Ale (Gold)
Other European Ale Styles: Emerson’s Brewery JP 2014 (Gold)
US Ale Styles: ParrotDog BloodyDingo (Gold)
International Ale Styles: Panhead Custom Ales BossHog (Gold)
Stout and Porter Styles: Three Boys Brewery Oyster Stout (Gold)
Wheat and Other Grain Styles: Renaissance Brewing Black the RIPA (Silver)
Flavoured Styles (including Fruit, Spice, Herb, Honey and Smoked): Wigram Brewing Company Captain Cook Spruce Beer (Gold)
New Zealand Specific Styles: Townshend Brewery Oldhams Tap Riwaka Pilsner (Gold)
Speciality, Experimental, Aged, Barrel, Wood-Aged Styles: Panhead Custom Ales Black Sabbath (Gold)
Cider and Perry Styles: Zeffer Cider Company Slack ma Girdle Cider (Gold)
Cask Conditioned: Moa Brewery Five Hop Handpull (Gold)
Festive Brew: Behemoth Brewing Company Brave Bikkie Brown Ale (Gold)

That should keep you off the streets.


Montessori Education & the Development of the Self

Now, this is something to get to, a fascinating event organised by Auckland’s Maria Montessori Education Foundation …

Don’t miss out – come and hear world leading paediatric neuropsychologist, Dr Steven Hughes present

Igniting the Flame Within –
Montessori Education &
the Development of the Self’

Thursday September 11th
7.00p.m. (doors open @ 6.30p.m.)

Auckland University of Technology (A.U.T.)
Northcote campus


Proudly sponsored by MMEF & AUT

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The whole setup was ridiculous.

In a proper debate – in a properly moderated debate – the moderator sets the topic, the first fellow then gets a minute or two to address it, the second fellow gets the same time to address it and to  respond, and then the first fellow gets a very short time to respond. If they want to challenge their opponent’s facts, then they do it in their appointed time, integrating it with their planned response. Contestants alternate with each topic, giving it at least the appearance of fairness

That’s a debate.

It’s not a debate when contestants are simply invited to talk as long they like, over whomever they like. Sure, they can talk over each other even in properly moderated debates, but then at least it’s clear who is supposed to be talking, and viewers can decide for themselves what that tells them about those who butt in.

Sheesh. Moderators in high-school debates do the job better.

And that’s not all. In  proper debate – in a debate between adversaries – the whole scene is set architecturally. Instead of lecterns side by side, like a Kraftwerk comeback concert, making them turn their heads to  insult each other, you have them facing  each other so they can talk like adults. Or at least try to.

This sets the scene visually, so that instead of appearing onscreen shoulder to shoulder, like collaborators in a big gig, they are facing off against other as they should be. As they are.

They manage it in US presidential debates. See: some recognition of the adversarial gravity of the event:

And see how the moderator in the presidential debates keeps his distance?  See how he’s made visually a lesser being? That’s a lesson right there for Mike Hosking.

This was a man who didn’t know his place. Viewers tuned in for sixty minutes of debate between the men who would be Prime Minister. Instead, they got twenty-eight minutes of talk by Mike Hosking and thirty-two minutes of future PMs trying to talk over him. As Tweeter @neogeo quipped, “Key is doing a terrible job of moderating this debate between Cunliffe and Hosking.”

And what about the topics this moron asked them? Sheesh! "What is your ideal date night?" “What was the best advice you ever received?” I started looking to see if the Women’s Weekly were sponsoring the whole fiasco.  And then on to what seemed like ten minutes about fricking polling!!  Does he not realise that polls are the result of performances like these. If we’re going to ask about polls instead of politics, on the basis of which people make their judgements about the politicians, thus raising further questions about polls, then our campaigns are going to spiral down into a concatenation of bullshit talking about bollocks.  Which is what Hosking’s final question amounted to. What sort of dickhead finishes what should be a debate about pressing political matters by asking the participants how they think they did.

For fuck’s sake!

I watched last night on sufferance. I don’t think I’ll bother again.

Thursday, August 28, 2014

Austrian Capital Theory and ‘Dawn of the Planet of the Apes’

Guest post by Mark Tovey

During an early scene of Dawn of the Planet of the Apes, in which the hyper-intelligent apes were depicted hunting for deer in the forest surrounding their settlement, someone behind me interjected “if those apes are so smart, how come they’re hunter-gatherers?”

This decent question received nothing but a shush from his more etiquette-conscious companion.

While there are many factors other than intelligence that are relevant to a society’s choice of an agricultural or hunter-gather economy, Austrian capital theory can go a long way in helping to explain why the apes featured in the film could be highly-intelligent while still remaining hunter-gatherers.

Austrian Capital Theory: Convoluted and Time-Consuming

The adoption of ever-more roundabout and convoluted production processes is, paradoxically, the hallmark of economic development. This is not, of course, because time-consuming methods are inherently more productive. If that were the case, we could increase output by simply working more slowly!

To solve the paradox, we must realize that the most direct and immediate means are adopted first in the pursuit of an end. Thus the apes will attempt to satiate their hunger initially by use of the most obvious means: barehanded hunting. This process involves only labour, meaning it is truly as direct as one can get; therefore, when the apes later refine it, for example, by crafting spears and other hunting tools, they will have necessarily elongated the production process. The institution of agriculture would re-direct the apes’ efforts even further from the direct route. To see this clearly, imagine an ape hungrily chasing down a deer, and then imagine him instead collecting wood with which to eventually, one day, produce an animal enclosure. But these roundabout methods are immensely more productive than their labour-intensive counterparts, hence it is why the more complex methods have come to replace the labour-intensive ones in the developed human economies of the world.

So why don’t the apes adopt these roundabout methods? Can their failure to start farming be explained by anything other than ignorance? Yes: the “idea” is far from the whole of it. The institution of roundabout production methods requires, first and foremost, the forgoing of present consumption. And so the cinema-heckler was mistaken in assuming stupidity to be the only explanation for a hunter-gatherer lifestyle. In fact, such a society exists in the hunter-gatherer state out of choice; for a time, it is what’s best. Forced and immediate “agriculturalisation” of their little economy would likely turn out to be immensely harmful.

To understand why it would be harmful, we need to focus on the present consumption sacrificed in the process. Let us imagine that, as per the moviegoer’s advice, the apes promptly “agriculturalise.” Caesar, the ringleader, must then delegate tasks to a number of apes; for example, land must be cleared and tilled, animals must be caught and secured. In the process, he will inevitably inflict a loss of present consumption upon the community. For example, if the apes he employs now for agricultural development were previously engaged in barehanded hunting, the loss would be one told by the supply of meat; or, had they instead been gatherers of firewood, the loss would be one felt at sundown when the air turned cold.

Admittedly, Caesar will be able to minimize the severity of the sacrifices by allocating the tasks to those apes he judges as currently contributing the least valuable services. Thus, the loss in consumption will be a marginal one, i.e., concerning the periphery of the community's needs. However, because they are operating close to a subsistence level as it is, this fact will prove to be of little consolation.

Here we run into what seems, superficially at least, to be a catch-22 situation: because the apes have such little capital at present, they will find it very difficult to produce capital for the future. The ape economy simply cannot afford to divert labourers en masse from the servicing of its present consumption needs. But there is an escape. Capital investment can occur, but it must be gradual. Only small sacrifices can initially be endured, and so only simple capital goods, like traps and spears, can be produced. These traps and spears, however, must not be downplayed in their significance: they permit a productivity that frees the marginal hunters to be re-deployed into additional capital investment projects. More labourers will similarly be liberated by the fruits of these further projects. Thus momentum gathers in this way, and an inexorable, ever-quickening march to prosperity is begun. Capital-intensive, elongated production processes, like agriculture, eventually become feasible.

But this process takes time. Even under the assumption that Caesar is aware of the benefits that a system of agriculture could confer, for the foreseeable future, he is powerless to institute it. His community must resort to unproductive, labour-intensive methods; for though the rewards are miserably meagre, they are immediate.


In the process of economic growth, saving is crucial. No matter how ingenious the individuals comprising a society, if the means to forgo present consumption are unavailable, capital goods simply cannot be created. Crude, labor-intensive methods of production will then necessarily be employed, not because sophisticated, roundabout alternatives, e.g., agriculture, are beyond the community’s capacity for imagination, but because they simply could not survive through the period of deferred consumption necessary for their implementation. Thus the hunter-gatherer lifestyle is, at least in the case of our apes, the sign not of primitive minds but instead of a primitive capital structure.

Mark Tovey is an undergraduate studying economics at the University of Sussex, England.

Experiments in Economics: Playing “Fair”

Here’s your info on what the Auckland Uni Economics Group is getting up to tonight …

Hi all,
This week are pleased to be joined by Professor Ananish Chaudhuri, Professor of Experimental Economics and Head of the Department of Economics, who will discuss the topic of Experiments in Economics: Playing Fair, including

  • the role of experiments in economics;
  • how experimental economics became a part of the mainstream; and
  • a brief overview of his own experimental work exploring the role of “fairness” in economic transactions.

Ananish Chaudhuri has edited and published in leading economics  journals, and is the author of a critically acclaimed book “Experiments in Economics: Playing Fair with Money, intended as an introduction for a general audience to “experimental economics.”

His work in this area focuses on “social dilemma games” such as the so-called prisoner’s dilemma, where it is alleged “there is tension between cooperation and self-interest.”  These are situations, he says, “where cooperation makes society as a whole better off; yet the individually rational course of action is to behave in a self-interested manner.”

Naturally, the professor will expect some challenging questions …

        Date: Thursday, August 28
        Time: 6-7pm
        Location: Case Room Two, Level Zero, University of Auckland Business School

We hope to see you all there!


PS Check us out on the web at our Facebook Group.


Wednesday, August 27, 2014

QUOTE OF THE DAY: On the political and social rights of Palestinians

“Many Arabs don’t know that the life expectancy of the Palestinians living in Israel is far longer
than many Arab states and they
enjoy far better political and social freedom than many of
their Arab brothers
. Even the Palestinians living under Israeli occupation in the West Bank
and Gaza Strip enjoy more political and social rights than some places in the Arab World.”

- Abdulateef Al-Mulhim, retired Royal Saudi Navy Commodore,
writing a couple of years ago in Arab News, and quoted this morning on Kiwiblog


The Only Email System DotCon and the NSA Can’t Access

Guest post by Hollie Slade

When the NSA surveillance news broke last year it sent shockwaves through CERN, the particle physics laboratory in Switzerland. Andy Yen, a PhD student, took to the Young at CERN Facebook group with a simple message: “I am very concerned about the privacy issue, and I was wondering what I could do about it.”

There was a massive response, and of the 40 or so active in the discussion, six started meeting at CERN’s Restaurant Number 1, pooling their deep knowledge of computing and physics to found ProtonMail, a gmail-like email system which uses end-to-end encryption, making it impossible for outside parties to monitor.

Encrypted emails have actually been around since the 1980s, but they are extremely difficult to use. When Edward Snowden asked a reporter to use an end-to-end encrypted email to share details of the NSA surveillance program the reporter couldn’t get the system to work, says Yen.

“We encrypt the data on the browser before it comes to the server,” he explains. “By the time the data comes to the server it’s already encrypted, so if someone comes to us and says we’d like to read the emails of this person, all we can say is we have the encrypted data but we’re sorry we don’t have the encryption key and we can’t give you the encryption key.”

“We’ve basically separated the message that’s encrypted apart from the key — all the encryption takes place on your computer instead of our servers, so there’s no way for us to see the original message.”

This is different from all other systems, says Yen. While Gmail has implemented some encryption, they still have the encrypted message and the key to decrypt the message.

Cofounders, from left to right, Jason Stockman, Wei Sun, Andy Yen.

While half the team is now at MIT, some are still in Switzerland where the ProtonMail’s servers are housed for extra protection.

“One of the key things we want to do is control our servers and make sure all the servers are in Switzerland which will increase privacy because Switzerland doesn’t do things like seize servers or tape conversations,” says Yen.

This will help avoid a situation where the U.S. government could forcibly shut them down, says Yen, similar to what happened to Lavabit last year.

Yen has turned down venture capital firms looking to invest in ProtonMail. “The reason we have to be bootstrapped is because if we take our money from something like Google Ventures, there goes our credibility. By being in this market we have to fund ourselves,” he says, adding that they’re considering a crowdfunding round next month.

ProtonMail’s revenue model is similar to something like Dropbox — charging only for extra storage.

ChalkboardCo-Founder Jason Stockman giving an informal lecture at MIT

“One of our motivations was human rights,” says Yen. “Having privacy is very important from a freedom of speech standpoint.”

The paid accounts will be $5/month and will provide 1GB of storage. Yen says they will accept bitcoin or even cash payments to allow users to remain anonymous.

They recently ran an update so they could support Chinese. Yen says they didn’t advertise this but through Twitter a blogger who has been involved in the freedom of speech movement heard about the service.

“All of a sudden we had an influx of hundreds of Chinese users — these are dissidents that don’t want the government to be tracking them,” says Yen. “It’s because we want to support users like this that we want to keep a certain level of the service free.”

Yen expects they’ll see the most traction in countries like China, Syria, Russia and Iran, where “you have these massive populations who cannot send an email without fear that they’re going to get arrested.” It’s also an alternative to the ad-based revenue model of free services like Gmail which actively scan your emails to deliver relevant ads to you online.

“You’re forced to trust Google,” says Yen. “What this really shows is that Google is not really trustworthy. Google makes money by scanning your emails and feeding you ads off of what you’re writing about; part of their core structure is to allow Gmail to read your emails and use your data.”

Most of ProtonMail’s team spends half their time working on the project. “We’re all CERN or MIT scientists, so we’re doing research on computing, mathematics, physics that’s actually closely related to what we do on the secure email. Encryption is very mathematical so we have four PhD physicists working on this,” says Yen.

ProtonMail just launched globally out of a private beta and is currently working on an Android or iPhone app expected to be ready by the end of the summer. Yen says demand is far higher than expected.

“We’re close to 20,000 users now and have had to close the signups temporarily while we add more servers. We were not expecting 10,000 users per day even in our most optimistic projections so we’re scrambling now to support more,” he says.

Hollie SladeHollie Slade was previously an editor at Global Security Finance, a London-based newsletter covering security and defence for the finance community which meant uncovering start ups with exciting technologies as well as interviewing VCs, government officials and defence giants on their financing, funding and M&A strategy. As a Columbia Journalism School student she delved into an eclectic mix of city politics, struggling Harlem businesses and the interactive theatre scene.
This post appeared previously at Forbes.Com, and Laissez Faire Today.


The Moral Case for Self-Driving Cars

Guest post by Ronald Bailey

Tesla, Nissan, Google, and several carmakers have declared that they will have commercial self-driving cars on the highways before the end of this decade. Experts at the Institute of Electrical and Electronics Engineers predict that 75% of cars will be self-driving by 2040. So far California, Nevada, Florida, Michigan, and the District of Columbia have passed laws explicitly legalizing self-driving vehicles, and many other states are looking to do so.

The coming era of autonomous autos raises concerns about legal liability and safety, but there are good reasons to believe that robot cars may exceed human drivers when it comes to practical and even ethical decision making.

More than 90% of all traffic accidents are the result of human error. In 2011, there were 5.3 million automobile crashes in the United States, resulting in more than 2.2 million injuries and 32,000 deaths. Americans spend $230 billion annually to cover the costs of accidents, accounting for approximately 2 to 3% of GDP.

Proponents of autonomous cars argue that they will be much safer than vehicles driven by distracted and error-prone humans. The longest-running safety tests have been conducted by Google, whose autonomous vehicles have traveled more than 700,000 miles so far with only one accident (when a human driver rear-ended the car). So far, so good.

Stanford University law professor Bryant Walker Smith, however, correctly observes that there are no engineered systems that are perfectly safe. Smith has roughly calculated that “Google’s cars would need to drive themselves more than 725,000 representative miles without incident for us to say with 99% confidence that they crash less frequently than conventional cars.”

Given expected improvements in sensor technologies, algorithms, and computation, it seems likely that this safety benchmark will soon be met.

Still, all systems fail eventually. So who will be liable when a robot car — howsoever rarely — crashes into someone?

An April 2014 report from the good-government think tank the Brookings Institution argues that the current liability system can handle the vast majority of claims that might arise from damages caused by self-driving cars.

A similar April 2014 report from the free market Competitive Enterprise Institute (CEI) largely agrees, “Products liability is an area that may be able to sufficiently evolve through common law without statutory or administrative intervention.”

A January 2014 RAND Corporation study suggests that one way to handle legal responsibility for accidents might be to extend a no-fault liability system, in which victims recover damages from their own auto insurers after a crash. Another RAND idea would be to legally establish an irrebuttable presumption of owner control over the autonomous vehicle.

Legislation could require that “a single person be responsible for the control of the vehicle. This person could delegate that responsibility to the car, but would still be presumed to be in control of the vehicle in the case of a crash.”

This would essentially leave the current liability system in place. To the extent that liability must be determined in some cases, the fact that self-driving cars will be embedded with all sorts of sensors, including cameras and radar, will provide a pretty comprehensive record of what happened during a crash.

Should we expect robot cars to be more ethical than human drivers? In a fascinating March 2014 Transportation Research Record study, Virginia Tech researcher Noah Goodall wonders about “Ethical Decision Making During Automated Vehicle Crashes.”

Goodall observes that engineers will necessarily install software in automated vehicles enabling them to “predict various crash trajectory alternatives and select a path with the lowest damage or likelihood of collision.”

To illustrate the challenge, Stanford’s Smith considers a case in which you are driving on a narrow mountain road between two big trucks. “Suddenly, the brakes on the truck behind you fail, and it rapidly gains speed,” he imagines. “If you stay in your lane, you will be crushed between the trucks. If you veer to the right, you will go off a cliff. If you veer to the left, you will strike a motorcyclist. What do you do? In short, who dies?”

Fortunately such fraught situations are rare. Although it may not be the moral thing to do, most drivers will react in ways that they hope will protect themselves and their passengers. So as a first approximation, autonomous vehicles should be programmed to choose actions that aim to protect their occupants.

Once the superior safety of driverless cars is established, they will dramatically change the shape of cities and the ways in which people live and work.

Roadway engineers estimate that typical highways now accommodate a maximum throughput of 2,200 human-driven vehicles per lane per hour, utilizing only about 5% of roadway capacity. Because self-driving cars would be safer and could thus drive closer and faster, switching to mostly self-driving cars would dramatically increase roadway throughput.

One estimate by the University of South Florida’s Center for Urban Transportation Research in November 2013 predicts that a 50% autonomous road fleet would boost highway capacity by 22%; an 80% robot fleet will goose capacity 50%, and a fully automated highway would see its throughput zoom by 80%.

Autonomous vehicles would also likely shift the way people think about car ownership. Currently most automobiles are idle most of the day in driveways or parking lots as their owners go about their lives. Truly autonomous vehicles make it possible for vehicles to be on the road much more of the time, essentially providing taxi service to users who summon them to their locations via mobile devices.

Once riders are done with the cars, the vehicles can be dismissed to serve other patrons. Self-driving cars will also increase the mobility of the disabled, elderly, and those too young to drive.

Researchers at the University of Texas, devising a realistic simulation of vehicle usage in cities that takes into account issues such as congestion and rush hour patterns, found that if all cars were driverless each shared autonomous vehicle could replace 11 conventional cars. In their simulations, riders waited an average of 18 seconds for a driverless vehicle to show up, and each vehicle served 31 to 41 travelers per day. Less than one half of one percent of travelers waited more than five minutes for a ride.

By one estimate in a 2013 study from Columbia University’s Earth Institute, shared autonomous vehicles would cut an individual’s average cost of travel by as much as 75% compared to now. There are some 600 million parking spaces in American cities, occupying about 10% of urban land.

In addition, 30% of city congestion originates from drivers seeking parking spaces close to their destinations. A fleet of shared driverless cars would free up lots of valuable urban land while at the same time reducing congestion on city streets. During low demand periods, vehicles would go to central locations for refueling and cleaning.

Since driving will be cheaper and more convenient, demand for travel will surely increase. People who can work while they commute might be willing to live even farther out from city centers.

But more vehicle miles traveled would not necessarily translate into more fuel burned. For example, safer autonomous vehicles could be built much lighter than conventional vehicles and thus consume less fuel. Smoother acceleration and deceleration would reduce fuel consumption by up to 10%.

Optimized autonomous vehicles could cut both the fuel used and pollutants emitted per mile. And poor countries could “leapfrog” to autonomous vehicles instead of embracing the personal ownership model of the 20th century West.

If driverless cars are in fact safer, every day of delay imposes a huge cost. People a generation hence will marvel at the carnage we inflicted as we hurtled down highways relying on just our own reflexes to keep us safe.

Ronald BaileyRonald Bailey is the award-winning science correspondent for Reason magazine and Reason.com, where he writes a weekly science and technology column. Bailey is the author of the book Liberation Biology: The Moral and Scientific Case for the Biotech Revolution (Prometheus, 2005), and his work was featured in The Best American Science and Nature Writing 2004.
This post appeared previously at Reason.com, and Laissez Faire Today.


Venezuela proves Hayek right again

Writing in the Road to Serfdom, Hayek pointed out that socialism inevitably ends up in tyranny. In his book, Government Against the Economy, George Reisman outlined the process in detail.

Socialist controls creates higher costs and partial  shortages, which inspire partial price controls and/or rationing, which creates more shortages and more controls, which creates even greater chaos in the production and distribution of goods, which leads to more shortages and universal controls, which leads to the seizure of production and distribution and even greater shortages and more and more controls – an inevitable and unsustainable process leading inexorably to bankruptcy, to starvation and to the tyranny and terror necessary to maintain the now-utterly corrupt system against those forced within it.

The process lasts either as long as a country has something to loot – or until its citizens wake up.

Venezuela continues to perform today’s demonstration of this tragic process.

Image: Wikimedia CommonsNot only has Venezuela imposed price controls, it now seeks to “cure” shortages by cracking down on shoppers. “Venezuela’s food shortage is so bad the country is mandating that people scan their fingerprints at grocery stores in order to keep people from buying too much of a single item,” Fox News reports.
The Guardian offers some background: “In 2008, when there was another serious wave of food scarcity, most people blamed shop owners for hoarding food as a mechanism to exert pressure on the government’s price controls, a measure that former president Hugo Chávez adopted as part of his self-styled socialist revolution.” (Nicolás Maduro, right, is the current president.) Of course, price controls spawned a black market where common items go for exorbitant prices.
Today’s left continues to pretend that they can strip away people’s economic liberties without harming their civil liberties. The fact that Venezuela now wants to fingerprint grocery shoppers to counter the “hoarding” caused by price controls is merely the latest reminder that economic liberties are civil liberties.TFR76_Cover_Web-Edition


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