The Economic Case for Limited Immigration

From my book:


Now to be sure, that there is so much capital accumulated in the US, and so little elsewhere, is a settled historical fact. For example, the US has enjoyed a strong tradition of liberty and respect for private property rights which contributed to its affluence. A company that wants to outsource its labor force to a poor country will, at first, be immune to the butler paradox, because of the intense worker competition there. As long as there is little capital accumulation overall in society, a firm can import even the most sophisticated tools and still save a bundle on labor costs. A worker will be very productive in that firm’s line of business but receive low wages, since his community will still be poor, until the amount of capital invested per worker reaches some critical mass. His opportunity cost of working elsewhere is low.

Immigration presents its own complications. If both capital and labor are mobile, then, abstracting from the political problems of mass immigration, and even assuming that only labor is mobile, i.e., unemployed people cannot move easily (contrary to all reason, because it is precisely the unemployed who are most in need of relocation services), it is the case that the capital presently concentrated in the US will become “spread” over the entire world. Hundreds of millions of people will want to move to the US, and firms will want to move out of the US. This would improve the standard of living of the poor in the “developing” countries but indeed, lower the standard of living of the US workers.

It is this and not the possibility that immigrants may take advantage of the welfare state that has people worried about opening up borders.

However, as economists, we must not take the parochial view of “America first” but be mindful of the interests of the entire world. Marshall argues that “custom in a primitive society… prescribes an attitude of hostility to strangers. In a modern society… neighbors are put more nearly on the same footing with strangers. In ordinary dealings with both of them the standard of fairness and honesty is lower than in some of the dealings of a primitive people with their neighbors: but it is much higher than in their dealings with strangers. …sympathy with those who are strangers to us is a growing source of a kind of deliberate unselfishness, that never existed before the modern age.” (1964: 5) That was, of course, written before the mass slaughter of World War I. But the devil’s century has finally left us, and we should struggle to live up to Marshall’s observations of the state of affairs in the 19th and early 20th centuries.

Even in the unique situation, in which we find ourselves, there is everything economically right about freedom of movement of capital and labor both within and between national borders. This is the fastest “path to global economic prosperity” in the long run.

A quick political analysis will illustrate the matter. Consider that the Republicans are the party of the corrupt power elite, and the Democrats are the party of the violent bloodthirsty mob. Among other things, this schema explains why the Republicans, when they obtain power in a reactionary spasm, faithfully preserve whatever socialistic policies were previously enacted by the Democrats. This is because the Democrat laws (which harm society as a whole) reshuffle the social hierarchy. The masses so love a good shake-up. But under both socialism and interventionism, the worst get on top. The elite in a welfare-warfare state, therefore, consists of moral and economic monsters. These are the people the Republicans predictably end up protecting.

It is an accident of history that the American masses are better than the American elites; arguably, in the US, there are almost no elites at all, if by that we mean people animated by any sense of noblesse oblige. The American rich and powerful are generally grasping, venal, anti-intellectual, and deeply selfish people who, in Marshall’s words, have “the worst faults of the old aristocracy without their virtues” (1964: 259) and who neither understand anything about the common good nor are interested in it. For that reason, the Republicans are at least in the long run a greater danger to liberty than the Democrats.

Sometimes, however, the Republicans go populist, especially on immigration, appealing to the masses. Why? Because compared with the rest of the world, American workers are a privileged upper class.

Do the Mexicans, say, take American jobs? Assuredly, they do. However, in order for the situation to be ameliorated, it would be sufficient that for any 50 Mexicans who become workers here, 1 becomes an entrepreneur and creates jobs both for his fellow Mexicans and for Americans, as well. The whole reason why this rarely happens is that the Mexican illegal immigrants have no standing under the US law. How could they become entrepreneurs with all the settled responsibility (such as, at least, a permanent address) that this implies, if they cannot even get driver’s licenses legally? We need to retain and even reinforce the privileges of citizenship: immigrants should not be able to vote or be elected to public office; but the status of “illegal immigrant” ought to be abolished.

What Mexicans do take is the use of capital that is clustered in the US. But that, too, is scarcely relevant, because if Americans enjoyed sustainable economic growth with sound money and banking, no taxes beyond the local, and the rest of my pleasant visions, then they would be happy to “share the wealth” with the Mexicans. In all probability, there would an immense sense of pride that America is such a magnet for immigrants. Moreover, a great political system would attract capital back into the US, as opposed to the current incentive to companies to go overseas. The American system of government needs to stay competitive and improve, not deteriorate. (Republicans are simply bad sports: they do not strive to improve the governance of the Unites States but rail against improvements in the political organization of other nations. That people who are better than “us” at something – anything – will be bombed is an ever-present threat.) Banish the cynical thought that good government is a pie in the sky. It is a laudable goal, worth fighting for, and never a lost cause. An evil empire can last for a century, look impregnable, and disappear in a day.

There is even more to it. An increase in wealth brought about by capital accumulation will strengthen the incentive for people to have more children. Now people purposively limit the number of the children they have precisely to enjoy the fruits of their labor. Children are expensive in two senses. First, as helpless infants to their parents. Second, even when they grow up to society as large; that is, to each other as workers competing for jobs and bidding down wages.

Regarding the first sense, in times of peace and prosperity, people’s happiness may overflow into their kids. I fully endorse the wisdom of St. Thomas that the “generation of offspring for the multiplication of the human race” is a “a great blessing.” (ST, I, 98, 1) The “optimal” population size can only be discovered and reached under unhampered free market with the aid of the individual and family responsibility promoted by it.

Regarding the second cost, let us consider an extreme case of there being so many machines out there that there are not enough people to work them. Then accumulation of novel capital must slow down, and complementary to capital labor must be found, either by means of capital goods physically moving to workers or vice versa. It is far more efficient to do so than to abandon whole projects and industries due to something so easily remedied as dearth of workers. The latter process can relieve the scarcity of workers and reignite economic growth.

(Machines, such as some sort of super-intelligent robots, can perhaps be designed and built that “on their own” produce other machines, but in practice it is much cheaper to import some folks from abroad. At any rate, we have dealt with the differences between men and machines and thereby also between labor and capital already.)

It may be readily objected that we are far from the happy surfeit of capital under consideration. That is true, but that is our fault. And in second place, the poverty of other nations will under freedom of immigration cause a tremendous influx of people into the more prosperous countries. True, as well, but that is now their fault. What both faults have in common, however, is that they stem from similar anti-laissez-faire ideologies and from Keynesism in particular. If Keynes were decisively refuted, and if nations quit ruining their own economies, then immigration policy would become a non-issue, and freedom of movement (restricted only by private property rights) would in not-so-distant future reign throughout the world.

The reason is, again, that free nations, like happy families according to Leo Tolstoy, are all alike in the most important ways. “The funniest thing about Europe,” says Vincent in the movie Pulp Fiction (Miramax Films, 1994), “is… the little differences.” In other words, cultural differences. Laissez-faire capitalism in country A will make it less likely for a person to feel the need to emigrate to country B. The pressure on countries with a high standard of living now treated crudely with coercive immigration controls will subside. Insofar as people do move around, there will be no easily identifiable pattern to the migrations, just as it is hard to track how Americans move throughout the very porous states, cities, and communities within the United States.

Recall the discussion of ideology in (Introduction, 1). A pertinent query is how one can measure general happiness. A useful measure is precisely immigration. If more people move from country A to country B than the reverse, voting, as it were, with their feet, then country B must be doing something right. David Friedman understood well the civilizing effects of the ability to immigrate: “Consider our world as it would be if the cost of moving from one country to another were zero. Everyone lives in a housetrailer and speaks the same language. One day, the president of France announces that because of troubles with neighboring countries, new military taxes are being levied and conscription will begin shortly. The next morning the president of France finds himself ruling a peaceful but empty landscape, the population having been reduced to himself, three generals, and twenty-seven war correspondents.” (1995: 123) By cutting off immigration, we lose the ability to gauge our own relative national success.

Principia Ethica, 1

Moore makes a strange assertion in this book. A "simple," as in, non-composite thing cannot have a definition.

He considers the definition of a horse, saying that it "is composed in a certain manner: that it has four legs, a head, a heart, a liver, etc., etc., all of them arranged in definite relations to one another. It is in this sense that I deny good to be definable." Outrageous! Suppose that good is indeed simple, as in having no components of which it might be made up. That only means that it lacks a material cause. It says nothing about its formal cause!

The former is an answer to the question, "What parts does good consist of?" The latter, to the question "What is good or the good?" These questions inquire of very different things, and conceding that materially, good is "nothing" does not entail that it is "nothing" formally, as well.

Let me illustrate the distinction.

Peruse the Wikipedia entry on the DNA. The first sentence is that it's "a molecule that encodes the genetic instructions used in the development and functioning of all known living organisms and many viruses." That sounds interesting.

The rest of the article, unfortunately, busies itself with the question of how the DNA is constructed, and a bit on how it works. But I, in turning to Wikipedia, want to know first and foremost what the DNA is! What does it do, and why? How does it further the ends of organisms, from their mere survival all the way up to pursuit of happiness, which pertain also to its final cause? Why is the DNA used in the "development and functioning of all known living organisms" as opposed to some other structure that might exceed it in efficiency? Given almost complete lack of attention devoted to such primal questions, the article is a failure.

Moore then uses the comparison of "good" to "yellow," saying that "yellow," too, is simple and (therefore) undefined. This, too, is nonsense. Yellow is "undefined," because it is a personal subjective experience, and those are fully private and incommunicable. How do I describe how yellow feels like to my sight? I cannot. How can I make sure that my experience of yellow is the same as your experience? I cannot do that, either, if that question is even meaningful. As a result, "yellow" cannot be defined other than by different types of ostention and hoping that our human bodies work sufficiently similarly that, however the mind-body connection is effected, the spiritual experiences are close to each other in "quality," as well, whatever exactly that means.

Presumably, however, Moore does not hold that good, just like yellow, is a subjective experience. The analogy fails. Let's hope, as I continue re-reading this book, that he will try to prove the simplicity of goodness in some other way.

Mystical Question of the Day

Q: How do you improve a perfect being?

A: You kill it and cause it to be born anew along with the requisite improvements.

Repost: Reinterpretations of Genesis

I used to like imaginative retellings of the story of creation and fall, and I think I still do. Here is one such, from Aeon Flux's "Chronophasia":

Trevor is holding Aeon captive in his tent and is feeding her.
Trevor: You've been exposed, Aeon. When will you learn to take precautions? What did you do with the vial?
Aeon: What?
Trevor: The vial from the vault.
Aeon: There was no vial. They were all broken.
Trevor: Were they? Pity. If I had that vial, I might be able to cure you.
Aeon: If you had the vial, you could infect the whole world.
Trevor: I am sorry about the restraints, Aeon, but it is for your own protection. I suggest you relax and get used to it. This particular strain of the virus causes permanent insanity. But don't worry, Aeon. I'll take care of you... always.
Aeon: Naturally, I prefer to be dead.
Trevor: Odd. The virus has never been fatal. In fact, there is some evidence exposure actually extends life. Why, Aeon, you may have another 80 or 90 years of this. Fresh ground pepper?
Aeon: Univesal madness? Is that your current project?
Trevor: As usual, Aeon, you only have half the picture. The virus they were working on here does produce a particularly nasty psychosis, as you are learning firsthand... the sauce is good, don't you think? But we believe that one time, before the dawn of history, a form of this virus existed in every human brain; in fact, it was an essential component of human consciousness. What it produced then was not a madness but a sense of connection, of being in and of the world. But somehow we developed an immunity. That was the Fall, Aeon. Ever since we've been missing a part of ourselves.
Aeon: I think your chef uses too much tarragon.
Trevor: Hard to say where the mutation occurred, in the virus or in the human mind, but if we could reverse the process... My project is not universal madness, it's universal happiness!
Aeon: Who, was it, you said was insane?

I recommend that brilliant series to everyone; just try to get the original versions, instead of the unfortunately altered director's cuts presently being sold on DVDs.

Repost: Rhymes

Consider the following rhymes, off the top of my head:

try and hide - cyanide
religion - pigeon
mind - try and
water - slaughter
along - strong - song
queen - seventeen
funeral - sooner-or-l... ater
society - impiety - propriety - variety
abdo'men - roman
church - perch
hears - grenadiers

Don't you think these are, well, interesting? Have I been in the ivory tower so long that I stopped realizing that the masses find rhymes like be-me and you-too perfectly adequate for top-ranking songs? And for heaven's sake, "come" does not rhyme with "home," nor "time," with "wine."

Love Songs

One of the best (and by best I mean that the first time I heard this song, I thought it was beautiful), and

one of the worst (a genuine monstrosity, as far as I'm concerned).

Singers are always talking to some imaginary romantic interest. It's "you this" and "you that." Who is this "you"? There's no one else here with you; who on earth are you addressing?!

At least when you are listening to old-time swing, the lyrics and rhymes are far more sophisticated than they are today. The singers still talk to "you," but at least they're having an intelligent conversation. Modern love songs are just awful.

IP: Scarcity vs. Non-Rivalrous Consumption

Scarcity means: given that a thing does not exist, is it difficult to bring it about? Does the supply or stock of the thing need to be enlarged via costly means?

Type of consumption means: given an existing supply of a thing, it is necessary to economize it by allocating it to the most urgent needs?

Air outside is non-scarce (superabundant, a general condition of human welfare) but is rivalrous: the parcel of air in my lungs is my property, and you can't have that.

Thus, air in a small closed room in which Smith and Jones have been trapped becomes very scarce while still remaining rivalrous. If Smith knows the only way to survive while waiting for rescue is for only one person to continue breathing, and vice versa, then we may quickly see how both scarce and rivalrous air really can be.

A song, on the other hand, is scarce but non-rivalrous.

A non-scarce song would be a song that any human on the planet could effortlessly come up with. But songs worth listening to are few and far between. You can reach up into the air and breathe; you cannot reach up into the air and grab with a new hit song. Songs are definitively scarce.

They are non-rivalrous, that's true; but they are not yet public goods, because under copyright, they are artificially, by human fiat, excludable.

A movie theater with a half-empty room is also non-rivalrous yet eminently excludable, yet no one is advocating allowing any hobo to just enter the movie theater's owner's property at will.

The whole point of making songs excludable is to attempt to alleviate their scarcity by enlarging the number of songs out there by giving songwriters incentives to create, etc. Yes, it hinders the social benefits of non-rivalrous consumption of existing songs. But whether the costs outweigh the benefits is not something that can be decided a priori.

Non-rivalrous consumption and non-excludability are separate and distinct conditions for a good's being public. The argument that "songs are non-rivalrous; therefore, they should not be non-excludable," is a non-sequitur. One may instead want to argue: "society will be better off if songs are public goods" or "songs are not the sort of things that can be owned."

Subverting Bitcoin

Bitcoin is digital cash and so is amenable to subversion by commercial banks and then by the Central Bank in much the same way physical cash is.

The decline could begin when people realize that the bitcoins they own are just sitting there "idly" and are not interest-bearing.

Banks to the rescue! They would offer to give people accounts that would, on the contrary, earn interest. However, the bitcoins would have to be transferred to the bank's own private key. The balance on the "accounts" would at first reflect the banks' bitcoin holdings at 100% reserves, but possibly not for long.

Now there would be no such thing as demand deposits for bitcoins; there would only be loan banking. But banks would find that they could gain competitive advantage by promising to pay back people who loaned them their bitcoins on demand. Who would refuse such a deal? Banks might then issue banknotes and checks at first fully backed by bitcoins.

But then why not loan out more Bitcoin-substitutes than they have in reserve? Etc.

We know how the story ended for gold and silver: superabundant fiat money, credit expansions, and inflation.

The same thing will await Bitcoin, if we are not careful.

This is an example how individual profit-seeking could lead to group misery.

If it is possible simply to get the government to outlaw fractional-reserve banking in bitcoins and to vow to hang any banker who engaged in such a practice, then the disaster could be averted.

However, we'll need to whip out our economic theories to persuade people that this would be a good policy.

The Dark Arts

That's how I've seen one person refer to computer programming.

In a way, he is right: programmers animate machines, in so doing being, I guess, necromancers.

But programming is not a dark art; it's merely an arcane art. It's dark only if you're an evil sumbitch who writes malware.

It also requires a unique combination of logical and empirical reasoning. Designing the software, the algorithms, the object models, etc. are pure deductions seen in the mind's eye, but flaws in one's logic and other kinds of bugs are always plentiful and require testing.

That's when the program meets the real world.

The Point of Bitcoin

For libertarians, it has never been tax evasion or making drug deals.

Instead, Bitcoin may be a replacement for the rotten government fiat + bank credit money. It's supposed to become -- eventually -- a superior medium of exchange, and this is the only feature for which Bitcoin is to be liked.

Taxes should be abolished, not evaded; drugs should be legalized, not bought surreptitiously with greater ease.

We just want a good monetary system, and some people say Bitcoin can do what gold and silver could not, to wit, end the Fed.

Climate, 4

Adam Weinstein wants to arrest those people who are skeptical of his forecasts of actual weather for the next 100 freaking years!

In other words, he is assigning actual criminal liability to climate change "deniers" for the suffering of people 50 years from now that will have some connection with unspecified bad weather (such as, I guess, car crashes on icy roads).

That won't fly in any court, but then with the present crazy politics, anything's possible.

NATO Appraisal

The idea behind NATO at the highest theoretical level is sound. From my book:

If the townsfolk do not hang together, then they will assuredly hang separately. ...

The unique problem of getting out of the state of nature then concerns uniting all for the sake of protecting each. ...

All the government requires is the entire citizen body’s willingness either to be drafted as law enforcers from time to time or simply to pay to hire some organized muscle, perhaps on a permanent basis, to step in and mete out some punishments when requested.

What applies to individuals figuring out how best to protect themselves in a town meeting -- at that precise moment in time still in the state of anarchy -- may seem at first glance also to apply to nations whose representatives are trying to set up some type of collective defense. Hence, NATO, the result of these deliberations.

There are at least 3 problems, however, with this organization and its mission. First, both the US and Estonia are members of NATO. It is obvious that if Estonia is attacked, the US will, as per the NATO accords, have to come to its aid. If the US is attacked, then Estonia will just as obviously not come to its aid. Hence, all the costs of collective defense are borne by the US, while all the benefits go to these small quiet nations.

Whether this is the "free man's burden" I don't know, but whose empire NATO represents is clear.

Perhaps it is this understanding that has given rise to the second problem. The US, finding itself a hegemon within NATO, allowed this power to go to its head. Whoever pays the piper calls the tune, and the US has called the tune of numerous unjust wars that it started. America has become a delusional and dangerous rogue state.

Finally, this is not a "unipolar" world. There are Russia and China at the very least. Even a conventional war with them is unthinkable, let alone a nuclear one. As a result, NATO could work in the case of Latvia attacking Estonia, but NATO has no credibility when it comes to the US protecting Estonia from a Russian attack. (I am almost certain there will be no such attack as part of some post-Crimea Russian plan, but the point is clear.)

Offering NATO memberships to the Western European nations may have helped avert conflicts there after World War 2. But these nations are now part of the European Union, marked by free trade, porous borders, and generally capitalist ideology. It is these things, and not the threat of NATO reprisals, that have kept and will be keeping peace in Europe.

E.g., Mises points out:

It is futile to place confidence in treaties, conferences, and such bureaucratic outfits as the League of Nations and the United Nations. Plenipotentiaries, office clerks and experts make a poor show in fighting ideologies. The spirit of conquest cannot be smothered by red tape. What is needed is a radical change in ideologies and economic policies. ...

To defeat the aggressors is not enough to make peace durable. The main thing is to discard the ideology that generates war.

Socialism is dead, and with it, the threat of another world war. Therefore, the United States has got itself entangled in the NATO commitments without profit either to itself (as in, the American people) or those it has sworn to protect.

The following calculations make this apparent.

(1) It is unlikely that Latvia will aggress on Estonia.
(2) If it does aggress on Estonia, who cares? The US has no interest in stopping that attack, except as part of its duties to fellow NATO nations. Must the US really, in Rothbard's words, "invade the world"? Further, smart interventionism is very difficult, and if the US does "send the Marines," it'll probably make things worse.
(3) If Russia nukes Estonia, the US is powerless to save it.
(4) Russia is disquieted and provoked by NATO's expansionism. It is no longer socialist, either, and so has no reason to fight wars, but on the whole it seems that NATO is a liability rather than an asset to world peace.

Regarding the "return of geography," instead of grabbing each other's land by force, nations should think about buying and selling their territories.

Thus, Russia should have offered money for and bought Crimea rather than proceeding aggressively as it did. It sold Alaska to the US; why shouldn't it pay for Crimea?

Obama the Omnipotent

"Obama sent a message to Russian president Vladimir Putin about strength. Specifically, economic strength. The message was this: Whenever I decide to, I can pick up a pen, and kill a significant financial institution in your country," says the Fiscal Times.

And this is supposed to be a free country. You know, "life, liberty..."; Economics in One Lesson; secure property rights. Apparently, it's now a country in which one man is "free," without precedent and outside the law, to disrupt major flows of global commerce at the stroke of a pen, thereby making everyone -- and not just the so-called Russian oligarchs -- poorer. Other people, like Lester M. Joseph, the international investigations manager at Wells Fargo Bank, are "free" to obey: "the first thing he did was check to see if [Bank Rossiya] was a customer of his institution. 'It is not, thankfully,' he said."

The response of the US elite? "According to John Byrne, executive vice president of the Association of Certified Anti-Money Laundering Specialists, 'There's no question these sanctions are an appropriate and effective national security tool.'"

Yeah. Right. Tool. Humans create things with tools, not destroy them. And how does fomenting a new Cold War promote anyone's security? Furthermore:

"In general, major industrialized countries don't try to shut down each other's financial institutions without evidence of blatant illegal activity -- which does not appear to exist in the case of Bank Rossiya. 'This is a new thing,' said Joseph. 'It's not a rogue bank. It's a bank in a country where we do a lot of business. It's not involved in a criminal case.' Compared to other actions by past administrations, he said, 'It's much more complex.'"

It's not that complex. The imperial court is smelling an opportunity to increase its power and swell in size and scope at the expense of both Americans, Russians, and everyone else.

Is there no one who will stop them?

Post Office, 3

There are two common ways in which a government-run enterprise can escape competition from the private sector. It can be decreed a monopoly, like the Post Office; or it can be subsidized and offer its services for free, like public schools or E-Check.

In the first case, competition can still arise on the black market; in the second case, the free service offered by the government can be so poor in quality that people will prefer to pay money to be served by a private company. (Why else would there be private schools?)

Regarding management, however, which way of financing the government firm is chosen is immaterial. It will continue to be a bureaucracy outside the market.

Original Sin

Original sin is an official doctrine of the Catholic Church. What is pointedly not a doctrine is any affirmation that the early Genesis that tells the tale of man's Fall is actual history.

Thus, we read in the Catechism that "the 'tree of the knowledge of good and evil' symbolically evokes the insurmountable limits that man, being a creature, must freely recognize and respect with trust." (396) Symbolically evokes. Not necessarily (or even probably) literally describes a piece of actual human history.

My take on original sin is that initially, indeed, "God created man [Adam] in his image and established him in his friendship." But then they had the following conversation:

ADAM: Listen, God, I feel pretty happy, and I'm enjoying your company, but how do I know there is nothing better out there?

GOD: 'Out there' is only evil.

ADAM: Well, surely, Lord, you are a better economist than I am and so you know that values are subjective, and what you think is evil I may find interesting.

GOD: I'm telling you, dude, you'll be killing yourself.

ADAM: I don't care; it's worth it. Let me drink the poison and find out what evil feels like for myself. If I, in my own judgment, find it as bad as you say it is, then I'll come back. But I insist on going through with this experiment.

GOD: Fine, if you really want to experience every manner of suffering, just eat of that tree over yonder. You will have the power to overcome some forms of suffering, but in the end, suffering and death will catch up with and claim you. It's your life, man. Do whatever.

Oh, and just so you know, the road "back to me" will be very difficult and will involve a rejection of every single evil. You'll have to squeeze every drop of that poison out of yourself.

ADAM: Yeah, yeah, ok, let me get a mouthful of that apple-like sucker.

This or similar sort of psychology may be the best we can do at interpreting the idea of original sin.

In Turmoil and Torture We Trust

Says Anne Williamson:

"Turmoil is the very aim of contemporary US statecraft. In the 'divide and rule' political schemata of empire, US blunders are but new opportunities to tighten the screws on what the US policymakers regard not as nations, but as subject territories.

"US scheming and bellicosity in Ukraine have only worked to drag the world back to the tired rhetoric of the cold war and to that era's nuclear dangers and destructive tit-for-tat policies of economic sanctions, asset freezes, and boycotts.

"Now that west has adopted Bolshevik political tools, the Russians ought to keep turning the tables and counter with what the west advocates only with words, i.e. freedom and economic competition."

Please, folks, do just that.

Putin and McCain

Russia should not have retaliated to the US sanctions by "banning" McCain, etc. from traveling to Russia. It's a stupid move; Putin should have shown himself the better man, not interested in such petty nonsense. Let the US commit sins; it's only digging its own grave.

As it is, the ban only plays right into McCain's hands. He wants the return of the Cold War. He wants the American and Russian people to hate and fear each other. In short, he's a monster. "This is a flagrant case of political atavism, or the desire for social strife and war, operated by EU and US politicians against a target -- Putin’s Russia -- that can hit back very, very hard," says Andrew McKillop. Let's not let the bad guys win.

Update. "Mr. Putin responded to the moves by banning nine American officials and legislators from Moscow. But on Friday he said he did not see the immediate need for further reprisals. ... When Russia's foreign minister, Sergey V. Lavrov, said that the ministry was prepared to draft unspecified retaliatory measures, however, Mr. Putin demurred. 'I think we should refrain from taking steps in response for now,' he said." Yay! Is Putin reading my blog? (I think he may be the only one who's reading my blog.)

In short, Russia, do not respond to the US's provocations.

Post Office, 2

Mises points out that a government-run enterprise (GRE) faces the problem that "every service can be improved by increasing expenditures."

This is to be understood as an application of marginalism. How much money per month should be spent on such-and-such Post Office (PO) branch? If we spend $10,000, then the branch will have bad pens and long lines. If we spend $100,000, then the branch will be encased in marble, and most things in it will be rather pretty. But in that case, taxpayers will be very unhappy. Mises goes on: "It is precisely the efficient and honest manager who will try to make the services of his outfit as good as possible. But as he is not restrained by any considerations of financial success, the costs involved would place a heavy burden on the public funds. He would become a sort of irresponsible spender of the taxpayers' money."

In other words, for a private business, if we start with the minimum of $10,000, then we should keep increasing the expenditures (say, by $1,000 each iteration) as long as the marginal costs are lower than the marginal revenues that would result if the costs are borne.

However, the PO is a monopoly. It's illegal to compete with the "people's postal service." Even with the web and all, it is unlikely to become completely irrelevant soon. Therefore, the demand for PO's services is inelastic or for simplicity's sake, vertical. The government then can extort any amount of money from the consumers, e.g., by setting the price of a stamp to $5. It can then use this money to build pyramids like Las Vegas's Luxor for every branch office.

Would that be a good way of spending taxpayer money? You might say, obviously not! But in fact, we have no idea! In a competitive market, it may well be that the customers of a private first class mail carrier (FC, Inc.) would be willing to pay for the "Luxors." It's unlikely, but possible. Only the market can determine that. The FC's owner then would start with our $10,000 and the services he can profitably provide with that amount of money and then consider the profitability of each marginal service. Should there be working pens? Well, that'd cost $20 / month (say). But it'd also attract enough customers to supply $75 worth of revenues. Out with the old, in with the new pens, then. Should there be 3 clerks on duty at any time or 4 or 5? A business calculation will provide a tentative answer.

The present monopoly PO cannot take recourse to the procedure of calculation. "Luxors + $5 / stamp or no-Luxors + ¢50 / stamp" is a bureaucratic or at best, political non-rational decision by whoever's in charge of this GRE or by the Congress.

Post Office’s Farce

No matter how much the Post Office tries to imitate the market, it fails in so many ways, like the non-functioning pens on its tables.

Climate, 3

To illustrate the point, suppose the climate was perfectly stable and was not changing at all.

A certain Smith says: "The weather is too hot in the summer for my liking. I propose we liquidate, i.e., kill, 4 billion people in order to cool the planet a little bit."

Or let Smith proclaim: "We must go back to a pre-industrial or even pre-civilized hunter-gatherer lifestyle in order to lessen the pressure on the climate to stay the same and in order to cause a cooling. Government action is essential to this vision: a strict totalitarian state should destroy the modern economy and reduce the 0.1% of those still alive to subsistent living."

Wouldn't he be regarded as insane?

Suppose now that the climate is changing and humans are a major cause. Somehow in this situation, people consider Smith's statements to be entirely reasonable. And I would disagree.

In short, if the present climate change tendency is dangerous, then a technology of mitigating it has to be invented that does not involve repression, statism, or impoverishment. I'd welcome any such development wholeheartedly.