no third solution

Blogging about liberty, anarchy, economics and politics

An Open Letter to Katrina Petitioners

January 9th, 2008

Recent reports on lawsuits filed against the Army Corps of Engineers in the wake of Hurricane Katrina are nothing short of monumental. Several claimants are seeking a billion dollars in damages. On ass-hat, however, takes the cake:

Hurricane Katrina’s victims have put a price tag on their suffering and it is staggering including one plaintiff seeking the unlikely sum of $3 quadrillion.

One Baton Rouge based economist says “I understand the anger. I also understand it’s a negotiating tactic: Aim high and negotiate down.”

So here is an open letter to the petitioners:

Dear Petitioner(s):

Asking for three quadrillion dollars is hardly a negotiating tactic. If this suit garners more than a quick toss into the circular file, it will be too much.

Every penny spent defending frivolous suits, like yours, comes from the pockets of ordinary tax-paying Americans, many of whom live nowhere near New Orleans. Moreover, every penny paid to claimants like you, ultimately comes from the pockets of the very same ordinary tax-paying Americans. It is important to remember that these ordinary tax-paying Americans were compelled to subsidize the existence of New Orleans and its suburbs, hence subsidizing the lifestyle to which you grew accustomed, through the Army Corps., which was from the get-go charged with the impossible task of preventing catastrophe in a region where catastrophe is known to frequently occur.

The proximate cause of the vast amount of pain and suffering for which claimants are petitioning is not the hurricane(s) which destroyed their livelihood. It is the morale hazard associated with living in a disaster-prone locale, one where the only predictability is that the disasters are essentially unpredictable, and hence, uninsurable. But petitioners lived there because someone else was footing the bill. And now that it’s come full circle, they’re asking for someone else to bail them out.

We subsidized the existence of your city. We paid for your levees. If you had flood “insurance,” we provided the lion’s share of it. We paid for your evacuation. We are paying for your reconstruction, and we continue to subsidize your “insurance,” so that you can afford to continue living in an area where nobody should’ve lived to begin with. And you have the stones to petition us for three quadrillion dollars? You’ve got to be fucking kidding me.

If we had never been taxed to susidize it, you’d never have lived there. Never have lost everything. I’m sorry you believed the lies, and I’m sorry for your losses. But it’s not my fault that I wasn’t taxed enough to prevent it in the first place, and it shouldn’t be my responsibility to fix what’s broken. If you still don’t get it, you are not merely part of the problem — you are the problem; everything that’s wrong with a world full of people who refuse to take responsibility for their own actions and their own lives and their own fortunes or misfortunes.

You’re welcome. You’re welcome for everything the rest of us have done for you throughout the years. You’ve never thanked anyone for it, because you’ve been told all along that it’s something to which you’re entitled. And this is how you repay us?

Sincerely,

David Z

Krugman Blames the “Free Market”

December 21st, 2007

Whether you choose to call it a bubble, a recession, a crisis, or a “downturn,” everyone has a solution to or a scapegoat for the current financial “episode.” (relatively neutral, no?) Par-for-the-course, Paul Krugman blames the free market:

In a 1963 essay for [Ayn] Rand’s newsletter, [Alan] Greenspan dismissed as a “collectivist” myth the idea that businessmen, left to their own devices, “would attempt to sell unsafe food and drugs, fraudulent securities, and shoddy buildings.” On the contrary, he declared, “it is in the self-interest of every businessman to have a reputation for honest dealings and a quality product.”

…In Mr. Greenspan’s world, predatory lending — like attempts to sell consumers poison toys and tainted seafood — just doesn’t happen.

…Of course, now that it has all gone bad, people with ties to the financial industry are rethinking their belief in the perfection of free markets.

He says that government should have prevented this. But government caused it!

As an economist, I suspect that Paul Krugman is familiar with the all-important caveat, ceteris paribus. It is this caveat which Krugman has wholly ignored in crafting the free-market straw-man.

Mr. Krugman, with his Ph.D. in Economics from the Massachussetts Institute of Technology, should know better than to characterize our current system as anything even approaching a “free market.” More free than some, certainly. But the market is not free where the price of corn is so heavily subsidized as to make our beer more expensive or unavailable at all. The market is not free where regulations at various levels preclude business owners from deciding whether to allow their patrons to smoke freely in their respective establishments.

“Left to their own devices” under a Randian ideal of unfettered capitalism, big business wouldn’t be in bed with big government, the Federal Reserve would not claim a monopoly on the issuance of money, nor would member banks (namely: all of them) be likely or able to form such a cabal as the Fed.

The market is not free where the interest rates are purposefully and unabashedly manipulated, and where contracts specifying payment in currency other than irredeemable paper banknotes are void.

A free market can not profitably create money out of thin air. It follows that a free market could not possibly have loaned more than their reserves would allow. Scarce reserves and able borrowers preclude a free market from finding borrowers of dubious credit-worthiness. Competition for credit makes it all-but-impossible for housing values to rise 5- or 10-fold in as many years barring other extreme circumstances.

No. By whatever euphemism you choose to call it, a free market did not, and could not have caused the current problems (I prefer “corrections” or “revelations”) in the the financial sector. With its negligently loose monetary policy prevailing for the better part of the decade, the Federal Reserve with its license for theft, is the prime mover for the current “episode.” Where someone criticizes the “free market,” look always for the shadowy hand of government pulling the strings behind the curtains.

The market is not free.

Contrived Demand

December 21st, 2007

Allow me to reprise my “Scrooge” role from years past. I still maintain that the Christmas holiday is grossly inefficient and that it probably does at least as much harm as it does good. The net result is that in general, we are induced to spend money on others, who are going to return the “favor” with items on which we wouldn’t otherwise spend our own money. What we are dealing with is completely contrived demand for holiday spending. Think about that outrageous Santa-themed sweater, or the toy that is neglected by your nephew a few days later…

Basically, the would-be gift recipients are pressured into creating a list which consists of items which they desire less than whatever they spend their own money on. And in turn, they are shamed into spending their money to buy the same category of gift for others. In one manner or another, “Advertising has us chasing cars and clothes, working jobs we hate so we can buy shit we don’t need.”

Now, the idea is pervasive in our society. Nearly everyone buys presents for some other people. And “nearly everyone” includes a great number of people who really don’t have money to spend. Michigan is mired in a single-state recession, reeling from continuous downsizing in the manufacturing/automotive sector which is compounded by the aftershock of a decade of loose lending and a bursting bubble. Housing values have declined in Oakland County for the first time ever, since they started keeping track about 40 years ago. Yet the mall is packed. The BestBuy is packed. Parking is hard to come by at Kohl’s or Target or Wal-Mart. People are spending money that they don’t have, in order to buy shit that they don’t need, all in the spirit of Christmas.

I’d rather give a thoughtful present, for no good reason, in April (or July, or October, etc.) than buy you some throwaway item from a list of things you neither need nor want, just because the Calendar says so. I’d rather receive my gifts in this manner, too. If you want to “spread the spirit,” then buy gifts for people all year ’round. A little bit here and there, just to say that you care. Help people out when they actually need the help — not when Macy’s says so.

And live up to the ideal, “better to give than to receive.” If you scratch enough backs, sooner or later, someone will scratch yours in return.

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NOTE: Blogging may be light and/or non-existent during the next few days, although I intend to resume a more normal posting schedule after Christmas. Then again, there’s Wi-Fi at Crystal Mountain, and if it rains, what else will I have to do?

no third solution

Blogging about liberty, anarchy, economics and politics