Another great one from the Calvin and Hobbes reruns today:

Calvin (chewing a huge wad of gum): I need to get a heart rate monitor.

Hobbes: What for?

Calvin: To make sure I’m chewing at my aerobic threshold! Every day I want to see that I’m chewing more gum faster, harder, and longer!

Hobbes: What’s the point of attaching a number to everything you do?

Calvin: If your numbers go up, it means you’re having more fun.

Hobbes: Science to the spirit’s rescue once again.

Where else in the funnies can you find, in nuce, the Austrian critique of the GDP and other econometric mummeries?

Further reading:

• GT 2006-04-16: Direct Action
• GT 2005-01-02: Vulture Economics
• Laurence Parks, Mises Insitute (October 1997): Burn Your House, Boost the Economy

(Link thanks to Anil Dash 2006-02-03.)

Here’s Tim Redmond, of the San Francisco Bay Guardian, on why he’s cheesed off about the ever-expanding Craigslist:

A little background. Mr. Newmark, whom everyone calls Craig, has created a system of online advertising that has pretty much wiped out traditional daily newspaper classified ads in many of the 115 US markets where he now operates. He’s also hurt the alternative press, although the damage to the dailies is deeper. Some say Craig has single-handedly destroyed thousands of newspaper jobs.

Frankly, that’s a little silly: The guy figured out how to do something that the newspapers weren’t doing, and they were way too late in responding, and he got their money, and that’s how capitalism works.

But Craig still annoys me, and here’s why:

Over and over in his brief speech, he talked about building community. He acted as if Craigslist was some sort of nonprofit with lofty goals and he a humble servant of the people who wants only to help improve human communications.

The problem with that is simple: When Craig comes to town (and he’s coming to just about every town in the nation soon), the existing community institutions — say, the locally owned weekly newspaper — have a very hard time competing. In many ways, he’s like a Wal-Mart — yeah, landlords get cheaper real estate ads, and consumers find some bargains, but the money all goes out of town. And he puts nothing back into the community: He doesn’t, for example, hire reporters or serve as a community watchdog.

Here’s the question I asked him:

How, exactly, does a San Francisco outfit moving into, say, Burlington, Vt. and threatening to eviscerate the local alternative newspaper, help build community? If he’s such an altruist, why does he have to keep expanding like a typical predatory chain? We all get the need for online ads and community sites now; why not let the folks in Burlington (or wherever) build their own? Why not (gasp) help them, instead of using his clout to hurt them?

— Tim Redmond, San Francisco Bay Guardian (2006-02-01): Editor’s Notes

So, to keep the score straight, let’s keep in mind that helping people to find a job in town, or helping people who have something to sell get in touch with other people in their town willing to buy it, doesn’t count as putting anything back into the community. Also, be sure to remember that getting the word out about shows, fundraisers, parties, or other events going on in town doesn’t count as building community, and neither does helping people to meet other people in town with common interests, jobs, hobbies, or passions. Real community, after all, is defined by its ability to keep professional editorialists like Tim Redmond employed, and by whether or not they print and distribute an alternative newsweekly tabloid, like the San Francisco Bay Guardian.

Next week: where will we find jobs for all the candle-makers?

You could also call this How Government Solved the Health Care Crisis, Part II; Part I being Roderick’s excellent article from 1993, on the government’s deliberate obstruction of mutual aid societies (in order to raise medical costs), and the havoc that it’s wreaked on the medical insurance system ever since.

As a follow-up in a similar vein, here’s an interesting bit I stumbled across in Robert Whitaker’s Mad in America (2002); the topic came up in the course of explaining how neuroleptics, and thorazine in particular — first marketed as chemical lobotomies, later repackaged as antipsychotics — took American psychiatry by storm during the 1950s. An essential part of the process was the destruction of private, independent oversight over the therapeutic value of drugs — a medical watchdog system that worked, until government fixed it.

After World War II, global leadership in drug development began to shift from Germany to the United States, and it did so because the financial opportunities in the United States were so much greater. Drug manufacturers in the United States could get FDA approval for their new medications with relative ease, since at that time they did not have to prove that their drugs were effective, only that they weren’t too toxic. They could also charge much higher prices for their drugs in the United States than in other countries because of strong patent-protection laws that limited competition. Finally, they could count on the support of the influential American Medical Association, which, as a result of a new law, had begun cozying up to the pharmaceutical industry.

Prior to 1951, the AMA had acted as a watchdog of the drug industry. In the absence of government regulations requiring pharmaceutical companies to prove that their medications had therepeutic merit, the AMA, for nearly fifty years, had assumed the responsibility of distinguishing good drugs from the bad. It had its own drug-testing laboratory, with drugs deemed worthwhile given the AMA seal of approval. Each year it published a book listing the medications it found useful. Drug companies were not even allowed to advertise in the Journal of the American Medical Association unless their products had been found worthy of the AMA seal. At that time, however, patients could obtain most drugs without a doctor’s prescription. Drug companies primarily sold their goods directly to the public or through pharmacists. Physicians were not, in essence, drug vendors. But in 1951, Minnesota senator Hubert Humphrey cosponsored a bill, which became the Durham-Humphrey Amendment to the Federal Food, Drug, and Cosmetics Act of 1938, that greatly expanded the list of medications that could be obtained only with a doctor’s prescription. While the amendment was designed to protect the public by allowing only the safest of drugs to be sold over the counter, it also provided doctors with a much more privileged status within society. The selling of nearly all potent medications now ran directly through them. As a result, drug companies began showering them, and their professional organizations, with their marketing dollars, and that flow of money changed the AMA almost overnight.

In 1950, the AMA received $5 million from member dues and journal subscriptions but only $2.6 million from drug-company advertisements in its journals. A decade later, its revenue from dues and subscriptions was still about the same ($6 million), but the money received from drug companies had leaped to $10 million–$8 million from journal advertisements and another $2 million from the sale of mailing lists. As this change occurred, the AMA dropped its critical stance toward the industry. It stopped publishing its book on useful drugs, abandoned its seal-of-approval program, and eliminated its requirement that pharmaceutical companies provide proof of their advertising claims. In 1961, the AMA even opposed a proposal by Tennessee senator Estes Kefauver to require drugmakers to prove to the Food and Drug Administration (FDA) that their new drugs were effective. As one frustrated physician told Kefauver, the AMA had become a sissy to the industry.

–Robert Whitaker, Mad in America (2002), pp.148–149

State Leftists who write on the medical industry routinely — rightly — talk up the corrupting effects that drug industry money and favors have had on the practice of medicine. But what they need to realize is that this is not some kind of disease endemic to a free market in medicine, or caused by the inevitable contamination from filthy lucre. Until 1951, there was no problem with drug companies bribing doctors to serve as drug-pushers; physicians’ organizations served as a system of voluntary, independent oversight on the claims of the drug industry — until, that is, the government shoved its way in to fix the problem of overhyped medication. What we found out is what we should have known all along: cartelization corrupts, and absolute cartelization corrupts absolutely.

Here’s a dumb argument that people sometimes make against workers’ co-ops. The incarnation I’ve picked comes from Econo-Creep Central, where Posner was lamenting the fact that Larry Summers, the overbearing jackass at the top of the educational red-tape hierarchy at Harvard, was hounded out of his position, largely by rowdy arts and sciences faculty with whom he was extremely unpopular. Here’s Posner, quoting some remarks from a year ago that he thinks are confirmed by the sorry end of Summers’ sorry tenure as University President:

To appreciate the sheer strangeness of the situation, imagine the reaction of the CEO of a business firm, and his board of directors, if after the CEO criticized one of the firm’s executives for absenteeism, ascribed the underrepresentation of women in the firm’s executive ranks to preferences rather than discrimination, dealt in peremptory fashion with the firm’s employees, and refused to share decision-making powers with them, was threatened with a vote of no confidence by the employees. He and his board would tell them to go jump in the lake. But of course there would be no danger that the employees would stage a vote of no confidence, because every employee would take for granted that a CEO can be brusque, can chew out underperforming employees, can delegate as much or as little authority to his subordinates as he deems good for the firm, and can deny accusations of discrimination.

If, however, for employees we substitute shareholders, the situation changes drastically. The shareholders are the owners, the principals; the CEO is their agent. He is deferential to them. Evidently the members of the Harvard faculty consider themselves the owners of the institution.

They should not be the owners. The economic literature on worker cooperatives identifies decisive objections to that form of organization that are fully applicable to university governance. The workers have a shorter horizon than the institution. Their interest is in getting as much from the institution as they can before they retire; what happens afterwards has no direct effect on them unless their pensions are dependent on the institution’s continued prosperity. That consideration aside (it has no application to most professors’ pensions), their incentive is to play a short-run game, to the disadvantage of the institution–and for the further reason that while the faculty as a group might be able to destroy the institution and if so hurt themselves, an individual professor who slacks off or otherwise acts against the best interests of the institution is unlikely to have much effect on the institution.

— Posner (2006-02-26): Summers’ Resignation and Organization Theory

Of course it’s true that in most workplaces, top executives are very often insufferable know-it-alls who treat workers rudely and don’t bother themselves with what the folks doing the work have to say about the workplace or the company. But being common is hardly the same as being right, so if you want to give some kind of argument against employee self-management, at a University or elsewhere, you’re going to need to provide some substantive argument. Posner tries to offer his substantive argument a couple paragraphs down, in his discussion of the incentives faced by workers in institutions; the problem is the argument, such as it is, relies on a jaw-droppingly crude economic fallacy.

Posner’s right that when it comes to operations like Harvard, workers generally have a shorter horizon of interest than the institution that they work for. There’s nothing wrong with pointing out the temptations that this creates. There is something wrong with passing this off as a problem that’s unique to workers (industrial, professional, or otherwise), or claiming that this kind of organizational problem is somehow solved by ditching co-operative models in favor of an organizational hierarchy.

When institutions are hundreds of years old and designed to last into the indefinite future, everyone has horizons shorter than those of hte institution. This is not just true of workers; it’s true of shareholders, trustees, clients, executives, and all other mortal human beings. Posner, like many theorists trying to stick up for modern corporate org charts, blithely assumes that a hierarchial model somehow removes the ordinary limitations of fallen humanity and creates some kind of mystical union whereby the CEO acts as The Institution itself. But since the institution makes no decisions and takes no actions independently of the decisions and actions of mortal human beings, organized in some concrete way or another, you can’t just lazily compare the horizons and incentives of the workers to the horizons and incentives of the institution and claim that this proves that workers shouldn’t be owners. You need to compare the horizons and incentives of shareholding workers with the horizons and incentives of shareholders not working for the institution (let’s call them absentee shareholders from here on out). Absentee shareholders are limited, self-interested, mortal human beings no less than workers are, and if Posner seriously wants to make the case for treating faculty as underlings and not as part of the governance of the University, he needs to make honest comparisons between the two, not a phoney comparison between workers and the disembodied Institution.

So, if you’re concerned with the long-term flourishing of the institution — actually, how important that is is open to some serious questions, but that’s for another day — you need to ask a different set of questions, questions which Posner’s fallacy simply closes off without consideration. For example, (1) whether absentee shareholders have longer horizons than shareholding workers, or vice versa; (2) whether absentee shareholders are less likely than shareholding workers to milk the institution for personal gain within the horizon of their own relationship to the institution at the expense of the long-term flourishing of the institution, or vice versa; (3) whether absentee shareholders are more willing or better able than shareholding workers to discover the best means of serving the interests of the institution within their short-term horizons, or vice versa; and (4) whether absentee shareholders are more willing and/or better able than shareholding workers to discover the best means of serving the interests of the institution beyond the short-term horizons of their personal relationship to the University.

These questions are all important, and I think not obviously to be answered in favor of control by absentee shareholders, at least not in every imaginable case. (Since the structure and goals of the University make it an atypical case compared to factories, restaurant chains, shipping companies, and other for-profit enterprises, it seems like special caution is needed in the particular case at hand. For more on the role that bossless worker co-operatives actually played in the birth of the European University, see Roderick Long’s A University Built by the Invisible Hand.)

But all of these questions remain unasked as long as we pretend that the mystical body of The Institution will somehow be making decisions once mortal workers are no longer playing a substantive role in decision-making. Posner needs a much stronger case before he can justify such a radical set of policy proposals as the accountable to none save the Board platform for University CEOs that he outlines in his post. And folks who want to defend corporate-capitalist modes of production against worker-driven alternatives need to give a much more serious and detailed argument in defense of their position.

In a similar vein

• GT 2005-10-09: State of grace

There’s no real way to reply seriously to the kind of deliberate political sadism suggested by nativist creeps like those commenting on Wizbang’s latest on the Evil Alien Invasion. So, instead, I’ll limit myself to a couple questions and a remark. Here’s Linoge, suggesting massive new layers of government regulation in order to make undocumented immigrants suffer as much as it’s feasible to make them:

The word illegal sums it up entirely… I would not go so far as to say they should be arrested on sight (though I am close), but their presence illegally in another nation should be heavily discouraged. That means, no health care, no driver’s licenses, no jobs, no nothing. At all. Ever. —Linoge

Well, at least you’re not going so far as to say they should be arrested on sight. That’s mighty white of you.

Now, here’s the question for the day. How would immigration cops looking to make an arrest determine somebody’s immigration status on sight in the first place?

Meanwhile, here’s a small-government conservative who’s a fan of the East Berlin immigration policy:

At any rate, I don’t see why the States don’t take matters into their own hands. Why do we have to wait for the feds to take action? Is there some reason that Texas, New Mexico, Arizona and California can’t start building walls and fences along their borders with Mexico? What prevents the States from using their state police forces to find, arrest and detain for later deportation illegal aliens? I’m not suggesting roadblocks, house-to-house searches, or Ihre Papiere, bitte, but I don’t see why a state trooper who stops a Hispanic driver can’t do a quick computer check to see if the person is in the country legally.

— docjim505

Here’s the second question for the day: what is the difference, if any, between (1) a cop stopping you and — solely on the basis of your race, by the way — demanding your ID for a check of your immigration status, and (2) a uniformed goon demanding Ihre Papiere, bitte? Because he, what … demands your papers in English rather than in German?

SJBill, for his part, didn’t feel threatened by undocumented Mexican immigrants until they scared him by … exercised freedom of speech and assembly:

Before these protests, I was pretty ambivalent on the issue — meaning I wasn’t directly threatened by illegal Mexicans. I see them all the time at local Home Depots, etc., but they are looking for work and trying to grind out a living. So, with the protests, the lights in the kitchen came on and we see millions of Mexicans (presuming most have other than legal status) marching in our cities and streets — all of a sudden I’m not quite so comfy. It’s pretty scary.

… I see a credible threat to our nation’s security, and we should do what we can to send these folks back home if they cannot abide the law of our land. That’s not being a xenophobe.

— SJBill

Maybe not. But suggesting that people be threatened, beaten, restrained, arrested, detained, imprisoned, exiled, etc. simply on the basis of their nationality, for having done nothing more than tried to work for a living for a willing employer, is.