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Talk About Missing the Point!

Mar 18 by Roderick | 20 comments

Guest Blog by Jennifer McKitrick

[cross-posted at JenMc’s Blog]

It seems to me much of the criticism about executive compensation has been misplaced.

What’s supposed to be so horrible about CEO’s getting big bonuses?

  • “They just don’t get it.”
  • “They’re idiots.”
  • “They don’t understand that people are hurting and angry.”
  • “They’re insensitive to public perceptions.”

That might be true. But is that really the problem? Is that what’s important – whether or not CEO’s know or care what we think?

  • “They don’t deserve it.”
  • “It’s rewarding failure.”

OK, imagine this… Suppose that certain executives at these companies had been working really hard, doing their best, etc., etc. And let’s even suppose they’re not the people who had made bad decisions, but they are doing their darnedest to repair the damage. And suppose we had good evidence that, if it weren’t for their work, things would be much worse. Given the circumstances, they might be described as moderately successful in their endeavors. Even if this were the case, how would you feel if millions of taxpayer dollars that was intended to help save their companies was used to give them bonuses instead? Myself, personally, would still not be happy about it. (I find it implausible that the bonuses, in the current environment, actually help the company be more profitable.)

Community Chest: Bailout in your favor - collect $20000000000On the other hand, suppose that a private company that has taken no bailout money decides to give a reckless and irresponsible executive a multi-million dollar bonus that he doesn’t deserve. This might be a bad idea for many reasons. It will probably be bad for the company, and in turn, bad for everyone who depends on that company. But, hey, if they want to shoot themselves in the foot, that’s more or less their problem. Investors and other people who depend on this company should be aware and take caution. If such practices are harmful to companies, companies that are determined to engage in them should fail.

In sum:
Bonuses for well-meaning, “deserving” executives for bailed out companies – Grrr!
Bonuses for reckless, undeserving executives for private (un-bailed-out) companies – Oh well.

Ergo: The executives’ being undeserving is irrelevant to how bad an idea the bonuses are!

So why are the bonuses so horrible? In my opinion, it’s because they constitute the transfer of vast sums of wealth from millions of Americans who can’t afford it to a privileged few, which serves no other purpose than the interests of the few (who also happen to have been a lot better off in the first place).

Who cares what they do or don’t understand, what their motives are, or what they do or do not deserve? I don’t.

This has got to be the biggest rip-off perpetrated against the American people in the history of our country. And all people can complain about is that the beneficiaries of this scam are insensitive and undeserving?!

But if we stop talking about the character flaws of CEO’s, we’ll have to start talking about the people who just handed them billions of dollars that we don’t even have. I mean, it’s not as if they broke into Fort Knox and stole it.

  • “This is a red herring. It’s such a small percentage of the bailout (or TARP or whatever) money. Complaining about it is great political theater, but in the big picture, the bonuses are irrelevant.”

OK. Here’s how to get away with wasting a billion dollars: First, spend a trillion dollars. Then, when someone asks about how a billion of it was spent, point out that that is only 0.1% of the total. (Recall that the same kind of response was made in defense of various parts of the stimulus package. It is so huge that to complain about multi-billion dollar expenditures looks like knit-picking.)

The sums of money here are just beyond my comprehension. But I’m not supposed to worry about amounts that are far more than I could earn in 10 lifetimes, because it’s a drop in the bucket of what the U.S. taxpayers are on the hook for. And this is supposed to make me feel better why?

Jennifer McKitrick is Associate Professor of Philosophy at the University of Nebraska – Lincoln, and Vice-President of the Molinari Institute and Molinari Society.

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Tortured Logic

Jan 18 by Roderick | 4 comments

Guest Blog by Jennifer McKitrick

[cross-posted at JenMc’s Blog]

1. Water boarding is torture.
2. The Bush administration authorized water boarding.
3. Authorizing torture is a punishable offense.
Therefore… ?

What’s the rationale for denying the claim that someone from the Bush administration is liable to criminal prosecution?

  • We should look forward, not backward (Obama).

Let's go waterboarding!I tried telling that to the judge when I was in traffic court: “That speeding I did – that’s in the past. The important thing is that I will obey the speed limit in the future.” It didn’t fly.

  • We shouldn’t criminalize policy disagreements (Holder).

But what if it’s someone’s policy to break the law? It’s not their disagreeing with you that’s criminal – it’s the crime that they committed.

  • The Bush administration didn’t know that what they were doing was illegal.

Ignorance of the law is no excuse. I told the judge in traffic court that I didn’t know that going 60 mph on that particular stretch of road was illegal, but that didn’t work either.

  • The Bush administration acted in accord with legal counsel that said that what they were doing was legal.

Oh! The lawyers said it was OK! Why didn’t you say so? So, if I hire a lawyer to tell me that speeding is legal, I can drive as fast as I want?! Yippee!

It seems to me that the laws that protect people from being tortured should be at least as strong as the laws that protect people from my driving too fast.

And it seems to me, if something is against the law now, and the reasons it is against the law were in play at time t, then that thing was against the law at time t.

So, are there any reasons that make water boarding against the law now that weren’t in play in the last several years?

A different administrative “policy”?

What was that I heard, once upon a time, about a separation of legislative and executive branches…? If Obama’s policies can deem water boarding to be against the law when it was previously not a punishable offense, then it would seem that they would be justified in not having those policies if that were their prerogative.

Lucky for us, they’re nice guys.
Let’s hope so, since they seem to basically agree with the Bush administration about the executive being above the law.

It reminds me of when my co-worker opined that our boss was a very judgmental person. When I told her that he didn’t seem that way to me, she said “Well, it’s not obvious, since most of his judgments are positive.”

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Don’t Know Much About Economics…

Dec 10 by Roderick | 3 comments

Guest Blog by Jennifer McKitrick

[cross-posted at Jen Mc’s Blog]

Don’t Know Much About Economics…

But as far as I can figure…

The plan of the Trouble Asset Relief Program is that the US government borrows money from China so that they can lend it to banks so banks can lend it to consumers/taxpayers.

(China should just open up banks in the US and lend directly to consumers. Cut out the middle men! Especially ones that spend the money on spa retreats for their clients.)

So basically, the government is putting taxpayers in debt so that money can be lent to same taxpayers, with interest.

Rube Goldberg cartoon

If enough taxpayers pay back the bank, the bank can pay the government, and the government can pay back China, and if there’s any left over, it will “benefit the taxpayer,” whatever that means.

(Another short cut: If you really want to benefit the taxpayer, reduce the amount that they have to pay on their loans now, rather than giving them a promise of a cut of the profits made off their own interest payments.)

Now, if not enough taxpayers pay their loans, the bank can’t pay back the government, but the government still has to pay back China, so where will they get the money? From taxpayers! Which taxpayers? The ones who were unable or unwilling to pay their loans? Unlikely. For the others (and subsequent generations), after they’re done paying back any money that they may have borrowed, they still have to pay back the money that someone else borrowed. That sounds less like being financially responsible and more like being a sucker.

Another thing…
If the Big 3 are good for the money, why can’t they get regular loans?

Credit is tight, I know. But the government already gave billions to financial institutions so they could make loans. I guess the banks figure they shouldn’t risk the taxpayer’s money that way. That would be irresponsible!

But what do I know?

Jennifer McKitrick is Associate Professor of Philosophy at the University of Nebraska – Lincoln, and Vice-President of the Molinari Institute and Molinari Society.

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Walter Block Replies

Mar 16 by Roderick | 71 comments

Guest Blog by Walter E. Block

Why do I think of Ron Paul as a libertarian and support his candidacy for president (for purposes of the present discussion I will not distinguish between these) but do not consider Randy Barnett in this way? As Roderick very, very truly says, each of these men hold views incompatible with libertarianism. Why, then, such a sharp distinction between them on my part?

To wit, Paul is mistaken in his views of abortion and immigration, while Barnett is in error on war (I leave to the side federalism.)

There are several reasons for my judgment.

Walter Block 1. I regard questions of war and peace, offense and defense, as far more important to libertarianism than abortion and immigration. The essence of libertarianism is the non-aggression axiom (coupled with homesteading and property rights). I see bombing innocent children and adults as a far more serious violation of liberty than aborting fetuses, or violating the rights of people to cross national borders. If this were my only reason, I regard it is sufficient to distinguish between Paul and Barnett, accepting the former as a libertarian but not the latter.

2. My second reason is that I regard abortion and immigration as far more complex issues than the question of whether a person or nation is committing an offensive act of war or a defensive one. Roderick rejects this as irrelevant. I demur. Suppose we were trying to determine who is a mathematician and who is not. Candidate A does not know that 2 + 2 = 4. Candidate B knows that, but stumbles over the Pythagorean theorem. I regard the latter as far more complex than the former. I consider B more of a mathematician than A. It seems to me that if a putative libertarian (Barnett) cannot distinguish offense from defense in such a simple case as war, while Paul certainly can, even though he stumbles on the far more complex issues of abortion and immigration, then Paul is certainly more of a libertarian, or a better one. But, the difference in complexity between these two issues is so gigantic, this difference of degree is so great that it amounts to a difference in kind, that I am entirely comfortable in evaluating Paul as a libertarian, but not Barnett.

Let me try again on this point. Here are two statements to which all Austrian economists subscribe.

a. Voluntary trade is mutually beneficial in the ex ante sense

b. The Austrian Business Cycle Theory (ABCT) is correct

I regard (a) as exceedingly simple to grasp. The Austrian credentials of anyone who does not see this, that is, agree with it, are nil. I regard (b) as very complex. Austrianism consists of belief in scores of such claims. If someone agreed to all such claims except for (b), I would consider him an Austrian. Heck, even an Austrian in good standing. But, if he rejected (a) but accepted everything else, I’d think he was pulling my leg, so weird would this be.

In other words, complexity is not at all irrelevant to the issues which separate Roderick and me. Indeed, it is very important.

3. My supposed argument from authority: I regard my own views on abortion and immigration to be the correct libertarian positions (if I did not, I would change them). However, in my assessment, Murray Rothbard, Hans Hoppe and Stephan Kinsella are three of the most import libertarian theoreticians in all of history. They disagree with me on at least one and I think both of these issues. Thus, I am a bit more modest in my stance on abortion and immigration than I would otherwise be. However, I know of NO eminent libertarian who thinks that our war in Iraq is defensive.

At first blush, you are of course correct in asserting that this is circular reasoning on my part. For, I readily admit it, if there were some other eminent libertarian (hey, give me a break, I don’t count Randroids) who did take this view, he would be dismissed, forthwith, as a libertarian in my view. Come to think of it, I think that John Hospers takes this view. Well, scratch Hospers from the ranks not only of eminent libertarian theoreticians, but from being a libertarian at all.

And yet, and yet… How else are we to determine issues of this sort? Will you concede to me that Rothbard, Hoppe and Kinsella, completely apart from the present issues under discussion, are more deserving of the title of eminent libertarian theorist than are Barnett, Hospers and the Randroids? If so, does not your position give you pause for reconsideration?

Maybe one way to reconcile our differences is as follows. I am operating from a sort of agnostic point of view: even though I have strong opinions on abortion and immigration, I am assuming, not a God’s eye point of view, but rather the position of a newcomer to libertarianism, who doesn’t know which way to go on this question since libertarian leaders diverge. You, in contrast, adopt a more knowledgeable position.

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Stating the Obvious

Dec 14 by Roderick | 2 comments

Guest Blog by Jennifer McKitrick

Watch news, a talk show, or the like, and notice how many times you hear the word “obviously.”

horse or frog? About the flooding in the Northwest the other day:

“Residents are obviously trapped and obviously in need of supplies.”

Umm … what they were showing was houses with water up to the 2nd floor. Maybe they had been evacuated. Maybe someone had just come by and delivered a boat load of supplies. I don’t know. Neither of those things were obvious.

About “baby Grace,” the dead toddler found off the coast of Texas (before she was identified):

“Her family is obviously very worried about her and loves her very much.”

No one knew who her family was, or if indeed they had been the ones that killed her. In fact, her mother and stepfather are now in custody.

I think the use of “obviously” often corresponds closely with what is usually meant by “presumably.”

If you just take “obviously” out of the sentences in which it appears, oddly what is left is something that the speaker is in no position to assert. But somehow “obviously” qualifies what they say, as if they are taking it as obvious. Since the “news” is so often involved with guesswork and presumption nowadays, it’s no wonder that they would often employ words which hedge what they say. What is a wonder is the irony of using “obviously” to characterize something that is not only not obvious, but not even known to be true.

Either that, or it’s just a verbal tick, like “err” and “ummm.”

Jennifer McKitrick is Associate Professor of Philosophy at the University of Nebraska – Lincoln, and Vice-President of the Molinari Institute and Molinari Society.

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Only Against Illegal Immigration?

Oct 07 by Roderick | 44 comments

Guest Blog by Jennifer McKitrick

There’s something fishy about some anti-immigration arguments.

NO AMNESTY - GO U.S.A.! - GO U.S. LAW! - GO HOME! They say “We’re not against immigration, we’re against illegal immigration.” OK, so the problem with immigrants is that they broke some laws. But are they good laws? If yes, they’re for laws designed to keep immigrants out, so they are against immigration. If no, then they should be for changing the laws. But they say changing the laws is either unacceptable “amnesty” for illegals that are already here and/or it would encourage more immigration. But the immigration that would happen then would be legal, so if they’re only against illegal immigration, they should have no problem.

So, I think I think that they are less than sincere when they say they are only against illegal immigration. Perhaps the right thing to say is that they only support the amount of immigration currently allowed by law. Which is pretty much being against immigration for the most part. But I suspect it’s really just lip service so they don’t seem so much like xenophobic racists. Of course, they want to protect American jobs, but preferring that companies pay higher wages to Americans rather than lower wages to needy non-Americans has no moral justification that I can see, and is probably based on racism as well.

Jennifer McKitrick is Associate Professor of Philosophy at the University of Nebraska – Lincoln, and Vice-President of the Molinari Institute and Molinari Society.

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