Live from the WTC has received a coveted 4.5 stars from the most excellent John and Antonio (unfortunately, no permalink, but that's okay because you should read the whole thing anyway). Guys, when I said that I loved Europeans, I most especially meant ones who say nice things about me.
Blogger's down. I'm waiting for the day when my host, my comments, my stats, and my blogging software are all working at the same time for more than a couple of hours. Then it's me for a bottle of Dom and a copy of the Critical Review!
What is up with the WTC cough? I've been sitting across from the Pile for six months now, and given that my asthma already had a nice head start, if anyone's got it, it should be me. But my asthma's about what you would expect if I was sitting on any construction site, even one where only 100% organic dirt from dispossessed Third World workers was floating around in the air. I'm waiting for Michael Fumento or someone to give me the straight talk on what's going on.
A friend emails from Europe to ask why I'm bashing Europeans. The email is somewhat inebriated, so I won't print the contents or the author's name. But you ought to know better, Marc. I love Europeans, even when they show up unannounced for a two-week stay, plying me with more wine than a woman of my age should drink and filling my apartment with a permacloud of noxious Gauloise sans filtres smoke that makes me wonder how the French knew when they were being gassed in WWI. I adore drunk Norwegians, uptight Germans, supercilious Polkas, and even the occasional British public school boy, in all their many splendored charms. I live for Spaniards who host 3-month house parties, and Austrians whose idea of a good time is a fifteen-mile hike. I even maintain a soft spot in my heart for earnest Swedish socialists for whom lagom is a form of Nirvana, and short Swiss bankers who throw things when they're drunk. I love you all.
Of course, I wish that you would stop calling me to complain that McDonalds is taking over the world, as if we'd sent the marines in to establish this commercial beachhead, and instead, if you wish to get rid of our fast food restaurants, try the simple expedient of persuading your compatriots to stop eating there. I occasionally dream that you will make up your minds between complaining (while you are here) that everything is much better in Europe, and complaining (while you are there) about the taxes, cost of living, and unavailability of certain consumer goods in the erstwhile paradise you have chosen to call home. Once in a while, I permit myself the faint hope that your countrymen who complain about Americans abroad might start the ball rolling by smiling at us and asking how we like their country, rather than using each brief encounter as an opportunity to educate us on the perils of American capitalism, bankruptcy of American culture, or the horrible excesses of the American penal system. In extremis, I range into wild flights of fancy where those who complain that Americans can't speak their languages, do not greet our attempts to do so with a contemptuous sniff, and reply in English. But these are the minor pecadilloes that family members love about each other. And I do adore you as individuals. It's your governments I can't stand.
The European Union? It's more like the Grammar School Gulag, from the petty authoritarianism to the sentimentalist politics of need that would replace physical reality with fairyland. They return generosity with animosity, and violence with craven cowardice. They perpetuate an aristocracy of pull in the name of the people. They abet the worst tyrannies in the world just because it makes them feel larger next to us, and call this "I am so a big boy!" tantrum sophistication. And they do it all on the dime of the American taxpayer.
When you see your friends making a disastrous mistake with their lives, you can't just sit there. It's time for some tough love. I know from experience that you aren't like your politicians -- so why the hell are you voting for these yahoos? It's time for y'all to check into the Hotel Reality. If you want to be a superpower, you're going to have to start acting like one, and that means taking some responsibility for your own Geopolitical Future. I'm doing this for your own good -- I want the best for you. But you have to take the first step by admitting that you have a problem.
Via OpinionJournal comes this tale of a man who shot the armed men who were trying to rob the video store where his son worked. The police seem to be behaving with uncommon sense:
From his DeLand home Tuesday, Shockey recalled the events. The door burst open and two men rushed in. Ski masks covered their faces. One brandished a rifle and both were shouting violent, obscenity-laced threats."They made it clear that they would kill us," Shockey said. . . .
The gunman first pointed the rifle at Robert Shockey and then at an employee, identified only as Brian. While the rifle was pointed at the young employee, Shockey reached for the pistol tucked in his belt against the small of his back. He drew the weapon.
"I shouted, "Freeze!" he said. The man with the rifle--standing only about 6 feet away--turned and pointed it at Shockey. . . .
Detectives say Shockey fired at least two shots, hitting the gunman once in the throat and once in the chest. The man detectives say was an accomplice then reached for the rifle, so Shockey fired again, hitting him in the chest.
Robber James Franklin Wince died; his alleged accomplice, Darius Bennett, is charged with his murder. As for Shockley, "He is going to get the good-citizenship award," says a sheriff's department spokesman.
Chalk one up for moral order. Contrast this to Britain, where if you shoot an armed robber, you're at fault -- and watch them wonder why their crime rates are rising while ours fall.
Eve Tushnet's Questions for Objectivists is chock full of thorny philisophical arguments. There may not be any definitive answers -- but, oh, such interesting questions!
I have to say, I really like the Democrat's new bumper sticker. No, that's not a prelude to some sarcastic comment -- I just think it's a cute design. I may get one to stick on my bumper, just so I can watch my sister the social conservative hop up and down like the Energizer bunny on a handful of Crystal Meth -- but not unless they drop the price below $25.
Yes, that's right -- I'm still getting the Democratic party emails. Thanks to whatever kind soul signed me up for their mailing list. This week: Bush is trying to help pharmaceutical companies kill our babies, and the Evil Trent Lott is unfairly holding up Democratic proposals after the Dems bent over backwards to make sure that Grand Wizard Pickering got a fair hearing.
Follow up to my post below: Are professional journalists paranoid about us because we're harsher to them than we are to each other? Must think about this. . .
William Quick asks where all the journalist angst about the Blogosphere is coming from. Well, the vanity answer is that we're so darn challenging and fresh that those sad old hacks feel threatened. But I think there might be a simpler reason: Google. Google loves us. It can't get enough of us. And so when those journalists Google themselves, guess who pops up early and often, making fun of their deathless prose? Because we form so much of the criticism they see, we come to seem much more threatening than we really are, though much less so than most of us would probably like to be.
One of the core reasons that governments and taxation come into being is what’s known as the Free Rider Problem. As the name implies, the Free Rider Problem comes into being when it is impossible to keep others from enjoying the benefits of a public good, which tempts them to try to get by without paying as much as that item is worth to them. The classic example of this is the military. We all want a safe country; however, once the borders are defended, it’s impossible to keep everyone inside those borders from enjoying the benefits of the added security – we can’t issue those who pay for the defense a special tag that tells enemy soldiers not to shoot them. We have to tax to pay for this, because otherwise people will be tempted to free ride on the generosity of others, and we’ll all end up with less military than we want.
Another classic example of the free rider problem is this weblog. You’ll note it has a tip jar on the side. Yet, curiously, not everyone uses it. Just remember – if you’re not a part of the solution, you’re part of the problem.
Anyway. Europe’s public health system has been free riding on America’s for years. (Even if this is old ground for you, bear with me – I’m going somewhere with this, and not just to another telling point about European perfidy, either) Because the government is pretty much the sole purchaser in many or most European nations, they exert enormous pricing pressure on pharmaceuticals and other medical technology. Faced with the choice of offering European countries sweetheart deals or selling nothing there at all, providers end up selling their wares in Europe at prices quite close to their Marginal Cost, which is to say the cost of the extra stuff, from electricity to raw materials, that it takes to produce one additional unit of product.
Lefties in America have been screaming about this for years – screaming, that is, that we are allowing our evil Pharmaceutical Giants to charge outrageous prices for their products, when prices in Europe show that the actual price of the product is really much lower.
If you haven’t picked out the problem with this argument already, it’s that the lefties have forgotten one little thing: the ENORMOUS cost of developing drugs. The average drug has to make $500 million to earn back all the R&D costs, not only for itself but for the 999 other compounds that didn’t work.
This R&D is a Fixed Cost -- it doesn’t change depending on how much product you produce. Because of this, (most) drugs have a high fixed cost, but a low marginal cost. This is what makes it possible for drug companies to sell to Europe at low prices near their marginal cost. Anything they make above marginal cost is essentially gravy.
But they’ve got to make up that R&D cost somewhere; otherwise, shareholders will pull out their money and sink it something more profitable – like changing their money into singles and using it to economize on toilet paper. And guess where they get that money for the research costs? That’s right – right here in the good old USA. You’re paying through the nose for your blood pressure meds so that the French can have cheap Viagra. They’re not only jamming us with the “Oops, I missed the schoolbus” school of military operations – they’re getting lucky on your dime.
So the next time someone tells you that nationalized health care will solve our problems, and points to lower health care costs elsewhere, ask what they think those costs would look like if we weren’t subsidizing their drugs. Prepare for a drooling stare – or if you’re sparring with someone who’s been through this wringer before, a misinformed soundbite, of which the speaker understands not a word, about the “absurdly high” Return on Assets (ROA) in the pharmaceutical industry.
ROA is the percentage of the value of a firm's assets that it earns back every year. To take a simple example: if I have a bakery, with equipment valued at $100, and I make $10 a year, my ROA is $10/$100 or 10%. Clear? In fact, it’s true that pharmaceutical companies have an absurd ROA, but the reason isn’t that the pirates of the boardroom are greedily grabbing all our money so they can throw it all on that gazillion-foot table and roll around in it like Demi Moore in Indecent Proposal (and if you’ve ever seen what the average corporate boardmember looks like, you’ll be awfully glad they don’t). The reason is that the main assets of the pharmaceutical companies, their patents, are not counted as assets under the rules of financial accounting, unless they’ve been purchased from another firm (there are good reasons for not counting the patents, but it does skew the books). This makes the assets on the balance sheet of your average pharma company much lower than they actually are. Let’s imagine that for some reason, I only show $10 worth of ovens and such on the bakery’s books -- suddenly my ROA is $10/$10, or 100%. Lowering the asset total makes a huge difference.
But I digress. What I meant to talk about, when I began this, is the broader question that I have been pondering over the last few days: is Europe free-riding on America’s growth?
One of the mysteries, after all, for free marketeers, is why Europe’s growth isn’t much lower than it is. History teaches, after all, that excessively regulated societies are generally stagnant, yet Europe has managed respectable, if not stellar, growth.
Now, there are three basic ways that you can increase growth in an economy: you can increase one of the inputs, either capital or labor, or you can increase the productivity of your inputs. In the demographically declining European nations, labor isn’t increasing at all -- in fact, often the labor force is getting smaller, for reasons I discussed elsewhere. Capital flows are, but far more capital pours into the US than into Europe – that’s one of the prime reasons for the decline of the Euro against the dollar. And then we get to productivity.
Productivity isn’t as high in most European nations as it in the US. And though it’s been growing, it hasn’t been growing as fast as that in the US, leading to a relative decline in European living standards against those in America. Now, broadly, productivity growth can come from two places: technology, and structural changes in the economy. Most economists, outside the French “What is the socially just thing for my numbers to say?” school, agree that the structural changes in the European economies have been, currency integration aside, mostly in the wrong direction. So we have to look to technological innovation for productivity growth. And where does that come from, boys and girls?
That’s right – the lion’s share of the original invention comes from the US, with the price and engineering refinements emerging mostly from Asia. Now, technology doesn’t have quite the same free rider problem, although the EU is a little more generous with patent violations than we are. But in a broader sense, they are free riding on our entrepreneurial economy. We bear the social costs of creative destruction, and get all the benefits; they get some of the benefits, without the costs. Yet the relationship is fundamentally parasitic: we could get along quite well in every sense without Europe (we would not be better off; trade, after all, is beneficial to all parties, and Europe does do some innovation. But we would still cruise along quite nicely without them.), while without more vibrant economies to export innovation to it, Europe would stagnate or even experience absolute decline.
So the next time one of your friends starts waxing lyrical about how much better life would be if America were more like Europe, tell them they have to trade in their PC for a Minitel before they’re allowed to talk about it.
Looks like Louis Rukeyser will finally be exiting stage left from Wall Street Week. I confess that I've never cared much for his corpse-like pallor or monatonic delivery, and his guests seem to confirm the efficient markets theory that says no one beats the market over the long run. So I'm not too sad -- but my mother, like the millions of her generation who've watched the pallid prophet religiously, is going to be bereft.
As predicted by many, the EU is preparing to level sanctions against the United States over the steel tariffs. These sanctions will be targeted at products from states that benefit from the tariffs. I find this interesting for two reasons:
The EU is a net importer of steel. US tariffs don't hurt the EU; on the contrary, they drive prices down in the outside free market.
Also, there could be no more effective way to fuel the strength of the protectionist forces that brought us the steel tariffs then to target them with sanctions. Broad sanctions might have had the countervailing effect of creating another large interest group in the US with a vested interest in the removal of tariffs; targeted sanctions will only harden the resolve of a group already enraged by the way Europe's political and media elite have behaved in the War on Terror. Was the purpose of the sanctions to get the tariffs, lifted, or just piss us off?
Note that I'm not arguing that the EU doesn't have a right to enact sanctions (all right, I am kind of arguing that, but I'm not arguing that someone doesn't have the right to retaliate) just that this is a damn poor way to go about it.
Andrew Olmstead reacts to the much-blogged Jonah Goldberg column calling for a "return to horror" by posting a site I haven't seen for a while, but should have. Every one of us should watch this movie ever so often, so that we don't forget what this War on Terror stuff is really all about.
Excercise for the class: whatever your opinion on Israel -- watch that movie, and then ask yourself if you'd take whatever solution you think the other side should accept.
I love James Lileks, except that pieces like this from the Michael Moore screed give me an inferiority complex so massive that the only way I can work it out is by becoming sheriff of a small Southern town on television and using my power to bullyrag and batter until all who know me cower at the sight of my looming shadow:
There’s Moore in a nutshell. We have “the masses,” that big doughy heap of sodden proles, heads bent from their daily lashing by The Man, wondering if they’ll have enough left over after they’ve paid off Consolidated Coal and Gruel so they can pool pennies with the rest of the tenants of State Housing Block 432 and buy a copy of Moore’s book - they say a light shines from the pages when you open it! Brother Sam was reading it at the Borders before the police beat him with clubs for browsing, and now he can cure your chilblains just by describing the book’s typeface!
I'll get you one day, Mr. Lileks. Then we'll see who doesn't get asked to the Winter Wonderland dance . . .
Extremely interesting debate on the future of European defense over at Jonathan Braue's blog. He's responding to credible allegations that for all our complaining that the Europeans don't defend themselves, the reason they don't is that we don't want them to.
I remember in the 80's at the height of "Japan's going to own the whole wide world because of Just-in-Time" hysteria, people (I think I may have been one of them) used to fulminate about how much money we saved Japan by defending their region -- without seeming to be aware that the reason we did this is that we'd written it into their constitution that their military couldn't leave Japanese shores. So I'm keenly alive to the danger that I'm wrong about Europe.
But I don't think that I am. If Europe were serious, they'd be contributing cash. They'd be doing serious defense tech. Their forces, even at current small sizes, would expect to actually do something other than show up. The European military right now is about one step above the Beefeaters or the Swiss Guards in terms of actual usefulness in defense. Maybe it is our fault, in the same way that it was our fault for creating a welfare system that subsidized anti-social behavior, in no small part in a rather unattractive hope that by buying off the (then smaller) underclass we could keep them from rioting. But it is also the fault of the people who choose to live on the dole rather than taking the responsibility for becoming adults.
The hegemonic argument is that we "forced" Europe to give up its own viable military force by threatening to leave NATO. This is circular. If Europe's military force were viable, why would it need NATO? The purpose of the organization, after all, was to deter Russia from invading a Europe too fragmented, and weakened by war, to defend itself against the Soviet military machine. The countries most in danger of this now aren't in NATO -- and won't be, because Western Europe doesn't want to extend the same safety net to the Balkans that we gave them, because they fear destabilizing the peace they enjoy, and don't wish to pay the extra freight to extend it to others. 9-11 has shown us that the usefulness of NATO is coming to an end -- the threat it was meant to defend against no longer exists, and the threats it could counter, it won't. So why continue it?
I have a feeling we won't, much longer. And I confess that when NATO does end (or is gutted so that it no longer means much) I will take a certain deep satisfaction in seeing the Europeans who have been whining about the American military try to cope financially, militarily, and diplomatically, with its absence.
Via Dailypundit: Looks like the Democrats are pinning their electoral hopes on raising taxes to pay down the debt (or so says the Gray Lady, though I'd bet that some of those taxes go to key constituent groups as well).
Five gets you twelve that Paul Krugman, who is on record elsewhere (his work on the Asia crisis, for example) saying that raising taxes to balance the budget is a bad thing for fragile economies, finds some reason to endorse this.
I'm about 2/3 of the way through the legal essays (I'm reading two books: one in which insiders discuss how they conducted the campaign and post-election campaign; the other a compendium of legal essays on the Florida dispute). So far, the most decisive point I've gleaned is that legal writing is harder to understand than I thought.
My reading strategy, when I attack a topic I don't understand very well, is to read a bunch of books on the topic and attempt to absorb, as if by osmosis, what I'd call the operating environment of the topic. It's hard to read eighteenth century literature until you've read enough of it that you can occupy the world of the work without conscious effort; the same holds true of economics, or technical writing, or anything else more difficult than a regency romance -- and even then, in 150 years or so people will be laboring mightily to immerse themselves in the fantasy world of the 20th century American female.
Right now I've got five or six books I'm reading on various legal topics, and while I don't think I'm going to turn into a legal expert, I'm hoping that at the end I'll be sufficiently comfortable in the legal operating environment to comfortably assimilate arguments as they're made by legal academics. (My, that sounds arrogant, doesn't it? I'm not suggesting that I'll be able to correctly resolve them -- just wrassle 'em a little).
So it's slow going for me -- I'm considerably under four pages a minute, since I have to keep re-reading. But I have gleaned some interesting points. One of the most interesting so far is just how badly Gore shot himself in the foot with his strategy. (Don't think I started this to bash on Gore. But Gore had the more active, and of course, less successful, strategy in the Florida dispute, so it lends itself more readily to commentary.)
I'm about to get shouted at again, but I think that it's obvious to everyone, no matter what you think of the merits of the position, that each side in the dispute took the position most likely to benefit them. Bush, of course, wanted the recounts stopped. Gore wanted them conducted in such a way as to get many votes for him, while systematically excluding counties where either the Democratic party did not control the counting process, or Republicans were the majority of the voters, and therefore likely to be the majority of the votes gained from any recount. The Florida Supreme Court's first decision told Gore, in effect, to go ahead. This made it extremely hard for honest observers to argue that the Florida court was not being nakedly partisan.
It also made it extremely hard for the Supreme Court to ignore what was going on. If Gore had requested a statewide recount, he not only might have won (this contention is apparently not as clear as the New York Times would have you believe), but also would probably have slid under the radar of the Supreme Court -- no matter how partisan you think the justices were, they would not have reversed a ruling just because it favored Gore. The Gore team instead chose to contest only in counties where it thought it might win. But rationally, this couldn't stand. Other than Palm Beach, there weren't specific allegations of error in other counties; counting only where it would glean for one candidate was a naked attempt to alter the totals in the state. It undercut Gore's argument about "Counting every vote" in the public, and made it almost certain that the Court would put a stop to it.
That first ruling from the Florida Court also hurt the Gore campaign in extending the certification deadline to November 26th -- because it put off the Supreme Court review until there was not time to conduct the statewide recount that the Supreme Court probably would have had to accept. Recall that the Court ruled, 7-2, that the recount as formulated by the 2nd Florida ruling, was unconstitutional. With good reason; the way the count had been conducted, and the standards were formulated, favored Democratic votes over Republican votes. The 5-4 split was not over whether the recount was acceptable -- it wasn't -- but whether there was time to send it back to fashion a uniform standard and perform a recount. Democrats understandably regret that the recount wasn't attempted, but practically speaking, the outcome would have been the same, because the statewide recount couldn't have been completed under any new standard, and 7 justices of the Supreme Court had said that you couldn't do a partial recount. So while it might have been better for the Court to send it back, ultimately it was a moot point.
If, on the other hand, Gore had asked for a statewide count, or the Florida court had ordered one with uniform standards, the Supreme Court would have passed. Enough votes might have been found to throw the contest to Congress, and some legislators might have found it impossible to vote against the popular vote. No one knows what would have happened -- but it's clear that Gore threw away his best shot at the presidency by adopting the cynical, "pragmatic" approach.
Hard though it may be to feel on this cold, wet, and thoroughly miserable day, it is the first of Spring. And as you know, one of the many Jane Galt mottoes is "A Poem for Every Occasion, No Matter How Slight":
Earliest Spring
TOSSING his mane of snows in wildest eddies and tangles, Lion-like March cometh in, hoarse, with tempestuous breath, Through all the moaning chimneys, and 'thwart all the hollows and angles Round the shuddering house, threating of winter and death.
But in my heart I feel the life of the wood and the meadow Thrilling the pulses that own kindred with fibres that lift Bud and blade to the sunward, within the inscrutable shadow, Deep in the oak's chill core, under the gathering drift.
Nay, to earth's life in mine some prescience, or dream, or desire (How shall I name it aright?) comes for a moment and goes— Rapture of life ineffable, perfect—as if in the brier, Leafless there by my door, trembled a sense of the rose.
I love this man: Tony Woodlief on why people shouldn't talk about taking other people out unless they are capable of doing the taking. This blog is reliably hilarious -- read the whole thing. And as someone who freely admits that I rely on other people, usually burly males, to do any taking out that must be done, I hereby resolve to avoid talking about how "we" should take out Sadaam Hussein. (But I still think our fine boys and girls in the armed forces should smack him flatter than Calista Flockhart. I hope that's allowed.)
All right, I'm now going to shamelessly plug for a cause near and dear to my heart: the University of Chicago GSB Follies, a show put on by the grad students. I was one of the producers last year, bringing the world such memorable hits as "Down, down, down went the Nasdaq" (to the tune of "The Trolley Song" from Meet Me in St. Louis) and "Oops! We Admitted All Men" (to the tune of that Brittany Spears Oops song that I hate -- but ours was funny).
It costs a surprising amount to put on a show, especially when the University considers the business school students to be a lower form of life and charges for the tiniest of services. Usually this is made up in corporate contributions, but due to the recession, contributions are down 95%. The show is threatened with death after 25 years. So if you've got a buck or two to spare, and you want to put a smile on the face of some students who are $100,000 in hock (and 60% of whom are unemployed), click through this link and donate. I imagine few of you will -- but the Chicago alums had better, or I'm going to know the reason why. And the rest of you would be giving a little rest to some very stressed students. Plus if you live in the area, you could think about buying tickets to what actually is a pretty good show, even if you don't go to the business school.
I think it's a great idea. Those who've been following my opinion on the 2000 elections know that I am extremely suspicious of partisans on either side fudging the criteria we use to decide elections in order to benefit one side or the other. Set up the criteria in advance, proof it against interference by either party when their ox gets gored, and let the thing run. Sounds like a huge improvement on the current system -- which is why we can be sure it'll never pass.
