Spero Consulting

Archive for July 1st, 2009

We’re not the first com­men­ta­tor to note the sim­i­lar­i­ties between global warm­ing activists and early 20^th cen­tury pro­hi­bi­tion­ists, but that sim­i­lar­ity struck us hard on Mon­day morn­ing when we read an edi­to­r­ial on The Wall Street Journal. It is enti­tled, The Black Liquor War, and was the word, “liquor” that did it for us.

The edi­to­r­ial describes how a tax credit for alter­na­tive fuels has cre­ated a mini trade war between the U.S. and Canada involv­ing paper prod­ucts. Yeah, it’s a semi-​long story, but involves the usual degree of stu­pid­ity that we see in Con­gress from our well-​intentioned representatives.

For read­ers unfa­mil­iar with “black liquor,” it is carbon-​based fuel that (pre­vi­ously) did not include petro­leum or coal. How­ever, a few years ago, the U.S. gov­ern­ment passed a law to pro­vide tax cred­its for “alter­na­tive” fuels that were mix­tures of fos­sil fuels and other things.

Clearly, the gov­ern­ment – your elected offi­cials and ours – was hop­ing that renew­able fuels would be added to petroleum-​based ones to reduce the depen­dency on oil, e.g., like ethanol. (Besides rais­ing corn prices, what exactly has that done for us, but that’s a dif­fer­ent story for another day?)

Any­way, the clever folks at the forestry com­pa­nies – and we write “clever” in all sin­cer­ity – real­ized that if they added petro­leum to their fuel, they would be able to claim the tax credit because they would then use a mix­ture of the two. It’s just one more exam­ple of an unin­tended con­se­quence – in this case result­ing in the con­sump­tion of more petro­leum, which of course is the exact oppo­site of the urge behind the leg­is­la­tion. Unlike our motto – there was no thought before, well, any­thing. (It is Con­gress, after all.) Aside: that stu­pid­ity being said and noted, for the sake of argu­ment, let’s con­sider the paper man­u­fac­tur­ers’ behav­ior to be anti-​social and “dys­func­tional.” That alone doesn’t mean that the law should be changed to elim­i­nate it. When pro­vid­ing incen­tives in a decen­tral­ized envi­ron­ment, it’s impos­si­ble to elim­i­nate all such behav­ior and the asso­ci­ated costs with­out destroy­ing the decen­tral­ized aspect of the envi­ron­ment. There is gen­er­ally an eco­nomic (or opti­mal) level of anti-​social behav­ior, and we see this often in other areas where the cit­i­zens and politi­cians must make trade-​offs between secu­rity and free­dom. See any of our essays and posts on con­trol and incen­tives for more on those top­ics, includ­ing com­mon man­age­r­ial mis­takes in decen­tral­ized organizations.

The edi­tio­r­ial goes on to explain how Cana­dian paper man­u­fac­tur­ers view that tax credit as an unfair sub­sidy and now want their own sub­sidy from the Cana­dian gov­ern­ment to com­bat the U.S. trans­gres­sion (or is it “aggres­sion?”) So, we have a mini trade war between friendly neigh­bors as another unin­tended consequence.

When­ever the ten­dency to act over­comes the ten­dency to think, “unex­pected” and (usu­ally) bad things will hap­pen. (We ask: shouldn’t that be trans­lated into Latin and engraved some­where in the Capitol?)

The Big­ger Picture

Given the rash­ness in which new leg­is­la­tion has been pro­posed and rat­i­fied dur­ing the pass sev­eral months, expect to see many, many anal­o­gous cases in the com­ing months and years. Will such laws and reg­u­la­tions harm the U.S. econ­omy and impair the free­dom of its cit­i­zens? As they say in Min­nesota, “you betcha.”

Will its cit­i­zens and its econ­omy sur­vive? Yes, but not as well as they could have. Like the Great Depres­sion, it will take far longer and be much harder than nec­es­sary – all because some­one wants “to help” some­one else or some­thing – whether the object is the autowork­ers’ union, the unin­sured, Mother Nature, the vast pools of oil still trapped beneath the earth’s sur­face or whomever or what­ever. Per Saint Fran­cis de Sales, “The road to hell is (truly) paved with good inten­tions.” The prob­lem is the very bad execution.

Will the cur­rent régime in the White House and Con­gress admit its mis­takes and adjust? Yes, we real­ize that it is a very silly, rhetor­i­cal question.

But there is hope in the long-​run. Just a pro­hi­bi­tion – in the form of the eigh­teenth amend­ment – took a dozen years to repeal, even­tu­ally the desire to decen­tral­ize decision-​making and return those rights to pri­vate cit­i­zens will rise again and be realized.

In that hope, we are less pes­simistic than other con­ser­v­a­tives who see the U.S.A. mov­ing inex­orably towards Europe (like some social/​political ver­sion of con­ti­nen­tal shift to cre­ate a giant Pan­gaea of nanny-​statism). As we’ll explain, our view of Europe is very dif­fer­ent than most.

In the 233 years since this coun­try declared its inde­pen­dence, it has suf­fered no dic­ta­tors: shames, like slav­ery, yes but dic­ta­tors and tyrants, no. Since its for­mal found­ing in 1788 – with the rat­i­fi­ca­tion of the Con­sti­tu­tion – we have had one con­tin­u­ous gov­ern­ment. In that time, despite the short, ser­ial nature of its many gov­ern­ments and it human rights abuses, Europe has become more like us – but not as free. Towards us – not the other way around. We are the suc­cess­ful exper­i­ment, the lodestar, the exem­plar, and we remain that way – despite the mis­guided attempts of a some.

In 220-​or-​so years how many gov­ern­ments and dic­ta­tors has Europe – from the Atlantic Ocean to the Ural Moun­tains – suf­fered? How many Euro­peans have been killed and oppressed by their own and neigh­bor­ing gov­ern­ments? How many mil­lions had their human rights restricted if not out­right crushed? As we under­stand, even now, none has the equiv­a­lent of our first amend­ment – near absolute free­dom of speech – or sec­ond amend­ment – the right to bear arms – and there is no tra­di­tion of those free­doms (to the same extent) and oth­ers in any of those nations.

We like to joke that many Euro­pean nations have turned into nanny states because many of the brave were killed in the World Wars and died before they could pro­cre­ate (thereby cre­at­ing no brave off­spring) and many of the freedom-​seeking entre­pre­neurs emi­grated here or else­where to either escape per­se­cu­tion or to enjoy free­dom. When one com­bines those phe­nom­ena with the lack of tra­di­tion on the Con­ti­nent, one shouldn’t be sur­prised that the results are nanny states with less free­dom than we have. Of course, many of the places exist and are safe because of the secu­rity pro­vided and pre­served by Uncle Sam and his proud and brave.

We real­ize that per­haps we are falling vic­tim to the Prob­lem of Induc­tion – and sense­lessly believe that the future will be like the past – but we do see hope in the long run.

Our nation is not Europe. It is huge and free, and many of its cit­i­zens have the tem­pera­ment and energy to fight for that free­dom – as elected rep­re­sen­ta­tives and court plain­tiffs and sol­diers and as annoy­ing, loud-​mouthed cit­i­zens such as our­selves. The past few months and next sev­eral years will re-​energize them and that will per­mit them to be reor­ga­nized and effec­tive as they were dur­ing the Rea­gan Rev­o­lu­tion. Don’t worry fel­low conservatives.

As the say­ing goes, con­ser­v­a­tives are lib­er­als who were mugged by reality. The Pres­i­dent and his allies in Con­gress are cre­at­ing a new gen­er­a­tion of lib­er­als. They are groom­ing the next edi­tion of the Vast Right Wing Con­spir­acy, but none of them knows it, yet, and they are as obtuse about that as they are about the other unin­tended con­se­quences of their other actions and policies.

We may edit this when we have the chance.