Archive for July 1st, 2009
Prohibition, “Black Liquor” and Freedom
We’re not the first commentator to note the similarities between global warming activists and early 20th 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.
