The Problem:

"The natural progress of things is for liberty to yield and government to gain ground."

- Thomas Jefferson

"Liberal institutions cease to be liberal as soon as they are attained: later on, there are no worse and no more thorough injurers of freedom than liberal institutions."

- Friedrich Nietzsche

The Solution:

The Rule of Law Amendment

No law in these United States of America may alter the relative economic or social standing of U.S. citizens. Laws related to defense and policing powers are exempt from this article.

- Countdown, Chapter 2
 

Current Crank

    7/24/04. A War of Ideology (David Brooks op-ed, NY Times). Mr. Brooks is pleased that the 9-11 Commission eventually gets around to recognizing that the War on Terrorism is fundamentally an ideological war. He warms to the hope that we will put money behind teaching all those backward madrassa-educated Muslims about freedom, American style. What he misses is that they already know all about it. All they have to do is pick up a "newspaper of record," the New York Times, and they can read all about our pluralistic society, with its equal rights for women, equal pay crusades at WalMart and Wall Street, equal rights for homosexuals, gay marriage celebrations etc. And if they venture to the editorials, they will find the intellectual elite in our country, of which Mr. Brooks is a prime example, opining positively on all of these modern articulations of American freedom. If they delve deeper into the debates, they will find that there is little actual freedom to think otherwise in our politically correct society. OK, maybe that's harsh. But think of it from their perspective. There is no reason for them to expect that we would allow them to evolve their own attitudes on these issues, even though it took us a couple hundred years to reach this pass. And they would not be allowed to differ as to whether we are an advanced civilization on these issues or, as Gibbon might have recognized, a civilization in decline. No, those benighted Muslims will be forced to swallow, hook, line and sinker, the modern American version of freedom.

    All in all, the situation is as I feared it would be when I wrote Countdown three weeks after 9-11: "And most frightening of all, both the number and strength of our enemies will expand without limit unless we stand again for the principles our Founding Fathers enunciated two centuries ago." It is clear now that we have no intention of reaffirming those principles. As I also said then, the War on Terrorism is essentially an intensification of the policies that led to the attack. From the Commission's report, as read by David Brooks, it looks like that bad policy is going to intensify further.

    One thing Brooks has right: time is not on our side; they can be more patient, pick their spots, wait for nukes. Unfortunately, we are behaving as if it is, as if, given time and more education from us, they will like us better. Maybe some will, but those aren't the ones we should be worried about.

    3/21/04. New Heart Studies Cast Doubt on Artery-Opening Operations (NY Times). It's tempting to blame the rush to intervention described here on the financial incentives, which are certainly there. But the perhaps more important cause is that patients, themselves, seem almost addicted to intervention:

Dr. David Hillis, an interventional cardiologist at the University of Texas Southwestern Medical Center in Dallas, explained: "If you're an invasive cardiologist and Joe Smith, the local internist, is sending you patients, and if you tell them they don't need the procedure, pretty soon Joe Smith doesn't send patients anymore. Sometimes you can talk yourself into doing it even though in your heart of hearts you don't think it's right."

Dr. Topol said a patient typically goes to a cardiologist with a vague complaint like indigestion or shortness of breath, or because a scan of the heart indicated calcium deposits -- a sign of atherosclerosis, or buildup of plaque. The cardiologist puts the patient in the cardiac catheterization room, examining the arteries with an angiogram. Since most people who are middle-aged and older have atherosclerosis, the angiogram will more often than not show a narrowing. Inevitably, the patient gets a stent.

"It's this train where you can't get off at any station along the way," Dr. Topol said. "Once you get on the train, you're getting the stents. Once you get in the cath lab, it's pretty likely that something will get done."

One reason for the enthusiastic opening of blocked arteries is that it feels like the right thing to do, Dr. Hillis said. "I think it is ingrained in the American psyche that the worth of medical care is directly related to how aggressive it is," he said. "Americans want a full-court press."

Dr. Hillis said he tried to explain the evidence to patients, to little avail. "You end up reaching a level of frustration," he said. "I think they have talked to someone along the line who convinced them that this procedure will save their life. They are told if you don't have it done you are, quote, a walking time bomb."

    Given our clear preference to giving the benefit of the doubt to intervention over nature, even when it comes to our own health, we really shouldn't be surprised any longer when the most venerable institutions we know are redefined out of existence by Government intervention. We shouldn't, for example, be surprised when stock exchanges are redefined into committing mass suicide (they call it "demutualization" in the current fad sweeping the world's capital markets, in which regulators define stock markets as they wish they were, not as they are). And we shouldn't be surprised if, when marriage is redefined into a self-esteem program for homosexuals, heterosexuals are no longer interested in it, or in raising children. We shouldn't be surprised at such rejiggerings of the natural order, but we are -- every time. How else would we be able to embrace so many forms of death wish?

    12/31/03. Mr. Deregulation's Regulations (NY Times). Demonstrating the dangers lurking in the "deregulation" jihad, Bush and the conservative (OK, "compassionate" conservative) movement are painted as hypocritical, confused or worse by opponents who see the acceptance of more Government as inconsistent with their stated philosophy. Whether they delight in watching Bush in the dilemma of trying to fight wars on terror, bad food or drugs without expanding Government, or actively embrace such expansion as the mature or realistically political thing for a ruling party to do, as many of his supporters do, the view is universal that he has fallen off the lesser-Government wagon. Apparently none of these commentators have read Countdown, where they would have learned that there is no "de" in deregulation, for the whole movement is nothing but an excuse to increase Government oversight and control through antitrust. In this regard, it is entirely consistent and appropriate that Bush so admires Teddy Roosevelt, for he was the most important former president to have led us into this particularly pernicious form of socialism. Pernicious, because antitrust has effectively immunized itself from attack from any quarter, having managed to take root and grow under the banners of almost all of the major political philosophies, from capitalism to communism. Indeed, as Robert Higgs points out in Crisis and Leviathan, it is not really even socialism that we're talking about, since Government doesn't really own that much of the means of production anymore. Rather, because its control is exercised via regulatory oversight rather than ownership, it is more properly called "fascism". Whatever. Semantics aside, there is nothing inconsistent at all with Bush and the current brand of conservatives, libertarians and others who have championed deregulation embracing ever bigger Government. That's what they have been doing all along.

    12/24/03. Imposing a Pipe Dream. On this the Administration and its critics agree: Iraq should become a model democracy, a showcase for the efficacy of Western pluralism. Trouble is, it could not be more ill-suited to that role, what with its poisonous legacy of colonial allocations and mis-allocations among three competing groups: Shiites (60%+), Sunnis (20%) and Kurds (15 - 20%) (NY Times editorial: Inventing a New Iraq). It never did make sense to stuff those groups in a "country" called "Iraq," but there you have it. Now for all time the US, the UN and the "civilized world" are going to be faced with defending those absurd divisions and allocations, with world peace at stake. A showcase, all right, but not the one we want.

    It's all well and good for the editors and pundits to aim their moralizing at officials in Washington and Baghdad ("Decentralizing authority on a territorial basis makes more sense than using religious or ethnic categories" (Can't we all just get along?)), but the reality on the ground -- and a vast ground it is! -- is that imposing peace on such naturally competitive peoples will be impossible in an age where resistance fighters and the weapons to support them flow freely across those absurd borders. Not that they couldn't work out acceptable borders and groupings on their own, coalescing as peoples around combinations of ethnic, religious and idealistic sources of cohesion, as we and the descendents of Europe did. But as long as there is someone else, such as a Pax Americana, imposing and allocating from above and therefore implicitly responsible for the outcomes, all the competing divisions will have incentives and means to violently protest their situation forever. And there is no reason to assume that their arguments with each other will not eventually spill over to violence against the one enemy they will all be able to agree on: US.

    11/29/03. The Democracy Dilemma. Calling our bluff last July, Iraq's Grand Ayatollah Ali Sistani declared that no constitution would be acceptable that was written by unelected appointees.

The occupation authorities had endorsed a plan by which their handpicked governing council would appoint a committee that would in turn devise the new constitution. In a fatwa written in graceful classical Arabic, Sistani declared that this approach was "unacceptable" because there was no guarantee that a constitution produced in this way would "represent the (Iraqi) National identity of which Islam and the noble values of society are an integral part." . . . Instead, he insisted, anyone writing a constitution would have to be elected. A constitution devised by any other means, he made clear, would be "illegitimate." (The Smithsonian, December, 2003).

    The top Shiite's devotion to democracy may or may not have been formed with his sect's 60% majority in mind. But there is no question that his sudden acceptance of the nominal goal of the US invasion and occupation has thrown a curve ball to the Administration. How do you give Iraqis ballots before they have been sufficiently infused with American attitudes that they won't deliberately and democratically design an anti-Western society? This dilemma is acute because, on the one hand, we seem to need time to teach them democracy, while on the other it appears that, the longer we stay, the more anti-Western they become.

    "We're boxed in," said an administration official. "We have a highly difficult set of issues to deal with here. We can't settle for just anything that gets us out of Iraq." . . . But hostility to the American occupation is growing so fast, [American policymakers] say, that if Iraq does not become self-governing quickly, attacks on American forces could increase.

    Running counter to the pressure to speed up the transfer is the concern that any future government of Iraq be seen as something that Iraqis have chosen. The 24-member Governing Council, handpicked by the American occupation, is not currently seen that way by most Iraqis. (Iraq Exit Plan: New Obstacles, NY Times.)

    We may chafe at settling "for just anything that gets us out of Iraq," but our own survival may depend on it. If we don't abandon, under any pretense we can find, this suicidal War on Terror and its concomitant "democratization" of the world's populations, we will be faced over and over with dilemmas of the kind Sistani has thrown our way. If we could count on Muslims becoming less militant as we confer democracy upon them, the current policy might have a chance. But the reality is the opposite: They will become more militant the more we attempt to democratize them. That is because 1) there are some aspects of our democracy that they will never accept and 2) we can't now and never will be able to afford the security risks of giving them our version of democracy, anyway.

Among the democratic principles that we will insist they adopt, no matter how large the majorities of their populations that oppose them, are:

Among the principles of our own democracy that we will not allow them to have, no matter how many Muslims demand them as democratic rights, are:

    On this last point, NBC's Saturday Evening News with John Siegenthaler just reported that our forces in Iraq are shutting down Al Arabiya for broadcasting films of resistance fighters firing at our planes, while the Pentagon's own Al Iraqiya is touted as our favored station for those Iraqis who want to follow the war. Apparently, the idea of embedding reporters to show how your soldiers are doing is going to be restricted to our side alone. In spite of this advantage, Al Iraqiya is so far a dud, while the likes of Al Arabiya and Al Jezeera are still the channels of choice for news over there. While the propaganda and security motivations behind our press policies are understandable, we will never win hearts and minds with them. In fact, as our own home stations are reporting (in spite of Administration objections and attempts to reshape the news), we are losing hearts and minds at a rapid clip.

    So, again, the dilemma: We can't afford to let such an anti-American population vote now, but, the longer we wait, the more anti-American it is bound to become. What's a democrat to do?

    11/24/03. Amid Acceptance of Gays, a Split on Marriage Issue (NY Times). The most important part of this article is what is missing from it entirely. While no-one seems shy about offering opinions on what national policy should be regarding personal relations, the fact that personal policy has been blocked by national policy is not recognized. Even as they justify gay marriage or civil unions as personal rights, all have forgotten that the most important personal rights in this area have long since been stripped from the realm. Individuals, even ones such as "Hilda James, 83, a home nurse, [who] said the idea of gay marriage, even gay unions, 'makes me sick to my stomach'", are barred from exercising such basic personal associational and discrimination rights as not renting to or hiring homosexuals. It may well be that "the choice of partners [is] an inherent right and nobody else's business", as supporters of the Massachusetts Supreme Court ruling favoring gay marriage say it is, but similar logic should by rights take you to allowing personal discrimination of all kinds, too. By banning such basic personal property rights (and their corporate extensions), our Government has destroyed the most important forces for organizing our social and moral institutions. No wonder marriage -- the most important institution of all, without which our society will clearly not long survive -- is being destroyed. Marriage is now, for all intents and purposes, just another Government program, to be defined, sliced and diced along with all those others whose constituency groups beg for official status and largesse (For Better or Worse: Marriage's Stormy Future, yesterday's Week In Review). And we wonder why Muslims don't want to be democratized. 

    9/23/03. "A Crisis Is a Terrible Thing to Waste." The one liner got its deserved laughs at the end of SEC Chief Economist Larry Harris's talk to the Plexus Group client conference last night. Fair disclosure: Larry is a good friend whose intelligence I have long enjoyed in many discussions of stock market structure over the years. His consistent warnings on decimals were particularly on point and nearly unique among prominent microstructure academics as that fad took hold in Washington and subsequently erased both institutional liquidity and Wall Street profitability. His quip came toward the end of a speech that covered such burning if esoteric issues as pennying, sub-pennying, the trade-through rule and soft dollars, and it came amid a fervent call for action to address these problems in order to promote both efficiency and morality on Wall Street. As always, his analyses and prescriptions were well thought out and articulated.

    As readers are aware, however, this right wing crank worries about every increase in Government power, perhaps especially those that seem so well thought out that we can't yet ferret out their flaws. Unintended consequences are the rule, not the exception, by my lights. I have in the past addressed nearly every problem Larry covered and have often come up with a different take on their nature and cause. But, regardless of which of us is right on the particulars of any microstructure question, my reading of the history of how we came to face so many perplexing dilemmas tells me that they were and are -- without exception -- the result of previous interventions of the same basic genre that Larry is now recommending more of.

    In Crisis and Leviathan, Robert Higgs argues that Government grows primarily in response to crises. His thesis is that we respond to crises like depressions and wars by granting Government far greater powers to deal with them and that those powers are mostly retained after each crisis recedes. This "ratchet" effect, described and documented so well by Higgs, certainly underlies the phenomenon to which Thomas Jefferson refers at the top of this column:

        "The natural progress of things is for liberty to yield and government to gain ground."

But I'll go Higgs one further. He argues persuasively that, even if Government's growth spurts were only our legitimate and effective responses to exogenous crises (which they aren't, but never mind), the fact is that Leviathan never shrinks post crisis to pre-crisis size. But the far bigger problem is that now, in addition to any arguably legitimate growth in response to exogenous crises, Government is regularly creating the crises to which it is responding. This is like the out of work firefighter who becomes a pyromaniac to create jobs for himself, and it is the real scandal behind every headline of fraud or dysfunctionality in the network industries, including the stock market: Every single one of the perceived or actual crises that Larry invokes as justification for increased Government action was created by previous Government action. We have entered the Maelstrom.

    9/13/03. Overseers Missed [The] Big Picture As Failures Led to Blackout (NY Times). Again, the lack of coordination is painfully obvious. Also obvious is how it could be solved: a a national monopoly, either Government owned or privately owned, would do the trick. Getting from here to there, however, is not obvious at all. The right will not accept the Government owned monopoly, and the left will not accept a privately owned one -- and they both have an effective veto. So what we are likely to get is a continuation of the deregulatory mix: more Government here, less there, voluntary standards here, mandatory there etc etc. Oh, and more blackouts.

    9/3/03. A Loopy Policy. Utilities Point Their Fingers at Each Other Over Blackout (NY Times). Enough said. No, maybe not. Here's an example.

Another utility, International Transmission of Ann Arbor, Mich., complained that "with absolutely no warning, the I.T.C. transmission grid was slammed with a tsunami of loop flow, which collapsed our grid and the grids of our neighbors."

Loop flow is when current sold by one company and bought by another takes an indirect route and flows over the lines of a third company.

Although the problem seems obvious enough, the solutions offered -- cooperation here, sharing there, reliability standards everywhere -- can only produce more of the same. The "loop flow" definition above is standard operating procedure for antitrust regulators in all industries. That especially includes all deregulated industries, namely, those in which trustbusters were so confident of their mandatory sharing and competition theories that they felt they could do without the coordination of regulated monopolies.

    9/2/03. Experts Point to Strain on Electric Grid's Specialists (NY Times).

"The culture used to be `Keep the lights on,' " Mr. Dushaw said. "There was a duty, a responsibility, a pride that existed. That is very hard to maintain under the pressures that are here now."

    A principle reason that all deregulated industries seem so cavalier about leaving consumers in the lurch is that the decentralization deliberately foisted on their networks by the propeller-heads is bound to disperse responsibility to the point of dissipation. It's just another aspect of the term paper policy that says a lot of trading will lead to efficiency and cost reductions. More trades means more "gains from trade", don't you see? So what if the grid was built for something else? So what if nobody knows how to run the thing fast enough to produce those "efficiencies"? They'll get the kinks out in due time, won't they?

    8/19/03. Finally an article out of the dozens since last Thursday's blackout to hone in on the real problem: Set of Rules Too Complex to be Followed Properly (NY Times). But don't think that merely rewriting or simplifying the 700 page handbook, along with the similar, though no doubt occasionally conflicting rules of the other agencies and jurisdictions, will solve the problem. The reality is that the electricity network, a natural monopoly if ever there was one, is bound to require such voluminous and endlessly confusing user manuals as long as we try to pretend that mere Government oversight can re-impose the coordination that was banished by policy long ago when we decided to block private monopolies. If we insist on continuing to outlaw such private monopolies, there is simply no hope that the various deregulation or even re-regulation schemes coming out of the think tanks, essentially term paper policies "freeing" this or that little corner of the electricity business, will do anything but sow chaos in the overall network. If we aren't going to allow a network to form naturally as the result of private enterprise, we might as well just assume that Government will have to do the job. That's right: if we don't have the courage of our convictions as a nation to allow free monopolies to form, then we might as well admit that Government should own and operate the whole electricity business, and not just the grid, but the whole ball of wax. That is going to be the inescapable conclusion of all this deregulation nonsense, which has only produced confusion in the economy's infrastructure industries -- and given freedom a bad name to boot.

    7/4/03. Independence Day. Floyd Norris's NY Times article, Regulators May Be Clamping Down on Merger Accounting, indirectly gives a good example of a point I make in my new piece, Is the Bubble Back? (not that he would agree with it). Although one never knows until it's too late, Jacuzzi appears to be well versed at complying with the letter of accounting rules (or at least appearing to give a good faith effort to do so), while basking in the misimpressions the numbers generate and the positive effects on their stock price. Such "cooking the books according to GAAP," as former Treasury Secretary Paul O'Neill called it, is the inevitable result of relying on top-down compliance regimes rather than natural networks of reputation to enforce honesty. Since compliance regimes crowd out the private reputation networks as governors of honesty, the net effect of giving Government the role of enforcing honesty is that dishonesty and fraud multiply. Investors know this instinctively, the conventional wisdom about needing stricter enforcement to restore investor confidence notwithstanding. That is why the market suddenly surged Tuesday afternoon when Judge Pollack slammed the enforcers with his decision favoring Merrill Lynch. If the conventional wisdom were correct, then the market should have fallen with this setback to the enforcers. By Thursday, of course, the market was falling back, perhaps as it became clear that Pollack wouldn't hold back the witch hunters much after all (Legal Reprieve for Wall Street is Not Likely to Last Long).

    5/29/03. The Rule of Law. Now that US troops are running Iraq, supposedly to give them a lesson in how the Rule of Law works, some may be surprised to find that they already have their own version: Islamic Justice Taking Hold in Baghdad (Washington Post). And I mean that without a trace of sarcasm. Indeed, their version is probably a good deal closer to the original concept than ours is today. In particular, the lack of power to enforce decisions means that Baghdad's clerics must make decisions that everyone agrees on:

Under Islamic law, circumstantial evidence cannot convict someone, and Rubai complained that witnesses were not always forthcoming. "We can't take confessions by torture," he said with a knowing smile. Even more difficult, the 39-year-old judge said, was his lack of power to enforce decisions. He relies on the respect and reputation of the clergy.

"I try to satisfy both sides," he said. "In any case, there's a fair solution."

This is considerably closer to the original ideal than we have in our own country, where twisted interpretations of the Constitution, legislation and legal precedent conspire routinely to confiscate property and violate other natural rights in ways that no reasonable person would accept. These routine violations range from the trivial, such as when the First Amendment is invoked to protect the right of bums to defecate on city sidewalks or the public to enter private beaches in Greenwich Connecticut, to the massive confiscation and redistribution generated by the rent-seeking frenzies that characterize all regulated industries and are destroying our economic infrastructure (Deregulation: The Backdoor Socialism).

    As I said in Countdown, "the Rule of Law -- if it means anything -- means that the rules should be the same for all and very nearly for all time." Footnote 72 elaborates:

72. Friedrich Hayek and Bruno Leoni make the best arguments in this direction I have found. Leoni, in Freedom and The Law (1961), for example, says that in order for all new interpretations of law to be accepted universally by everyone, they must, from everyone’s perspective, prevent every person from doing anything that he would not want someone else to do to him. This "negative" Golden Rule allows for only a very slow evolution of law, because all laws must by common agreement be universally applicable to everyone, and always applied. This is what is meant by the Rule of Law, which evolves according to a common law process of passing every potential new interpretation by these principles, and results in universally accepted and acknowledged law. Both Hayek and Leoni warn, quixotically it seems, of the power of "legislation" to avoid this process and produce illegitimate laws that are not only not universally accepted, but are in the end not even accepted by a majority of the people to whom they apply.

While we love to talk about how the American experience, which once fully justified our pride in the Rule of Law, gives us the right to impose our version of it on others, in fact we have a long way to go -- or to go back -- before the term would mean anything but another sham excuse for imperialism.

    5/16/03. A Decision With Life-or-Death Potential (NY Times editorial: When Astronauts Were in Peril). What is clear from the Columbia story now is not just that the NASA bureaucracy and its Political Parasite protectors were OK with unnecessarily risking the lives of astronauts, but that they were willing to sacrifice them wantonly to save the space program itself from the withering public criticism that a mid-flight admission of its failings would no doubt have engendered. Would it have been withering enough to get the program shut down? Who knows? But better to write off astronauts than risk loss of the gravy train.

    4/6/03. Woman's War II. Proving my point from the last RWC, Deputy Defense Secretary Paul Wolfowitz just told Tim Russert on Meet the Press that the Arab street will come around once they see Iraqi women throwing off their burqas. Leaving aside his apparent factual error (Saddam's regime is not the Taliban; Iraqi women have been more free in his secular version of Islam than in most other countries Wolfowitz could have been referring to), the fact that this senior leader and shaper of our policies thinks that imposing our view of women's rights will improve world opinion toward us is truly frightening, stunning in its ignorance and arrogance. Especially so, in that he repeatedly invoked world opinion as justification for our attack on Iraq. Isn't he aware that world opinion in every country but the US and Israel is solidly opposed to our policy, and by overwhelming majorities in Muslim countries? Why does he think they hate us? Could he possibly imagine that it is because we haven't yet brought feminism and other Western sexual attitudes to them? What an idiot. It is largely the fear that we will do just that that inflames them. Not that fear of feminism is their only gripe. But it is probably the most visceral issue convincing them that they should oppose our general attempts to impose democracy on them, with its apparently inevitable baggage (from their perspective) of cultural and religious pluralism. Wolfowitz made his remarks in answer to a question that began with a reference to Egyptian president Mubarak's recent claim that the image of the US in Iraq will create 100 bin Ladens. Wolfowitz haughtily dismissed Mubarak's insight, apparently because he thinks that all the Arab street needs to be convinced of before they will welcome us with open arms is that the US is sincere in its desire to bring Western-style feminism to them. God help us.

    3/24/03. Woman's War. Diane Sawyer featured a woman pilot on GMA this morning, one of many efforts to highlight the fact that this isn't your father's war, ie, it's no longer just "our boys" doing the fighting over there in Iraq. Ms Sawyer is, of course, fully in synch with the politically correct times (The Pinking of the Armed Forces, NY Times editorial). Everyone, from the President and First Lady down through all the politicians in Congress and even all the commanders in our military, maintains steadfastly that women can and should be allowed to pursue military careers. Just as they can and should be allowed to pursue sports careers, business careers, Wall Street careers etc. These days, women are allowed, indeed encouraged by the cognoscenti, to put their ambitions of breaking into male bastions ahead of their traditional roles as wives and mothers. Even when it is clear that such role switches can lead to big problems (Women Recount Life as Cadets: Forced Sex, Fear and Silent Rage, NY Times, 3/16/03), the times and the Times treat these role reversals as signs of progress. Any backlashes against them, such as at the Air Force Academy, are assumed to be mere anachronisms that will diminish as, with the Times' help, we all become more enlightened. No consideration is given whatsoever to the possibility that it all may be a huge mistake, one that might lead to the end of Western Civilization.

    Patrick Buchanan's The Death of the West chronicles convincingly how the birth rates in Western countries, where feminism and women's liberation have become entrenched (as part perhaps of a more general egalitarian socialism), have declined below levels needed to maintain population. In stark contrast, Muslim populations, with their "backward" attitudes toward women, are growing rapidly. These demographic trends alone, it would seem, could lead to the death of the West.

    But there is a far more clear and present danger. A good friend who has spent his career in the Army tells me that it is "career death" to question the role of women. And apparently it's not enough just to refrain from voicing concerns over the policy. Rather, it is positively required to actively voice support for it if you want to advance. This, in spite of the fact that a great many of our career officers and soldiers know in their hearts that the presence of women is at best inefficient and at worst disruptive to military effectiveness. Everything from sexual distractions to difficulties instilling aggression to resentment at the affirmative action-like lowering of standards helping women advance to the fact that part of the reason men join up in the first place is to be manly (and how can you do that if you are going to be fighting alongside women?) -- all of these and many more problems would lead any thinking, honest observer to the conclusion that putting women in the military is one of the riskiest gambles our nation has ever undertaken. But, bad as all that is, it probably isn't the worst effect of our inclusionary policy. The worst effect is that the required acceptance of the policy is breeding cowards. Not physical cowards; courage is still a prime attribute of our men at arms and, yes, of our women at arms, as the stories from our embedded newsmenandwomen in the field are clearly demonstrating. But the courage to take a stand against policies that may endanger both the troops and their mission is bound to disappear, if career soldiers are afraid to speak out against what they know is a bad policy.

    And what if that instinctive political cowardice that accepting female soldiers breeds leads to other errors due to an excess of career-enhancing political correctness? Much has been made of the presumed fact that the War in Iraq is as much to be won in the world of public opinion as on the battlefield. Maybe so. But what if the choice to avoid civilian populations proves untenable when the enemy, which also watches CNN, orients its whole strategy toward hiding behind those populations? What if, with all of the precision munitions our experts brag about on TV, combined with our much touted policy of avoiding civilians, we have only handed the enemy a get-out-of-harms-way pass?

    What if the best or maybe the only way to effectively neutralize the enemy is at some point to use nuclear weapons? We had such opportunities repeatedly in the last year and a half. In the first few days after 9/11, for example, when we knew who had attacked us and where they were (never mind the cowering disclaimers of our leaders who were afraid to admit it for fear they would be blamed for doing nothing about it ahead of time), we could have taken out the whole leadership of the Taliban and al Qaeda instantly, but chose instead to engage in futile diplomatic maneuvers to impress world opinion and the United Nations. But not only didn't we do so well with the UN, but the diplomatic strategy gave our enemies time to disperse. Then we compounded the error as we figured out how to put the minimum amount of our soldiers on the ground in favor of the PR value of letting the Northern Alliance do our fighting for us. We had another grand nuclear opportunity when we knew that bin Laden and his senior al Qaeda gang were holed up in Tora Bora, but again we didn't consider nuclear weapons or even going in with a large number of US ground troops to surround them. Instead, we relied on the Northern Alliance to do the job of entering the caves we had bombed conventionally from on high, and then relied on the Pakistanis to keep any fleeing al Qaeda from getting into Pakistan.

    All of these turned out to be grossly incorrect military judgments. And now in Iraq we are already seeing similar hesitancy as we hold back from taking our best shots so as to look good on the news programs (NY Times, Marines Meet Potent Enemy In Deadly Clash). Worse yet, it may be that our best nuclear opportunities are behind us, or will be soon, once our enemies fully develop the human shield strategy. Ultimately, given the saturation of al Qaeda in Western countries, it will become impossible to get a clear shot at them even with conventional weapons as they hide behind hostages and civilian populations. And since our leaders have concluded that the war is as much over their hearts and minds as our own self defense, our rationale for defending ourselves aggressively is disappearing. But I've got news: We Will Lose The PR War. Just as we lost the recent one in the United Nations to Saddam, we will increasingly find it impossible to convince the world that our actions are justified by self defense or anything else. As I described at length in Countdown, any time Government, in this case the US Superpower, takes responsibility for economic, social or other outcomes, in this case the world's -- including the Muslim world's -- it is inevitable that all the factions seeking its largesse will fight over its distribution choices, both with each other and with the Government itself. In other words, our effectively socialist declaration of hegemony is bound to cause an inevitable and continuous attack on America.

    While it may never be known if we really did have more aggressive options available, such as to have put more US soldiers on the ground in Afghanistan or nuking Tora Bora, it is almost certain that these options were not seriously considered. Although it must be the case that many career officers and top brass knew that they were realistic and potentially effective options, the aggressive approaches were probably either not brought up or were immediately discarded, just as any consideration of the possibility that women should not be in the military would be. The same could be said, by the way, of many other options, from intelligence to homeland security, where our politicians and leaders have proven time and again that they do not have the courage to act aggressively, that is, in a way that risks bad PR for their careers.

    And it isn't just the nuclear or other aggressive military options that are disappearing from our self defense arsenal. Also disappearing are the actually far better options of dropping out of the inevitably socialist world opinion game. If we were simply to declare that we would no longer try to sway world opinion in our favor by distributing outcomes, but would henceforward only act in our self defense, this would go a long to way to extricating us from the danger in the first place. Dropping out of the UN, for example, or ceasing foreign aid, or ending our interventionist "free" trade policies, or declaring a moratorium on nation building and "democratization" -- all of these would actually be far more effective than deploying nuclear weapons at ending the threat of terrorism. But there are no politicians, none at all, who have the courage to mention that the interventions we are addicted to -- and that their careers are based on -- are at the root of our terrorism problem.  

    One other thing they are not willing to admit is that the pursuit of their political ambitions is incompatible with the freedoms America was founded on. America was not founded by feminists and, indeed, their agenda would have been entirely incompatible with our Founders' philosophy. But this has not kept anyone in Washington from proclaiming loud and clear that one of our main goals in Iraq and elsewhere in the Muslim and Arab world is to improve the lot of women. And, wherever you come out on the feminist agenda as it is practiced in America, it is unquestionably imperialist to demand that other countries and other religions adopt it, no matter how incompatible it is with their traditions and desires. This isn't the only fundamentally incompatible element of the Western model that we are demanding they adopt (Al Qaeda's Philosopher: How an Egyptian Islamist invented the terrorist jihad from his jail cell; Sunday's NY Times Magazine). Religious pluralism and a separation of church and state are among them (although, interestingly, the right to bear arms in our Second Amendment is not, and wait 'til you hear how anti-American they become when they can actually vote!). But the women's agenda is perhaps the most damaging to our own interests, as its acceptance -- and the cowardly absence of any objection to it by any of our leaders -- is precluding each and every option we might otherwise have for escaping our terrorism predicament. This is truly a woman's war; fought for women, by women and men who act like women.

    2/25/03. The one clear winner in all the current debates over what to do about Iraq is the United Nations (U.S. Says U.N.'s Legitimacy Is At Stake, Washington Post) or (U.S. and Allies Ask U.N. to Affirm Iraq Won't Disarm, NY Times). In spite of all Bush's bluster about how inaction in the face of violations of its own resolutions will make the body irrelevant, the fact that the Administration always puts the universal right of self-defense in second position to the need to carry out the "will of the international community" when justifying military action means that the UN will have won the day, no matter how the war comes out. No matter how the war comes out, no nation, big or small, will ever again be able to defend itself without reference to UN resolutions and the will of the world. This is very dangerous and will ultimately lead to disaster, for the UN is a fundamentally illegitimate institution. By implicitly denigrating the right of self defense, the UN is destroying the only natural and effective counter to unbridled aggression. And by employing so many socialist and redistributionist tools (aid, trade, bribes for votes in the Security Council etc), the UN confirms World Socialism's Iron Fist as the only legitimate organizer and planner for the world's peoples. It is a travesty that the US gives credence to this violation of freedom. And it is becoming a mortal danger to all of us in freedom's homeland.

    The fact that the US, as the UN's leader and the only member whose membership really matters, continues to defer to its processes and "principles" means that it is the US's and only the US's fault that this illegitimate socialist institution does so much damage. Why do we put up with it? Because our leaders are cowards. Even those who see the danger haven't the guts to say so. Even when the US has an obviously legitimate self defense interest, they continue to rely on UN resolutions and votes as justification for taking the measures needed to defend our people and our country, cowering behind the skirts of international opinion as if that conferred legitimacy on their own. It doesn't and it can't. The only thing it confers legitimacy on is World Socialism's Iron Fist. And their kowtowing only proves that it is our leaders' own political ambitions that matter most to them; the safety and security of Americans and America are secondary.

    It is one thing to try to rally defensive allies around for protection, as NATO once did. But the purpose of all these bodies now, including NATO, is for the cowardly politicians of the West to gain the cover of international opinion for what once would have been considered legitimate self defensive measures. This shift from self defense, and from alliances organized for that purpose, to using the UN and NATO as world opinion referendum bodies can only undermine self defense.

    If you think about it, it is inevitable that the UN will always and continuously oppose and undermine the US. How could it not, when we are the one and only superpower, but with only one vote, and all the lesser powers and non powers can outvote us? Sure, we've got that Security Council veto, but we also had to give one of them to several other lesser or non-powers to justify having it ourselves, who -- surprise surprise -- are increasingly lining up against us. What idiot thought that one up? Why wouldn't the UN rabble try to extort deals from us and demand that we not defend ourselves when they get too aggressive? And why wouldn't we, when faced with such extortion, be politically forced into using the UN to justify disarming a country with an international mob rather than simply defending ourselves on our own? Why wouldn't we, when faced with World Opinion, swear off the use of our own nuclear weapons, even though the credible threat to use them is probably the best defense we could have against tinhorn dictators who threaten us with "total war"? And why wouldn't they blackmail us, when they know that, tied up by UN process and World Opinion as we are, we would not dream of simply wiping out such menaces?

    So instead, dragged down by the UN, we engage in the endless process of regime change and nation building while we fight a war on terrorism, which very war -- endorsed at one point by all UN members -- is what creates those terrorists in the first place, and will ultimately empower them to hit our cities in the homeland. When they do, the UN will have so emasculated the concept of national sovereignty that we will have no idea which country to hit in retaliation, which will of course only invite more attacks and bog us down in even more UN process. Attacking Iraq now, under UN auspices, pursuant to UN resolutions, for the purpose of regime change and inserting democracy in the Arab world rather than pure self defense -- and with an implicit promise not to use our full force (ie, nuclear -- which could easily enable us to win without risking many American lives), will only solidify the UN's hegemony and make a further mockery of the right of self defense. But this is going to be a CNN war (and a Fox and CBS and al Jezeera etc war). It's purpose is to win world opinion to our side, rather than to defend America. But this is a gross miscalculation, for in the end we will lose the battle for world opinion and, ultimately, America too. How could an America, based on the principles of individual freedom and national sovereignty have so thoroughly abandoned those principles to UN process? It's a long story. But its principal actors are Political Ambition and consequent Political Cowardice. In short, we have no leaders worth following.

    2/17/03. All This Discussion is Mute [Sick]. When reading this post mortem in the Times about the Columbia disaster (After Liftoff, Uncertainty and Guesswork), keep asking yourself one question: Why didn't NASA's bureaucrats and scientists take the foam-damaged tile theory seriously while the shuttle was in flight? Given the now undeniable private and internal doubts raised by many engineers and scientists during the flight, what could possibly have kept them from being more forthcoming about the dangers before the breakup? Why does there appear to have been a studied, if unspoken, willingness to accept the optimistic view, and an apparent ban on revealing anything to the contrary to the press?

"Given that you may have lost a bit of tile during liftoff, I'm wondering if there's going to be anything different about the entry profile, taking that into regard?" a reporter from The Associated Press asked.

"We have no concerns whatsoever," Mr. Cain replied.

The answer is that science and engineering took a back seat to shuttle PR. As I said on February 8, manned space flight, with all its risks and dangers, is undertaken primarily as a public relations exercise. It is the only way the bureaucrats and politicians can keep the money and support flowing. In service of that goal, it is ever so much more acceptable to have the dangers be objective and uncontrollable, such as space debris, rather than subjective ones resulting from scientists' or engineers' errors. The last thing the program needs, politically speaking, is clear evidence showing that, like every other incompetent Government program (and there isn't any other kind), all the bureaucrats are really interested in is keeping their jobs.

    2/12/03. Colin Powell and Osama bin Laden agree on one thing, at least. They both clearly want everyone to believe that there is a connection between al Qaeda and Iraq. Our Secretary of State was so anxious to make that connection that he revealed the existence of a new bin Laden tape three hours before it was played on Al Jezeera, thus blowing the cover of our secret deal with the station, according to Good Morning America. Powell, you see, was anxious to prove to a Senate Budget Committee that bin Laden was "'in partnership with Iraq,'" the better to get our war moving there (WSJ: Talk of "Packages" Led U.S. to Raise Terror-Alert Level). The tape itself was a little more equivocal on the "partnership" concept, but the Terrorist-In-Chief left no doubt that, whatever his differences with the "infidel" Saddam, al Qaeda is with the Iraqis against the US. Oh, and other things bin Laden and Powell almost certainly would see eye to eye on? Both are in favor of the US invasion of Iraq and both are in favor of the US War on Terror. They would differ, of course, on whether those wars will prevent or promote the delivery of Islamist "packages" to US cities.

    2/11/03. Reversals In Some U.S.-South Korea Links, And Some Jagged Fault Lines (NY Times). The problem with foreign interventionist policies is that they all have to go right almost all the time. There is little room for changes in policy with changes in administration or even just plain inattention while turning to other matters. Perfection is, of course, an impossible expectation to follow through on, as at least all recent administrations have demonstrated in the Koreas. The answer? (and the only answer)? Time to book! Only by a rapid withdrawal from all entanglements in that area can we reduce the risk of nuclear attack, and not just against Seoul or our soldiers on the peninsula, but against our cities in the US. Every other option requires us to get everything right all the time, a task that is clearly beyond us.

    2/9/03. Unintended Consequences. Today's Times has a couple of premier examples of the hubris and stupidity of Government intervention. 

#1.    "'Out of noplace came methadone,' said James McDonough, director of the Florida Office of Drug Control. 'It is the fastest rising killer drug.'" Methadone, Once the Way Out, Suddenly Grows as a Killer Drug.

#2.    "'If consumer choice isn't dead, it's certainly in emergency care,' said Fred Zalcman, executive director of of the Pace Law School Energy Project, an advocacy group that works for renewable energy and conservation. 'In the current vein, it seems inevitable that the system will fail.'" Energy Consumers Playing the Field? Oh, Behave!

Government programs always fail, or at best are inefficient means of delivering on their intended promises. But a surprising number of them actually become the primary cause of the evil they attempt to address (remember the National Market System, the War on Poverty, the Food Pyramid?). Aren't you glad they're now turning their attention to suppressing terrorists armed with chemical, biological and nuclear weapons?

    2/8/03, Saturday. The Columbia Is Lost.  A week after those sad words from President Bush, a haunting image appears on the front page of the NY Times of the Columbia about a minute before beginning to disintegrate. It appears to have a bulge right about where the foam that NASA said on Wednesday wasn't a problem (nor was their studied intent to ignore it) would have hit it. The image reminds me of another, even more haunting: A rich, powerful and beautiful civilization in its final moments, its occupants oblivious to the impending breakup.

    Why are they oblivious? Because their leaders, like the NASA bureaucrats, keep them in the dark and thereby risk their lives in order to aggrandize or salvage their own power. The primary purpose of manned space flight today is public relations for the space program. That's right, PR; they all died for NASA PR. There is no race to the moon against the Soviets, no science experiments that robots or monkeys couldn't perform, no national defense or commercial advantage to be had. Why, then, have the many words of warning about the risks been ignored? Because, in the current political climate, there is no better advertising for a continuation of the program than sending up that parade of brave men and women of every color, creed and nationality. All of them are willing to risk their lives for a shot at space; thousands of people would. But is that sufficient justification for sending them, for risking their fine lives, the national prestige, the money? The only real beneficiaries at this point are the bureaucrats and politicians who support the program and the states that benefit from the funding of it.

    One could legitimately ask, Why No Ocean Program?, as Tibor Machan did in my daily Mises letter last week:

His point is clear and well made: there is no legitimate way to determine whether public funds should be spent on either space or ocean programs. But the space program hangs in there. Why? Partly the luck of history, of course. But the real practical reason is the steady stream of good and brave people willing to die for space exploration. Not that they know it, or could possibly think of it this way, but the risk they take, and the deaths and disasters that from time to time make that risk real, is the most important component of the public relations campaign that keeps manned space flight alive. In that respect the Columbia disaster paid off: the political consensus of the leaders of both parties is to increase funds devoted to the program. But, at bottom, it's just another wasteful Government program living off taxpayers.

    There is no end to such programs, of course. And all of them share a characteristic illegitimacy, in that they are all fed taxpayer funds that would not willingly be provided. Another right wing crank (Ben Franklin on Liberty) had something to say about that (also in my daily Mises letter last week):

History affords us many instances of the ruin of states...the ordaining of laws in favor of one part of the nation to the prejudice and oppression of another, is certainly the most erroneous and mistaken policy...An equal dispensation of protection, rights, privileges, and advantages, is what every part is entitled to, and ought to enjoy...

BUT

When the people find that they can vote themselves money, that will herald the end of the republic.

So, are we doomed because we've got too many bureaucrats doing what bureaucrats always do? Hardly. We are doomed because the same impulse that allows bureaucrats to flourish is now informing our every action in a much more important and deadly sphere. Hint: it involves weapons of mass destruction. And there is no one, not even the most conservative, libertarian, Austrian, Wall Street Journal editor types etc., who can see the problem or lead us away from the danger. In fact, they are the very ones who are leading us toward it. The same redistributionist socialism that even conservatives have acquiesced to at home is now the leading edge of our foreign policy, an integral part of the "war" on terrorism. Thus, the Administration's trade negotiator, Robert Zoellick, wields trade deals as coercive weapons in the "war:"

"'The long-term war against terrorism has to include trade, openness and development,' he said in a recent interview. Implicit in the international rules, he said is an even bigger goal: persuading other countries to accept American ideas about internal reforms that could eventually affect nearly every aspect of daily life. "Trade is more than economic efficiency," Mr. Zoellick said. 'It's about America's role in the world.'" (NY Times, Performing a Free Trade Juggling Act, Offstage).

There is no evidence that such policies have ever worked at home, or placated the underclass to which they are meant to show compassion. Quite the opposite; it has only inflamed them. How much worse is such an effect likely to be when the underclass is global, uniting under a common religion, and headed toward using some fearsome weapons. The "war" on terrorism is, like the space program, just another Government program AND THEY ALL FAIL.

    2/2/02. If you were wondering where Michael Powell gets his undeserved reputation for conservative freedom fighting (Dream Nears Reality: Ease Up at the F.C.C., NY Times), look no further than the Cato Institute. In a recent report (Is America Exporting Misguided Telecommunications Policy? by Motohiro Tsuchiya and Adam Thierer), the case is made that we should not be pushing our bad ideas on other countries. So far, so good. But the nut of T&T's recommendation is that we should change our domestic deregulatory focus from "infrastructure sharing" to "facilities based" competition -- precisely what Powell is proposing to do, and the current action that seems most responsible for his free market reputation. T&T apparently have no problem with this equally antitrust-supportive approach. It doesn't really matter that facilities based competition would be even more confusing, duplicative, costly and fragmented than infrastructure sharing, although it would be. What really matters is that both approaches are designed primarily to eliminate the option that consumers would almost certainly choose if given the option: a unified private network monopoly service. But Cato has so much political capital placed on the deregulation bet -- and has raised so much money from contributors based on its seemingly capitalist appeal -- that all of its authors are locked in to this socialism hidden behind capitalist words. As I pointed out in Deregulation, The Backdoor Socialism, the "denial defense" behind such arguments implicitly supports antitrust. And, since conservatives and libertarians like those at Cato would be the ones we would expect to defend freedom from trustbusters, if defense were needed or justified, their capitulation to the enemy is more devastating to freedom than any explicit trustbusters' arguments could possibly be.

    1/16/03. It's interesting that Congress and the Supreme Court are pushing perpetual copyrights (The Coming of Copyright Perpetuity, NY Times editorial) at the same time that the ability to enforce them is disappearing (Rip, Mix, Burn in the current Wired Magazine). Maybe now is the time to reconsider the whole concept, because there is a better way. As I described in Deregulation: The Backdoor Socialism, one could create effective natural property rights to inventions by simultaneously eliminating both antitrust and intellectual property rights (patents, copyrights etc). Among the benefits of this natural approach: 1) you wouldn't need Government to define or enforce intellectual property rights, such as by deciding how long copyrights should last; 2) the creativity that is rewarded would have a much better correlation with its actual value to the market or society; and 3) much of the return from creativity would swing to inventors and artists and away from lawyers and lobbyists.

    1/15/03. Affirmative Action. Conservatives are confused again (not that they'd know it, or admit it if they did) over an important policy issue. Their belief in freedom, or what they think is freedom, takes them to an anti-affirmative action stance on, for example, whether colleges and universities should be allowed to give racial preferences to applicants for admission, whether to make up for past discrimination or to promote diversity. The proper view from freedom's perspective is that of course they should be able to discriminate, whether on that basis or on any basis they choose. It is an irony of the current debate that a policy alleged to promote diversity is actually headed toward eliminating it, because ultimately every institution will be forced to adhere to roughly the same policy and display the same homogenized, "look-like-America" student body. Under freedom, institutions would be able to truly diversify: some would promote diversity as currently defined; others would opt for white only, black only, male only, female only, straight only, gay only -- legacy only (WSJ, Preferences for Alumni Children In College Admission Draws Fire) -- and God knows what else. The market and survival of the fittest would sort out what is really popular from what has only a small demand to what has no demand at all. There simply is no freedom-based argument for having a national policy on this issue. (The common perception that, because all institutions of higher learning are at least partly subsidized by public funds, there is a legitimate public interest in deciding this issue at the national level is probably incorrect even legally, not to mention morally. In any case, under freedom, that aberration would be eliminated, too, as there would be no public funding of education at all.) And removing the right to discriminate is profoundly anti-freedom.  

    It is always unknown what policies like diversity or affirmative action that are forced down the public's throat at a national level will produce. What is virtually certain is that the results will surprise us, and not happily. In Malaysia, affirmative action seems to have aided terrorism (How Malaysia's Experiment Helped Mold a radical):

Dr. Mahatir came to power in 1981 with a deep aversion to fundamentalist Muslims who put theology above technology and economic growth. Building on an array of affirmative-action    policies begun in the 1970s, he aimed to mold Malaysia's economically weak, poorly educated ethnic-Malay Muslim majority into a new class of entrepreneurs, technocrats and skilled blue-collar workers.

    Another surprise was the SEC's affirmative action-like attempt to force a level playing field on the stock market, which has already resulted in large fines for some millionaires (Several Pioneers Of Day Trading To Pay Big Fines) and will probably cause the market to buckle and crash when those big bad institutions (ie, mutual funds) need to sell someday and find that the level playing field can't take their size.

    1/12/03. Guinea Pigs and Lab Rats. Airline's New Diet Has Rivals Watching (NY Times). It is not known yet whether airline passengers will pay for food, but it is certain that the experiment will be a bust for America West. That is because only two outcomes are possible, both of them bad for the airline: 1) If passengers do show a willingness to pony up for food, then all of America West's competitors will copy the innovation and commoditize its value to zero, or less than zero in the case of America West, which will have footed the bill for the experiment that its competitors will benefit from, and -- once everyone else copies them -- still won't be remembered or given any special kudos for innovating; or 2) passengers don't like paying for food. In this case America West will not only have footed the bill for the experiment, but will be uniquely remembered for being insensitive to what fliers want. All airlines are in this same boat, in which innovation is of benefit primarily for your competitors and, whether or not an innovation sticks, in the end the sum total of the service will be of no competitive benefit to anyone. Such antitrust-induced commoditization will forever prevent the only thing consumers really want: an integrated single network for air travel. When all is said and done, the whole industry will probably be remembered more for having suffered the fate of lab rats: regardless of what is learned in the experiments, they all die.

    1/7/03. Get Real. FCC Reopens War Over Use of Phone Networks, according to the Wall Street Journal. Chairman Michael Powell is apparently convinced that requiring the Bells to lease their networks cheaply to rivals is not real competition. Only requiring the rivals to build their own networks would be real, according to Powell. He's certainly right about the first thought, which was the centerpiece of the 1996 Telecommunications Act, the quid pro quo that would allow the Bells into long distance. The Bells got their quid, all right, but without much quo. Never mind, says Powell; it was a dumb idea anyway.

    But his solution is just as dumb: How can it be wise to require the massive capital expenditures on redundant networks that Powell's competition requires? Back in the late nineteenth century, two railroads competed for the New York to Albany traffic from parallel roads on the East and West banks of the Hudson. J. Pierpont Morgan and associates deemed the competition "ruinous" and maneuvered to combine the roads to eliminate the rivalry. They did and restored the confidence of capital markets, most importantly the willingness of European investors to resume their financing of US railroads. And it is certain that not a single load of cargo between New York and Albany went unshipped as a result of their "anticompetitive" agreement.

    A century later, however, the antitrust laws ban such arrangements, the railroads are a mess, the airlines are a mess, the telephone networks are a mess etc etc etc. And now Michael Powell comes up with one more stupid scheme to enforce a bureaucrat's vision of competition. When will they realize that until we let the consumer and only the consumer make such decisions, it will be impossible to create the networks they want? Consumers are the only ones capable of determining when a monopoly is wanted and when it is not. And it is in the nature of networks that in most cases they'll vote for monopoly. Who would want a fragmented network? (Besides a bureaucrat, that is, whose job depends on having the authority and funding to launch endless inevitably futile attempts to scramble and unscramble those omelets.)

    As long as the President is trying to come up with schemes to lift the stock market (he thinks ending the taxability of dividends may be worth a 10% rally), he should consider what eliminating the antitrust laws would do. Probably multiply markets tenfold or more would be my guess.

    12/30/02. Hank Dittmar is right about one thing (Washington Post op-ed, The Next Move for Transportation): the nation's transportation systems are a mess. He is right, too, that what we need is an integrated network. It's too bad that he seems unaware that our antitrust laws are designed precisely to prevent such a result. Perhaps if he knew that, he would be less enamored of Europe's socialist model, which he praises effusively -- indeed, it's only a little surprising that he doesn't mention how Mussolini made the trains run on time.

    It may well be that, were Government to own and control all transportation facilities, they would work better, because they would be allowed for once to work as an interconnected network, ie, a monopoly. And even Hayek noted that, if Government spends enough of the people's money on a project, it will eventually be successful. (He also noted, of course, the unlikelihood that the service would be worth the taxes confiscated to provide it from the perspective of the people whose pockets were picked to fund it.) Apart from cost issues, however, note that, if transportation (or health care, or telecom, or electricity etc) must be a unified network to function effectively, and if Government is the only legal way that such a network can be created (because all networks are inherent, or "natural" monopolies), then we might as well stop fussing around with all this free market stuff. It is a foregone conclusion under antitrust that our infrastructure industries cannot work effectively unless Government takes them over.

    It's interesting that Dittmar trots out the national defense rationale for a Government role in transportation. The same, of course, could be said for almost every important industry, and often is. The national defense rationale is ironic in that the nation has apparently sworn off the one method that can assemble networks reliably, cost-effectively and in a manner that is consistent with the freedom we think we are defending. Only by repealing antitrust laws can we bring our infrastructure industries out of crisis and, oh by the way, improve our defenses to boot. Failing that, we might as well throw in the towel and go with the Mussolini model. In fact, given our reflexive acceptance of all things antitrust (Post editorial, Microsoft Back in Court), it could be argued that we already have adopted Fascism in even our newest industries. Never mind what you thought it would accomplish; doesn't it just feel weird when competitors are required to promote their competitors' products? Oh well, I guess if national defense is the goal, national socialism worked all right in that category, at least for a while.

    12/24/02. Microsoft Restrained. Further demonstrating that our antitrust laws are more appropriate to sports competition than economic competition, Judge Motz compares Microsoft's behavior versus Sun to Tonya Harding's kneecapping of Nancy Kerrigan and to a baseball team's stealing of the other team's signals (Microsoft Loses a Round to Rival Sun, NY Times). He would be right, if sports competition were an appropriate analogy. But the purpose of economic activity is presumably broader than to entertain us. And unfortunately, the economy, the technology boom and the stock market have been dead in the water roughly since the antitrust attack on Wintel. At least one reason for the dismal performance is that it has become enforceable policy never to let productive monopolization happen again. As I wrote in Mayday, Mayday (5/1/99),

The ultimate dispositions of the individual cases against Microsoft and Intel are no longer important. What is important is the fact that trustbusters now know how to prevent the predatory practices the Duo used so successfully to organize and energize the economy. . .    [Now, as a result,] Old standards are disintegrating and new ones won't form, so the fear of making bad choices is rising rapidly and the risk of getting stranded is soaring. Multiple suddenly credible operating systems, each building its own installed base of devotees in separating development communities; various versions of Unix (still); resurgent Macintosh (if you can believe it); Java (that supposedly runs on anything -- but doesn't) dividing developers over where to devote their time; free and open source systems like Linux, and, reportedly, maybe even Windows (perhaps to show Microsoft's contrition, or maybe because it doesn't matter anymore) -- all of these fragmenting features of the new landscape, while demonstrating clearly the continued vibrancy of the industry's potential for innovation, also raise the specter that, without the most important innovation of all -- coordination -- much of that potential will turn to sand.

Clearly still clinging to the belief that refereed competition is as good for commerce as it is for the Wide World of Sports, trustbusters have doomed the economy to wallow in arrested development for the foreseeable future. Curiously, they often refer to these entertainments as "Darwinian", when in fact they are designed precisely to prevent the survival-of-the-fittest contests that result in constructive evolution. Were he still around, Darwin would certainly be suing the Justice Department for defamation of character.

    12/9/02. Read A Movement in Saudi Arabia Pushes Toward an Islamic Ideal, and Frowns on the U.S. (NY Times), if you think invading Iraq will reduce the terrorist threat to the United States. There is a direct correlation between the number and militancy of our enemies and our involvement in the Muslim world:

"'If America continues to follow these policies, I'm sure there will be no room for modernists    and reformers who are raising the flag of coexistence,' he said over a glass of water in a Riyadh hotel."

    12/8/02. The Bankruptcy Model. According to the godfather of airline deregulation, Alfred Kahn, "The public is not willing to support the levels of airline service that we've had in the past." (The Days of Coasting Are Gone, NY Times). What an idiot! How could we possibly know what level of service the public would support, when we force ruinous competition onto the would-be providers of the service? Such competition can have no possible effect but price cuts, service cuts, angry consumers and bankruptcy. It's not the carriers that are in need of new business models, it's the country. No, I take that back; the country used to have the proper business model. It was called freedom. But ever since the "Progressive" Era and the advent of antitrust, it has become impossible to provide service levels that customers will support in any of the network industries where monopolies tend to form naturally out of initially fragmented competition. That none of the experts, of which Dr. Kahn is the consummate example, can see the need to allow competition to run its natural course is the reason that nobody anymore can see the obvious -- even newspaper article authors who understatedly notice that "travelers have grown frustrated with the irritations of the industry." That is why they cannot see that every new strategy, negotiating technique or business model -- including bankruptcy -- that a competitor comes up with will just be copied by the field and further the downward spiral.

    12/7/02. The Unfriendlier Still Skies. Americans are about to discover another downside to having allowed their Government to take over the air travel business via deregulation and antitrust: It will be impossible to protect them against missile attack, which may cause many of them to stay home, or at least to do their traveling on the ground. In An American No-Flight Zone? (NY Times op-ed by Robert Mackey), we hear that the cost of protective measures is high and likely to be tossed back and forth between federal and state authorities. In the end, of course, this means that protection will be ineffective and will cost more than travelers and/or taxpayers will bear willingly. Any amount of the burden given to airlines will only worsen their already non-viable economic models. So the whole burden will fall to Government to assess taxpayers and travelers for the incremental cost due to deflecting SAMs and Stingers from our "national asset" called air travel. This will be a 100% political exercise, now that competition policy has prevented the only path to a commercially viable air travel network. While the owner of a network monopoly would have had a compelling interest in solving the problem effectively and affordably, none of today's fragmented competitors have any direct interest in doing so for any but their own tiny fraction of the network, nor for spending any of their own resources on the task. This has always been an economically stupid policy, and it has always made flying more dangerous than it would otherwise be (Deregulation, The Backdoor Socialism). But it is now likely to become even clearer that antitrust costs lives as well as dollars when it comes to air travel.

    12/6/02. The Unfriendly Skies. "There are no legitimate public policy grounds for interfering with a market-driven industry restructuring," says the NY Times in today's editorial. Of course, "That doesn't mean the government shouldn't be taking steps to strengthen this critical industry." Oh, that explains it.

    The reason There Is No Clear Way Forward for Airlines is that editors, op-editors, regulators, academics and the rest are all blind to the real problem, namely, that antitrust blocks the coming together of a unified airline industry monopoly that would provide quality service at reasonable prices. So instead the experts pontificate about how the industry must become more efficient, cut prices, use the internet, bargain better with unions and blah blah blah -- all the things they have been trying to do all along which are killing them. But there is not now and never will be a way to make a network work like a network if it is Government policy to destroy it. 

    11/13/02. Bin Laden's Back (tape excerpts). Although General Tommy Franks is convinced bin Laden "is having a bad year," (Purported bin Laden Tape Lauds Bali, Moscow Attacks, Washington Post) the latest tape shows no sign of it. While the Bush team seems quite satisfied with their recent electoral success and their vote in the UN Security Council on Iraq, both votes are less secure than just after 9/11. At that time, the President sported a 90% approval rating, which has since declined to the mid 60s. And the entire UN, not just the Security Council, voted in favor of the Administration's resolution condemning the 9/11 attack. Meanwhile, the Islamic world has moved increasingly toward the bin Laden view of things, with recent elections in Pakistan and Turkey establishing forceful momentum in favor of fundamentalism. General Franks may think we're winning the War on Terror, but polls of both sides' peoples are increasingly telling us something else.

    11/12/02. Officials Question FBI Terror Readiness (Washington Post). Two excerpts

FBI officials "still aren't looking at this as an intelligence agency, but as cops," said one U.S. government official who has been briefed on FBI assessments and plans. "You get the sense they don't really have a clue" about domestic terrorists in the United States.

 

    The main difference this time around, said terrorism experts, is that international terrorism now includes determined militant Islamic groups such as al Qaeda that are not under state control. On the contrary, as the U.S. war on terrorism has captured or killed al Qaeda's leadership, it has spawned small bands of entrepreneurial terrorists encouraged by the idea of a jihad or "holy war" against the United States to act independently.

Some of those freelancers are undoubtedly US-born Muslim converts, like the sniper John Muhammed. These black Muslims have been recruited in our prisons and mosques for two decades in a Saudi-funded effort to indoctrinate them in the violently anti-American version of Islam known as Wahhabism. Treating them only as potential criminals rather than as probable enemies will cause many deaths in our country by the time our worldwide policy of regime change runs its course. For example, failing to develop a national black Muslim database and profiling on that basis whenever regularized violence kills Americans will let the next snipers go unapprehended for a lot longer than Mohammed and Malvo were. (Had one been in place, Mohammed would have been under suspicion a lot sooner than he was, since he was stopped several times before his spree ended. And the next snipers are unlikely to be as vain as to brag to police about their actions. Imagine snipers with the discipline of a Mohammed Atta, who led the 9/11 team.) Similarly, searching WASP grandmothers who want to fly with as much rigor as middle eastern men is an inefficient foolishness we can no longer afford. But of course the same set of egalitarian assumptions that causes our interventionists to march around the  world changing regimes also causes them to avoid profiling and treat all violence at home as criminal rather than political. It is the desire to socialize everything and create level playing fields everywhere that drives all interventionism. This is why the FBI and its policing -- as opposed to self-defense -- approach will be left intact, however many Americans lose their lives as a result.

    11/5/02. The War on Terror: Just Another Government Program. The Impossible War, by Llewellyn H. Rockwell, just arrived in my e-mailbox from Mises.com and is well worth reading. A concluding excerpt:

    11/3/02. A Penny for Your Thoughts. 66% of Americans, in a new New York Times/CBS News poll (In Poll, Most Americans Say Both Parties Lack Clear Vision), believe their children will live in a worse America. A majority believe we are on the wrong track. Perhaps these dismal findings have something to do with the inevitable quagmires of pessimism one gets into when every national issue turns into a question of which intervention should be undertaken. Perhaps this is why both parties come off as lacking principles and looking only for the most momentarily popular fundraising and vote-buying position to take.

    For example, Ohio Republican congressman Michael Oxley is portrayed in this article as a defender of Wall Street special interests (A Friend of Main Street, or Wall Street?). Addicted to a variety of campaign financing flows, he is said to be able to subtly derail reform on his funders' behalf. That's funny. I remember Mr. Oxley as the prime mover in Congress behind decimalization, the reform staunchly opposed by Wall Street, but that was portrayed by academics and regulators like former SEC Chairman Arthur Levitt as a prospective boon to individuals, whose trading costs would go down. As it turns out, they did go down under decimals. But so did liquidity for institutions and the business models of almost all brokers, dealers, exchanges and ECNs. The net result is far less liquidity where it matters (for institutions, that is; individuals never did have any difficulty getting liquidity), and markets that are far more volatile and vulnerable to crashes. These consequences were predicted by only a very small number of off-beat academics and observers of market structure, but their warnings were ignored, largely because they also appeared consistent with the interests of dealers, who were in bad odor at the time after having been caught fixing prices and trading practices in their favor. It seemed, therefore, that forcing decimalization down their throats would only be fair, so supporting it was a populist freebie.

    The reason we stumble into such interventionist messes is that no one anymore, on either side of the aisle, liberal or conservative, has any principles based on freedom to guide them. They are all only looking for the next popular intervention that will extract the most campaign funding to keep themselves in power. "Political Parasites" I call them. No wonder people expect worse to come. They are right. 

    11/2/02. Pot Calls Kettle Black. In her Ruling in Microsoft Settlement (NY Times), Judge Colleen Kollar-Kotelly, incredibly, accused Microsoft of paternalism: "In this regard, the court has largely rejected Microsoft's paternalistic view that it can determine what is best for consumers with regard to the configuration of the Windows operating system." This, in a decree that outlines a detailed and highly paternalistic oversight process under which it will be impossible for Microsoft to resume its monopolization practices with anywhere near the effectiveness as those that created the greatest boom in economic history. As I said in Mayday, Mayday (1999),

The jig, indeed, is up. Neither Microsoft nor Intel -- nor any other American companies -- will again in our lifetimes lead an economic boom with their standardizing monopolization. Our technology advantage and our once leading technology sector are in chains, doing penance or otherwise prevented from any useful monopolization. The only real question now is how long these disastrous antitrust policies will take to destroy America's economic leadership.

    11/1/02. China's Schism On Cellphones Rocks Industry. Now that we have deliberately fragmented our own telecom industry with self-destructive "competition" policies, trustbusters surveying the bankruptcies, confusion and dysfunctional service offerings might want to contemplate this one, too: within a decade or two at most, China will effectively own and control the telecom industry worldwide. This is not just because they may have the most consumers of the service by then. It is because, given our abdication of the right of our private companies to roll up competition into effective network monopolies, the Chinese Government will step into the void and control the standard. Game over. And to think, we invented the damned things!

    10/31/02. Trick or Treat. The Washington Post reports this morning that the same gun that the Beltway sniper(s) used was involved in the earlier Alabama shooting, although it was not fired by him (them). And last week's National Enquirer quotes an anonymous Justice Department official as saying there may be 100 al Qaeda-trained snipers in the US now. The official also points out that the Beltway sniper MO followed pretty closely that recommended in the al Qaeda training tapes discovered in Afghanistan.

    10/27/02. "His race or his religion had nothing to do with it. He was just a random, psycho loser." So says Eleanor Clift on McLaughlin Group this morning. Nonetheless John McLaughlin concludes that Muhammad's victims do deserve compensation similar to the victims of 9/11, because they were in all likelihood killed pursuant to the bin Laden fatwa and jihad, saying the sniper spree fits the pattern of other freelance Muslim terrorists, such as the guy who shot up the El Al ticket counter at LAX. McLaughlin didn't manage to convince any of his panelists. And minutes later, experts on Meet the Press seek to assure us that these events are and will remain highly rare, because most of us are law-abiding people, because serial and spree killers are rare psychological abnormalities. We should not be fooled by the hyper attention of the news media on these unusual aberrations.

    Why are we stuck with these apologist mantras? A window onto the problem can be found in "Jihad and the Professors," which is the lead article in the November Commentary magazine by Daniel Pipes. Pipes surveyed scholars of Islam on the meaning of the term, "jihad," which had become controversial when a graduating senior from Harvard gave a speech at commencement called "My American Jihad." Pipes shows that with virtual unanimity the scholars have adopted the soft view pushed in the speech, namely, that jihad means "to resist temptation and become a better person," or "Internally, to be a good Muslim. Externally, to create a just society" or "resisting apartheid or working for women's rights." Trouble is, according to Pipes, these views are not correct:

"But of course it is bin Laden, Islamic Jihad, and the jihadists worldwide who define the term, not a covey of academic apologists. More Importantly, the way jihadists understand the term is in keeping with its usage through fourteen centuries of Islamic history. . . It meant the legal, compulsory, communal effort to expand the territories ruled by Muslims. . . About the basic meaning of jihad -- warfare against unbelievers to extend Muslim domains -- there was perfect consensus. For example, the most important collection of hadith (reports about the sayings of Muhammad), called Sahih al-Bukkari, contains 199 references to jihad, and every one of them refers to it in the sense of armed warfare against non-Muslims. To quote the 1885 Dictionary of Islam, jihad is 'an incumbent religious duty, established in the Qur'an and in the traditions (hadith) as a divine institution, and enjoined especially for the purpose of advancing Islam and of repelling evil from Muslims.'"

    It is refreshing, of course, to hear McLaughlin boning up on the terms and history enough to reach some reasonable conclusions about the dangers we should be worrying about. But it is telling that he mispronounced both "fatwa" and "jihad" before correcting himself, demonstrating how far we Westerners have to go to understand what is happening to us. And the bigger question is why are all the apologists in academia, the media, the Administration and Congress so numerous, so dominant? Very few of them, especially the experts on Islam among them, have any trouble pronouncing the terms anymore. I