Unforeseen Contingencies

I intermittently read writing by Justin Raimondo.  The last time I read anything of his I agreed with was well over twenty years ago.  But he's largely hit the nail on the head with his recent piece in Chronicles, Lost Near the Beltway.  I think many of his details aren't quite right -- Rothbard, Ron Paul, and the Rockwellites have their own problems, and Russia really is a very bad player (Putin imagines Russia at war with us, whether we do or not) -- but Raimondo is certainly onto the rot that's infested the minds of modern libertarians.  

You are advocates of violence, and you should stop -- pull back from the brink to which you are heading.  You're "demanding" that I, and millions of people like me, surrender our rights and our property, because of your stupid ideas and your hatred of us.  I guess we're to assume the government will take care of us -- the way the FBI did when warned about the recent Florida high school murderer, or the Boston bombers, or the Fort Hood murderer... or the way the the Broward Country sheriff did?  (45 calls on the killer, including felony complaints).  And we're to trust you and the rest of the left and the government that if you could disarm us, you'd proceed to respect the remainder of our rights? Well, we don't.

Stripping people of their abilities to defend against criminals and tyrannical government will not lead to less violence, but more.  The venom and hate you spew against those of us who disagree with you shows what's in your soul.  It's violent.  You ought to be looking at yourselves, asking what you've become and asking if you really want to declare war on your fellow citizens.  No one would win a civil war, but you'd not come in first.

Photo: If you want peace, learn to use these and keep them ready.

Tariffs are a terrible idea.  It's clear that Chinese government policies pose problems that need addressing -- the Chinese government steals all sorts of data, including patents and proprietary trade information, personal data (including biometric markers and security clearances).  They also require firms doing business in China to reveal proprietary technological information, which they promptly steal.  All of this does call for sharp, harsh, intelligent responses.

Steel and aluminum tariffs are a blunt and non-targeted response.  They don't directly attack the problem, nor the culprits responsible.  Tariffs become a stupid response when applied broadly, to other countries, and especially when levied at non-offender South Korea.  South Korea is an American ally.   At a time when we need allies in the Pacific, tariffs on South Korea not only make us poorer and make our friends weaker, they threaten us by strengthening our enemy, Rocket Man -- that fat, short homicidal dope with a ridiculous haircut and nuclear weapons.  Tariffs on South Korean steel are a dumb idea, even from the standpoint of anti-free-traders so foolish as to believe that low prices are a problem for us.

Fortunately, the threatened tariffs against South Korea have been temporarily suspended.  But the suspension is temporary, and imposition of the draconian tariffs depends upon the outcome of the upcoming talks.  "We" at Unforeseen Contingencies would like to point out to President Trump and the USTR that tariffs on South Korean steel  will hurt America.  They will raise costs for Americans who use steel (they far outnumber the few American steel users who might gain, and might not), they will jeopardize the trade surplus that American service providers and American farmers and ranchers have with South Korea, over steel?  Do you really want to jeopardize $6.9 billion in American ag exports over $3.4 billion of South Korean steel imports?  Do really want to weaken South Korea and reduce South Koreans' willingness to cooperate with Americans in opposing homicidal Rocket Man, all in the the name of 16th century economic theory?

Mr. Trump --DO NOT RAISE TARIFFS ON SOUTH KOREA, and stop with the mercantilist nonsense.  Make America great again.  Free trade and a robust, aggressive defense, please.

"We" at Unforeseen Contingencies always strive to be on the cutting edge, and what could be cutting-edgier than celebrating "Israel-Apartheid Week," a carnival of hatred against Israel and Israelis?  Israel-Apartheid Week (IAW) is a pro-BDS movement that promotes eliminating Israel.  IAW rejects the 1948 borders, and even the idea of a Jewish homeland; they are explicit about this.  (See the  second and fourth paragraphs.) (But caution: their website is set so that you cannot click back to this one.)

To celebrate, let's share the concerns of Micah Lakin Avni, who just spoke before the UNHCR (United Nations High Commissioner for Refugees).  Avni's father, Richard Avni, was a school principal who taught both Jewish and Arab children.  He was an American who immigrated to Israel.  As a young man in the U.S., he had been active in the civil rights movement, and after moving to Israel he promoted rights of Palestinians.  In 2015, Palestinian terrorists stabbed and shot him to death, because he was, after all, Jewish.

His son recently spoke to the UNHCR concerning the Palestinian Authority's (PA) longstanding practice of paying bounties -- permanent incomes, in fact -- to families of those who murdered his father and similar terrorists.  As he put it, "What if I paid to butcher your fathers?"

Great question.  UNHCR had no answer.  Those who pronounce Israel an apartheid state, or even who see moral equivalence between Israel and the exterminationists of the PA and Hamas, need this shoved in their faces.  They are on the side of murder.  Israel is not an apartheid state.  Israelis who are Arabs, Blacks, Muslims, Christians, and Druse all have equal rights.  The "apartheid" claim is disinformation, designed to demonize a country that is a thorn in the New Left's side, for some reason.

OTOH, what "apartheid" literally means is "separateness."  In that sense, perhaps Israel might be well-advised to separate itself entirely from the PA territory, Gaza, and Syria?  Put up impenetrable walls, backed by minefields and missile defense systems and anti-tunnel defenses, and blast anyone who dares try venture across?  That would at least isolate the Palestinians from the supposedly pernicious effects of contact with Jews; would that help, in the eyes of the BDS/IAW movement?  I'm guessing not.  PA territories and Gaza would die on their own; they need Israel to survive.

Our "Israeli Apartheid Week" celebration seems to be petering out.  The problem is that Israel, a Jewish state, is a country of freedom, and the Palestinian alternatives, PA and Hamas, are regimes of murderous thugs, and Israeli Apartheid Week is a disgusting farce.  But Unforeseen Contingencies remains cutting edge, for what could be more cutting edge than cutting down the left's cutting edge?

When my brothers and I were quite young, we heard that rhubarb leaves are poisonous.  We had rhubarb growing in our back yard, so on more than one occasion (usually when friends were over) we would each take a bite out of a rhubarb leaf to test whether it really would poison us.  Apparently this is well below the dose required for toxicity, and none of us noticed any effects.  (Perhaps some readers are now saying "Aha, that explains him!")

President Trump is engaging in a very interesting economic experiment.  It's sometimes said one cannot conduct economic experiments on a nationwide or worldwide level, but of course it is academic economists saying this about themselves, not about the president.  We are about to witness a grand experiment.  Tariffs are  poison, and Trump is about to prescribe a big dose.  OK, alleged to be poison, by us oddballs called economists.  Let's see who's right.

I've not yet read the details of the tariffs, other than that steel and aluminum will be particularly targeted, but apparently retaliations are already being considered elsewhere.  An economic experiment is about to get underway, and the results will be instructive. 

I will make some predictions.  The overall prediction -- the main experiment -- is that trade war will inflict real economic harm on America and Americans.  Some specifics:

1. There will be a series of tit-for-tat responses, in which tariffs will increase and trade war intensifies.  This isn't a forgone conclusion, and I think it's the weakest of my predictions.  Conceivably targeted nations could drop some of the trade restrictions and practices that Trump claims justify his tariffs.  I don't expect this, but it is certainly possible that trade war won't ensue, that the threat of U.S. tariffs will cause trade partners to increase their openness American exports. 

As Adam Smith put it in Wealth of Nations, "To judge whether such retaliations are likely to produce such an effect, does not, perhaps, belong so much to the science of a legislator, whose deliberations ought to be governed by general principles which are always the same, as to the skill of that insidious and crafty animal, vulgarly called a statesman or politician, whose councils are directed by the momentary fluctuations of affairs."  Trump claims expertise at the art of the deal; we'll see how insidious and crafty an animal we really have in Mr. Trump.

2. This will cause consumer prices to rise substantially in the United States, especially for lower end consumer goods, e.g. the sorts of things one buys at Walmart.  I'm reminded that Robert Reich lamented that low consumer prices at Walmart meant a lower standard of living for the bottom half.  I think that showed Reich to be an utter ignoramous, but now we'll have a test of his claim.

3. I expect capital inflows into the U.S. to plummet.  Somehow Trump supposes that foreign investment into the United States is good, and trade deficits bad.  Apparently Trump, his pseudo-economic advisor Peter Navarro, and all the other people who think this could make sense are unaware that there is no way to have net foreign investment in a country unless it runs a trade deficit.  The simplest balance of payments accounting shows this.  It's not a theory, it's basic accounting.

4. If net foreign capital inflow declines, I expect interest rates in the U.S. to rise. The national debt is already growing out of control; when the federal government must refinance its burgeoning debt at higher interest rates, this growth will accelerate.  Trump is playing with fire.  The debt problem is about to get much worse.

There are really three predictions here for economic harm in the United States: higher prices and lower living standards, lower investment and hence future productivity, and an acceleration of the national debt and risk of sovereign debt crisis.  I can make other observations of a more political nature.  Given DPRK's behavior, this seems an especially dumb time to hit South Korea with damaging tariffs.  Trade war has the potential to undo the economic gain from tax cuts and deregulation that was undercutting the chances of the Democrats to take over Congress.  (Memo to Trump: The dems are your enemies.  They will impeach you and destroy you if they ever get the chance.)  And I'm skeptical this tariff policy is really driven by "unfair" foreign practices.  I think it is pure mercantilist rent-seeking by the U.S. steel industry. 

This is not a good situation; it's a terrible one.  But enemies of economics  -- our enemies on both the left and the right -- have been yammering for far too long about how free trade is just dogma, that protectionism creates jobs and prosperity, that economists know nothing. Oh yeah?  Well I say (and 95% of economists say) that protectionism is poison.  So on with it, let's have a little empirical testing.

It's spring break at [redacted]* and I've returned to reading things not directly work related, mostly newer stuff on Austrian economics.  It's only a short step from that to recent writings on anarcho-capitalism (AC).  Ugh.  What surprises me about AC writing is how little it deals with political reality. 

I would suppose that, having laid out the basic ideas, anarchists would next explain 1) how their utopian system actually might be brought about, and 2) how it would deal with some obvious real-world challenges.  Perhaps such writing exists, but I haven't seen it.  Instead, AC writing mostly seems to be the Nirvana fallacy, invective directed against non-believers, equivocation, and kicking up dust to confuse the issues.  I used to take anarcho-capitalism seriously, and even considered myself an anarcho-capitalist (although not a very good one because I also liked the minimal state idea and wasn't so sure an anarcho-capitalist society could defend itself against a USSR or a Nazi Germany), but increasingly I think that most adherents are just espousing a religious faith, and a rather silly one at that.  There's no point in considering it a viable system if adherents can't come up with reasonable answers to questions and objections.  Here's an example.

How will we get to an anarcho-capitalist system?

This seems a crucial question.  If someone tells me "I have the perfect system, but there's no way to make it actually come about," I'm inclined to think they do not have the perfect system, or even a better system.  A better system will actually solve real world problems, and to do that, it must be attainable.  I'm uninterested in performance on the blackboard.

Anarcho-capitalists such as Murray Rothbard describe how their system would work in an ideal world.  Rothbard proposes that private protection agencies (PPAs) would sell defensive services such as protection of life, liberty, and property, or contract enforcement, or legal proceedings, etc. in the free market.  And since private enterprise in the free market works better than government for provision of the usual goods and services, it would similarly excel here.  I dispute this, but let's grant Rothbard's argument.  The proper response is "so what?"  So far as I know, no one has ever explained how we could transition to this allegedly superior system. 

Let's put some teeth in this criticism.  What is the anarcho-capitalist solution for South Korea?  Suppose everyone in RoK reads Rothbard, sees the anarcho-capitalist light, and agrees the state should be abolished.  Should they do it?  Vote in a national referendum to immediately disband the state, including the military?  And watch as DPRK troops pour across the undefended border?

Perhaps that's not a fair question.  Instead of voting to abolish the state, everyone in RoK instead agrees that all state branches will be auctioned off among themselves.  Buyers of defensive agencies like the police, military and courts, can then start enrolling subscribers, and competing agencies can spring up as well.  I suppose Kim Jong un shouldn't be allowed to bid, and the authorities will have to screen for straw buyers, but otherwise this should work well, no? 

Well, probably not.  A South Korean entrepreneur contemplating buying the RoK Army, say, would be faced with the problem of figuring out how to collect payments for defensive services.  S/he'd also be faced with staffing problems, since RoK currently has universal conscription for males.  Let's assume there could be solutions (I have no idea what), but they'd be costly and time consuming to set up.  The same goes for police, courts, and law.  In the interim, Kim Jong un, miffed that he was blocked from bidding, invades.  And remember, I'm assuming everyone in South Korea has converted to Rothbardianism, so by assumption we rule out that bidders would use the army or police for nefarious purposes, like robbing their fellow citizens, or that the high bidder would simply turn and sell all the military hardware abroad and retire in the Bahamas.

Again, maybe this isn't fair either.  Maybe anarcho-capitalism would just arise, "spontaneously," on the market, and eventually displace the state.  Well, if AC is so superior, why doesn't it do this?

And there's my real point.  If anarcho-capitalism really is superior to state systems, why don't these AC systems spring up "spontaneously," either overnight or gradually.  Because the state won't let them?  So far as I can tell, anarcho-capitalists believe that a society that adopts anarcho-capitalism would be able to fend off attacks by states, and that it would be superior in this regard than if it had a state organizing a national defense.  Yet we don't see anarcho-capitalist systems emerging anywhere.

Perhaps there's an "infant industry" argument so it would be too much to expect AC to emerge where there are established and well-functioning states (although I think that would be an admission that anarcho-capitalism really doesn't work), but then why not in places where there's no state to speak of at all -- e.g. Somalia, Afghanistan, or Syria?  Or some isolated tropical island, like the Republic of Minerva?

The whole AC theory seems mostly a religious faith, held regardless of empirical evidence or logic, mere "assurance of things hoped for, conviction of things not seen."  A utopian political theory is a weird thing in which to place one's faith.
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* We've never bothered to follow our "new policy" before, and aren't about to start doing it now!