Pretending the Rules of Arithmetic Don't Work (or The Perfect Issue for a Demagogue)

The widespread support for minimum wage laws is an interesting phenomenon, especially given the simple nature of the economics of this issue.

Almost everyone has heard of the 'Law of Demand', and anyone who has taken an introductory class in economics is taught this law: other things being equal, the quantity demanded of something is inversely related to its price.

But more than that, we all experience it directly, since it expresses an external constraint on human behavior, that everyone is unable to buy more of something as its price rises.

Here is the classic graph that shows the basic relationship between supply and demand.  The demand curve slopes down from left to right, indicating the inverse relationship between demand and price — everyone demands less as price rises.  The supply curve slopes up from left to right, indicating the direct relationship between supply and price — rising prices cause more of something to be produced, since the increasing price increases the reward for producing that something.

But why do we know the Law of Demand is true, and that the demand curve above must slope down to the right, indicating that price and quantity demanded are inversely related?  It certainly is not because some academics believe it (many do not — at least not consistently).  It is because it is impossible for it not to be true.

Why? Because the Law of Demand is restating an obvious fact of simple arithmetic, that when you perform a division, the result (or quotient) must get smaller as the divisor (or denominator) gets larger.  Even school age children learn fairly early that when you take larger pieces of something, there will not be as many pieces to go around.

In determining how much you can buy of anything, you divide the amount of money you have available to spend (what you have produced), by the unit price of whatever you would like to buy, like this:
                My Money / Unit Price = Quantity I Can Afford.

So when prices rise, the effect is to divide the money available for spending (the available production) into smaller quantities.  For example, it is pretty obvious that if your favorite hamburger cost $10, and you have $100 available from your pay each month to spend on hamburgers (after all other expenses), that the maximum quantity you can demand of those hamburgers is $100/$10 = 10 hamburgers.  If the price of those hamburgers doubles to $20, but your income does not change, then you can only buy $100/$20 = 5 hamburgers.

Obviously, there is nothing new here.  But it is important to point out that nothing is altered about this basic relationship by the complications of the modern day economy.  In essence, simple division explains why the Law of Demand must be true and universal, since if it were not, it would mean that the behavior of division must be inconsistent, behaving differently in different cases.

And note that quantities of money have nothing to do with it — using money as the measure of cost and productivity is just a convenience that everyone is familiar with.  Money, in this sense, is just a tool of exchange, and represents the value of labor (the value of your productivity).  If you were stranded on a deserted island, and you had to climb coconut trees to gather coconuts to survive, your daily demand for coconuts would be computed like this:
       Daily Working Hours / Average Hours to Get a Coconut = Daily Quantity of Coconuts.

And so if one day you jumped down from a tree while gathering coconuts, and you badly sprained your ankle on the landing, and the injury doubled the average amount of time it took you to gather a coconut, your demand for coconuts would be cut in half, just as it was for hamburgers in the previous example above, since in both cases the cost to you has doubled — nothing necessarily changed about the good you were trying to acquire, but your ability to produce it, or produce enough to trade for it, has decreased.

When viewed in this way, it is immediately obvious why demand is inversely related to price.  To say that the demand curve is flat, or that it sloped up to the right, would be to say that the quantity you could produce, was in now way affected by how long it took you to produce it — i.e. that you could acquire more of something, as the cost to you was increasing.

This is obviously impossible.

So, do you have to do a study to show that raising the minimum wage will reduce employment to the degree that individuals were earning less than the higher wage amount?

No, of course not, since if the minimum wage were raised above market rates, while there was no corresponding increase in the available capital to purchase labor, and unemployment did not increase, it would mean that the behavior of simple arithmetic changed, that the law of demand stopped working, and that employers could purchase just as much labor, as the cost was increasing.

That is, this same relationship holds:
        Money Available to Purchase Labor / Unit Cost of Labor = Quantity of Labor Purchased

Since the unit cost of labor is the divisor, increasing it in isolation must reduce the quantity of labor that can be employed. Even if employment went up after a minimum wage increase — which is still possible, depending on how far the new minimum is below prevailing wages — if there are any individuals who are not worth the new minimum, employment must still be less than it would have been without the minimum wage increase, since a minimum wage makes it uneconomical to hire those with skills that are worth less.  Increasing the cost of labor can only cause a decrease in employment, since the increase reduces the amount of labor that can be purchased.

Even if you believe that businesses can exploit individuals, and pay them far less than their labor is worth, raising the minimum does nothing to change that situation.  The obvious implication of this view is that businesses can simply charge their customers far more than it costs to produce something.  If this were true, raising the cost of labor would not eliminate that power — this belief implies that businesses can easily pass cost increases onto customers, since by assumption, they were charging well over their costs to begin with.  And so this means workers will just spend more on rising prices as a result of the wage increase, leaving them no better off — everyone will just be spending more, whether or not their income went up.

This is what is so comical about comments about how little prices would have to go up to support an increase in the minimum wage.  Here is a blog post regarding Senator Elizabeth Warren's (D-MA) comments on this issue back in March, 2013, that is titled as if Warren 'dismantled a right wing talking point' that is obviously false —

---

http://boldprogressives.org/2013/03/watch-elizabeth-warren-bat-down-right-wing-talking-points-about-the-minimum-wage/
http://archive.is/ARCPK

WARREN: During my Senate campaign, I ate a number 11 at McDonald’s many, many times a week. I know the price on that. $7.19. According to the data on the analysis of what would happen if we raised the minimum wage to $10.10 over three years, the price increase on that item would be about four cents. So instead of being $7.19 it would be $7.23. Are you telling me that’s unsustainable?

---

Again, if prices have to rise to compensate for the increase, will not workers making minimum wage be in exactly the same position as they were before the increase?  This is just inflation, that does nothing to improve anyone's living standard.

The minimum wage is such a useful issue for demagogues, because it plays into popular public biases.  Regardless of knowing how difficult it is to start a business, and regardless of knowing how many businesses fail, people still act as if there is no competition for labor, and that businesses can pay workers as little as they want.

Even many economists support minimum wage laws.  Here is a letter signed by over 600 economists in support of an increase to the Federal Minimum Wage --
   http://www.epi.org/minimum-wage-statement/
   https://archive.is/VDDtV

Here is an excellent article by Walter Williams, John M. Olin Distinguished Professor of Economics at George Mason University, where he points out the absurdity of supporting minimum wage laws as a way to fight poverty, since we could eliminate poverty everywhere, if this worked.  But he goes on to make the rarely heard point that minimum wage laws are discriminatory, and hurt minorities the most.  He gives the example of the openly racist South African Building Worker's Union, and its support for minimum wage laws for blacks, as a way to price them out of the labor market --
  http://www.fee.org/files/docLib/0703williams.pdf

Here is a recording of Walter Williams and Thomas Sowell discussing these issues with minimum wage laws —
   https://www.youtube.com/watch?v=b4Ubp7U9Dq4

Here is another excellent article by Walter Williams on this issue.  His comparison of the law of demand with the law of gravity really highlights the absurdity of the disagreement among economists on this issue, since the law of demand is just as fundamental to the science of economics, as the law of gravity is to physics —
  http://walterewilliams.com/minimum-wage,-maximum-folly/

The disagreement among economists on the effects of minimum wage laws, would be like physicists being divided on the effects of gravity.

But since it is easier to support a popular bias, than explain why that bias is false, minimum wage laws will likely continue to get widespread support, despite that such laws only harm people.

Here is Elizabeth Warren again, pretending she is fighting for the underdog by supporting an increase in the minimum wage --
   http://archive.is/Ks5f3
   http://abcnews.go.com/Business/17-million-reasons-raise-minimum-wage/story?id=23054905
   http://archive.is/p7PgP

As they say, with friends like these ...

Ayn Rand's Questionable Integrity

It is not difficult to come across articles that are instructive to read only for what they reveal about the author's commitment to honesty.

Especially in the internet age, when it is so easy to get content online, it is easy to find writings that contain no useful information, and must be read solely as a revelation of the dishonesty and missing critical thinking skills of the author.

Here is an example:  this post on Huffingpost.com by Michael Ford, from December 5, 2010, supposedly dealing with hypocrisy, entitled 'Ayn Rand and the VIP-DIPers' —
      http://www.huffingtonpost.com/michael-ford/ayn-rand-and-the-vip-dipe_b_792184.html

It is especially absurdly comical when a writer massively exhibits the qualities he is pretending to expose and criticize.

If you are going to attempt to criticize someone for a particular position, it is helpful if you first find out what their exact position is, since if you fail to do this, not only are you demonstrating your own dishonesty in the misrepresentation, you are wasting everyone else's time with a false characterization, not to mention the damage done to the individual from the myths you help to create about them.

Michael Ford's post is a short criticism of Ayn Rand for supposed hypocrisy, but his post should have been much shorter, since, beyond making the accusation, he wrote nothing to properly defend it.  Ford's premise is that Ayn Rand is a hypocrite, because she accepted payments from Social Security and Medicare, after having denounced those government programs as legalized robbery.  Here are the most substantial quotes from Ford's post --

---

http://www.huffingtonpost.com/michael-ford/ayn-rand-and-the-vip-dipe_b_792184.html
https://archive.is/TSkLP

...
Miss Rand, famously a believer in rugged individualism and personal responsibility, was a strong defender of self-interest. She was a staunch opponent of government programs from the New Deal and Social Security to the Great Society and Medicare.
...
An interview with Evva Pryror, a social worker and consultant to Miss Rand's law firm of Ernst, Cane, Gitlin and Winick verified that on Miss Rand's behalf she secured Rand's Social Security and Medicare payments which Ayn received under the name of Ann O'Connor (husband Frank O'Connor).

As Pryor said, "Doctors cost a lot more money than books earn and she could be totally wiped out" without the aid of these two government programs. Ayn took the bail out even though Ayn "despised government interference and felt that people should and could live independently... She didn't feel that an individual should take help."

But alas she did and said it was wrong for everyone else to do so. Apart from the strong implication that those who take the help are morally weak, it is also a philosophic point that such help dulls the will to work, to save and government assistance is said to dull the entrepreneurial spirit.

In the end, Miss Rand was a hypocrite but she could never be faulted for failing to act in her own self-interest.

---

Of course, Ford does not accurately describe Ayn Rand's position, conveniently leaving out her reasons for being opposed to those plans, and why she would accept the payments — which is very telling, since it is easy to find out why she opposed Social Security and Medicare — see the chapter 'Collectivized Ethics' in her book 'The Virtue of Selfishness', for example —
      https://www.youtube.com/watch?v=2OvL1_89QDs

But notice this Ayn Rand quote from the June 1966 Issue of 'The Objectivist', where she clearly states that opponents of government welfare plans should never hesitate to accept benefit payments from those plans, in direct contradiction to Ford's claim above that Rand stated 'it was wrong for everyone else to do so' —

---

http://aynrandlexicon.com/lexicon/government_grants_and_scholarships.html
https://books.google.com/books?id=OsCSArJxIRwC&printsec=frontcover#v=onepage&q&f=false (from Chapter 7)

...
Since there is no such thing as the right of some men to vote away the rights of others, and no such thing as the right of the government to seize the property of some men for the unearned benefit of others—the advocates and supporters of the welfare state are morally guilty of robbing their opponents, and the fact that the robbery is legalized makes it morally worse, not better.  The victims do not have to add self-inflicted martyrdom to the injury done to them by others; they do not have to let the looters profit doubly, by letting them distribute the money exclusively to the parasites who clamored for it.  Whenever the welfare-state laws offer them some small restitution, the victims should take it . . . .

The same moral principles and considerations apply to the issue of accepting social security, unemployment insurance or other payments of that kind. It is obvious, in such cases, that a man receives his own money which was taken from him by force, directly and specifically, without his consent, against his own choice.  Those who advocated such laws are morally guilty, since they assumed the “right” to force employers and unwilling co-workers. But the victims, who opposed such laws, have a clear right to any refund of their own money—and they would not advance the cause of freedom if they left their money, unclaimed, for the benefit of the welfare-state administration.
...

---

Of course, as Rand stated so clearly in the quote above, it makes no sense to refuse benefits from some plan that you were forced to participate in — and especially for those who denounce the immorality of such plans, since their refusal would only aid the proponents (i.e. the cause) of the immoral use of force (the Michael Fords of the world).

Why would you double the injury by refusing money being returned to you, that was taken from you by force — especially given that your refusal would only serve to benefit those that sought to violate your rights to begin with?

And note that in accepting the payments, Ayn Rand did exactly what she recommended to others.

Ford's piece is comical, in that he writes as if he did some sort of investigative reporting by finding a source who stated that Ayn Rand took Social Security, when Rand publicly stated her view that opponents of such laws should never refuse payments from any forced government welfare plan.   If Ford had done just a little honest reporting he would have known this.

And never mind the missing attempt by Michael Ford to criticize Ayn Rand's actual position — he writes about the issue as if each of us were given the choice to participate.  But this is absurd on its face, given that every working person is forced to pay into government welfare plans.   Ford makes the blatantly absurd statement that Ayn Rand 'took the bail out', as if she were being given a gift, and had not been forced to pay into the plan.

Refusing payments from forced government welfare plans, because you had denounced them as immoral, would be the same as refusing to accept the return of your stolen car from the police, because you had denounced the thief as morally reprehensible, or the police as corrupt — i.e. it would be ludicrous.

It was also instructive to read the comments in response to Ford's post — the majority of readers accepted his statements uncritically, ignoring his avoidance of the glaringly obvious point that Rand, just like everyone else, was forced to pay into Social Security and Medicare, and would have only injured herself further by refusing payments from those plans.

If Micheal Ford is so concerned about integrity (not likely), he might start by examining its lack in him, and his willingness to spread falsehoods about others — not to mention his absurd position, that if we further injure ourselves in response to our rights having been violated, after having denounced the violation, that we are somehow demonstrating integrity.

Michael Ford, and the many others like him, may find Ayn Rand's integrity questionable, but that means little given their obvious displays of hypocrisy, and their complete inability to accurately describe what she advocated.

Pretending You're Helping People ...

Consider this idea for a government social welfare policy --

• Force every working person, regardless of their circumstances, to pay a fixed percentage of their income to the government as a payroll deduction, up to some maximum amount of income.
• The government would then pay part of the amount collected to current retirees over a certain age.
• Any amount that is not paid to retirees is to be spent immediately by the government, with an 'IOU' recorded for how much the government owes the plan, and so will have to collect again with taxes in order to help fund future payments to new retirees.
• The 'IOUs' will earn interest, and those interest payments will also be made by working people, via another payroll deduction.
• Explicitly state that the proceeds collected from the payroll deduction are paid into the treasury, and are not earmarked in any way, and that government is at liberty to spend them as it will.
• Explicitly state that no person has a right to any particular benefit from the plan, regardless of how much they may have contributed in payroll deductions.

Most people probably wouldn't support such a scheme, even if not for the obvious and blatant injustice of denying participants a specific right to a benefit after having paid into the plan, but also because of the problem of allowing government to simply spend any surplus on whatever it wanted.

But while most people would recognize some similarity between the description above and the current Social Security system in the U.S. (OASDI), the vast majority would probably not know that every bullet point listed above accurately describes Social Security.

It's exceedingly rare to hear anyone mention (or write about) anything but the first two bullet points, that Social Security uses a payroll deduction to fund people's retirement.

Not only are the last four bullet points rarely discussed, people are encouraged to believe exactly the opposite -- that because they've made payments to Social Security via the payroll deduction, they own an account in a 'trust fund', that holds an income producing asset.

But the Supreme Court of the United States has clearly ruled this is NOT the case.

In 1937 the Supreme Court of the United States ruled in Helvering v. Davis that the taxes paid into Social Security are not earmarked in any way, and that Congress is at liberty to spend them as it will --

---

  http://www.law.cornell.edu/socsec/course/readings/301us619.htm
  https://casetext.com/case/helvering-v-davis#.U6M_0fldXDs

   The argument for petitioners is that the tax moneys are not earmarked, and that Congress is at liberty to spend them as it will.
...
   Title VIII, as we have said, lays two different types of tax, an "income tax on employees," and "an excise tax on employers." The income tax on employees is measured by wages paid during the calendar year. § 801. The excise tax on the employer is to be paid "with respect to having individuals in his employ," and, like the tax on employees, is measured by wages.
...
   The proceeds of both taxes are to be paid into the Treasury like internal-revenue taxes generally, and are not earmarked in any way. § 807(a). There are penalties for non-payment.

---

In 1960 the Supreme Court of  the United States ruled in Flemming v. Nestor that an individual has no right to benefit payments, regardless of having paid into the plan --

---

  http://www.law.cornell.edu/supremecourt/text/363/603
  https://casetext.com/case/flemming-v-nestor#.U6NAGfldXDs

   To engraft upon the Social Security system a concept of "accrued property rights" would deprive it of the flexibility and boldness in adjustment to ever-changing conditions which it demands.
...
   We must conclude that a person covered by the Act has not such a right in benefit payments as would make every defeasance of "accrued" interests violative of the Due Process Clause of the Fifth Amendment.

---

Even the Social Security Administration has a page informing people about the Flemming v. Nestor ruling, and warning that there's no promise of any benefit --

---

http://www.ssa.gov/history/nestor.html
https://archive.is/kWlJ

Background to the Case:

The fact that workers contribute to the Social Security program's funding through a dedicated payroll tax establishes a unique connection between those tax payments and future benefits. More so than general federal income taxes can be said to establish "rights" to certain government services. This is often expressed in the idea that Social Security benefits are "an earned right." This is true enough in a moral and political sense. But like all federal entitlement programs, Congress can change the rules regarding eligibility--and it has done so many times over the years. The rules can be made more generous, or they can be made more restrictive. Benefits which are granted at one time can be withdrawn, as for example with student benefits, which were substantially scaled-back in the 1983 Amendments.

There has been a temptation throughout the program's history for some people to suppose that their FICA payroll taxes entitle them to a benefit in a legal, contractual sense. That is to say, if a person makes FICA contributions over a number of years, Congress cannot, according to this reasoning, change the rules in such a way that deprives a contributor of a promised future benefit. Under this reasoning, benefits under Social Security could probably only be increased, never decreased, if the Act could be amended at all. Congress clearly had no such limitation in mind when crafting the law. Section 1104 of the 1935 Act, entitled "RESERVATION OF POWER," specifically said: "The right to alter, amend, or repeal any provision of this Act is hereby reserved to the Congress." Even so, some have thought that this reservation was in some way unconstitutional. This is the issue finally settled by Flemming v. Nestor.

In this 1960 Supreme Court decision Nestor's denial of benefits was upheld even though he had contributed to the program for 19 years and was already receiving benefits. Under a 1954 law, Social Security benefits were denied to persons deported for, among other things, having been a member of the Communist party. Accordingly, Mr. Nestor's benefits were terminated. He appealed the termination arguing, among other claims, that promised Social Security benefits were a contract and that Congress could not renege on that contract. In its ruling, the Court rejected this argument and established the principle that entitlement to Social Security benefits is not contractual right.

---

And yet almost without exception, Americans view Social Security as a bedrock social program that should not be touched.

'Social Security' is misnamed -- it should be called 'Government Security', because it is clearly designed to give government power over people, rather than the reverse.

See this commentary written back in 1998, by Michael Tanner of the Cato Institute, where he points out that only private accounts can solve this problem --
  http://www.cato.org/publications/commentary/is-there-right-social-security

Prohibitions (or Pretending Human Nature is Malleable)

There is a very popular fallacy that government prohibitions can limit (or even eliminate) certain behaviors.  As evidenced by the support for the prohibition on drugs, and the inevitable call for stricter gun controls in reaction to public shootings.

But without even considering data on a specific issue, there is an obvious question that should be asked — How could any law prevent people from engaging in a certain behavior?  How could this possibly work?

If you consider the basic facts, it is absurd on its face to think that a government prohibition (short of implementing an Orwellian police state) will do anything but create a black market in the prohibited good or activity.  From murder to marijuana, there is a black market for everything that is prohibited by the government — and there always has been.

It is surreal to listen to those with a blind faith in some imagined magical power of law to regulate human behavior, when every government prohibition that has ever existed has obviously failed.

Advocates of gun control are especially prone to this way of thinking.  Over and over, we hear bizarre fantasy-based recommendations for some firearm restriction (like limiting magazine sizes, for example), as if someone who were willing to risk the penalty for murder, would not risk the penalty for possessing an illegal firearm.

When viewed in this way, it is nonsensical to talk about writing specific laws about gun features or even outright bans, as a way to prevent gun violence, since murder already has an outright ban with the most serious legal penalty, and that penalty obviously does not prevent gun violence.

Some might be tempted to respond, 'Well, why not eliminate laws altogether, if they don't act as a deterrent, and won't stop criminals.'

But that response is ridiculous — the point is not that all penalties should be eliminated, because they will not stop crime, but to recognize that nothing is gained by pointlessly multiplying laws to absurdity in the blind hope for an impossible effect.  Of course, every society should have a prohibition against murder, for example, but not an endless list of nonsensical laws dealing with how a murder is committed.

Studies of gun control legislation are especially interesting in this regard, because not only do they tend to ignore the obvious point that no prohibition has ever worked, but the even more obvious question — 'Why on earth would a would-be murderer be restrained by the much less severe penalty for violating a firearms restriction?'

With this in mind, any study is highly suspect that purports to show that some restrictive law, in and of itself, reduced some criminal activity.  Demonstrating that some set of laws actually altered human behavior, would require extraordinary evidence, since it would be an incredible exception, breaking a well established pattern of ineffectiveness.

Case in point:  The June 2010 paper, by Andrew Leigh and Christine Neill, regarding the 1996 gun buy back in Australia, 'Do Gun Buybacks Save Lives? Evidence from Panel Data'.

Here is the introductory paragraph from that paper, with the author's conclusion —

---

http://andrewleigh.org/pdf/GunBuyback_Panel.pdf
http://ftp.iza.org/dp4995.pdf
https://web.archive.org/web/20180219023005/http://andrewleigh.org/pdf/GunBuyback_Panel.pdf
http://archive.is/dit6e

In 1997, Australia implemented a gun buyback program that reduced the stock of firearms by around one-fifth. Using differences across states in the number of firearms withdrawn, we test whether the reduction in firearms availability affected firearm homicide and suicide rates.  We find that the buyback led to a drop in the firearm suicide rates of almost 80 per cent, with  no statistically significant effect on non-firearm death rates. The estimated effect on firearm  homicides is of similar magnitude, but is less precise. The results are robust to a variety of  specification checks, and to instrumenting the state-level buyback rate.

---

These two sentences from the introduction, should make any questioning reader very suspicious:

'We find that the buyback led to a drop in the firearm suicide rate of almost 80 per cent, with no statistically significant effect on non-firearm death rates.  The estimated effect on firearm homicides is of similar magnitude, but is less precise.'

This begs the obvious question: 'Why would this change in law change human behavior so radically?'   If this change actually took place, it would be absolutely magical.

And note that the Australian government did not ban firearms — only particular types of firearms — in particular, certain long guns.  This means the ability to commit suicide with a firearm was not even affected by the ban, making the claim that the firearm suicide rate would drop as a result of the ban that much more suspicious.

That is, why would eliminating just one method of suicide or homicide, cause such a large decrease in the rate of firearm suicides and homicides?

It is appropriate to wonder if there is a fallacy in this research, because the claim is so fantastic, and stands in stark contradiction to every other attempt to control human behavior.  Why would such a control work here, when other similar controls have never worked anywhere else.

The 'after this, therefore because of this' fallacy (post hoc, ergo propter hoc) is an obvious candidate for explaining the error in their conclusion, but one must look at the data cited by the authors to find out.

Here is a page from the Leigh/Neill paper showing a graph of the rate of suicides and homicides using 'Australian Bureau of Statistics' data —

---

http://andrewleigh.org/pdf/GunBuyback_Panel.pdf
http://ftp.iza.org/dp4995.pdf
https://web.archive.org/web/20180219023005/http://andrewleigh.org/pdf/GunBuyback_Panel.pdf
http://archive.is/dit6e

---

Well, clearly there is a problem with their conclusion, given that a downtrend in both the firearm homicide and suicide rates was in place years before the Australian gun buy back took effect.  Obviously, a gun buy back starting after 1996 (at the vertical line in the graphs), could not cause downtrends that began roughly 8 or 9 years earlier, at about 1987.

And notice the sudden drop in the firearm homicide rate at about 1987 in Figure 1 b. — it looks very similar to the drop that started in 1996, and continued through the gun buy back.  If you are tempted to explain the drop that started in 1996 with the gun buy back, then that raises the problem of explaining similar drops that occurred without a buy back — the author's own chart proves the buy back is not the likely explanation, since similar drops had already occurred without a gun buy back.

The authors acknowledge the established downtrend in the rates in their paper, but do not address the massive problem that it poses to their conclusion, that the Australian gun buy back caused a massive reduction in firearms deaths.

Also, pay special attention to footnote #8 from the quote shown below, stating that there are disagreements in the homicide statistics after 2002, and that the downtrend shown in the graphs above may be exaggerated, further undercutting their claim of a massive reduction in firearms homicides as a result of the gun buy back.  The accuracy of the data in this period is critical to their conclusion, but they dismiss the issue in a footnote —

---

It is also clear from Figure 1 that firearm deaths have been falling on a
consistent basis in recent decades, while a similar trend is not as clear in the
case of non-firearm deaths.8  Firearm deaths—both homicide and suicide—
are currently at exceptionally low levels by historical standards

8. Note again that there may be some inconsistencies in the homicide (death by
assault) statistics after 2002. The figures for 2004 and 2005 seem exceptionally low
and do not align with the justice statistics on homicides in those years.

---

So the 'after this, therefore because of this' fallacy (post hoc, ergo propter hoc) is just one of their problems.

And notice this chart from the 'Australian Institute of Criminology', from their 2012 collection of data —

---

https://aic.gov.au/publications/facts/2012
https://archive.is/7cLiN

---

This graph from the 'Australian Institute of Criminology' data does not separate firearms homicides, but note the maximum point on the graph occurred in 1999, a couple of years after the gun buy back occurred.  This further undercuts the claim that something significant happened to the homicide rate as a direct result of the gun buy back.

And of course, gun control plays on the public's sense of self-righteousness, so the conclusion from this paper will be repeated, without people doing anything to find out if the conclusion has any validity — this conclusion was already being repeated, since it is such a popular myth that gun restrictions reduce gun violence.

And here we go —
    http://www.washingtonpost.com/blogs/wonkblog/wp/2012/08/02/did-gun-control-work-in-australia/
    https://web.archive.org/...washingtonpost.com/news/wonk/wp/2012/08/02/did-gun-control-work-in-australia/
    http://archive.is/kc5Hr

What is it about this issue that makes it so satisfying to pretend some policy works, regardless of the evidence?

What can we possibly gain, by deceiving ourselves that simple policy changes will solve the difficulties of human nature?

It is really too bad that more academics will not try to educate the public about what works, rather than presenting questionable (at best) research like this, that appears to have an agenda, in that a sweeping conclusion is drawn which is obviously unsupported by the data presented.

But here is a somewhat surprising article on time.com, in that it gives a more objective treatment of the Australian gun buy back, and makes some of the same points I made in this post —
    http://content.time.com/time/world/article/0,8599,1736501,00.html
    https://web.archive.org/web/20180219023838/http://content.time.com/time/world/article/0,8599,1736501,00.html
    http://archive.is/B2nRI

You're Mostly Luck (or How to Justify an Entitlement Mentality)

In 2012 Michael Lewis got a lot of attention for the commencement speech he gave at Princeton, in which he claimed that being ‘lucky’ creates an obligation.  Here are excerpts from his speech --

---

https://archive.is/oM6Es
http://www.princeton.edu/main/news/archive/S33/87/54K53/
http://www.pbs.org/newshour/bb/entertainment-jan-june12-michaellewis_06-13/

...
One night I was invited to a dinner, where I sat next to the wife of a big shot at a giant Wall Street investment bank, called Salomon Brothers.  She more or less forced her husband to give me a job.
...
The book I wrote was called "Liar’s Poker."  It sold a million copies. I was 28 years old. I had a career, a little fame, a small fortune and a new life narrative.  All of a sudden people were telling me I was a born writer.  This was absurd.  Even I could see there was another, truer narrative, with luck as its theme.  What were the odds of being seated at that dinner next to that Salomon Brothers lady?  Of landing inside the best Wall Street firm from which to write the story of the age?  Of landing in the seat with the best view of the business?  Of having parents who didn't disinherit me but instead sighed and said "do it if you must?"  Of having had that sense of must kindled inside of me by a professor of art history at Princeton?  Of having been let into Princeton in the first place?

This isn't just false humility.  It's false humility with a point.  My case illustrates how success is always rationalized.  People really don’t like to hear success explained away as luck — especially successful people.  As they age, and succeed, people feel their success was somehow inevitable.  They don't want to acknowledge the role played by accident in their lives.  There is a reason for this: the world does not want to acknowledge it either.
...

Life's outcomes, while not entirely random, have a huge amount of luck baked into them.  Above all, recognize that if you have had success, you have also had luck — and with luck comes obligation.  You owe a debt, and not just to your Gods.  You owe a debt to the unlucky.
...

https://www.youtube.com/watch?v=CiQ_T5C3hIM

---

The public reaction was fascinating, because Lewis received praise for his comments, as if he were arguing against an entitlement mentality.  But he confuses the nature of responsibility (very badly) and assumes that if a beneficial accident befalls you (luck), other individuals who had absolutely nothing to do with your good fortune, somehow have a right to benefit as well.

And by emphasizing luck as a critical element of success, he effectively undercuts the nature of individual rights, while at the same time justifying an entitlement mentality.

If luck really does create an obligation, then everyone is entitled to part of the good fortune of anyone who is in any way better off than them, if any accidents contributed to the success of the one who is better off.  This means no one has a right to any advantage that is a result of anything they are not directly responsible for — anyone worse off has a claim against them, and they have a claim against anyone better off.

Such views certainly will not help combat the public’s tendency to think in terms of entitlement.

If you read Lewis's book 'Liar's Poker', you will know why he thinks ‘luck’ is so important — for him, it really was huge — his first big job (and the fodder for his first book) came from him simply happening to be in the right place at the right time.  As he also stated in his Princeton speech, he happened to sit next to a helpful person at a social engagement (the wife of a Wall Street investment banker) — it is actually that person he owes a debt to, and not all the so-called 'unlucky' people who were not sitting there and did not get that job.  So it is not surprising that he would want to pretend that other successful people were also primarily lucky.  Hard won successes make his success look silly and unearned by comparison.

I think I know why this seemed to resonate with so many people — as much as some people may say it is an argument against an entitlement mentality, the attempt to emphasize luck will help to engender that very attitude, since there will always be some group or class of people that the majority of people can view as 'luckier than me' — but more than that, it is a rationalization that denigrates the hard earned success of people that were unlucky.  Isn't it flattering to think that all the people that are more successful than I am were just luckier, and that I would be just as successful as them, if I had their 'luck'.

It is certainly obvious that good fortune can be enormously helpful.  For example, being born in a relatively free country with opportunities, and the mental capacity to take advantage of those opportunities, is huge — but millions of people are born into such circumstances and can be considered ‘lucky’ by comparison to millions of others around the world, but even with such ‘luck’ they are never able to achieve any kind of success — clearly, individual traits, like determination and a willingness to work hard, are at least as important — and there are obvious examples of individuals who are clearly ‘unlucky’ in many ways, and yet achieve more than many others who would be considered ‘lucky’.  Luck obviously helps, but it's just as obviously not decisive in an individual's success, in anything but the most extreme sense (like not being born in a North Korean prison camp).

Thomas Sowell’s book ‘A Personal Odyssey’ is just one example that stands as a stark contradiction to this way of thinking.  Certainly, no reasonable person would describe Sowell's success as largely due to luck — he had to fight all the way.  I cannot help but wonder what would have happened to Michael Lewis (or myself) had we been dealt just some of Sowell's 'luck'.  But by Michael Lewis's way of thinking, Sowell must be lucky, since he did achieve success, and, according to Lewis, 'life's outcomes have a huge amount of luck baked into them'.

Clearly, Michael Lewis's perspective on success, is not a good one to use in judging the particular successes of others.

When I Advocate Hurting Others, It's OK ...

But not when they advocate hurting me ...

The 2014 issue with Brendan Eich highlights the contradiction in the positions of those who favor a large intrusive government, but then object to some intrusive policy, and those who support it, when they view that policy as hurting a group of people to which they belong, or are sympathetic to.

Brendan Eich stepped down as the CEO of Mozilla after just a couple of weeks when it was discovered that he was one among many contributors supporting California's Proposition 8 (ban of same-sex marriage), back in 2008 —
  http://www.computerworld.com/s/article/9247281/Mozilla_employees_call_for_CEO_s_resignation
  https://archive.is/qou57

Many comments critical of Eich were made in the media, and a number of Mozilla employees used Twitter to voice their disagreement with the appointment of Eich as CEO of Mozilla.

Consider this quote dated March 27, 2014 from Paula Le Dieu, who was then a senior Director at Mozilla --

---

http://archiville.org/2014/03/27/mozilla-and-i/
https://archive.is/wGB0F

I am an employee of the Mozilla Foundation.  My colleagues at the Foundation and the broader community we support are an extraordinary group of people aligned around a mission for an open and inclusive web.  We work tirelessly to create the conditions for everyone to thrive in an age defined by the web.  My colleagues spend their lives actively and vocally advocating for open, inclusive societies through the web.

I can’t walk away from these people nor the cause I share with them nor the potential for Mozilla to once again be known as the champion to all but neither can I continue to earn my living from Mozilla while it is seen to exclude and alienate anyone.  So as of today, I am on unpaid leave.  Hardly a brave act but one that I can take that doesn’t break my heart at the thought of permanently severing my connection to an organisation that I hope will very soon find its way back to the core values that I hold so dear.  I will continue to work next to my colleagues for an open, inclusive web, continue to help Mozilla through these difficult days but I will do so as a volunteer for as long as I can.

---

Note this sentence from the quote above —
    '... but neither can I continue to earn my living from Mozilla while it is seen to exclude and alienate anyone.'

How many people besides Paula Le Dieu can't tell that the actions of a particular individual don't define an organization that individual may belong to. If the Mozilla organization doesn't want to be seen to exclude anyone, then the organization shouldn't exclude anyone (they might start with not excluding Brendan Eich).

But notice the long list of extremely popular government policies that are specifically designed to hurt some number of people, with the intent that there will be a net benefit to the population.

It rings pretty hollow for people to attack someone for supposedly 'excluding and alienating' others (a common refrain), while at the same time ignoring, or supporting, so much of popular policy that has the same effect.

Right or wrong, California's Proposition 8 is just another example of the widely accepted notion that government can penalize one group of people, as long as there is some vague pretext of helping someone.

When Religious believers express their opposition to same-sex marriage, they often speak in terms of preventing a cultural norm that supports society through family formation, from being turned into something that will encourage a lifestyle that undermines that value.  Right or wrong, their stated goal is most often phrased to prevent harm, not discriminate.

And just to name a few other examples that follow this same line of thinking, consider Social Security, Medicare, progressive income taxes, drug prohibitions, etc. — all of these policies hurt some group of people.

Would anyone really try to argue that progressive income taxes help everyone, for example?

Certainly some would make the claim that wealthy people receive more benefit from government than those less well off, and so the wealthy should pay a higher tax rate, and not just a higher total amount — but if it's true that the wealthy receive a greater benefit from government, this unfairness should be eliminated, not simply adjusted for in a sloppy way with a tax penalty.

And would anyone really try to argue that Social Security helps everyone, for example?

Notice that Social Security already hurts a majority of people, in that the majority of current recipients would be better off had their contributions simply been put in bank CDs —
   http://research.stlouisfed.org/publications/review/05/03/part1/GarrettRhine.pdf

And even if Social Security didn't perform badly, it would still hurt the people that could better manage their savings without the intrusion of a forced government Ponzi scheme.

And here's an issue that really drives the point home, that the vast majority support the principle that a majority can restrict the freedoms of all of society, if there's some supposed benefit, even if some people are certainly harmed — the ban on organ sales.

The fundamental principle underlying the popular support for a ban on an organ market is perfectly consistent with what appears to be the position of opponents of gay marriage (and maybe Brendan Eich's).

The particulars of the two issues are completely different, but the underlying principle is the same — many argue that since they cannot see any obvious benefit to an open market for organs (or whatever), that it is appropriate to have government enforce a complete prohibition on that activity, denying every individual the right to make the choice, however well informed they may be.

So, the position many advocate, actively hurts those people that are capable of using an organ market effectively — especially those in desperate need of a transplant.

Without knowing those who take these kinds of positions, it's impossible to question their motives — one must assume they're convinced that any benefits from the freedoms or rights they are attempting to eliminate would be overwhelmed by negative consequences, and that they are not trying to discriminate against those who would benefit — but that's exactly the argument religious conservatives often make in opposition to gay marriage.   They claim many more people would be harmed by gay marriage than would be helped.

So the point here isn't to attempt to give some kind of defense of Brendan Eich (or any other opponent of gay marriage), but to point out that it's hypocritical to support a government ban on one activity based on a supposed net negative result, while at the same time criticizing others for doing so.

To put it simply, if you support government action that violates the rights of others by initiating force against them (for whatever reason), expect government to do the same to you, and accept it without complaint.

Regarding marriage, the fairest course of action would be to simply eliminate all laws that make a distinction regarding marriage.  It's primarily a religious tradition, and so the government shouldn't be regulating it.

From that point of view, supporting a ban on same-sex marriage may actually be the best course, because it helps to limit the number of people taking advantage of a law that by definition is intended to make a distinction that 'excludes and alienates', as Paula Le Dieu put it.  Of course, that's the whole point — those who want to be in a same-sex marriage are not upset because current laws 'exclude and alienate', they're upset because the law 'excludes and alienates' them.   Obviously, if the law didn't provide some special privilege, no one would care.

And note that the popular support for a total prohibition of organ sales, when compared with other popular policies, is an especially dramatic example of public hypocrisy regarding the harm caused by various government policies, since the limited supply of organ donors actually KILLS people.  One certainly can't make even a remotely similar claim about prohibiting same-sex marriage.

It really is laughingly ridiculous that people would attack someone based on the notion that a policy they advocate 'excludes' some group of people.  'Excludes' people?  You have got to be kidding — of course, the intent is to hurt some number of people, with the hope that there will be a net benefit to the population — all popular social welfare policies (especially those supported by so-called progressives) share this feature.

If you can't (or won't) argue from a strict concept of individual rights — that individuals have a right to exist free from coercion — then you do not have a consistent basis for attacking any policy, and you certainly can't attack a policy because it violates someone's rights, when violating rights is central to your vision of what government should be doing.

Violating individual rights, however irrational, is perfectly consistent with the modern day view of democracy — which in popular usage is just a euphemism for majority rule.  The founders of the United States knew that a pure democracy is in no way consistent with freedom — as evidenced by one of the main features of the U.S. Constitution: its identification of general principles that cannot legitimately be subject to a vote, and to establish branches of government that would be difficult for a majority to capture, and that would check each other to make change difficult (which also makes the often heard complaints about grid-lock in government especially ridiculous).


Regarding organ donations, here is an interesting piece from Virginia Postrel, who donated one of her kidneys to a friend —
   http://vpostrel.com/articles/here-s-looking-at-you-kidney

She also makes some good points here regarding the harm done by not allowing payments to organ donors —
   http://www.theatlantic.com/magazine/archive/2009/07/with-functioning-kidneys-for-all/307587/

Nothing Gold Can Stay

Nature’s first green is gold,
Her hardest hue to hold.
Her early leaf’s a flower;
But only so an hour.
Then leaf subsides to leaf.
So Eden sank to grief,
So dawn goes down to day.
Nothing gold can stay.

  — Robert Frost, 1874 - 1963

---

Robert Frost's famous poem has nothing to do with the U.S. Constitution, but I can't help but feel a similar sentiment about it.

Clearly, Thomas Jefferson was right when he wrote this to Edward Carrington back in 1788 —

---

http://founders.archives.gov/documents/Jefferson/01-13-02-0120

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

---

The U.S. Constitution is such an anomaly in human history, and given the normal dictatorial state of most governments, it's shocking that most Americans show such little appreciation for the limits the Constitution places on government.

Think about one of the main purposes of the Constitution, and what that purpose says about the intentions of the founders.  The U.S. Constitution writes into law a procedure for regularly replacing members of government — that is, the U.S. has a legal requirement that politicians re-compete for their jobs at regular intervals.

But note that today, political challengers have very little chance of defeating an incumbent in an election.  The public has essentially established a permanent ruling class, even though the U.S. Constitution was clearly written to prevent it.  Who's fault is that?

Here are bar charts showing the reelection rates for the U.S. House and Senate going back to 1964, from the 'Center for Responsive Politics' —

---

https://www.opensecrets.org/bigpicture/reelect.php

---

And notice that the vast majority of Americans believe any law that seems intended to help promote the 'general welfare' is constitutional.  But why would the founders go to the trouble of enumerating powers in Article 1, Section 8 of the Constitution, if the intent were for government to do anything, as long as a majority could claim the 'general welfare' were supposedly being served?

So then, what are the enumerated powers in Article 1, Section 8 —  a hint at how to get started?

Pretending You Owe Yourself (or The Mother of All Moral Hazards)

Regarding Social Security, many people seem to believe that it's meaningful to talk about owing yourself money.

But consider what that means.  A debt is an asset to the lender (lien holder), since it generates income to them (the borrower is paying them to use their money).  But a debt is a liability to the borrower, since the debt is an expense that must be paid from the borrower's income.  In short, the debt makes the lender wealthier, and the borrower poorer.  So, if one wants to treat a debt to themselves as an asset, they also have to acknowledge that same debt is a liability, and so they cancel each other out for accounting purposes -- there is no net gain to you from a debt to yourself.

So why not simplify the issue and not try to pretend that you owe yourself something?  Why engage in silly delusions, such as, 'I own a valuable asset in the money I'm going to pay myself'?

Saying 'my bank account is empty, but I owe myself One Trillion dollars', is the same as saying, 'my bank account is empty.'

This is the position of the Social Security trust fund.  The so-called trust fund holds 'special issue' government bonds, which are not available for purchase or trade by the general public.  Since they are not available for trade (at least as of 2014), they are not subject to the normal price fluctuations of the publicly traded government securities, as a result of economic conditions, interest rate changes, etc.  Of course, if the government needed to raise cash by selling them on the open market, their price would be determined by the market, and not the government's statement of their value, so this distinction is only a point of information -- it doesn't make the bonds safer to hold, or reduce taxpayer liability for the principle and interest owed on the bonds.

The main point is, ALL government securities are a claim on future tax receipts.  This means that U.S. taxpayers owe the value of the government bonds held by the Social Security trust -- the bonds are a liability to U.S. taxpayers, not an asset, since they are an expense that must be paid from their income.

Here's a quote from an unnamed senate aide of Senator Rob Portman (R-OH), from an article by Mike Patton on forbes.com, from 6/12/2013 on the solvency of the Social Security trust.  This a clear statement of the point, that people are trying desperately hard to ignore:

---

http://www.forbes.com/sites/mikepatton/2013/06/12/is-the-social-security-trust-fund-solvent/

“The Social Security Trust Fund represents a bonds-backed promise to finance a certain level of Social Security spending.  However, it does not provide economic assets to fulfill that promise.  While the trust fund represents an asset to the Social Security program, it represents an equal liability to the Treasury which must come from new taxes, spending cuts, or additional borrowing.”

---

Many people detest the idea of putting funds from the OASDI payroll deduction into any stock market investment, as part of a plan to transition to private accounts to replace Social Security.  But notice how ridiculous this position is, if you keep clearly in mind the actual position of the Social Security trust fund, in that it just contains a promise to tax people to pay its debt.

That is, had all of the surplus payroll deductions been invested in the Dow Industrials over the worst possible time frame in recent years, say from the high of 2007 to the low of 2009, which represents about a 50% loss (terrible), at least the Social Security trust would still have 50% of the original surplus from the payroll contributions -- rather than a total loss, as it currently stands, with government having spent all of the surplus contributions.  Had the total of the surplus contributions gone into the stock market over a terrible time frame, the Treasury would only have to re-raise 50% (or whatever the loss was) through taxation, rather than the TOTAL amount.

As much as people view the stock market as a risky investment, it's much less risky than giving the government the money to manage.

Of course, there's no real surprise here -- it would be more shocking if Social Security were not failing, given the perverse incentives in play.  Of course, the money was spent by politicians on vote buying activities (rather than held for future beneficiaries), since the real victims are future generations that can have no effect on the careers of current politicians.   This is the mother of all moral hazards -- politicians, as well as the public at large, have nothing to lose by pushing this debt onto future generations.

Indeed, how is it even possible to make a convincing case that this was not the point?