Monthly Archives: June 2009

Knowledge is Dispersed and Incomplete

Posted on by razma766
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Here’s a letter I recently sent to the Midland Daily News

To the editor:

There have been several different opinions on the infrastructure funding for Michigan.  Some believe that we need a higher degree of repairs, while others feel that we cannot afford any additional repairs.  Regardless of what the “right” answer is, we may first want to examine the process for determining infrastructure spending.

Have you ever wondered why we don’t have individuals bickering over how much money should be spent on the creation of peanut butter, computers, clothing, paper, glass, etc…?  Or at what quality these respective goods should be produced.  Or where they should be distributed.

There are sound reasons for the absence of bickering in these markets: all the transactions are made voluntarily by millions of individuals who pursue what they value most.  No one person determines the “right” number.

Infrastructure funding, on the other hand, is determined by a few politicians.  Most, if not all of these politicians have driven on no more than 1% or 2% of all the roads in Michigan.  The bulk of their knowledge on infrastructure comes from the bickering of their constituents.  Can you imagine if a similar process were used to determine the production of all goods and services?

It would be childish to assume that any one individual, or small group of individuals wields the power to gauge the preferences of all the citizens of Michigan and miraculously generate the exact dollar amount for funding.

Sincerely,

Kurt Bouwhuis

Losing Faith (Part 2)

Posted on by adamrule
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This is the continuation of a previous post in which I showed that living out one’s faith in providing social services has been the root of a 10% better success rate for Faith-Based Organizations (FBOs) than similar non-faith organizations.

Government funding requires FBOs to do the impossible, stay successful and lose their faith.  Current law states that organizations receiving government funds cannot perform religious acts at the same time or place as their social services.  However, it is the inclusion of faith that makes FBOs successful.

As a result, FBOs have had to do extra accounting to make sure government funds do not go toward their religious activities.  Some organizations that are faith-based only by affiliation have chosen drop religious programs altogether.  Even those that separate accounts and hold onto their faith elements are prone to mission shift.

In 1974 Catholic Charities USA received 24% of its funds from the government.  That figure rose to 52% by 1979, and today has leveled off around two thirds of their total funding.  With this increase has come a change in programming and a redefinition of the organization’s mission in secular terms.

As government grants were offered for alcohol and drug treatment programs, Catholic Charities programming followed. In 1995 its Massachusetts office in focused 80% of its funds on substance abuse services that benefited only a quarter of their clients.  A 2001 Cato institute report found the St. Francis House in Boston, once staffed largely by Franciscan Brothers, now avoids hiring “overtly religious people” at the same time filling 52% of its budget with state contracts.

Other issues arise from government funding.  FBOs are called on to professionalize their staff, who in many cases are former clients.  FBOs have found that the best person to rehab a drug addict is a former drug addict who, though not having a masters in counciling, knows the challenges their client will face.

By using this model, and being extremely clear that Jesus is the answer to leaving a life of drugs, Teen Challenge has been extremely successful in its mission to rehabilitate those with drug addictions.  Time Magazine and Northwestern University found Teen challenge to have a 70%-80% success rate, a figure dwarfing that of secular organizations.  The Northwestern Report concluded that,

The “Jesus Factor” is still the only true answer to the drug problem.

It is faith and local volunteers, not training, not professionalism, and not high salaries that has had the greatest sucess in solving social problems.  Government funding pulls down these two pillars of FBO success.  Charity should be left up to private citizens who invest in the communities they live in and use everything they believe in when serving others.

Adam Rule – MCPP Intern

Want to Trade with Bandits? (Answered)

Posted on by razma766
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idea_bulbKurt Bouwhuis, Mackinac Center Intern

This post will answer the question I posed in my last post, which was: Is the market capable of dissolving violence and addressing imbalances in power, or does the government need to step in?

Answer:  The market IS capable of dissolving violence and adjusting to the imbalances in power.  In the scenario I presented yesterday, the interior communities solved the issue of violence by establishing a system of credit.  The system of credit worked like this – the interior communities would initially not harvest any goods.  When the middlemen came to trade (with bigger guns), the individuals of the interior community would not have anything of value in their villages.  The interior community members would record the demands of the middlemen, and take their money in advance.  The middlemen would leave, and the villagers would go hide the money, and harvest the exact quantity of goods demanded.  At a later time, when the middlemen came back, the villagers would provide the middllemen with the goods they had already paid for.

At this point, the middlemen have no incentive to kill the interior community members.  The middlemen have already paid for the goods they are receiving, and there is nothing of value to steal.  Additionally, the middlemen do not want to go out and harvest the goods themselves, so they have an incentive to keep the interior community members alive.

Imagine the government alternative – Hiring policeman to stand on guard all day.  Under a system of policeman, there are still incentives for middlemen to attack the interior communities (if the potential loot was big enough).  There is also the possibility of bribes and corruption.  In either case, the police system diverts resources away from productive activities and may not even solve the problem entirely.

Losing Faith (Part 1)

Posted on by adamrule
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When running for the presidency in 2000, George Bush pushed for the inclusion of faith-based organizations (FBO’s) in the government grant making process.  He targeting social programs, arguing that faith allowed these organizations to reach people in a way government simply could not.  FBOs had traditionally been excluded from receiving grants because they practiced discriminatory hiring based on faith.

Though legislation in 1994 opened the government’s coffers to FBOs, it took Bush’s 2001 executive order creating the Office of Faith Based and Community Initiatives to get significant money flowing.

In the early months of his presidency, Obama followed Bush’s lead with an executive order of his own, essentially extending Bush’s faith office under the new name of Faith Based and Neighborhood Partnerships.

Community based social organizations are more effective in achieving their ends than larger government programs because they have a vested interest in the area in which they work.  If they can decrease local poverty, drug abuse, and criminal activity they will be directly benefitted by a safer, more stable community.

FBOs go a step further.  Not only are workers benefitted indirectly through the community, they are also benefited on a more personal level as they serve in response to a call from God.  When they help others leave a life of drugs, crime or poverty, FBO workers get the added bonus of obeying God’s command to reach out the downcast and impoverished.

A similar benefit is given to FBO clients, who through these programs respond to God’s call to leave drugs, crime and injustice toward others.  There is an extra motivation to succeed when one believes that by doing so, they will be pleasing God.

This extra benefit of faith comes to the tune of a 10% higher success rate for FBOs than community based organizations not based on faith.

But what has government funding done to this structure?  Look for part two in the next few days.

Adam Rule – MCPP Intern

Want to Trade with Bandits?

Posted on by razma766
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Peter Leeson1Kurt Bouwhuis, Mackinac Center Intern

Peter Leeson, professor at George Mason University, has conducted extensive research on pirates revealing some very interesting economic insights.  He recently published a new book on this very topic, titled The Invisible Hook.

I was recently reading through one of his papers, titled Trading with Bandits, where he presents an interesting dilemma faced by traders in Africa.  In the early to mid 1800′s, in upper Zambezi and Kasai, there existed settlers along the Angolan coast.  The settlers employed middlemen who were hired to trade and transport goods from the interior communities.  The interior communities were made up of many small tribes with no government oversight – only various tribal leaders who enforced informal rules.

The interior communities generally harvested ivory, beeswax, and wild rubber for trade.  The middlemen brought tobacco, gin, beads, shells, and brass, which were used as body ornaments, cloth, and firearms.  The middlemen were the sole suppliers of firearms to interior communities, which created a large incentive for plunder.  The interior communities were presented with a limited number of guns in trade, in order to create a large imbalance in weapons.  Within a short time, the middlemen began to resort to plunder, choosing to steal rather than trade.  This leaves us with an interesting question:

Is the market capable of dissolving violence and addressing imbalances in power, or does the government need to step in?  In tomorrows blog post, I will reveal the answer to this question.

Grandma Annie Oakley

Posted on by jskorup
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-Jarrett Skorup

According to the AP, after being told by her daughter that there was an armed intruded in their home, 77-year-old Doris Gatchell pulled out her gun and sent the man running.  The suspect faces 30 years in prison and heavy fines for armed burglary in different parts of Maine.

This crime, we can guess, would never have been prevented in any of the big cities in America as a result of their stringent gun laws.  Allowing people the freedom to carry guns doesn’t mean they will necessarily do so, but at least criminals would have to consider the possibility. 

The ironic thing about anti-gun legislation is that they make the weakest of those the most vulnerable to crimes (when given the choice, grown fit men aren’t typically targeted).  As the saying goes:  “God created man and woman. Sam Colt made them equal.” 

And granny can speak to that.

Put that in your pipe and smoke it!

Posted on by pontoppidandk
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D. Pontoppidan, Summer Fellow at the Mackinac Center for Public Policy

Oscar Wilde once said that he’d rather have an interesting vice than a boring virtue. Yet to Bill Apple, [letters, NY Times, June 13] the only viable solution to this country’s smoking problem is a “Prohibition-style tobacco ban”. People cannot be trusted to make decisions in their own interest. Smoking, he argues, is the best example of this, since the dangers of smoking are widely-known, and people still choose to smoke.

However, there is much to suggest that Bill Apple himself is merely blowing out smoke. In fact, smoking in itself is not at all proven dangerous , just as eating fast food with moderation or drinking on occasion does not make one obese or an alcoholic. The fact that some choose to smoke excessively, on the other hand, is a result of different time preferences, not of poor choice.

If we approach the problem from an economic point of view, and borrow a famous example from Eugen von Böhm-Bawerk we can imagine a farmer with five sacks of grain, and no way of selling them or buying more. There are five possible uses: as basic feed for himself, food to build strength, food for his chickens, an ingredient for making whiskey, and feed for his parrots to amuse him. If the farmer loses one sack of grain, he will simply starve the parrots, rather than reducing every activity by a fifth, since they are of less utility to him than the other four uses. His decision is not made with a view of the big picture, but considering the marginal utility of each sack of grain.

His high time preference thus values present consumption more than the long-term goal of keeping the parrots. Similarly, disenfranchised groups in particular see an affordable pleasure in smoking cigarettes, in spite of living a toilsome life. Prohibiting tobacco would only serve to further marginalize them from society.

Obama Blocks Access to White House Logs

Posted on by razma766
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obamaFrom Reason Magazine

Another blow to transparency: The Obama administration is fighting to block access to names of visitors to the White House, taking up the Bush administration argument that a president doesn’t have to reveal who comes calling to influence policy decisions. Despite President Barack Obama’s pledge to introduce a new era of transparency to Washington, and despite two rulings by a federal judge that the records are public, the Secret Service has denied msnbc.com’s request for the names of all White House visitors from Jan. 20 to the present.

Detroit: A Glimpse into America’s Future?

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-Jarrett Skorup

Detroit was arguably the most prosperous city in the world in the 1920s. Today, however, whole neighborhoods are abandoned; still-occupied neighborhoods are in a frightful state of decay; some of the streets are so rough you would think that the military used them for target practice. Most startling is that the median sale price for a house in the once-thriving city of Detroit this January was $7,500. Yes, 75 HUNDRED, not “thousand.” You can buy two or three houses in Detroit today for the price of one new car.

So writes Professor Mark Hendrickson of Grove City College.  He explains how the unions and government took over most of the industry of his hometown much earlier than in many other cities in America.  The mayor and city council began to see government as a mechanism for redistributing wealth and the city became known for corruption (“rife with nepotism and favoritism”).

Taxes were raised causing people to leave Detroit.  And when they moved out and had to commute to work, taxes were put on income commuters made in the city limits.  Businesses uprooted, leaving the once-prosperous city.  Education became more and more unionized and soured.  Crime soared.  The downward spiral continued.

We should keep these self-inflicted tragedies in mind in considering whether to assent to the massive expansion of government that President Obama and his congressional allies are seeking. We don’t want the whole country to share the fate of Detroit.

794 Years Ago…

Posted on by ewreynolds
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www.clevelandpeople.com

www.clevelandpeople.com

Per Scriptum,

E. Wesley — Mackinac Center Intern

June 15th should go down in history as a cornerstone in the freedom movement in the West. Although the Magna Carta didn’t apply to all men and women when first crafted, it implemented the concept of fundamental human rights into political reality. In the West, it was arguably the first step towards forming a society with explicit rights for humanity, and limitations on how a ruler can rule over his subjects. We ought to remember the strife that determined the fate of such a vital document.

In 1204, King John of England was forced to concede the loss of his French provinces. However, he was determined to regain popularity among the English nobles by continuing renewed military campaigns with France. This necessitated a rise in English taxes to support the foreign wars, which only led to more dissatisfaction among the nobility. Meanwhile, John also disagreed with Pope Innocent III over the Canterbury archbishopric election. The Pope threatened to depose John in 1212, but stopped when John (as a necessary compromise) offered England as a fief to the Church. John, in attempting to save his own power, now became a puppet.

The nobility, now completely enraged at John’s most resent political blunder, began to form a confederacy. Ironically, Langton as Archbishop of Canterbury revealed a copy of Henry I’s charter of freedoms in a meeting of nobility in London. The nobles swore to renew the observance of this charter. Soon, the confederacy spread throughout England and comprised the vast majority of the all the nobility. A much larger meeting was called at St. Edmundsbury by Langton, and the results were the same. It was agreed that after Christmas, they would trek to London for a “petition.” In the meantime, they armed themselves.

At the festival of Easter, when the nobles expected to hear the King’s reply to their petition, 2,000 knights in majestic array (and countless others of inferior rank) formed at Brackley, 15 miles from Oxford. The King, in an angry rant, refused to limit his power. Not a good idea! The confederacy then chose Robert Fitz-Walter as their general. They besieged Northampton castle (though unsuccessfully), marched through the gates of Bedford castle, and rode on to London. Upon reaching London, the nobles issued compulsory orders to other loyal barons to join the fight. The confederacy trashed the King’s palaces and parks, and “loyalists” flocked to their ranks all the more as an opportunity to make their secret hopes of freedom a reality. King John, having only 7 knights left, finally capitulated. In Runnymede, on June 15th 1215, John signed the “Great Charter” into law.

The Magna Carta’s influence is extraordinary. It laid the foundation for local elections in England (originally, only for the nobility). When England began to institute the “election” into society as a legitimate means of governance, it simultaneously spelled doom on its class system. Noble councils became parliaments, and rights to lords became rights to mankind. America would then take these seeds and plant them in a new world.

Pursing Wealth, Not Money

Posted on by adamrule
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Maybe all of us became enamored of making money from money, money from money from money, and we forgot that making things, real, innovative things, matters.

So said Dow Chemical’s CEO Andrew Liveris today at The National Summit in Detroit.  The Summit, hosted by the Detroit Economic Club, is bringing together top business leaders and politicians to determine the next steps that need to be taken to bring a remedy to America’s shaky economy.  The program looks to focus on the areas of technology, energy, environment, and manufacturing.  The hope is that this meeting of ideas will produce a list of top issues in each area as well as top actions that need to be taken in the near future to thoroughly address these problems.

What is so interesting about Mr. Liveris’ quote is that it hits the foundation of wealth.  A country’s wealth is found not in the amount of money it has, but in the amount and quality of goods and services it provides.  If the summit can bring about a revolution in the American economy that increases manufacturing, and advances technology to truly achieve greater wealth, it will go far to reverse the current crisis.

Adam Rule – MCPP Intern

Competiton in the Church

Posted on by adamrule
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As of late my view of economics has been narrowed by report after report of “$_____ billion appropriated for ______” and “$____million could be saved if we just_____” to strictly contain dollar amounts.  Liberty however is a basic human right not limited to the scope of the financial sector, and the need to economize can be found in nearly every area of life.  Consider then, the church.

World Magazine’s Marvin Olasky recently conducted an interviewwith John Micklethwait and Adrian Wooldridge, editor-in-chief and Washington bureau chief of The Economist regarding their latest book God is Back.  Despite secularization theory, these two men have found that religion looks to be on the rise and that Christianity seems to be doing quite well compared with many other faiths.

The reason for the success of the church?  Micklethwait and Wooldridge claim it is competition.  Having such a root in free societies, churches are forced to be accountable to parishioners for both the quality of their services and an efficient use of resources.  If a church-goer does not think a specific church is making good use of their tithes they are free to find one that will. 

These findings should come as no surprise.  All over the world, and especially in countries like China that have strict church control by the state, it is underground churches that are flourishing.  These unsanctioned institutions provide believers with organizations they can have a say in and hold to account, in strict contrast to state regulated institutions that largely dictate what the church may do.  The desire to worship freely apart from state control was in large part what sparked American colonization. 

The need for freedom in not restricted to markets or politics.  Competition is not something that should be shied away from, even in religion.

Adam Rule – MCPP Intern

Gravel Roads and Budget Cuts

Posted on by jskorup
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As a Classical Liberal, I have long been accused of wanting to send America (and the world) back to the olden days of the 19th Century and earlier.  Apparently a civilized society and limited government cannot go hand-in-hand.  Ironically, as a result of too much government spending, some Michigan counties have had to give up what are normally a basic government provision:  roads.

As a result of lowering tax revenues, some Michigan counties are turning once-paved streets into gravel roads in order to save money.  A normal paved road costs $100,000 per mile to pave whereas a gravel one is one-tenth that.  So far 20 of our 83 counties have gone with gravel instead of pavement.

- Jarrett Skorup

Protectionism vs Free Trade – Russ Roberts

Posted on by razma766
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roberts_russelld_biophotoKurt Bouwhuis, Mackinac Center Intern

This video is of Russ Roberts, a professor at George Mason University, speaking on protectionism vs free trade.  It is 44 minutes long – containing a Q&A that is roughly 20 minutes.  He offers some great insights, and gives you another perspective on this issue.

Enjoy