Some confusion.

James Surowiecki says:

The most striking thing about this scandal is that it was predictable—the way LIBOR was designed practically invited corruption—yet no one did anything to stop it. That’s because, for decades, regulators and people in the financial industry assumed that banks’ desire to protect their reputations would keep them honest. If banks submitted false LIBOR estimates, the argument went, the market would inevitably find out, and people would stop trusting them, with dire consequences for their businesses. LIBOR was supposedly a great example of self-regulation, evidence that the market could look after itself better than regulators could.

So that’s exactly what happened right? The market did find out and there was punishment. But then Surowiecki says:

But, if recent history has taught us anything, it’s that self-regulation doesn’t work in finance, and that worries about reputation are a weak deterrent to corporate malfeasance.

The only way I can square the circle is to be persuaded that Surowiecki doesn’t believe what he states when he writes that a critical part of self regulation is post-facto punishment by the market. This seems justified because backwards induction tells us that the credible threat of punishment in the end makes it logically impossible for transgression along the way. So we judge self regulation by whether people follow the logical rules. Regulation, self or not, is supposed to be preventive. If they transgress the self regulation failed and it’s rather irrelevant if the market exacts revenge later.

Bankers believed they could break the rules they agreed to and escape punishment – forever. From that moment the system failed.

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Why VGA ports, or “the curse of bigness.”

Not trying intentionally to hate on Gruber this week this much. But people harping about VGA ports makes me marginally more likely to blog with every jab.

Regarding the article: Apple is already abandoning its own only-a-decade-old proprietary adaptor for something better and smaller; PC notebooks still ship with huge 25-year-old VGA ports. Every time I bring this up, the VGA defenders argue that of course notebooks need to ship with VGA ports, added thickness be damned, because the world is full of VGA-only projectors. But the world is also full of Apple 30-pin dock connector cables and accessories. This is how progress is made.

First, I can’t believe VGA is 25 years old. That’s impressive.

Now, regarding the sentiment.

Say you are a consumer. You rarely hook up to a projector. If you do, then maybe it’s still worth it for you to buy an adapter (as I have personally done with my macbook). The uptake cost is about, say twenty bucks. It takes a second to install.

Say you’re a multinational firm. You use projectors a lot. It is very important to your IT department that uniformity be achieved in hardware usage to the greatest extent possible. You have many VGA projectors in your buildings scattered around the world. The uptake cost is multiplied across all of your employees’ hardware. Oh yeah, and that nominal cost in wages and foregone productivity in the few minutes it takes each employee to install and figure out how to use it? It’s still not huge, but it’s getting bigger. Hardware must also be distributed. Extra shipping weight — pile that cost on. Also, get ready to stock up on extra adapters because your employees WILL lose them. You could, of course, upgrade the projectors too but then you’re talking about real wage and time investment in having them installed in every conference room across the nation and/or world. The point is that when firms upgrade, they experience diseconomies of scale, unless they get a special trade discount for upgrading as an incentive to move forward that makes it cheaper than sticking with the old stuff. The very uniformity and tight integration that generates huge profits is deeply resistant to technological change.

Now, let’s say you’re a company selling enterprise hardware. Are you going to stop making VGA ports? Can you afford to throw in adapters and an extra discount for the trouble so that huge corporations will adopt your product? What do you expect IT reps from a multinational firm to say when you sell your product by saying VGA is 25 years old and makes laptops fat so it’s time to move forward?

The fact is that the marginal benefit of size reduction is withering away. We’re reaching an age where laptops are thin ENOUGH. Projectors are sharp ENOUGH. It’s no longer clear that there’s great benefit to be harnessed from slimming down another fraction of a pound or matter of inches. This will make individuals like Gruber increasingly frustrated because consumers can save up for that extra slimmer or sharper device. Corporations will not. The economics isn’t there.

Companies ideologically motivated by design, and small companies, are likely to ditch VGA first. In general, companies that are ideologically motivated by design ARE small companies. When you’re a huge firm, you are both a very valuable customer of enterprise-serving firms and also obsessed with margins. Every time you have to buy a new license or upgrade hardware across all of your operations you’re incurring massive costs for marginal or nonexistent productivity gain. Sharper projectors or sleeker laptops or Excel 2010 over 2003 have a sheen that belies their additional usefulness in most contexts. In fact, they often set back productivity because of tweaks that require additional learning and adaptation. It’s especially true of software but applies to hardware as well.

Gruber is right that VGA should die. Consumers should shirk it. Smart firms that want to remain competitive with consumers, those little firms of one, ought to ditch VGA. Don’t count on enterprise to, and don’t act like there is no compelling reason other than being a philistine to keep VGA. The bottom line is the BEST reason.

Cash is a fact.

“Income is an opinion, cash is a fact” are some words of wisdom an accounting professor told me once. It’s true. The reason is that there are unbelievably crafty people out there who use and abuse accounting rules to finesse what gets counted as “income” for a company and how. But what no one can legally manipulate is how many dollars came in, and how many came out.

So regarding Microsoft’s goodwill impairment, Gruber says:

Six billion here, eight billion there, and pretty soon you’re talking about real money.

Well, that’s a matter of interpretation.

The income statement is, elementally:

Revenue
Gains
Expenses
Losses

I’m not trying to be offensive. I just think it’s important for what I’m getting at to use this framework. Revenues and expenses are the sales and costs associated with running the business. They directly relate to operations and are permanent, recurring costs. Gains and losses are transitory — usually write-downs, impairments, or charges related to restructuring. They are a dumping ground and it’s not always clear what belongs there. Companies in trouble can spend a lot of time either jamming gains into revenue or expenses into losses to make people think things are less permanently bad. But analysts get paid big money to be insightful enough to parse those numbers and read through the ruse companies often fabricate.

Goodwill, which is that Microsoft had 6.2-ish billion dollars more worth before this month, is a pure fiction. Seriously. It’s the excess purchase price over the value of the purchased assets. That’s it. Microsoft added up all the assets of aQuantive, and whatever was left over in the purchase price went into goodwill. Microsoft believed phasing aQuantive into its platform would yield benefits in the form of synergies and overall magical goodness that would make it 6 billion more valuable. This was a stupid decision, and it often is. Companies often wait for a good time to impair their goodwill because they often overpay.

What’s important is that nothing happened to Microsoft this month with respect to its finances.

Ok that’s not entirely true. But what happened was that Microsoft lifted $6.2 billion of goodwill from its balance sheet, where it sat as an asset, and funneled it through its income statement as a loss. Note: Microsoft paid for aQuantive years ago. The cash has long since left the firm. It’s just that part of it was capitalized on the balance sheet as an asset. The rules of accounting demand that we account for things as they are incurred. So the purchase of the original assets went right out of cash years ago. But as long as the goodwill isn’t used up, there it sits. If Microsoft didn’t think there was a material reason to impair it, it would sit there forever. Literally. Till the end of Microsoft’s days. Goodwill in a past time used to be amortized over a number of years. Not anymore. It’s a completely nonexistent asset. If you wanna know how bogus it is, Microsoft actually had MORE goodwill in June 2012 than a year earlier (13,452 million vs. 12,581 million). Not really because it created value. It just paid excess over the total asset value of its acquisitions.

Anyway, Microsoft funneled the aQuantive goodwill through its income statement, which impacts net income, which impacts retained earnings (earnings after dividends) which get added to the equity portion of the balance sheet and it all balances again. That’s the accounting that is required to get that goodwill off and have order restored.

If you wanna know what really happened to Microsoft this quarter you can look at its cash flow statement, which takes income and reconciles it with what actually constituted cold hard currency. There, Microsoft had $7,677 million in positive cash flow from operations. That’s for 3 months. Nearly $8 billion in 3 months. That’s an increase over a year ago.

You can say Microsoft is doomed long term because the server and tools division is making more in revenues than Windows (5,092 million vs. 4,145 million) — although on an operating income basis Windows is still more profitable. You can say these acquisitions are squandering cash on the purchase date and goodwill impairments show that wise management choices were not made back then. The internet services division will continue to be a drag on earnings (which lost about $400 million anyway this quarter before the goodwill impairment). That’s all fair. What you can’t do is jump on this announcement and say that we saw some kind of turning or inflection point for Microsoft this quarter. Because truly, it did a maneuver that involved shifting numbers around on some spreadsheets to appease US accounting standards.

If Microsoft is in decline, it’s because of secular trends in the mix of its operations and the reduced future operating cash flows that will stem from them. A lesser risk is continued bad acquisitions, which come out of investing cash flows (I say lesser risk because Microsoft could remedy bad acquiring by simply no longer acquiring. On the other hand, fixing a business model can be impossible if you’re hemorrhaging cash — see Nokia and RIM). Goodwill impairments will never, however, hail the end.

Chris Nolan as philosopher.

Broad themes in The Dark Knight Rises. Spoiler: the fun stuff is at the bottom.

1. Occupy.
1.a. Class conflict.
Bane tantalizes the masses with the prospect of an egalitarian future. The first step is to forcibly equalize resources.

1.b. Radical Democracy.
Jeremy Waldron might be impressed. My impression is that the only branch left in Gotham is a quasi-legislative, although its main function in the film is to carry out judicial sentencing. Formal executive police power and formal courts are swept away.

1.c. Distrust of finance.
Bane holds up the stock exchange and the cops flippantly tell one member that their lives aren’t worth risking for the traders’ money. Another cop boasts about how his money is UNDER HIS MATTRESS. One sleaze getting his shoes shined boasts about how he flipped a coin to figure out whether to go long or short a stock. The least amount of sympathy for any of Bane’s victims occurs in this scene. There’s a sense of “you had it coming.”

2. Rousseauism.
This extends throughout the trilogy. As far as I can tell The League of Shadows’ ideology is deeply imbued antipathy of civilization, which it sees as corrupting. Conversely, the league believes man is purest in his natural state (why else train in subsistence on a mountain top?) It marries this with eastern asceticism and various other blends but Rousseau appears to be the most akin Western analogue.

3. Military/Industrial complex.
Wayne Enterprises has a generously funded defense arm. They build big toys for Batman, and also death machines generally that can, whoops, fall into bad men’s hands. As Wayne says “one man’s tool is another man’s weapon.”

4. Specious security state.
The Dent Act is The Patriot Act. That’s all you need to know.

5. Go green.
Wayne builds a fusion device to create sustainable green energy for everyone. I find it oddly un-environmentalist for Nolan to call nuclear power “green” but I’m on board with it. Sadly, humanity isn’t ready for it because it just gets turned into a bomb. Go figure.

A couple of left-leaning interpretations.

6. Anti-woman.
One woman is a backstabbing bitch. Another woman is only interested in amassing a jewelry collection for herself by theft and only seems to contain a kernel of morality at the end of the film when the man guilts her into it. Physically, she saves him, but morally, he saves her. She can’t be allowed to be a real hero because her heroism is contingent entirely upon her salvation at his hands.

7. Public sector bashing.
What kind of city is it where public institutions rely on a rich capitalist in a cape to make things run smoothly? I’ll turn it over to Corey Robin, who is in this quote referring to Cory Booker’s bravery in Newark.

The whole story speaks to a quintessentially American love of amateurism and cowboy theatrics, but it also speaks to our neoliberal age: like the superhero of comic-book lore, Booker is a stand-in, a compensation in this case for a public sector that doesn’t work. And the reason it doesn’t work—the reason we put more stock in the antics of a Batman Mayor than a well paid and well trained city employee—is that we’ve made it not work: through tax cuts, privatization, and outsourcing, policies that Booker himself often supports.

So while Nolan shows solidarity with egalitarianism, let’s not forget the central theme of this trilogy is that a very rich man who makes a great deal of money off of the state by building death machines and otherwise from the rest of an inherited conglomerate deeply integrated into the capitalist order is essential for public stability. He’s never suffered, wanted, or really worked a day in his life, so we should be fortunate he funneled some of his wealth into making big toys and sticking his neck out to save us. In reality he repudiates public institutions and the law itself to do what rich people tend to do – operate outside of the constraints the prevailing order places upon the rest of us.

That’s either good or bad on net depending on your ideological persuasion.

UPDATE
Patrick Egan over at The Monkey Cage blog has great data on this as well. In summary:

Thus long-term trends suggest that we are in fact currently experiencing a waning culture of guns and violence in the United States. This is undoubtedly helping to dampen the public’s support for both gun control and the death penalty. There are growing partisan gaps on attitudes regarding the two policies, but enthusiasm for both has declined recently in lockstep with the drop in crime and violence. The total effects of these trends on opinion and policy remain to be seen, but one thing is clear: they defy easy ideological explanation.

A history of violence.

It’s been a bad several years for advocates of stricter gun control laws. The recent shooting in Aurora, CO and the Gabby Giffords shooting in AZ are two events of tragic gun violence that have punctuated an era in which gun rights have been strengthened. Gun control is one of those issues where the ideological left and right (aided greatly by the work of John Lott) draw the deepest lines in the sand, and thus the outrage is all the greater when tragic events can serve as confirmation of the left’s worldview.

Thus, here’s Roger Ebert on Aurora:

Should this young man — whose nature was apparently so obvious to his mother that, when a ABC News reporter called, she said “You have the right person” — have been able to buy guns, ammunition and explosives? The gun lobby will say yes. And the endless gun control debate will begin again, and the lobbyists of the National Rifle Association will go to work, and the op-ed thinkers will have their usual thoughts, and the right wing will issue alarms, and nothing will change. And there will be another mass murder.

Ebert laments this cycle but he arguably kicked it off with an op-ed in the Times. While doing so, he repudiates the idea of a connection between violence in film and crime and instead weighs in on a policy debate armed with nothing but years of having watched films, and of writing. If there is any empirical evidence that has molded his opinion on this issue, he doesn’t mention it. As far as I can see, Ebert spends a great deal of time chastising the right for reasoning from emotion as he does much the same, albeit in a mild-mannered and pensive opinion piece.

Elsewhere on the web, Gawker has this to say, very much in the “the personal is political” vein:

This is stupid. There is no such thing as “politicizing” tragedy. James Holmes did not materialize in a movie theater in Aurora this morning, free of any relationship to law and authority and the structures of power in this country; nor did he exit those relationships and structures by murdering 12 people and injuring several dozen more. Before he entered the theater, he purchased guns, whether legally or illegally, under a framework of laws and regulations governed and negotiated by politics; in the parking lot outside, he was arrested by a police force whose salaries, equipment, tactics and rights were shaped and determined by politics. Holmes’ ability to seek, or to not seek, mental health care; the government’s ability, or inability, to lock up persons deemed unstable — these are things decided and directed by politics. You cannot “politicize” a tragedy because the tragedy is already political. When you talk about the tragedy you’re already talking about politics.

But we’re not talking about Holmes or his act in the context of their political status. We’re talking about what has followed. We’re talking about the idea of capitalizing on the surge of emotion, the “something must be done!” mentality, to make public policy. The right is almost certainly wrong for comparing reasonable firearm regulation to tyranny. The left is equally wrong to point to a tragedy as affirmation of the need for tighter regulation, or more broadly as indicative of how guns make us a violent culture.

I say this because the Aurora tragedy either affirms empirical truth or it doesn’t, but it’s status is entirely contingent on that underlying truth. So it is abundantly clear that, between the emotion that a single event evokes, and the clarity of a body of evidence, the latter is the only legitimate basis for public policy. This renders the tragic event itself a mere rallying cry —  a stick with which ideologues will draw their lines in the tribal sands.

It’s said that we’re a violent country among nations. My understanding is that the firearm-related death rate is relatively high here. Obviously, no guns at all would mean that there would be no more firearm related deaths, but that’s a naive way of interpreting the data. The implication, however, is that our generous gun ownership regime is a contributing factor. That’s a much more complicated story.

I’ve spent the last several days thinking about this. There is a very generous 2010 data set from the FBI on state level gun crime statistics that The Guardian has blogged about, with a link to the actual data. I did a little bit of extra exploring and I also found the FBI list of registrations through the National Instant Criminal Background Check System. I used the 2010 totals for each state as a proxy for gun ownership. Here are a few charts.

Here’s one thing we can all agree on: handguns are dangerous. Most firearm deaths are caused by them. The proportions haven’t shifted radically in the five years between 2005 and 2010. But firearm deaths have fallen slightly. That’s pretty consistent with the fact that violent crime is down, and down dramatically over the past several decades. You can attribute it to better policing or to a more moral society, but it’s a secular downward trend.

But what about gun ownership’s influence on this?

This is specifically for murder. I think the graph speaks for itself: not particularly clear association, but negative. The interpretation is that more registered guns per capita corresponds to fewer murders. The R^2 is very low, and the slope is shallow. Sadly, Florida data wasn’t in this data set.

The far right dot at ~54 on the X axis is Kentucky. I checked the numbers but I don’t know why KY is so high. So I removed it. I also removed Utah, which was at ~18. That really tall dot you see around 16 on the Y axis is Washington, DC. That’s kind of pathetic but it seems like large outlier so let’s take it out as well. It’s heavily influencing the negative slope.

Things don’t get much clearer here. Still negative. Still shallow slope. Lot’s of noise.

And what if we expand from murders to assaults?

Now here’s a positive relationship. Note that this is ONLY the case when KY, UT, and DC are removed. Otherwise the slope is -0.39 and the R^2 is .009.

The point of these graphs is not to draw a conclusion. Rather the opposite — to demonstrate how inconclusive the story is relative to the narrative perpetuated by ideological leaders in the wake of tragedy. Even here, NICS registrations are not a perfect proxy for gun ownership. My understanding is that there are data collection issues. Also, gun shows allow for people to purchase weapons while circumventing some regulation. That might also skew numbers. But even more nuanced and sophisticated analyses than my public data number crunching will only get us to an approximate idea of the truth. People commit crimes for a plethora of reasons.

Access to guns might conceivably make crime more likely because guns increase the odds of successful crime, but access to guns also increases the likelihood that would-be victims are also packing heat. Yet moral people are generally less likely to have a gun on them than a criminal, and certainly will be less willing to use it. That will always in some way tip the scale in the criminal’s favor. It is a testament to the strength of our civil society that this natural advantage is not more often exploited. The right can be accused of many things but one of them is not neglecting to appreciate the potency of social institutions.

If our leaders came together to acknowledge that what happened in Aurora is tragic in large part because it is so exceedingly rare and unlikely, it might temper the climate of anger and shift the intonation from “something must be done!” to “something must be done?” We often lament the polarization of our political institutions and pray for cooler heads to prevail. That’s our stated preference. Our revealed preference is in fact that we are like those who we elect — ready and willing to stoke tribal fires when it’s politically expedient. If we want better public policy it’s incumbent on all of us to CTFO. And dive deep in search of the objective truth.

The problem with reporting climate change.

This week’s New Yorker spurns a packed news cycle to give us a Comment about how temperature is affecting the corn crop. Elizabeth Kolbert imbues this with significance in this way:

Up until fairly recently, it was possible—which, of course, is not the same as advisable—to see climate change as a phenomenon that was happening somewhere else. In the Arctic, Americans were told (again and again and again), the effects were particularly dramatic. The sea ice was melting. This was bad for native Alaskans, and even worse for polar bears, who rely on the ice for survival. But in the Lower Forty-eight there always seemed to be more pressing concerns, like Barack Obama’s birth certificate. Similarly, the Antarctic Peninsula was reported to be warming fast, with unfortunate consequences for penguins and sea levels. But penguins live far away and sea-level rise is prospective, so again the issue seemed to lack “the fierce urgency of now.”

Disclaimer: I believe climate change is a real phenomenon.

But I see paragraphs like this all the time in the press and I consistently cringe. First, “global warming” in a literal sense can’t happen only in the arctic. So if it was really possible that one could think of it as “happening somewhere else” then we weren’t having global warming. I have seen many stories about disappearing wetlands here in America. In fact, it seems every time we have aberrant weather the media trots out an article in the same fashion as Kolbert. So I don’t know what she’s talking about.

The more PC term for global warming  is of course “climate change.” This is what Kolbert uses. But singling out events as evidence of climate change is like finding a mutated animal and writing an article about the species’ trajectory of evolution. We are talking about the slow secular shift of a complex system on its path to some new equilibrium. Just like economists can only mark the beginning and end of recessions after they have begun and ended, we can really only evaluate climate change on a backward looking basis. Complex systems almost never change uniformly and can almost never be accurately characterized using anything other than aggregate or longitudinal measures.

This is a problem for the media because climate change is an ongoing concern and it’s also a political concern in this country, which makes it a sexy and important topic for the press. But news writing relies on pegging discrete events to larger phenomena. It’s about narrative. Newswires report basic facts but the gold standard for reporting is taking facts and painting broad strokes. Even coming from a soft science background I am generally skeptical about storytelling as a prudential path to truth, but it sometimes works and is usually thought provoking regardless. But you literally can’t report on climate change this way. It’s stretching what you can do with a discrete set of facts (it was a hot summer in the midwest) without being completely and utterly disingenuous.

It also invites the right to counter back with examples of COLD weather and have credibility for rebutting climate change when it shouldn’t. The media should only blame itself for this because it set the bar so shamefully low and consciously intervened in one side of the political battle over climate change.

So what is the media to do?

The best thing would be for it to stop reporting on individual weather events and stick to human interest stories that consist of deep reporting on a longitudinal narrative about a specific place.

At the end of the day, there’s a difference between yarns you spin that have plausible veracity and those that violate their own terms. Stories about climate change evidenced by discrete shifts in weather fall into the latter category.

Wage stickiness is market failure. So why are we not correcting it?

Scott Sumner has a gift for inspiring revelation. He says:

The W/NGDP ratio shot up in 2009, and unemployment soared. Since then the ratio has come part way back to trend, and the unemployment rate has come part way back to trend. We have excellent data showing George Selgin’s example is common, wage increases bunch around zero percent. Until we get a more plausible theory of unemployment, I’m sticking with stickiness.

I believe this is what he was talking about.

In 2008, NGDP fell rapidly. If average hourly compensation did as well, the ratio would have been the same. We’ve come a long way to adjusting back to trend, but this graph is striking nevertheless.

In 2008, employers were faced with a decision: slash compensation across the board or fire people. Being averse to spreading the pain (for cognitive and practical purposes), they fired people. And that shows you how crucial timely and aggressive anti-cyclical policy has to be. Because the poor souls who were laid off in 2008 were relatively powerless, but they were insiders. Now they’re outsiders. It’s become an incumbents/entrants game. If Susy wasn’t willing to take a pay cut in 2008 to protect Bobby’s job even though they worked together and discussed each others kids often, Susy is going to be less interested in a pay cut to hire Jerry who she doesn’t know. That’s assuming the rosy and unrealistic picture that firms haven’t done the aggressive cost-cutting needed in the past four years to squeeze more productivity out of the remaining employees and thus reducing the firm’s overall employment needs.

This is market failure. The market has collectively decided wage stickiness is worth the monumental cost to society. It’s not. That is the clearest sign that public institutions should act. GDP growth is the side of this equation that must be targeted. What institution should act, though? Coincidentally, employment and GDP growth are THE two things the Fed is charged with targeting. A martian who came here would be able to study our institutions for an hour and come up with the answer.

You would think Scott Sumner’s blog would get banal given its singular and incessant focus. It demonstrates, however, that every angle from which light can be cast on the great injustice being perpetrated against humanity today by public leaders makes it clearer and more distinct still.

On a final note, when people look back with astonishment at how the Fed consistently undershot its targets and — with the support of a majority of economists — nevertheless resisted helping society, I hope the blogosphere gets some credit. Dismal science indeed.

UPDATE:

Commenter Mark Sadowski, who is better versed in this data than I am points me to this graph with a slightly different data series.

It shows we aren’t as far back to trend as we might think. It also shows just how much wage stickiness is built into unemployment.

Workers need opportunity, not protection.

Shots fired on Bleeding Heart Libertarians by lefties over at Crooked Timber. Everyone piled on. Cowen has a few thoughts, as does Tabarrok. Wilkinson throws his hat in, sort of. Noah Smith has something to say as well. That’s not even all. And there are REPLIES. Seriously, this is great stuff.

There’s so much ground covered by these folks, there’s not much for me to say. But I did have a few supplemental thoughts.

1. The Crooked Timber piece is chock full of links to ridiculous types of abuses in the workplace. I agree with Cowen though — because something does happen doesn’t mean it’s a pervasive problem. I’m glad Corey Robin has been keeping a list of absurd abuses about people pissing their pants, but empirics 101 demands more. There’s maybe 100 solid links in this piece. But there’s 300 million Americans.

2. Weird rebuttal of the Universal Basic Income:

Let’s say we decided that our freedom threshold would be met by ensuring that someone who didn’t work wouldn’t fall into poverty. The current, rather miserly, poverty line for a single person in the United States is $11,170. Providing a UBI of $11,170 would require taxing roughly 40 percent of current GDP. Tax revenues now consume 20% of GDP, so tax rates would have to double—or we could simply expropriate the top 1%, who command roughly 20% of national income. A UBI guaranteeing the equivalent of the annual minimum wage—$15,080—would require taxing roughly 50% of current GDP.

Where’s that coming from? No one wants to just tack that on to the awful welfare state we have now, and surely not EVERY American will require a payout. Jessica Flannagan at BHL called bullshit on this for good reason.

3. Libertarianism does need a better theory of private power. Yes, there are power asymmetries in the workplace. This is probably not generally a problem. Where it is a problem is in places that are poor and that there are not a large variety of employment opportunities. Big surprise: those tend to be THE SAME PLACES. Now, do you think a real solution for people in these places is to make it harder for them to get fired? The answer is no. These people don’t need security in their shit jobs. They need better job opportunities to they can tell their shit employers to fuck themselves. Not trying to be vulgar, but this seems absurdly obvious to me. More workplace regulation that simply makes inadequate labor markets more rigid will not help anyone.

4. This goes along with 3 but I want to break it out: workers who hate their jobs but feel like they can’t leave for lack of opportunity don’t need job protection, they need viable alternatives.

5. This is not meant to be cheeky or to suggest at all that the authors of all of these pieces are incapable of studying this issue, but I am curious as to how many of the authors of these pieces have worked anywhere in their adult professional lives outside of academia.

6. I work for a financial institution. As part of my employment I work incredibly long hours doing tasks that are not always fun. But it’s not only that. Much of my job requires me to adhere to a number of compliance related restrictions that I think are entirely reasonable but that greatly circumscribe my freedom to engage in certain transactions and, at times, to even speak in public about certain subjects. These are not arbitrary acts of tyranny by my superiors. This is all relatively clear in my terms of employment, so I know this isn’t exactlywhat the CTers were criticizing, but it’s not NOT what they were against either. My point here is that I wonder if the authors have considered the extent to which proscribing certain worker liberties is essential for commerce to take place.

7. The theory of the firm is needed in this discussion. It’s a great mystery of market economies how centralized forms of corporate governance become so powerful when much of our economic intuition is based around the idea that bigness and centralization and inefficient. Corporations really are analogous to governments. That’s worth discussing. But it’s not like living in Nazi Germany, as the CTers suggest. No one asks to be born, much less born in a certain place. Government’s don’t ask for consent. We enter into contracts with employers. Hate on them, but it’s a fundamental distinction regardless.

This isn’t to say the CTers don’t have a point. Libertarians really really really need to discuss private power more. Some regulations are probably freedom enhancing. Libertarians should be prepared to give some ground, as should liberals. I see the CTers getting angry that the right beats up on unions for being coercive but gives employers a break (“On the flip side, libertarians often have little problem in finding the activities of unions to be coercive.”). But I don’t see them realizing that they are the mirror image. Both sides are clearly practicing some kind of hypocrisy.

But I can’t stress this enough. People who are made to pee on themselves by bosses who abuse them don’t need regulation. They need a way out. A basic income is a start. Better policies that more evenly promote economic growth are another. Eliminating bad land use regulations that lower the barriers to city living for the lower class would be another excellent way to help. These are far less controversial, are nowhere near as fraught with unintended adverse consequences, and would be infinitely more helpful.