Is Bernie Madoff a Heroic John Galt?

Bernie Madoff deprived the super-wealthy of $50 billion, without resorting to the Estate Tax (a/k/a the Paris Hilton Tax) or armed robbery.

According to Republican economic theory, we should be throwing roses at his feet.

By fleecing the wise uber-wealthy folks of some $50 billion, he had provided a supply-side burst of incentive to those fine people to regain their former wealth. Those captains of industry are now incented to the tune of $50 billion, just to get back to where they thought they were a couple weeks ago. Better yet, he accomplished his gift of incentive without spending the money on wasteful government programs such as school lunches or welfare that simply disincentivize the poor. And BEST yet, he did it in a fashion that owes its existence to the under-regulated market the the Republicans have made a fetish of.

The bedrock of Republican "Economic Theory" is that incentives for the super-wealthy are critical. The wealthy - not lazy unionized workers, pampered teachers in our schools, or grossly inefficient government civil servants - are the supermen who, with their finely attuned, market-sensitive, invisibly guided wise hands are the ones must be allowed to keep their billions and billions of dollars, so that they remain incentivized to create more wealth. Taxing the wealthy hurts us all, they claim, because the wealthy will no longer feel the incentive to work, and we will all suffer in their absence.

The timing could not have been better, either. With Obama's election, rightwingers were beginning to darkly (inappropriate pun intended) mutter about the "John Galt Option" or "Going John Galt
", in a reference to a character in a very bad novel who withdraws his productive force from the economy when the unproductive "looters" seek to tax his fortune. Rightwingers were threatening to slow down their productivity in the prospect of having to pay for the war they supported.

Dr. Helen, in a pre-Madoff meditation on the possiblity of an Obama administration, sets out the thought process that motivates those who would imitate John Galt:

Perhaps the partisian politics we are dealing with now is really just a struggle between those of us who believe in productivity, personal responsibility, and keeping government interference to a minimum, and those who believe in the socialistic policies of taking from others, using the government as a watchdog, and rewarding those who overspend, underwork, or are just plain unproductive.

Obama talks about taking from those who are productive and redistributing to those who are not -- or who are not as successful. If success and productivity is to be punished, why bother? Perhaps it is time for those of us who make the money and pay the taxes to take it easy, live on less and let the looters of the world find their own way.

If Republican incentive-based economic theory is valid, then Bernie Madoff was the right man at the right time to boldly create incentive in an economy that was going to hibernate until a new administration of deregulation, no watchdogs and deficit spending could reverse Obama's plans. Instead, thanks to the heroic Bernie Madoff, the John Galts of this world are waking up to find themselves in a $50 billion hole in an economy that needs more of their "wise" investments. They now have the incentive to rejoin the economy.

Looking Down Ballot - Proposition C - Renewable Energy

Proposition C is not only a forward-thinking, inexpensive step in the right direction for Missouri, it is also a wonderful Rorschach ink blot test to uncover fundamental attitudes about the intersection of Government and the Free Market. Absolutists see Proposition C as a scary monster out to devour the Free Market, while realists see it as something positive and helpful.

Here is the language of the measure (and, while I'm at it, here is the link to the Kansas City sample ballot):

Shall Missouri law be amended to require investor-owned electric utilities to generate or purchase electricity from renewable energy sources such as solar, wind, biomass and hydropower with the renewable energy sources equaling at least 2% of retail sales by 2011 increasing incrementally to at least 15% by 2021, including at least 2% from solar energy; and restricting to no more than 1% any rate increase to consumers for this renewable energy?

The estimated direct cost to state governmental entities is $395,183. It is estimated there are no direct costs or savings to local governmental entities. However, indirect costs may be incurred by state and local governmental entities if the proposal results in increased electricity retail rates.

The question that voters ought to be pondering is whether we are "in" or "out" on breaking our dependence on fossil fuels. I believe now is the time to move forward and seize for Missouri some of the economic, ecological and societal benefits of renewable energy.

The arguments against helping Missouri take a leadership position in the new economy is that it represents an expensive and unjustified intrusion on the Free Market. If alternative energy is a viable option, they argue, the market will recognize and exploit that fact, and utility companies will move toward renewable energy on their own.

Those arguments, based on the fundamental immorality of Libertarianism, ignore the reality of the marketplace in the 21st Century. While it is nice to sit back and dream of the day when enlightened utility companies will embrace new technology, there are two main reasons they never will, and why we need Proposition C to help our state economy.

First, the marketplace is fundamentally conservative, and requires encouragement to adjust its approach on energy. The utility industry is simply not a nimble industry, and never will become one without encouragement. Billions of dollars in "sunk costs" have bound the industry to centralized production and fossil fuels. If I owned a fantastically expensive power plant that burned coal, I, too, would resent a movement toward wind energy, which could reduce the relative advantage I have in the marketplace for electricity. Just as wise saddlemakers and livery stables opposed governmental involvement in paving roads for those unproven cars, utility owners are fighting a rearguard battle against a shift toward renewable energies. Their self-interest does not reflect what is best for Missouri.

Second, Missourians are justified in this enhancement of the free market because the utility industry has so many hidden societal costs. In ways we never really stop to consider, we have been subsidizing fossil-based utilities since their birth. When a coal plant emits "acceptable levels" of pollution, Missourians are subsidizing the profits of the owner by absorbing that pollution. Similarly, when the Missouri National Guard sends troops to Iraq, we are subsidizing our dependence on fossil fuels. (I won't argue whether the Iraq War is a war for oil, but I will insist that our involvement in the Middle East is largely motivated by the region's petroleum.) On the positive side, we demand that our utilities provide us with energy, even after an ice storm, when it might be more economically efficient to wait until spring to repair the lines. The "free market" is a myth in the heavily-regulated and high-social-cost realm of power generation.

Proposition C represents an opportunity for Missouri, and one we should support enthusiastically. In demanding a move toward renewable energy, Missourians will be getting out in front of and supporting the next wave of industrial change. We will be helping the market work for us instead of against us by encouraging innovation and new thinking. If the beneficent boards of our utility companies really had Missouri's interest at heart instead of their own, we would have moved this way generations ago. They, of course, do not have our best interest at heart, so this Proposition C will serve to make our voices heard.

Vote for Proposition C so that Missouri can be at the front of the next industrial revolution.

What Makes an Opinion Important?

In the comments to my brief piece about the Heller decision ("Probably the Correct Ruling on Guns"), Missouri's finest Libertarian candidate (which I mean as a sincere compliment, though I acknowledge it may be viewed as damned faint praise) agrees with the astonishing statement that "It is not hyperbole to describe today’s decision in Heller as the most significant opinion of this century, and likely, of the last two generations."

Really?! An opinion that stands for the wishy-washy common-sense virtually status-quo proposition that the feds can regulate but not ban individual ownership of guns is the most significant opinion of the last two generations?

Perhaps so. Perhaps there really was a national consensus gathering in favor of banning all handguns, and confiscating deer rifles. Alternatively, perhaps in light of the Heller opinion's recognition that I have a right to own a gun, all restrictions on arms will be legislatively repealed, and soon our neighbor's Fourth of July celebration will feature SAMs and tank rides.

While it would be fun to engage in paragraphs of mockery of the hyperbole which knows not what it is, the question then arises, what IS the most significant opinion of the last two generations? Roe v. Wade? Bush v. Gore (certainly, in terms of tragic and unforeseen though not unforeseeable results)? Lawrence v Texas?

Here's a list of important Supreme Court cases since 1989, if you care to limit yourself to one generation . . .

Libertarianism is Immoral

In an email conversation today, I opined that libertarianism is immoral, infeasible and undesirable. One of the participants acknowledged that I had arguments to support the infeasibility and undesirability of libertarianism, but questioned how I could say that libertarianism is immoral. I responded with what follows:

The easy answer is to tell you to go ask the nearest minister or priest - they'll tell you that Libertarianism is adverse to what Jesus had to say. The elevation of self-interest and self-reliance over your neighbor doesn't really capture the essence of Christianity. (I don't presume to speak of other religions with which I'm less familiar.)

Some libertarians will claim that they just don't want the government involved, and that, privately, they will be completely Christian in charitable support. Maybe. But that ignores another of the underpinnings of libertarianism - charity is destructive to the self-reliance of the recipient. And it also supplants what I think is a societal duty with an individual duty. I don't want my society to allow people to starve in the streets, even if it allows me to feed those I can.

This religious objection, however, leads me to the fact that libertarianism is anti-democratic. If 100% of Americans support taxation of tobacco, they wouldn't be allowed to make that decision. Economic freedom would trump democracy. Similarly, if 100% of us thought that the most effective solution to having people starve in the streets would be to levy a tax on us all to buy them food, we would not be allowed to do so in a libertarian system.

Perhaps impacting morality more directly, a libertarian world would be an environment in which immorality would be free to flourish. Polygamy, sex with animals, and selling heroin would be condoned. Racial discrimination would not only be legal, it would be economically necessary in many communities.

Ultimately, though, my objection to libertarianism is that it is based on a fundamental misunderstanding of the human condition. Libertarianism is based upon individualism. The problem is that while I have met a few delusional people who actually believe that they are "self-made men" or "self-made women", I have never met a self-made infant. We begin our lives, and spend a good amount of our lives exceedingly dependent on others for survival, guidance, formation, etc. We cannot even survive as individuals - each of us owes our lives to others. Radical individualism ignores that we would not exist outside of some form of society. Even if we could survive from birth on our own, our very essence is determined by DNA from other people. My personal view of mankind is that we are not really absolute owners of our own lives. We, as individuals, are bound by genetic connections, received history, inherited society and, in my personal belief, a debt to a higher power. No man is an island.

Oddly enough, every libertarian I have ever met has run up a large debt to society. Many have held government jobs, and many have gone to state schools (not that private universities aren't state-supported in many ways, as well). It seems immoral to me that they who have drunk so deeply from the public well would deny the ladle to those who thirst now.

Even ignoring the inconvenient truth of their (and our) debt to the benevolent society our ancestors have delivered to us, I think it would be immoral to abandon our messy, contentious, gray area of a country in favor of a utopian view of pure economic freedom. I like public art. I'm happy that some farmers in mid-Missouri were coerced to sell their land at a reasonable price so that I can drive to St. Louis on I-70 and visit my mother. I appreciate the fact that public schools exist. I sincerely believe it would be immoral to sacrifice all that is wonderful about America for ONE chosen freedom.

Economic freedom is a fine thing, and I'm glad we have it, though I appreciate the limitations our society places on that freedom. Elevating personal economic freedom to exalted status in libertarianism is just as immoral as elevating collectivism to exalted status in a communist system.