by Taylor Conant
On something of a lark last night, I ended up seeing the comedy documentary, The Red Chapel, playing in town at the Dallas Film Festival. As a libertarian and detester of all things totalitarian, I find the idea of a country of over 20 million people that has remained almost entirely isolated from the rest of the world for nearly 60 years thanks to its dynastic socialist human-control experiment to be absolutely fascinating. And a movie like The Red Chapel, which offers me the opportunity to look inside it, seemed too good to pass up.
Truth be told, it was even better than I had hoped, thanks in part because Danish director Mads Brugger is a man of ruthless conviction concerning the unambiguous evil of the DPRK's current regime. Spoiler alert, I will be discussing a few elements of the plot because this movie is hard to get a feel for otherwise and the trailer at the film's website doesn't do it any justice.
This film is beautiful in so many ways but perhaps the most easily appreciated artistic element of the film is the fact that Kim Jong-Il, the NoKo dictator, besides being an outstanding golfer on par with the likes of Tiger Woods, is reportedly a humongous film buff as well. Kim Jong-Il has even reportedly written a book On the Art of the Cinema, which Brugger is found to be reading in his NoKo hotel room in the opening of the film, "for inspiration." To then use the "art of cinema" to attack this despot is a stroke of wit that is gratifying throughout the film.
Another easily appreciated element of the film is that the absurdity of the plot seems to directly mimic the absurdity of the reality of the regime and life in the DPRK. At its heart, The Red Chapel is something of a rolling spoof-- a Danish director (Mads Brugger) and his two Danish-(South) Korean comedian partners-in-crime arrive in NoKo to engage in a "cultural exchange" by putting on a comedy show that seems like something out of a horrible Monty Python-skit. Of course, the horribleness is the whole point. Brugger and company are really there to show how a dictatorship that takes itself too seriously to the point of absurdity reacts to something that is itself patently and obviously absurd to anyone living outside NoKo's bubble.
On the one hand, it seems a bit juvenile and crass, like a sketch from the Jackass-series or a scene from the film Borat where the producers are taking advantage of the courtesy, hospitality and good-naturedness of their victims. On the other hand, this is the last full-fledged communist dictatorship on the planet and at the end of the day, taking advantage of their hospitality is the least The Red Chapel crew could do to thank them all for the pure, deluded evil the regime represents. Still, as Brugger is quick to remind the audience throughout the film, it's never perfectly clear who is really playing whom. The DPRK lackeys are all experts in the art of propaganda and mind control and its hard to believe they'd ever invite any outsiders in, for any purpose, if they didn't think they could somehow spin it to their benefit. In this sense, it's entirely possible that after leaving the country, the regime used the wacky hijinks of the departed visitors to demonstrate how absolutely insane everyone else in the world is.
The Red Chapel gets you thinking about cause-and-effect in other ways. At the beginning of the film, it's easy to see all of the NoKo people, subjects, minders, apparatchiks and nomenklatura alike as victims of the tyrannical Kim regime. As Brugger notes in one disturbing scene in which a number of NoKo schoolchildren clap mindlessly and enthusiastically for the camera, everyone in NoKo is playing a role in Kim's fantasy and they act with conviction out of fear of reprisal.
But when one steps back from this scene, and many others like it, and reflects on the insights of French philosopher Etienne de la Boetie in his Discourse on Voluntary Servitude, one begins to wonder to what extent the NoKo populace has entrapped itself by lending these antics their consent. Surely, for treating the delusion of the NoKo "Worker's Paradise" as a serious reality, every individual bears some responsibility, from the military down and from the people-prisoners themselves on up?
Additionally, the film leaves you wondering about the culpability of the producer and his two comedian friends, Jacob and Simon, who not only had to go along with the farce to create their film, but actively encouraged it at times to provoke increasingly twisted reactions and to heighten the dramatic element of the treatment. As the director and producer, Brugger himself is necessarily a manipulative and controlling character personally and whether he intends to or not (my guess is he meant to), he depicts himself as somewhat conscienceless in his pursuit of doing what it takes to get the film made. Meanwhile, both Jacob, the spastic, and Simon suffer bouts of self-doubt and emotional hesitancy in between their displays of acerbic but thoughtful wit. Maybe a bit too predictably, it is the physically handicapped Jacob who proves to be the most emotionally sensitive of the bunch and he suffers a tearful breakdown partway through the film when he first faces his growing realization that they are actively participating in the evil and perhaps even callously using it to their artistic advantage.
At this point I've really only touched the surface of this wonderful film and all it has to offer. Were there no sound, no dialog and no voice-over from Brugger throughout the film it'd still be a fascinating piece just for the exotic contrast between the banal urbanity of the seemingly abandoned streets and buildings of Pyongyang (Brugger likens it to witnessing a city after the explosion of a neutron bomb, an apt description) and the charming, unspoiled beauty of the NoKo rivers and countryside. As Bruggers says, it is a land of hidden people and hidden places: behind those hills, death camps; behind that building's facade, possibly a small shop or other site of commerce; and behind the fake smiles or more commonly emotionless and expressionless faces of the average NoKo, a terrifying trauma and unabiding sadness at a mass of human potential utterly lost.
And that's to say nothing of the absolute hilariousness of this movie. It... is... FUNNY! Questions of mischievous manipulation aside, Brugger, Jacob and Simon are masters of injecting humor into the most unlikely places, through subtle and overt means alike.
In the end, there are two things that stand out most about the NoKo experience and both provide instructive lessons for American and Western audiences. The first lesson is that the number of "true believers" in a given tyrannical regime appears to be inversely proportional to the extent to which that regime is totalitarian. As much as the minders and the common NoKo citizenry depicted in the film seem to be moved by their Dear Leader, it seems rather obvious that they've all lived in close enough proximity to the lie to grasp it as such. Compare this to today's America, marching on the path to totalitarian absurdity itself, and you will find a lot more sincerity in the joyful tears of supporters of Bush or BHO... here, the totalitarianism is not yet a reality and therefore it still holds for the various sycophants some future promise not yet attained.
The second lesson is that dictatorships and socialism are completely and utterly childish. It doesn't take the viewer long to realize that the incredible, orchestrated displays of self-adulation of the Kim regime are constructed to satisfy an intensely immature mind, a mind that has not developed past the insecure vanities of childhood in the realms of emotion, psychology and intellect alike. It's not so much that socialist dictators are irrational so much as they seem to suffer from something best understood as a specific kind of sociopathic mental illness.
This is a powerful, complex film that will leave you thinking. It's best enjoyed with other people and followed up with an after-screening discussion at your favorite watering-hole. What's more, it's perhaps a perfect empirical antidote for any of your long-suffering friends afflicted with socialist sympathies.
Unfortunately, it's also in extremely limited release right now, so it may be hard to find. Hopefully, with more exposure, more highly deserved awards and more time it will reach a wider audience. Until then, keep your eyes peeled for it and take time to see it if you get the chance.
The Red Chapel (Det Rode Kapel), 2009, 87m, directed by Mads Brugger, in English, Korean and Danish, w/ English subtitles. www.theredchapel.com
Taylor Conant writes about economics, politics and liberty from Dallas, Texas. He believes the world would be a better place if more people minded their own business.
Showing posts with label TaylorConant. Show all posts
Showing posts with label TaylorConant. Show all posts
Sunday, April 11, 2010
Tuesday, January 26, 2010
Me and My Droid: A User Review
By Taylor Conant
I've had the Motorola Droid (with Verizon Wireless) since late November and at this point I think I can speak with confidence when I say, undeniably, this phone is great... and not so great.
The display is great. It's quite large (larger than the iPhone's, the seemingly most important and relevant way to describe via comparison). It's also sharper, more vivid and brighter. If you show your Droid to an iPhone person whose heart has not completely calcified with fanboy jealousy they will likely admit this to you, sometimes grudgingly but most times with wondrous enthusiasm.
It's a touchscreen display, too. You can interact with the phone by tapping and dragging all over the place. The built in browser is not as intuitive as the iPhone-- double tap to zoom in, double tap again to zoom out, and flick your fingers across the screens surface to scroll. No precision-pinching. When entering data on the screen (such as composing a text, e-mail or typing in a URL) a large keyboard appears. The Droid can be turned 90-degrees at any time and the screen will reorient horizontally, along with the keyboard, which allows for quick dual-thumb typing.
Even better, the Droid has a full slide out QWERTY-keyboard, with Alt-key presses on most keys and a 4-way directional thumb pad and enter button on the side. When I first got the Droid, I hated the keyboard. Hated it. It's a little cramped. The buttons are small. It's too flat! I don't even have large hands and I was seriously fumbling on the thing after experiencing the joy of rapid-fire texting on my old LG enV2 (dang, I still need to sell that thing on eBay or something!) But my frustration gave way to determination and, low and behold, I got used to it with some practice. I'm now a whizbang. I've had a few people comment to me in various settings that I seemed to be hammering out an essay on my phone. When someone says that to you, you know you've arrived in Phone-Keyboard Heaven.
There are four buttons along the bottom of the display, on the exterior case of the Droid: Search, Home, Menu and Back. This should be pretty self explanatory but, Search lets you search anything within whatever program you're using at the time if that's available (search your e-mail, search the web, search Google Maps, search your phone), Home gets you back to your main, icon-scattered home screen, Menu brings up a menu with additional options based on context and Back will navigate you back through pages and menus and eventually to Home if you press it enough.
It doesn't always work as nicely as it should, though. Say you get a text-message. You read it. You hit Back. Sometimes Back dumps you into your text-messaging "app" where you can see a list of your other text-messages. Other times, Back dumps you into the Home screen. Why? I haven't figured it out yet but I am guessing if I tested it more it's got something to do with whether I accessed my text-message via the Notification Bar, or by going through the Messaging program from the Home screen. It's inconsistent, even if it is user-error, and it's middling on frustrating.
And how about that Notification Bar, huh? It seems to be something the Droid marketing machine has been proud of, but it's not as glitzy as it could be. Yes, it does a good job of keeping all notifications in one central, easy to find location, and it does keep the user from being annoyed by constant pop-ups. But much seems to be lost in the simplicity. If you don't happen to look at your phone right as or right after you're receiving a notification (such as a new text), you'll have to go into the Notification Bar and see what is bothering you specifically if you want more information than a program-specific icon.
Perhaps even more disturbing than this is the fact that, aside from incoming phone calls, the screen does not light up and display information when new notifications occur! I'll admit this could be a Droid noob's mistake as my phone, for whatever reason, did not come with a user manual, but I could find no setting within the phone anywhere that might change this. This is one of the incredibly not great things about the Droid-- even if you memorize the various custom notification sounds associated with your various programs (messaging, e-mail, Gmail, general phone notification, etc.), you still have to 1.) press the display power button to activate the display, 2.) slide your finger to unlock the phone and 3.) check the Notification Bar or relevant program to get an idea of what just happened. Oh, and then you have to 4.) decide if it was important enough to go through all that effort.
This is cumbersome. If the phone operated in a more intuitive manner in this regard all one should need do is 1.) look at the screen and decide if it's worth going through the other steps to retrieve the full message.
Something else you may have to get used to, which I realize now is cool, but was extremely annoying before I understood what was going on-- when you hold the phone up to your ear the display turns off so you save battery and don't accidentally press a key with your ear and say, hang up unexpectedly. If you need to interact with the touch pad (say you're accessing your voicemail) or you want to check your contacts, Messaging list or e-mail while on the phone and you remove the phone from your ear to more in front of your face, the Droid's gyroscopes sense this and turn the screen back on automatically. It takes a split-second though... until I figured that out, I'd hit the screen power button right away and inadvertently turn the screen off when it was trying to turn on, leaving me convinced that for some reason it took two presses of the power button to get the screen back on in this situation!
The 5MP on board camera is not so hot. It does video as well. And it has a flash. But it has trouble focusing a lot of the time. And the pictures aren't that crisp. Don't buy this phone for the camera, okay?
The Droid comes with a 16GB flash memory stick. Frustratingly, it's buried underneath the battery so you must power down the phone if you have some reason to remove it and put it inside something else. Luckily, the micro-USB (mini-USB? whatever it's called) port on the side of the phone that's used to charge it is also a quick and easy way to mount the phone's memory card via USB to any computer as an external drive, at which point one can easily get files onto or off of the phone's memory. This is also the way you can dump all your music onto the memory, which you can then access with the not-so-robust-but-still-usable Music "app" the Droid comes with. A 3.5mm jack on top of the Droid allows you to use your phone as an MP3-player on the subway or in your car hooked up to the speakers through an auxiliary cable.
What else? The Droid comes with Google Maps and real-time, turn-by-turn GPS navigation. It can give you directions for a vehicle or even on foot. It is sweet. You can go sell your Garmin on eBay once you pick up the Droid (eats through the battery fairly quick, though). The Droid supports the Android App Market-- it's not that exciting a place right now in terms of free apps, but it will get there. I've got Google Finance and the US Debt Clock apps, along with a few others, but there are no Droid versions of popular apps like Yelp, yet. The built-in personal e-mail app is pretty weak, and recently decided to stop checking for new e-mails according to the schedule I gave to it (it keeps forgetting), so if you're looking for something with Blackberry-like e-mail prowess, keep looking, and maybe even try a Blackberry.
As a heavy Google user, I think the biggest selling point of the Droid (and other Google Android OS-based phones) is the way the phone syncs with your Google accounts. Anytime I update my contacts on my phone, they are instantly updated on the web as well, or vice versa. I can access my GCalendar with the related app and the same syncing occurs. Same with GFinance. I'd just like to see some official GNotepad, GReader and GBlogger apps, as well. Picasa, too... the mobile version accessible via phone browser is cool, but wonky, and provides no way to really upload and manage my pictures.
Finally, the phone supports voice-recognition and voice-search, which are especially handy while driving. There's even a special Car Home screen that offers large, easily identifiable icons of things like Contacts, Maps, etc. along with a Voice Command button so you can simply tap the button and say "Dial ________ " and keep your eyes on the road (hopefully you've got a Bluetooth-enabled car audio system, too).
And the external-speaker (speakerphone) on the phone is LOUD. But the vibrate is feeble... be prepared to miss all kinds of calls as you walk around town with your Droid in your pocket set to vibrate.
Taylor Conant writes about economics, politics and liberty from Texas. He believes that no matter what we do, the jungle is everywhere.
I've had the Motorola Droid (with Verizon Wireless) since late November and at this point I think I can speak with confidence when I say, undeniably, this phone is great... and not so great.
The display is great. It's quite large (larger than the iPhone's, the seemingly most important and relevant way to describe via comparison). It's also sharper, more vivid and brighter. If you show your Droid to an iPhone person whose heart has not completely calcified with fanboy jealousy they will likely admit this to you, sometimes grudgingly but most times with wondrous enthusiasm.
It's a touchscreen display, too. You can interact with the phone by tapping and dragging all over the place. The built in browser is not as intuitive as the iPhone-- double tap to zoom in, double tap again to zoom out, and flick your fingers across the screens surface to scroll. No precision-pinching. When entering data on the screen (such as composing a text, e-mail or typing in a URL) a large keyboard appears. The Droid can be turned 90-degrees at any time and the screen will reorient horizontally, along with the keyboard, which allows for quick dual-thumb typing.
Even better, the Droid has a full slide out QWERTY-keyboard, with Alt-key presses on most keys and a 4-way directional thumb pad and enter button on the side. When I first got the Droid, I hated the keyboard. Hated it. It's a little cramped. The buttons are small. It's too flat! I don't even have large hands and I was seriously fumbling on the thing after experiencing the joy of rapid-fire texting on my old LG enV2 (dang, I still need to sell that thing on eBay or something!) But my frustration gave way to determination and, low and behold, I got used to it with some practice. I'm now a whizbang. I've had a few people comment to me in various settings that I seemed to be hammering out an essay on my phone. When someone says that to you, you know you've arrived in Phone-Keyboard Heaven.
There are four buttons along the bottom of the display, on the exterior case of the Droid: Search, Home, Menu and Back. This should be pretty self explanatory but, Search lets you search anything within whatever program you're using at the time if that's available (search your e-mail, search the web, search Google Maps, search your phone), Home gets you back to your main, icon-scattered home screen, Menu brings up a menu with additional options based on context and Back will navigate you back through pages and menus and eventually to Home if you press it enough.
It doesn't always work as nicely as it should, though. Say you get a text-message. You read it. You hit Back. Sometimes Back dumps you into your text-messaging "app" where you can see a list of your other text-messages. Other times, Back dumps you into the Home screen. Why? I haven't figured it out yet but I am guessing if I tested it more it's got something to do with whether I accessed my text-message via the Notification Bar, or by going through the Messaging program from the Home screen. It's inconsistent, even if it is user-error, and it's middling on frustrating.
And how about that Notification Bar, huh? It seems to be something the Droid marketing machine has been proud of, but it's not as glitzy as it could be. Yes, it does a good job of keeping all notifications in one central, easy to find location, and it does keep the user from being annoyed by constant pop-ups. But much seems to be lost in the simplicity. If you don't happen to look at your phone right as or right after you're receiving a notification (such as a new text), you'll have to go into the Notification Bar and see what is bothering you specifically if you want more information than a program-specific icon.
Perhaps even more disturbing than this is the fact that, aside from incoming phone calls, the screen does not light up and display information when new notifications occur! I'll admit this could be a Droid noob's mistake as my phone, for whatever reason, did not come with a user manual, but I could find no setting within the phone anywhere that might change this. This is one of the incredibly not great things about the Droid-- even if you memorize the various custom notification sounds associated with your various programs (messaging, e-mail, Gmail, general phone notification, etc.), you still have to 1.) press the display power button to activate the display, 2.) slide your finger to unlock the phone and 3.) check the Notification Bar or relevant program to get an idea of what just happened. Oh, and then you have to 4.) decide if it was important enough to go through all that effort.
This is cumbersome. If the phone operated in a more intuitive manner in this regard all one should need do is 1.) look at the screen and decide if it's worth going through the other steps to retrieve the full message.
Something else you may have to get used to, which I realize now is cool, but was extremely annoying before I understood what was going on-- when you hold the phone up to your ear the display turns off so you save battery and don't accidentally press a key with your ear and say, hang up unexpectedly. If you need to interact with the touch pad (say you're accessing your voicemail) or you want to check your contacts, Messaging list or e-mail while on the phone and you remove the phone from your ear to more in front of your face, the Droid's gyroscopes sense this and turn the screen back on automatically. It takes a split-second though... until I figured that out, I'd hit the screen power button right away and inadvertently turn the screen off when it was trying to turn on, leaving me convinced that for some reason it took two presses of the power button to get the screen back on in this situation!
The 5MP on board camera is not so hot. It does video as well. And it has a flash. But it has trouble focusing a lot of the time. And the pictures aren't that crisp. Don't buy this phone for the camera, okay?
The Droid comes with a 16GB flash memory stick. Frustratingly, it's buried underneath the battery so you must power down the phone if you have some reason to remove it and put it inside something else. Luckily, the micro-USB (mini-USB? whatever it's called) port on the side of the phone that's used to charge it is also a quick and easy way to mount the phone's memory card via USB to any computer as an external drive, at which point one can easily get files onto or off of the phone's memory. This is also the way you can dump all your music onto the memory, which you can then access with the not-so-robust-but-still-usable Music "app" the Droid comes with. A 3.5mm jack on top of the Droid allows you to use your phone as an MP3-player on the subway or in your car hooked up to the speakers through an auxiliary cable.
What else? The Droid comes with Google Maps and real-time, turn-by-turn GPS navigation. It can give you directions for a vehicle or even on foot. It is sweet. You can go sell your Garmin on eBay once you pick up the Droid (eats through the battery fairly quick, though). The Droid supports the Android App Market-- it's not that exciting a place right now in terms of free apps, but it will get there. I've got Google Finance and the US Debt Clock apps, along with a few others, but there are no Droid versions of popular apps like Yelp, yet. The built-in personal e-mail app is pretty weak, and recently decided to stop checking for new e-mails according to the schedule I gave to it (it keeps forgetting), so if you're looking for something with Blackberry-like e-mail prowess, keep looking, and maybe even try a Blackberry.
As a heavy Google user, I think the biggest selling point of the Droid (and other Google Android OS-based phones) is the way the phone syncs with your Google accounts. Anytime I update my contacts on my phone, they are instantly updated on the web as well, or vice versa. I can access my GCalendar with the related app and the same syncing occurs. Same with GFinance. I'd just like to see some official GNotepad, GReader and GBlogger apps, as well. Picasa, too... the mobile version accessible via phone browser is cool, but wonky, and provides no way to really upload and manage my pictures.
Finally, the phone supports voice-recognition and voice-search, which are especially handy while driving. There's even a special Car Home screen that offers large, easily identifiable icons of things like Contacts, Maps, etc. along with a Voice Command button so you can simply tap the button and say "Dial ________ " and keep your eyes on the road (hopefully you've got a Bluetooth-enabled car audio system, too).
And the external-speaker (speakerphone) on the phone is LOUD. But the vibrate is feeble... be prepared to miss all kinds of calls as you walk around town with your Droid in your pocket set to vibrate.
Taylor Conant writes about economics, politics and liberty from Texas. He believes that no matter what we do, the jungle is everywhere.
Sunday, November 1, 2009
The Saga of a Business Genius Who Attempts to Mind His Own Business
Taylor Conant reviews: The King of Oil: The Secret Lives of Marc Rich, by Daniel Ammann, 302 pgs:
The popular telling of the myth of the crimes of Marc Rich almost perfectly captures the modern American zeitgeist-- a businessman, the most evil and exploitative kind of villain that can plague a nation of honest and earnest people, sought to earn a profit via oil trades with the enemy (post-Revolution Iran) during a time of national crisis and embargo (the embarrassingly stupid hostage situation in Tehran circa 1979), evaded his tax obligations and then had the sheer nerve (or perhaps deep well of pure, black hatred within his heart) to refuse to stand trial for his crimes by fleeing to neutral Switzerland, using his enormous, illegally-acquired and not to mention positively unsightly personal wealth to buy himself immunity -- and eventually a full pardon -- from a criminal justice system to which lesser mortals must pay heed.
But if we peer a little closer (and trust the retelling of Rich's story in Daniel Ammann's biographic to be honest and accurate), we begin to see Marc Rich in an entirely different light-- if not immediately heroic, then certainly victimized by a benighted American public and tormented by a vengeful "limited" government with ulterior motives. Yes, in this new light, Marc Rich casts long shadows, and standing hunched over in the shadows we see the plotting, manipulative forms of then-US Attorney Rudy Giuliani and then-US Federal prosecutor Sandy Weinberg, as representatives of themselves but also as representatives of the disaster of unbridled ego, political pragmatism and the twisted logic of the State that has nowadays become so popular.
The man's accomplishments are legend and long-form: single-handedly creating the world market for spot-price oil; circumventing blockades, trade barriers and hare-brained foreign policy situations to move commodities from the conflict-ridden pieces of earth where they lay, wasted, into the hands of producers all over the world who value them most; organizing a billion-dollar-a-year commodity trading company with his partner Pincus Green, whose reach spanned the globe; and evading the vagabonds and plunderers calling themselves the US federal government and the US Marshal Service for over a decade.
And the man's crime? Libertarians, steady yourselves-- doing business in certain places and in a certain fashion without the express permission of the United States federal government to do so. In other words, Marc Rich was guilty of minding his own business.
That's the reality of Marc Rich's crimes, but that was not the story fed to journalists by U.S. attorney Rudy Giuliani on September 19th, 1983. On that day, the public learned of Rich's "fifty-one counts of fraud, racketeering" and "tax evasion" (pg. 116). "It was 'the largest tax evasion indictment ever,' Giuliani said."
"The defendants engaged in this scheme as a part of a pattern of racketeering activity in which they concealed in excess of $100 million in taxable income of the defendant Marc Rich International, most of which income was illegally generated through the defendants' violations of federal energy laws and regulations. This scheme, and pattern of racketeering activity, enabled the defendant Marc Rich International to evade taxes in excess of $48 million in United States taxes for the 1980 and 1981 tax years."
Giuliani, however, held back the most serious charge until the end of the press conference."
The most serious charge: "Marc Rich + Co. AG [Rich's Swiss trading corporation and mother-company to MRI] 'entered into contracts with the National Iranian Oil Company (NIOC) to purchase Iranian crude and fuel oil.' ... Trading with the enemy-- the gravest of accusations" (pg. 117).
This is how Marc Rich's crimes became famous, and Marc Rich himself infamous. Prior to these allegations, Rich had been a quiet genius, an unknown billionaire. For a man who would later become the detested scoundrel of a nation who had, until that time, been quite familiar with its many antiheroes (Billy the Kid, Al Capone, Charles Manson), the initial reaction of Sandy Weinberg to allegations against Marc Rich was telling.
"Marc who?" Weinberg asked. "I've never heard of a Marc Rich." (105)
Yet, this "accidental discovery" (117) of Weinberg and Giuliani's (trading with the enemy) would provide the political impetus to eventually charge Rich and partner Pincus Green with the nation's toughest "RICO" (Racketeer Influenced and Corrupt Organizations Act) laws, the "prosecutor's equivalent of nuclear weaponry" (122). For a man whose entire indictment contained not one crime of actual fraud or extortion, the traditional definition of racketeering, it's hard to imagine how racketeering charges could be justified. Actually, it's hard to imagine how any charges could be justified because, remember, Rich's crimes were not against actual, existing individuals but rather against the positive corporate mandates of the United States federal government and its immense regulatory and tax bureaucracies.
The real racket being run was that of the US tax authorities, the real crime Rich -- a literal world citizen with passports issued by Spain, Switzerland and Israel and whose main business was incorporated in Switzerland -- was guilty of was not paying his protection money and furthermore being so bold as to trade with a rival gang in Iran.
And this is really the most instructive moral of the many morals of the Marc Rich saga. Forget the struggle of fleeing Europe's Holocaust and losing everything in the process. Forget the hard work and determination of an immigrant family that allowed them to overcome language barriers and their immediate poverty to ultimately realize an 'American Dream' of their own. Forget the sheer talent and raw force of will necessary to forge a world commodities empire and create an entirely new way to trade oil, a new market that directly challenged the oligopoly of the Seven Sisters oil cartel.
No, Marc Rich's story is significant and telling because it reveals the true nature of government in practice, and especially government as practiced in America, where it is nothing but politics and egos that decides men's fates, and not some phony, childish striving for the "common good." It shows us that government is fundamentally anti-competitive, anti-business and anti-individual.
The crusade against Marc Rich was over the top and beyond any reasonable idea of the pursuit of justice in a free country. With rampant politicization of the process and the prosecution and defense alike, its use of the most formidable federal charges possible (RICO) and the wanton collateral damage caused to Rich's company, employees, trading partners and even world markets, it was akin to an all-out totalitarian war.
This is the stark reality of government, that it destroys wealth. That it tears society down. That it hobbles trade. And all for what? For the egos of ambitious politicians. Who benefited from Marc Rich's downfall? Not the people of the United States, and not the people of the rest of the world. But for Giuliani, it was "another feather in his cap" (123).
No, Marc Rich only traded for profit, nothing more, nothing less, and a value that is truly non-partial and non-political.
Taylor Conant writes about economics, politics and liberty from Texas. He believes the world would be a better place if more people minded their own business.
Copyright 2009 EPJ Group LLC
The popular telling of the myth of the crimes of Marc Rich almost perfectly captures the modern American zeitgeist-- a businessman, the most evil and exploitative kind of villain that can plague a nation of honest and earnest people, sought to earn a profit via oil trades with the enemy (post-Revolution Iran) during a time of national crisis and embargo (the embarrassingly stupid hostage situation in Tehran circa 1979), evaded his tax obligations and then had the sheer nerve (or perhaps deep well of pure, black hatred within his heart) to refuse to stand trial for his crimes by fleeing to neutral Switzerland, using his enormous, illegally-acquired and not to mention positively unsightly personal wealth to buy himself immunity -- and eventually a full pardon -- from a criminal justice system to which lesser mortals must pay heed.
But if we peer a little closer (and trust the retelling of Rich's story in Daniel Ammann's biographic to be honest and accurate), we begin to see Marc Rich in an entirely different light-- if not immediately heroic, then certainly victimized by a benighted American public and tormented by a vengeful "limited" government with ulterior motives. Yes, in this new light, Marc Rich casts long shadows, and standing hunched over in the shadows we see the plotting, manipulative forms of then-US Attorney Rudy Giuliani and then-US Federal prosecutor Sandy Weinberg, as representatives of themselves but also as representatives of the disaster of unbridled ego, political pragmatism and the twisted logic of the State that has nowadays become so popular.
The man's accomplishments are legend and long-form: single-handedly creating the world market for spot-price oil; circumventing blockades, trade barriers and hare-brained foreign policy situations to move commodities from the conflict-ridden pieces of earth where they lay, wasted, into the hands of producers all over the world who value them most; organizing a billion-dollar-a-year commodity trading company with his partner Pincus Green, whose reach spanned the globe; and evading the vagabonds and plunderers calling themselves the US federal government and the US Marshal Service for over a decade.
And the man's crime? Libertarians, steady yourselves-- doing business in certain places and in a certain fashion without the express permission of the United States federal government to do so. In other words, Marc Rich was guilty of minding his own business.
That's the reality of Marc Rich's crimes, but that was not the story fed to journalists by U.S. attorney Rudy Giuliani on September 19th, 1983. On that day, the public learned of Rich's "fifty-one counts of fraud, racketeering" and "tax evasion" (pg. 116). "It was 'the largest tax evasion indictment ever,' Giuliani said."
"The defendants engaged in this scheme as a part of a pattern of racketeering activity in which they concealed in excess of $100 million in taxable income of the defendant Marc Rich International, most of which income was illegally generated through the defendants' violations of federal energy laws and regulations. This scheme, and pattern of racketeering activity, enabled the defendant Marc Rich International to evade taxes in excess of $48 million in United States taxes for the 1980 and 1981 tax years."
Giuliani, however, held back the most serious charge until the end of the press conference."
The most serious charge: "Marc Rich + Co. AG [Rich's Swiss trading corporation and mother-company to MRI] 'entered into contracts with the National Iranian Oil Company (NIOC) to purchase Iranian crude and fuel oil.' ... Trading with the enemy-- the gravest of accusations" (pg. 117).
This is how Marc Rich's crimes became famous, and Marc Rich himself infamous. Prior to these allegations, Rich had been a quiet genius, an unknown billionaire. For a man who would later become the detested scoundrel of a nation who had, until that time, been quite familiar with its many antiheroes (Billy the Kid, Al Capone, Charles Manson), the initial reaction of Sandy Weinberg to allegations against Marc Rich was telling.
"Marc who?" Weinberg asked. "I've never heard of a Marc Rich." (105)
Yet, this "accidental discovery" (117) of Weinberg and Giuliani's (trading with the enemy) would provide the political impetus to eventually charge Rich and partner Pincus Green with the nation's toughest "RICO" (Racketeer Influenced and Corrupt Organizations Act) laws, the "prosecutor's equivalent of nuclear weaponry" (122). For a man whose entire indictment contained not one crime of actual fraud or extortion, the traditional definition of racketeering, it's hard to imagine how racketeering charges could be justified. Actually, it's hard to imagine how any charges could be justified because, remember, Rich's crimes were not against actual, existing individuals but rather against the positive corporate mandates of the United States federal government and its immense regulatory and tax bureaucracies.
The real racket being run was that of the US tax authorities, the real crime Rich -- a literal world citizen with passports issued by Spain, Switzerland and Israel and whose main business was incorporated in Switzerland -- was guilty of was not paying his protection money and furthermore being so bold as to trade with a rival gang in Iran.
And this is really the most instructive moral of the many morals of the Marc Rich saga. Forget the struggle of fleeing Europe's Holocaust and losing everything in the process. Forget the hard work and determination of an immigrant family that allowed them to overcome language barriers and their immediate poverty to ultimately realize an 'American Dream' of their own. Forget the sheer talent and raw force of will necessary to forge a world commodities empire and create an entirely new way to trade oil, a new market that directly challenged the oligopoly of the Seven Sisters oil cartel.
No, Marc Rich's story is significant and telling because it reveals the true nature of government in practice, and especially government as practiced in America, where it is nothing but politics and egos that decides men's fates, and not some phony, childish striving for the "common good." It shows us that government is fundamentally anti-competitive, anti-business and anti-individual.
The crusade against Marc Rich was over the top and beyond any reasonable idea of the pursuit of justice in a free country. With rampant politicization of the process and the prosecution and defense alike, its use of the most formidable federal charges possible (RICO) and the wanton collateral damage caused to Rich's company, employees, trading partners and even world markets, it was akin to an all-out totalitarian war.
"It was phenomenal," Sandy Weinberg told me with glee. "We tied up all U.S. assets, including 20th Century Fox. We shut 'em down completely. We shut the company down for a year. They couldn't operate in the U.S. It cost them dearly. I assume it cost them probably a billion dollars." (123)Ask yourself, what is this prosecutor gloating over? What is he gloating over besides his own pride in his personal power to destroy a man's business, business partners and reputation? What is he thrilling over but the loss of value, to many millions of people the world over, that the "billion dollars" in lost revenue represents? Rich was never charged with a crime that represented stealing from others or extorting his trading partners... all money he made, he made on the basis of voluntary, wealth-producing transactions from the viewpoint of his trading partners.
This is the stark reality of government, that it destroys wealth. That it tears society down. That it hobbles trade. And all for what? For the egos of ambitious politicians. Who benefited from Marc Rich's downfall? Not the people of the United States, and not the people of the rest of the world. But for Giuliani, it was "another feather in his cap" (123).
"U.S. Attorney Giuliani knew that the case would serve as a springboard for his political career-- a career that would lead him to become the mayor of New York and later to make an unsuccessful bid for the U.S. presidency. One could go so far as to say that Giuliani's political and very public career actually began with this case. As history has shown, the fact that the case escalated rapidly before virtually exploding as a media event was not exactly to Giuliani's disadvantage. In all likelihood, this escalation was even desired." (142)Ultimately, Marc Rich ran afoul of the political process. He sought to trade around arbitrary regulations and restrictions on oil exchange established by the political Department of Energy. He maintained multiple passports and was not beholden to the ever-changing nationalistic political winds of any land or time period. He exploited tax loopholes to avoid paying as much protection money as he could, protection fees which are, again, established arbitrarily and politically by the respective governments involved on he basis of what is expedient, not what is right or necessary. And finally, he traded with unpopular foreign regimes without respect for outstanding bans and embargoes and did so without the nauseating moral hypocrisy of the politician who makes claim that he is transacting with rights-violators for the Greater Good.
No, Marc Rich only traded for profit, nothing more, nothing less, and a value that is truly non-partial and non-political.
Taylor Conant writes about economics, politics and liberty from Texas. He believes the world would be a better place if more people minded their own business.
Copyright 2009 EPJ Group LLC
Sunday, October 18, 2009
Bloomie's Broken Window Blooper
by Taylor Conant
This ain't the 'Broken Window' theory championed by Rudy, Billy and Howie in NYC in the early 90's. No, this is the 'Broken Window fallacy' of French economist Frederic Bastiast of the 50's (the 1850's, that is), and NYC mayor Mike Bloomberg is all over it! According to the NYT.com:
This ain't the 'Broken Window' theory championed by Rudy, Billy and Howie in NYC in the early 90's. No, this is the 'Broken Window fallacy' of French economist Frederic Bastiast of the 50's (the 1850's, that is), and NYC mayor Mike Bloomberg is all over it! According to the NYT.com:
Mayor Michael R. Bloomberg is closing in on a milestone: building or preserving 165,000 city-financed apartments and houses for low-, moderate- and middle-income families, the goal of a $7.5 billion housing plan he announced in 2002 and expanded in 2005.
It has already financed the creation or preservation of 94,000 units, including 72,000 for low-income households, city officials say.
But those efforts have been overwhelmed by a far larger number — the 200,000 apartments affordable to low-income renters that New York City has lost over all, because of market forces, during the mayor’s tenure.
Oh Bloomie! While you may be in charge of executing the law, and your police buddies are responsible for enforcing it, Bastiat wrote the book, literally. Bastiat's The Law, published 1850, decried the twin evils of "stupid greed" and "false philanthropy" and served as a follow-up to his earlier pamphlet That Which Is Seen And That Which Is Unseen, which first related his Parable of the Broken Window which made the simple observation of redistributive welfare economics-- it doesn't work. For every dollar spent by the government on a welfare project, corporate or individual, there is concurrently one less dollar available to be spent in the private sector. In The Law, Bastiat railed against the "protective tariffs, subsidies, guaranteed profits" of stupid greed and the "guaranteed jobs, relief and welfare schemes, public education, progressive taxation, free credit, and public works" of false philanthropy.
Hey, Bloomie, which of these farcical fallacies have you pursued in your wanton violation of unrepealable (economic) Law?
When you read the sly propaganda of the NYT and learn that Bloomie has almost "built or preserved" 165,000 apartments and houses for "low-, moderate- and middle-income families" with his $7.5 billion program, you ought to make like Bastiat, the economic Lawficer, and ask yourself these questions:
--Whose money did Bloomie use to do this?
--How did he decide on the $7.5 billion figure (what calculation did he arrive at to conclude this was an optimal amount)?
--How many apartments and houses, for families and individuals of all economic strata, were NOT built because the funds to do so were absorbed by Bloomie's program? (If each of these apartments/houses house just one family, then the cost of construction/preservation was more than $45,000 per unit!)
--Furthermore, how many buildings providing all kinds of goods and services (housing, healthcare, food, entertainment, recreation, transportation, etc.) were NOT built because the funds to do so had been appropriated by Bloomie's ambition?
--Go one step further... imagine everything that could've been built/preserved with that money, and wasn't, and ask yourself how Bloomie knew that this use of the $7.5 billion total was the best, most economic/welfare-enhancing use of that money for NYC's society, in light of the nearly infinite multitude of alternative uses?
--How many votes do you estimate Bloomie bought with NYC-taxpayer money?
The last question is an important one, and the effects of the expenditure are obviously both direct and indirect. Nearly every one of the families housed by Bloomberg's affordability extravaganza will likely feel indebted to him for their cheap dwelling, but there will also undoubtedly be a ripple effect an order of magnitude greater in number amongst the voting 'conscientious' in the Big Apple.
Let's face it, "affordable housing" is a misnomer, if not an outright lie. Like the politicos who push it like a drug on the corner outside the local bodega, it's a definitional perpetration of the 'Broken Window fallacy' Bastiat warned us against. For every individual who is seen to gain a unit of "affordable" housing, another individual goes largely unseen in bearing the incredibly unaffordable tax burden placed upon him that permits the "affordable" housing to exist. And the tradeoff is rarely 1:1... a poor man gains his housing while a wealthy man loses the tax levied on him to pay for it. But maybe someone else loses, too, like the other poor man and his now non-existent job, who would've been hired by the wealthy taxpayer. Or maybe the wealthy man was an investor, who can now not afford to invest in a start-up company that would've provided a new good or service to thousands of people but which was unfortunately unable to secure their start-up capital.
The possibilities are endless, and they're all unrealized and therefore unseen.
And while the NYT laments the lack of "reasonable places to live" (gee, how do they calculate that one? Is it 'reasonable' to have your own bathroom? kitchen? dishwasher? laundry machine? bedroom plus dining room?) no one seems to miss all the other "reasonable places to live" and great places to hang out and cool new products and services to try that, thanks to Bloomie's "stupid greed" for votes and "false philanthropy" simply don't exist at all.
But that's not the most confusing part. The article continues:
The last question is an important one, and the effects of the expenditure are obviously both direct and indirect. Nearly every one of the families housed by Bloomberg's affordability extravaganza will likely feel indebted to him for their cheap dwelling, but there will also undoubtedly be a ripple effect an order of magnitude greater in number amongst the voting 'conscientious' in the Big Apple.
Let's face it, "affordable housing" is a misnomer, if not an outright lie. Like the politicos who push it like a drug on the corner outside the local bodega, it's a definitional perpetration of the 'Broken Window fallacy' Bastiat warned us against. For every individual who is seen to gain a unit of "affordable" housing, another individual goes largely unseen in bearing the incredibly unaffordable tax burden placed upon him that permits the "affordable" housing to exist. And the tradeoff is rarely 1:1... a poor man gains his housing while a wealthy man loses the tax levied on him to pay for it. But maybe someone else loses, too, like the other poor man and his now non-existent job, who would've been hired by the wealthy taxpayer. Or maybe the wealthy man was an investor, who can now not afford to invest in a start-up company that would've provided a new good or service to thousands of people but which was unfortunately unable to secure their start-up capital.
The possibilities are endless, and they're all unrealized and therefore unseen.
And while the NYT laments the lack of "reasonable places to live" (gee, how do they calculate that one? Is it 'reasonable' to have your own bathroom? kitchen? dishwasher? laundry machine? bedroom plus dining room?) no one seems to miss all the other "reasonable places to live" and great places to hang out and cool new products and services to try that, thanks to Bloomie's "stupid greed" for votes and "false philanthropy" simply don't exist at all.
But that's not the most confusing part. The article continues:
Including public housing, the number of apartments considered affordable to low-income households — those earning less than 80 percent of the city’s median income, or less than $37,000 — decreased to 991,592 from 1,189,962, a drop of nearly 17 percent, from 2002 to 2008. About 42 percent of the city’s households fit in that income category in 2008.
The data were supplied by the Furman Center for Real Estate and Urban Policy at New York University, which analyzed the city’s Housing and Vacancy Survey from 2002, 2005 and 2008. The center and other housing experts consider an apartment affordable if it costs no more than 30 percent of a family’s income, or about $925 a month for a family earning $37,000.
The city says a low-income household is one earning less than 80 percent of the median income of $37,000 (by the way, if this is a relativistic definition based on a sliding scale, it's possible for a household to qualify as low-income making $150,000 if the median income is $200,000). The Furman Center at NYU says an apartment is affordable if it costs no more than 30 percent of a family's income. But what do the people say?
The people say all kinds of things about affordability. Some people are thrifty and won't spend more than 20 percent of their income on housing. Some prefer to spend more of their income on housing than on other monthly expenses and will spend 40 percent. Some think it's more "reasonable" to spend more if they conclude they're getting a safer housing experience, others spend less when they find their housing options to be inconvenient to their lifestyles. There's no right or wrong answer when it comes to individual perceptions of affordability... unless you happen to work in the mayor's office or on the campus of NYU.
Comically, the NYT gives us the best proof of this concept possible with their own portrayal of one of the 'victims' of the affordability crisis:
The people say all kinds of things about affordability. Some people are thrifty and won't spend more than 20 percent of their income on housing. Some prefer to spend more of their income on housing than on other monthly expenses and will spend 40 percent. Some think it's more "reasonable" to spend more if they conclude they're getting a safer housing experience, others spend less when they find their housing options to be inconvenient to their lifestyles. There's no right or wrong answer when it comes to individual perceptions of affordability... unless you happen to work in the mayor's office or on the campus of NYU.
Comically, the NYT gives us the best proof of this concept possible with their own portrayal of one of the 'victims' of the affordability crisis:
Before the recession, James Hadden was earning up to $1,000 a week cutting hair at a Harlem salon, but more recently he has taken home $400 to $700. So he has fallen behind on the $1,300-a-month rent on his one-bedroom apartment, a fourth-floor walk-up on Lenox Avenue. His landlord began asking him to pay weekly. “I’m going to go pay this man’s rent so he’ll stop calling me,” Mr. Hadden, 42, said Tuesday.
Of course, the plight of poor James Hadden, a man who once made $4,000 a month styling people's hair, tells us absolutely nothing about how "affordable" or "unaffordable" housing in New York City is and everything about the choices and trade-offs individuals will make when it comes to allocating their own resources to housing. Mr. Hadden has presumably already made the decision to accept a 'less desireable' housing location in the city (Harlem), for a much lower average rent on same-space (even in the middle of the Next Great Depression, it's hard to find a studio apartment for less than $1,800/mo, and a 1-BR for less than $2,200 if you want to live further south in the city).
But there's even more to Mr. Hadden's economizing on housing than just cost:
He said he was happy to be only 16 blocks from work; closer to the salon, on Fifth Avenue at 116th Street, rents are even more expensive. But he said he sometimes heard gunfire outside his building on Saturdays. “My family comes to visit me and I’m embarrassed to show them where I live,” he said
.
Ah, so you see, Mr. Hadden also trades the convenience of living near work for the safety and security of living somewhere else. And although he's taken a pay cut lately -- his housing was already "unaffordable" by city/NYU standards at 32% of his income, even though Mr. Hadden presumably didn't begin complaining about the situation until recently -- Mr. Hadden continues to pay rent even at these elevated cost-to-income ratios because he appears to find this a more "affordable" set-up than the other alternatives presently available to him. But don't tell the "experts" that, or they might suffocate you in charts, facts and figures.
Bloomie's policy brings us one more treasure, too-- housing by lottery:
Ah, so you see, Mr. Hadden also trades the convenience of living near work for the safety and security of living somewhere else. And although he's taken a pay cut lately -- his housing was already "unaffordable" by city/NYU standards at 32% of his income, even though Mr. Hadden presumably didn't begin complaining about the situation until recently -- Mr. Hadden continues to pay rent even at these elevated cost-to-income ratios because he appears to find this a more "affordable" set-up than the other alternatives presently available to him. But don't tell the "experts" that, or they might suffocate you in charts, facts and figures.
Bloomie's policy brings us one more treasure, too-- housing by lottery:
Affordable housing is in such demand that most new apartments are awarded by lottery. Alan Ceballos, 30, said he was grateful to have won his two-bedroom apartment, costing $839 a month, in a new building on University Avenue in the Bronx.
Mr. Ceballos, who earns about $33,000 a year as a sales associate at a car rental agency, won the spot three years ago, allowing him to move out of a one-bedroom that cost $794. He and his wife had two children then, and now have three
.
Let's see, limited supply of "affordable" housing... nearly unlimited demand for it. How do we solve this problem? Bloomie wonders. Oh, I know! he shouts, Let's have a lottery!
Seems fair, right? Until you ask yourself, "How many families are there who could've paid $839 a month or more in rent and outcompeted Mr. Ceballos, but instead must settle for their next-best housing alternative as a result of not winning the lottery?"
The market's solution is impersonal and, dare I say it, fair: prices rise and fall in terms of rents asked for and rents bid until supply and demand equilibrate and those who value a unit of housing the most are those who get the housing.
Bloomie's solution is arbitrary and mean. He sets up a lottery and then says "Too bad, so sad" to those who don't win but could've afforded the housing nonetheless. Don't forget, this is the kind of 'solution' we'll be seeing with rationed public healthcare soon enough, too.
Public housing programs and "affordable" housing regulations are a disaster. They punish and reward at random, they suppress profits and leech taxes out of private wealth that could be used to maintain and expand the supply of ALL private goods and services, including private housing, and they violate economic law in a tragic race-to-the-bottom. The more housing resources and wealth in general under control of the State and Michael Bloomberg, the less housing resources and wealth in general will be available to you, me and everyone else to do as we prefer with it.
Keep in mind, whereas the private sector does everything it can to try to promote the kind of quality, convenience, security and accessibility that maintain and drive property prices higher, it is the stated policy aim of governments everywhere to drive property prices and values lower. And while it is the competition of the marketplace which is the only phenomenon capable of actually achieving the government's aims (lower real property values), the government will nevertheless achieve one of its goals (lower nominal property prices) by inviting in all the crime and decrepitude normally found in government-owned ghettos the world-round, and spreading this social malice as far and wide as it is able to do so.
So, in a nutshell, Bloomie, you blew it. Your pursuit of "affordable" housing for the benighted people of NYC will forever remain elusive, but your success in visiting more stagnation, rot and hardship on those same poor people will indeed be great and remembered forever!
Taylor Conant writes about economics, politics and liberty from Southern California. He believes the world would be a better place if more people minded their own business.
Copyright 2009 EPJ Group LLC
Let's see, limited supply of "affordable" housing... nearly unlimited demand for it. How do we solve this problem? Bloomie wonders. Oh, I know! he shouts, Let's have a lottery!
Seems fair, right? Until you ask yourself, "How many families are there who could've paid $839 a month or more in rent and outcompeted Mr. Ceballos, but instead must settle for their next-best housing alternative as a result of not winning the lottery?"
The market's solution is impersonal and, dare I say it, fair: prices rise and fall in terms of rents asked for and rents bid until supply and demand equilibrate and those who value a unit of housing the most are those who get the housing.
Bloomie's solution is arbitrary and mean. He sets up a lottery and then says "Too bad, so sad" to those who don't win but could've afforded the housing nonetheless. Don't forget, this is the kind of 'solution' we'll be seeing with rationed public healthcare soon enough, too.
Public housing programs and "affordable" housing regulations are a disaster. They punish and reward at random, they suppress profits and leech taxes out of private wealth that could be used to maintain and expand the supply of ALL private goods and services, including private housing, and they violate economic law in a tragic race-to-the-bottom. The more housing resources and wealth in general under control of the State and Michael Bloomberg, the less housing resources and wealth in general will be available to you, me and everyone else to do as we prefer with it.
Keep in mind, whereas the private sector does everything it can to try to promote the kind of quality, convenience, security and accessibility that maintain and drive property prices higher, it is the stated policy aim of governments everywhere to drive property prices and values lower. And while it is the competition of the marketplace which is the only phenomenon capable of actually achieving the government's aims (lower real property values), the government will nevertheless achieve one of its goals (lower nominal property prices) by inviting in all the crime and decrepitude normally found in government-owned ghettos the world-round, and spreading this social malice as far and wide as it is able to do so.
So, in a nutshell, Bloomie, you blew it. Your pursuit of "affordable" housing for the benighted people of NYC will forever remain elusive, but your success in visiting more stagnation, rot and hardship on those same poor people will indeed be great and remembered forever!
Taylor Conant writes about economics, politics and liberty from Southern California. He believes the world would be a better place if more people minded their own business.
Copyright 2009 EPJ Group LLC
Sunday, September 20, 2009
The Economic Fallacy Of 'Too Big Too Fail'
By Taylor Conant
The onset of the financial implosion two years ago brought with it an ongoing dialogue about the 'Too Big To Fail' (TBTF) doctrine of government intervention into the financial sector. According to TBTF, some financial institutions, such as major insurers like AIG or large money-center banks like Citi and BofA, are deemed to be too large and too centrally interconnected in the US and world financial systems and economies to be allowed to be recognized as insolvent and taken through bankruptcy resolution.
As all government interventions do, TBTF has experienced mission creep and other, non-financial institutions, have also been brought under the TBTF-umbrella, such as auto-manufacturers GM and Chrysler. According to proponents of TBTF, these companies were also too important to the economy and financial system (via unemployment impacts) to be allowed to fail, although clearly the extension of this 'safety net' was more about practical political favoritism than economics, much like the original, flawed theory of TBTF for finance itself.
There's a major problem with TBTF-- taken to its logical ends, it is guaranteed financial suicide. Why? TBTF implies a totalitarian pursuit of 'failure insurance' for the institution under consideration that potentially puts the entire economy at risk.
When a business is deemed to be TBTF, it means the government stands ready to backstop any and all losses that business has incurred and might incur from that point forward. TBTF means that if the business is operating in a market which is dying, or if it is employing a business strategy that can not make money, the government will continue to pour resources into the sinkhole with no limit in sight. If TBTF-promoters mean what they say, it's theoretically conceiveable that the government could sacrifice the financial well-being of the rest of the economy, including its own precarious financial situation, in order to keep one 'strategically important' institution that is TBTF, solvent.
Most likely, it won't go that far, and you're probably reading this thinking it's ridiculous to even consider that such a thing might happen.
But consider something that is, in a way, even more ridiculous-- if TBTF is not followed to its logical end and is instead abandoned at some point along the path of total systemic insolvency, then it means that someone, somewhere is responsible for making a calculation along the lines of determining that TBTF has gone far enough and that it is no longer 'worth it' to go any further.
How do they make that kind of a calculation?
When a firm faces insolvency, it is a result of a market calculation being handed down that deems the firm to be a failure in the pursuit of profits and financial solvency. Insolvency for a firm means that the firm is sufficiently inefficient, sufficiently mismanaged and sufficiently out-of-touch with consumer needs, as communicated through the market, to be supported by consumer activity on a voluntary basis. In other words, through a multuplicity of cost-benefit calculations performed by the totality of individuals supporting the market in question, further patronage of the firm in question is deemed to be 'not worth it.'
TBTF is an end-run around this verdict by politicians who are nothing more than calculating socialists. They seek to replace the individual subjectivity of market participants about a given institution's value to society, with their own 'objective' considerations of the value or worth to these same market participants. When market participants say, "It's not worth it," the calculating socialist says, "Yes, it is." This is economic chauvanism.
But because TBTF is financial suicide, there is some point where even the calculating socialist must change their mind and agree with the market. Until that point is reached, market participants can only sit and wonder how much of the rest of the economy the calculating socialist will deem worthy of sacrifice to the institution which is TBTF. And when that point is reached, the question remains, how did the calculating socialist calculate it?
In its latest incarnation, TBTF has already cost the private economy hundreds of billions of dollars. And as we're in the early innings of this sick game, before it is all through it will surely cost the private economy hundreds of billions more.
TBTF policy is screwing us all. Eventually, there's some point whre it will have to stop. Let us all hope that the calculating socialists determine that point has been reached sooner rather than later.
Taylor Conant writes about economics, politics and liberty from Southern California. He believes the world would be a better place if more people minded their own business.
Copyright 2009 EPJ Group LLC
The onset of the financial implosion two years ago brought with it an ongoing dialogue about the 'Too Big To Fail' (TBTF) doctrine of government intervention into the financial sector. According to TBTF, some financial institutions, such as major insurers like AIG or large money-center banks like Citi and BofA, are deemed to be too large and too centrally interconnected in the US and world financial systems and economies to be allowed to be recognized as insolvent and taken through bankruptcy resolution.
As all government interventions do, TBTF has experienced mission creep and other, non-financial institutions, have also been brought under the TBTF-umbrella, such as auto-manufacturers GM and Chrysler. According to proponents of TBTF, these companies were also too important to the economy and financial system (via unemployment impacts) to be allowed to fail, although clearly the extension of this 'safety net' was more about practical political favoritism than economics, much like the original, flawed theory of TBTF for finance itself.
There's a major problem with TBTF-- taken to its logical ends, it is guaranteed financial suicide. Why? TBTF implies a totalitarian pursuit of 'failure insurance' for the institution under consideration that potentially puts the entire economy at risk.
When a business is deemed to be TBTF, it means the government stands ready to backstop any and all losses that business has incurred and might incur from that point forward. TBTF means that if the business is operating in a market which is dying, or if it is employing a business strategy that can not make money, the government will continue to pour resources into the sinkhole with no limit in sight. If TBTF-promoters mean what they say, it's theoretically conceiveable that the government could sacrifice the financial well-being of the rest of the economy, including its own precarious financial situation, in order to keep one 'strategically important' institution that is TBTF, solvent.
Most likely, it won't go that far, and you're probably reading this thinking it's ridiculous to even consider that such a thing might happen.
But consider something that is, in a way, even more ridiculous-- if TBTF is not followed to its logical end and is instead abandoned at some point along the path of total systemic insolvency, then it means that someone, somewhere is responsible for making a calculation along the lines of determining that TBTF has gone far enough and that it is no longer 'worth it' to go any further.
How do they make that kind of a calculation?
When a firm faces insolvency, it is a result of a market calculation being handed down that deems the firm to be a failure in the pursuit of profits and financial solvency. Insolvency for a firm means that the firm is sufficiently inefficient, sufficiently mismanaged and sufficiently out-of-touch with consumer needs, as communicated through the market, to be supported by consumer activity on a voluntary basis. In other words, through a multuplicity of cost-benefit calculations performed by the totality of individuals supporting the market in question, further patronage of the firm in question is deemed to be 'not worth it.'
TBTF is an end-run around this verdict by politicians who are nothing more than calculating socialists. They seek to replace the individual subjectivity of market participants about a given institution's value to society, with their own 'objective' considerations of the value or worth to these same market participants. When market participants say, "It's not worth it," the calculating socialist says, "Yes, it is." This is economic chauvanism.
But because TBTF is financial suicide, there is some point where even the calculating socialist must change their mind and agree with the market. Until that point is reached, market participants can only sit and wonder how much of the rest of the economy the calculating socialist will deem worthy of sacrifice to the institution which is TBTF. And when that point is reached, the question remains, how did the calculating socialist calculate it?
In its latest incarnation, TBTF has already cost the private economy hundreds of billions of dollars. And as we're in the early innings of this sick game, before it is all through it will surely cost the private economy hundreds of billions more.
TBTF policy is screwing us all. Eventually, there's some point whre it will have to stop. Let us all hope that the calculating socialists determine that point has been reached sooner rather than later.
Taylor Conant writes about economics, politics and liberty from Southern California. He believes the world would be a better place if more people minded their own business.
Copyright 2009 EPJ Group LLC
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