Friday, March 31, 2006

"It's Not Their Money to Give"

Dear Letters Editor:

The December 23 front page article entitled "No room for good cheer in FEMA trailers" proves that government cannot provide charity, nor should it be in the business of providing hand-outs or assistance.

When private citizens aid those in need there are no complaints about petty matters such as a too-small water heater, an oven that can't cook a 13-pound turkey, limited space, etc.

Had the gift of the trailer been a private exchange between giver and hurricane victim, the recipient would have been appreciative of the sacrifice shown by the giver. But when the government provides the assistance there is the belief that the assistance is some form of a right; a right that always falls short of its perceived ideal. A quick glance of the accompanying photo shows a cozy trailer with satellite TV. It certainly appears that life in the trailer beats the alternative; no roof and exposure to the elements.

The problem is that government cannot provide anything, all it can do is use compulsion to force an exchange to occur. The trailer is not a gift from FEMA, neither is it a gift from the President or Congress. The trailer is simply a forced exchange between taxpayer and now-whining hurricane victim, with no one happy and no one showing appreciation.

Had FEMA not been involved, private citizens would have provided for the needs of the hurricane victims. The result: Those housed in trailers would be appreciative and taxpayers wouldn't be left holding the bag as government officials take credit for what they call a gift of their own. To paraphrase Davey Crockett, "It's not their money to give."

Jim Fedako

Thursday, March 30, 2006

It's All Over Now ... Follow the Money

It's all over now ... at least according to this dismal Time Magazine cover story. Or is it? If indeed those who raise fears of the latest global calamity really believed their tall tales, wouldn't they all be selling their homes and vacation sites in Florida and elsewhere? Follow the money. The Austrian School of Economics is centered on human action. Acting man demonstrates his true preferences, and hence his belief system, when he acts -- when he chooses one action over another. If indeed Florida is to be drowned by the seas and become a future Atlantis, wouldn't scientists, environmentalists, and the rest of the Chicken Little statist do-gooders be selling their Florida properties and moving north and inland? That there is not such a mass migration reveals the true beliefs of the doomsayers. Their actions reveal that they don’t believe their own drivel, should you?

Jim Fedako

Sunday, Mar. 26, 2006 Polar Ice Caps Are Melting Faster Than Ever... More And More Land Is Being Devastated By Drought... Rising Waters Are Drowning Low-Lying Communities... By Any Measure, Earth Is At ... The Tipping PointThe climate is crashing, and global warming is to blame. Why the crisis hit so soon--and what we can do about it By JEFFREY KLUGER No one can say exactly what it looks like when a planet takes ill, but it probably looks a lot like Earth. Never mind what you've heard about global warming as a slow-motion emergency that would take decades to play out. Suddenly and unexpectedly, the crisis is upon us. Read more ...,8816,1176980,00.html

Wednesday, March 29, 2006


Dear Letters Editor:
In her February 22 letter, Shelby Stocks repeats the standard error regarding Wal-Mart and the Market; the belief that Wal-Mart dictates what items are produced and where they are produced, and at what price they are sold. This error is one of the first steps down the road toward increasing government interventions. F.A. Hayek, Nobel Laureate in Economics, recognized this phenomenon in his classic Road to Serfdom.

The reality is this: Absent government compulsion, neither Wal-Mart, nor any other business for that matter, can coerce the consumer into purchasing items that are not desired. All successful businesses such as Wal-Mart provide the goods and services at a price and quality that the consumer wants. It's the consumer that captains the market. Wal-Mart will find itself out-of-business as soon as it stop satisfying the wants of it's customers.

In addition, Wal-Mart cannot coerce anyone to work at it's stores. People work there because it beats the next alternative.

Stocks' real issue is not with Wal-Mart; her issue is with those of us who shop at Wal-Mart. She simply wants to stop us from shopping there. Her choices are this: use her rhetorical skills to convince us to shop elsewhere, or, use government to achieve her goal. Fox obviously opts for the government approach.

Stocks and Robyn Blumner have every right to open a store that meets their definition of "patriotic," though they never sufficiently define their use of that term. Despite implying that they are more patriotic than shoppers at Wal-Mart, Stocks and Blumner have no qualms with using the coercive force of government to close any business that doesn't meet the Stocks/Blumner definition of patriotic. Sounds more Soviet than Yankee Doodle.

I suggest that Stocks open her "patriotic" store in Delaware and allow the consumer to choose where to shop. If Stocks is successful in identifying the unmet desires of the consumer, she will find herself the operator of a prosperous business and next target of other anti-market forces.

Or, maybe I am wrong. Maybe, just maybe, Stocks simply does not want commercial development in her area. If that's the case, state it. Just don't claim to be a do-gooder and attack the free market because of your own situation.

Jim Fedako

Wal-Mart Again!

Dear Letters Editor:

In Thursday's Gazette, Dave Beckly's letter shows that he lacks an understanding of both economics and causal relationships.

What Beckly does not understand, or is unwilling to admit, is that Wal-Mart does not apply any form of coercion or compulsion in order to entice consumers to shop at it's stores. Consumers shop at Wal-Mart simply because those stores provide the mix of price and quality that is currently demanded by a large number of consumers. That's right, Wal-Mart is just doing its job by satisfying the consumer. And for doing such a great job of satisfying the consumer, Wal-Mart is the latest recipient of anti-market rants and rages from those who claim to be looking out for the interests others.

Ludwig von Mises of the Austrian School of Economics was correct when he wrote that the consumer captains the economy, and the consumer is a heartless taskmaster. Should another company bring a better mix of price and quality to the market, consumers will cross the street to the better bargain and Wal-Mart will soon end up in the waste heap of failed businesses.

The Beckly's of the world don't like the fact that Wal-Mart is successful, they are at war with the free market. Though they may claim otherwise, they are statists: adherents to a less dogmatic form of socialism. But the Beckly's never direct their rage at the source of their unease; his family, friends and neighbors, those who like to save as much as they can at the end of the check-out lane.

Family, friends and neighbors of Beckly watch out, he wants to raise your cost of goods and services and thereby reduce your other expenditures. He would like to see government use it's power of control to limit your access to goods and services at a price that Beckly deems unfair. Sounds pretty socialistic to me.

Rant and rage all you like but please leave me to shop where I choose, and I choose to shop at stores where my mix of price and quality is the best. Today it's Wal-Mart. Tomorrow, who knows.

Jim Fedako

Intelligent Design

Dear Letters Editor:

Any conclusion about the Evolution v. Intelligent Design Debate requires an understanding of the differences between science and history.

Science uses a methodological approach to study the phenomena of the physical and natural world in order to generate a body of knowledge. This knowledge is then used to predict future states as well as to test new hypotheses through empirical studies, observations and data gathering. Science constantly tests its own assumptions as new hypotheses and technologies challenge past ideas. Science is in a constant state of flux and can never explain all phenomena. Scientific paradigms, or belief systems, change as unexplainable anomalies call the prevailing set of ideas and assumption into question.

Big "E" evolution is not a science; it is simply one version of history. Why is Evolution not a science? Simple, it provides no predictive knowledge about nature. Evolution cannot be tested through empirical studies and is not a verifiable explanation of the current state of the physical and natural world. Nor is it a means to predict any future state of the physical and natural world.

Evolution is one version of history. As a Christian, I have my own version of history. Fear not, my version of history will allow me to operate an Automated External Defibrillator device hanging on an airport wall should someone have a heart attack. In addition, I will not release a weight over your toe expecting the weight to simply float away. My history does not handicap my ability to study the phenomena of the physical and natural world. We can disagree on history but agree on the present. So, why the effort to push big "E" history as a science? And, why the effort to use coercion and compulsion to indoctrinate the next generation? Science is not at stake here, so what is?

Jim Fedako

What's Wrong with Questions in Science?

Dear Letters Editor,

In her editorial, "Did State Board of Education rule properly on evolution?"(Dispatch, February 27, 2006), State Board of Education member Martha Wise inadvertently reaffirmed the controversy over evolution in the state's science standards. Wise begins by stating that she is a creationist -- one who believes in a world created and ordered by God. She then defends evolution as a science that must be taught in schools because "Ohio's prosperity depends on a well-educated workforce that understands science..."

How can Wise claim to be both a believer in creationism and evolution? Logically one cannot rationally hold propositions A and not-A simultaneously true. Obviously the creationism/evolution debate rages within the mind of Wise. If she can wrestles with this, why does she not want Ohio students to wrestle also?

While understanding science is important for future generations, judges can't determine scientific truth. Scientific truth is found when science tests its own assumptions as new hypotheses and technologies call the prevailing set of ideas and assumption into question.

If the current scientific paradigm is believed false by educated folks such as Wise, the paradigm must be questioned and debated, and, if appropriate, a new paradigm -- one closer to the truth -- established. According to Thomas Kuhn, influential historian of science and philosopher, that's how real science works.
Jim Fedako

A Collectivist

Letters Editor:

In Sunday's Dispatch, William L. Bainbridge shows his true colors in "Home-schooling data need a closer look." Bainbridge is a collectivist; one who believes that we must all march in one step, and, more importantly, we all must march in step to the beat of his personal ideals. He is also a statist; one who believes that the state must assume responsibilities that should remain personal matters.

In all financial matters, accountability flows from the spender to the provider. Public schools are accountable to their taxpayers while privates schools are accountable to the parents who pay tuition. Families who chose to home school have made a personal family decision through which they consume no one else's dollar. These families are accountable only to themselves.

But, wait. The Bainbridges of the world believe that they can run your life better than you. They suffer from a belief in their own infallibility. You see, only the parent can make a poor decision, the Bainbridges are above the realm of mundane errors; they are omniscient. A quick history review of the twentieth century reveals the horrid results of this personality type.

When Bainbridge and others of his ilk appeal to "society," they really mean the system of coercion and compulsion that would force us all to the rice paddies for a stint of re-education, with Bainbridge chanting the party slogans hour after long hour.
The question you have to ask yourself is this, "Do you want Bainbridge sticking his nose in your personal decisions?" Based on his comments in this and prior articles, I'm certain that he is ready to guide your life. What happened to the American ideal of rugged individualism? Well, the ideal is slowly be eroded by the collectivist, statist push to overthrow individual liberty. Watch out.

Jim Fedako

Equity and Adequacy for Whom?

Dear Letters Editor:

In his January 21, 2006 letter to the editor (Education overhaul is needed in Ohio), William Phillis, executive director of the Ohio Coalition for Equity and Adequacy of School Funding, contends that the legislature has failed to correct the state's system of funding public education. He is both wrong and right on this account.

Wrong because studies show, and actual numbers prove, that recent budgets have sent an influx of state funds to lower-wealth school districts. An example: Trimble Local in Athens County, the state's poorest school district, has greater per-pupil revenue and expenditures than wealthy districts such as mine, Olentangy Local in Delaware County. In addition, billions of state funds have built quality buildings in poor districts state-wide.

Phillis is correct when you realize that he is simply fighting for more money. Funding will not cure the ills of a sluggish education system. Adding an additional 10%, 20%, even 50% will not result in achievement gains. How do I know? Because the greater increases have not resulted in improvements over the last 40 years.

Look at my district: We pay counselors and librarians up to $96,000 for a 203 day work year. In addition, these employees get great health care coverage, 15 sick days, 4 personal days and a generous retirement. Providing our district with additional funds will only serve to increase salaries, it will not ensure a better outcome. An additional 10% will result in those same employees making almost $106,000, and nothing else. These salaries are much, much higher than corresponding salaries in the private sector.

I'm using these two job classifications as examples only. All district employees make salaries that are much higher than private sector -- private school -- equivalents.

Under the Phillis education funding ideal, more state funds always leads to the need for more state funds. Once any increase is given away in salaries and benefits, residents will be asked to cough up more. After agreeing to take on additional local property tax mills to support such increases, the education system will cry that the state is not living up to its end of the bargain.

In his world, Phillis is correct that the legislature is not funding his ideal system, nor should it.

As long as the average school employee receives a yearly salary/benefits increase of 6% or so -- far outpacing the private sector -- money will always be in short supply.

Jim Fedako

Wal-Mart and the Statist

Letters Editor:

Before his death in 1993, Henry Hazlitt, influential financial writer for Newsweek, always challenged his readers to think beyond the obvious and discover the unseen consequences of an economic policy.

The author of the letter "Wal-Mart employees can't afford coverage" simply recognizes the obvious. He claims to be defending the average worker as he looks for the state to impose additional costs on successful enterprises such as Wal-Mart.

This certainly sounds like the right road to take, but he has not looked for the less obvious impacts of his proposed state intervention -- increased prices and unemployment. Raise Wal-Mart's cost of doing business and you will be forcing additional workers to the unemployment lines. On top of that, those of us who remain employed will soon experience increased taxes to support the newly-displaced workers, and, we will have to pay more at the check-out line.

Of course those who fight Wal-Mart have a solution to these second and third consequences, more state interventions in the market. As China and other countries are seeing the free market as their solutions, why are we looking toward the failures of socialism to fix our ills?

Jim Fedako

Play the Correlation Game

Play the Correlation Game
By: Jim Fedako
Ludwig von Mises: As a method of economic analysis econometrics is a childish play with figures that does not contribute anything to the elucidation of the problems of economic reality.[1]

Think that you might be capable of a crime? Worried that you're the next face to appear on the local most-wanted list? Wonder no more. Just take a gander at your high school senior photo and make an honest assessment of your appearance. If you were cute or handsome, no prison yard for you. If you were ugly, better call an attorney and bondsman right away ‘cause the slammer is less than eight years away.

Confused? Well, I'm only reciting the latest research – or that which is called research – from the National Bureau of Economic Research. The abstract from Ugly Criminals, NBER Working Paper No. 12019, Issued in February 2006, includes the suggestive finding that, “the level of beauty in high school has an effect on criminal propensity 7-8 years later.” There you have it. Enough said. Crime is the result of looks, plain and simple. It gets worse; the labor market “provides an incentive” for ugly people to live lives of criminal activity. What an evil world we live in?

Compare this with what has to offer: The Epistemological Problems of Economics; and, The Ultimate Foundation of Economics Science. Talk about a dismal science. Come on now, who really needs an Austrian Perspective on the History of Economic Thought? I mean, what’s the point? As my Dad likes to say, “What does it have to do with the price of tea in China?” Or, more importantly, what does all that have to do with one’s propensity to commit a crime?

Why read Mises, Rothbard, and others, when you can understand the world simply by downloading a couple of sets of specious federal data from the web, importing them into any statistical software package – go ahead and use MS Excel if you like -- and correlating these unrelated data points? If two thoughts cross your mind, correlate them. You can even call yourself a researcher and maybe convince the NBER to publish your findings. If your findings are provocative, or even if your title is provocative, you may find yourself sitting with national talking-heads on a cable news channel, not to mention having your name, photo and findings on the front page of the New York Times. In a moment, you are a star. Set the countdown clock at fifteen minutes and enjoy.

Of course there will always be that fear which occasionally enters your conscious mind; what if someone actually reads my study? The study’s title is certainly catchy but the underlying statistical findings are spurious at best. The abstract will suggest a lot about the research, but it’s really easy to suggest; learning and understanding are different matters since they take actual effort and knowledge. It appears that the more provocative the title, or suggestive the findings, the less initial review given to the actual study. (No correlative proof here, just an observation.) Later, after your clock has expired, another researcher will review your findings and publish his refutation and begin his fifteen minutes in the limelight.

Now if you want, you can get more sophisticated by first creating a model and then testing the model against your shallow pool of data. Of course models are best in the end since they add complexity and allow you to include intricate equations in your research paper; form over substance. Just for kicks, link the models and equations together in lines of esoteric jargon that is muddled at best. Muddled writing implies intellect, right? Not so says Rothbard. Muddled writing is usually the sign of muddled thinking. Muddled begets muddled.

Positivism, empiricism, et al, are predicated on the belief that only testable knowledge is valid. They like to claim that aprioristic knowledge is simply a game of semantics and word play; it’s all just tautologies. Really? Mises built his economics on a solid foundation; humans use means to obtain ends; they act. From this he created the science of economics that truly explains the processes of the market, whether free, hampered or socialistic.

From this foundation, Mises can state as a truth such concepts as inflation is the increasing on the supply of fiat money. Inflation is not a push/pull between consumers and suppliers. It’s not some monster that arises when you don't want it only to be settled down by the latest reading from Oracle of the Fed. Inflation is the printing of money or the loosening of credit. Simple. Doesn't matter what the latest researcher has shown using the latest statistical equations and programs. Inflation is what it is.

Reading Mises and Rothbard are sufficient to disprove an NBER study espousing how “investing” in some social program will reap societal benefits in future years. Whereas General Electric sends me my dividends on a regular basis, in all the years that politicians and governmental bureaucrats have invested my confiscated earnings on social programs, I have not received one dividend check. Not one penny. This despite the advertised billions and trillions of dividends due to me by now. Where’s my return on investment from the all pork used to fund NBER research? I don’t need a ten percent return, just three or four percent will suffice. Heck, I’ll even settle for one percent. Check’s in the mail I suppose.

See, as long as we are led to believe that the world can only be understood through empirical and statistical studies, we will never be able to question the true causes of our current malaise. Studies can only suggest. The truth can never be found in statistics, the noise level always drowns out any knowledge that could possibly be garnered.

So, why the continued funding for these studies? Ask yourself, “If ugly people are forced into lives of criminal activity due to the conditions of the current labor market, who or what could correct that market flaw?” If you were a good student in public schools, raise your hand and be prepared to respond, “My dear Uncle Sam is your man.” There you have it, the implicit and sometimes explicit solution to all the social ills noted by NBER research is always interventionism. Government needs to regulate the labor market and correct “the possibility that beauty may have an impact on human capital formation.” One or two more interventions and we can all cross the river to the Land of Cockaigne. At least that’s the picture they paint on the minds of children throughout the nation’s public school system. It’s even tough for adults – myself included -- to keep fighting the party slogans we heard for twelve years over the scratchy PA.

Read Mises, Rothbard, and others who sought liberty and prosperity for all of us. Spend some time digesting the insights found in The Epistemological Problems of Economics, The Ultimate Foundation of Economics Science, not to mention Human Action and Man, Economy, and State. And, disregard the drivel that is portrayed as science but is nothing less than a game of MS Excel.

By the way, the study that I am truly awaiting is the one that correlates PT Barnum’s fool with those willing to forego $5 in order to read the latest drivel from NBER. That’s a study I'll purchase. No, wait. Wouldn't that make me the fool and PT correct once more?

1. The full quote from, Ludwig von Mises, The Ultimate Foundation of Economic Science, 1978. "Deluded by the idea that the sciences of human action must ape the technique of the natural sciences, hosts of authors are intent upon a quantification of economics. They think that economics ought to imitate chemistry, which progressed from a qualitative to a quantitative state.[1] Their motto is the positivistic maxim: Science is measurement. Supported by rich funds, they are busy reprinting and rearranging statistical data provided by governments, by trade associations, and by corporations and other enterprises. They try to compute the arithmetical relations among various of these data and thus to determine what they call, by analogy with the natural sciences, correlations and functions. They fail to realize that in the field of human action statistics is always history and that the alleged "correlations" and "functions" do not describe anything else than what happened at a definite instant of time in a definite geographical area as the outcome of the actions of a definite number of people.[2] As a method of economic analysis econometrics is a childish play with figures that does not contribute anything to the elucidation of the problems of economic reality."

Free Riders: Austrians v. Public Choice article: Free Riders: Austrian v. Public Choice
by Jim Fedako [Posted on Wednesday, July 13, 2005] [Subscribe at email services and tell others]

The latest exploits of Lance Armstrong in this year's Tour de France provide a solid backdrop for discussions contrasting the economic ideas of the Austrian School and the adherents of Public Choice.

Public Choice is predicated on the belief that individual preferences can be known and quantified. From this simplistic view of Thymology, the Public Choice school deduces supposed economic laws regarding government interventions in the market. Government is required because acting man cannot negotiate agreements effectively with other self-seeking acting men.

The Austrian School starts from an aprioristic axiom that humans act by using means to obtain ends. Their ends are individualistic and self-centered. The Austrians do not claim to know unrevealed individual preferences nor do they deduce the need for government interventionism in the market. Acting man is able to create working arrangements with other acting men that benefit all involved.

OK. Good and well. But what about the Tour? How can a bicycle race be applied in discussions of economic theory? Simple. Cycling is an excellent reflection of the market. 198 professionals begin each year's Tour with certain unrevealed goals. Sure, some end goals are widely known. For Lance, a seventh win. For Jan Ulrich, a chance to redeem himself. But what about the 196 other riders?

As in all sports, and all human activities for that matter, there are those few who sit at the pinnacle. The rest are simply one of the bunch. Sure they dream of winning the Tour, but more than likely they are concentrating on the wearing the best-in-the-mountains jersey, the best-in-the-sprints-jersey, winning a stage, or just securing a professional contract for next year.

Public Choice assumes that every racer has the same goals and will react like any other racer in all situations. The Austrians will have none of that. It is impossible to look at a rider and know for certain what he wants to achieve during any given day of the Tour. Certainly you may guess what his team has set for him but what really lies in his heart is unseen and unknown, at least until human action reveals his preferences.

In bicycle races, individual riders will typically "attack" the main field of riders in order to gain time over those other riders and a better chance of success. Better to be 1 of 4 in a small “breakaway” group at the finish line than 1 of 198 in the large field.

In order to gain time, riders must work together by taking turns leading and blocking the wind so that the following riders can rest awaiting their turn at the front. So there you have it, 4 riders with widely divergent preferences working together for a common goal. The four have established a de facto contract that is to everyone’s benefit, even though none knows the other's true motives.

One may assume that they all are looking to win the stage. Possible. But it's also likely that one just wants some time in front of the cameras, another wants to pad time on rivals, a third is there just to assist his team’s goals, and the fourth wants the win so bad he can taste it.

But how do the four create this ad hoc contract? A quick glance, a nod, a wink, or a few words exchanged is all that is required for the four riders at hand to build a successful coalition. Public Choice will have none of this reality. They say that negotiation cannot be frictionless and that only through government interventions can people agree to work together.

What about the "free rider?" In Public Choice theory, the "free rider" always gums up the works. The "free rider" causes coalitions to collapse and contracts not to be formed. Think there are no "free riders' in the Tour.

Think again. Everyone wants to ride in a breakaway group for free. Who wouldn't? Conservation of energy is important when you are racing over 2,000 miles in three weeks. But pressures internal to the coalition typically force the "free rider" to perform. In reality no one really knows if the all racers in the breakaway are giving their fullest effort because no one really knows other's internalized desires and abilities.

There are always “free riders” or “free loaders” in all human activities. That becomes just another datum assumed when choosing amongst alternative choices. Every racer in the Tour understands this quite clearly. Accept it and move on.
Externalities? Come on: every action creates supposed externalities. Should Lance be taxed to offset help he received during the Tour from other riders who were actively pursuing their own selfish interest? Who would create and administer the Pigovian tax structure that would offset all of Lance’s gains and loses? Can even the Cray Supercomputer solve these equations and derive a payout before the 2006 Tour begins?

OK. Individual preferences unrevealed, externalities, “free riders” everywhere, and ad hoc contracts being agreed upon without legal signatures. But what about society? What is best for the collective group of 198 riders? Can this spontaneous order (or disorder, depending on your viewpoint) be best for all? Is this even close to Pareto optimality? It all depends. If you agree that each rider has unrevealed goals, throw that neoclassical equilibrium out the window. The impossible task becomes the creation of an aggregate demand curve.

So, assume that you can create this curve. What would you have? A Tour that functioned much like the Soviet economy. As stated above, all riders want to be “free loaders”, er “riders,” in that they don’t really want to suffer over a hundred miles of mountain roads if their needs were truly going to be met otherwise. Why sweat and pound the asphalt when you can lazily ride and occasionally stop to view the sights?

A couple of problems will arise. First, all riders cannot be designated the Tour champ – the Tour is not a Kindergarten class – so all needs cannot be met. In order to correct for this, the results would have to be created in a manner that approximated the regressed preferences of the aggregate field. Lance would probably remain champ and the other riders would be slotted into their likely finishing positions – all based on creating the efficient solution.

This lead to the second problem, this manner of racing would be slow and boring. Who would watch the riders literally tour France at a leisurely pace? Other than a spouse or two, probably just a few mothers, fathers and girlfriends. The Tour would be no more and 198 riders would be out of a job, all to satisfy some odd belief in equilibrium and utility. This is not a very satisfactory solution.

As you enjoy the Tour on TV remember that riders from many countries, speaking a host of different languages, are able to negotiate productive contracts that are mutually beneficial to both riders and viewers.
Jim Fedako is a former professional cyclist. Comment on the blog.

Recycling: What a Waste! article:

Recycling: What a Waste!

by Jim Fedako
[Posted on Thursday, September 22, 2005] [Subscribe at email services and tell others]

This Fall, school kids across the country will again be taught a chief doctrine in the civic religion: recycle, not only because you fear the police but also because you love the planet. They come home well prepared to be the enforcers of the creed against parents who might inadvertently let a foil ball into the glass bin or overlook a plastic wrapper in the aluminum bin.

Oh, I used to believe in recycling, and I still believe in the other two Rs: reducing and reusing. But recycling? It's a waste of time, money, and ever scarce resources. What John Tierney wrote in the New York Times nearly 10 years ago is still true: "Recycling may be the most wasteful activity in modern America."

Reduce and reuse makes sense. With no investment in resources I can place the plastic grocery bag in the bathroom garbage can and save a penny or so for some more pressing need. Reducing and reusing are free market activities that are an absolute profitable investment of time and labor.

Any astute entrepreneur will see the benefit of conserving factors of production. Houses are built today with much, much less wood than homes built just 20 years ago; and they are built sturdier, for the most part anyway. The decision to reduce wood in houses was not prompted by a green's love for trees; it was a reaction to the increasing cost for wood products.

Using less wood makes financial sense and any entrepreneur worth his profit will change his recipe to conserve wood through better design or by substituting less dear materials for wood products.

A recent Mises article, Ethanol and the Calculation Issue, discussed the inability to calculate the true cost of producing Ethanol. No one can calculate the cost of all the factors of production in the direction from the highest order labor and land down to the lowest order. Ethanol at the pump, though the Chicago School, Keynesians, etc., would certainly give the calculation the old college try. Absent government supports, the cost of Ethanol at the pump reveals the true economic cost of producing that fuel.

The same applies to recycling. What is the true cost of all factors involved in the recycling activity? I haven't a clue. Though using Misesian logic I know that the costs of recycling exceed the benefits. This is the simple result of the observation that recycling doesn't return a financial profit.

I used to recycle. It paid. As a child living in the Pittsburgh area, I would clean used glass containers. After collecting a sufficient amount of glass, my father would drive the three or so miles to the local glass factory where the owner gladly exchanged cleaned waste glass for dollars. It this instance I was an entrepreneur investing factors of production in order to turn dirty waste glass into capital. The value of the exchange exceeded my preference for time, elbow grease, and my parents' soap, water, and auto fuel. (Of course all of my exchanges against my parents' resources were high on my preference list, but that's another issue altogether).

What's wrong with recycling? The answer is simple; it doesn't pay. And since it doesn't pay it is an inefficient use of the time, money, and scarce resources. That's right, as Mises would have argued: let prices be your guide. Prices are essential to evaluate actions ex post. If the accounting of a near past event reveals a financial loss, the activity was a waste of both the entrepreneur's and society's scarce resources.

I'm supposed to believe that I need to invest resources into cleaning and sorting all sorts of recyclable materials for no compensation. And this is considered economically efficient? In some local communities--many thousands of which have recycling progreams--residents have to pay extra so that a company will recycle their paper, plastic, and glass. The recycling bins come with a per-month fee.

In other areas, such as my township, the garbage company profits at the mercy of the political class. The trustees in my township specified that in order to win the waste removal contract, the winning company has to provide recycling bins. Further, they have to send a special truck around to empty those neatly packed bins and deliver them to companies that have no pressing need for these unraw materials. The recycling bins are ostensibly free, but in reality their cost is bundled into my monthly waste removal bill.

Since there is no market for recyclable materials, at least no market sufficient to at least return my investment in soap and water, not to mention time and labor, I conclude that there is no pressing need for recycling. If landfills were truly in short supply then the cost of dumping waste would quickly rise. I would then see the financial benefit to reducing my waste volume, and since the recycling bin does not count toward waste volume, the more in the recycling bin, the less in the increasingly expensive garbage cans. Prices drive entrepreneurial calculations and, hence, human action. Recycling is no different.

Come on now, there can't be any benefit to even the neoclassical society if you actually have to pay someone to remove recyclables.

That recycling doesn't pay signifies that resources devoted to recycling activities would be better utilized in other modes of production. Instead of wasting resources on recycling, it would be more prudent to invest that money so that new recipes could be created to better conserve scarce materials in the production process.

Human action guides resources toward the activities that meet the most pressing needs. This movement of resources means that those activities that don't meet pressing needs are relatively expensive. Why? Those activities have to bid for factors of production along with the profitable activities — activities that are meeting the most pressing needs. The profitable activities will drive the cost of those scarce factors upward leading to financial ruin for those activities that don't satisfy the most pressing needs. Forced recycling is such a failed activity.

The concept of lost materials is fraught with errors. Glass headed to the landfills will sit quietly awaiting someone to desire its value. The glass is not going anywhere, and should glass become as dear as gold or even something less dear, you can bet that entrepreneurs would begin mining landfills for all those junked glass bottles, not to mention plastic, aluminum, etc.

The only caveat to this train of thought is what Rothbard wrote about when he discussed psychic profit: the perceived benefit one gets from performing an action, even if that action leads to an economic loss.

Who reaps the real psychic reward from recycling? The statist do-gooder and the obsessed conservationist. Since recycling is now a statist goal, the do-gooders and greens force the cost of recycling on the unsuspecting masses by selling recycling as a pseudo-spiritual activity. In addition to these beneficiaries, there are those who have not considered the full costs of recycling, but their psychic benefit is more ephemeral than real. The other winners are the companies that do the collecting and process the materials, an industry that is sustained by mandates at the local level.

If recycling at a financial loss leads you to greater psychic profit, then recycle, recycle, recycle. Let your personal preferences guide your actions, but don't force your preference schedule on others who have a different preference rank for their own actions. And, do not delude yourself into thinking that you are economizing anything; you are simply increasing your psychic profit at the expense of a more rational investment. But, hey, your actions are your business; just don't force your preferences to be my business.

Oh, and don't tell my children half the recycling story. Remember Hazlitt and turn over the second and third stone before drawing an economic conclusion.

Jim Fedako is a former professional cyclist who lives in Lewis Center, OH. Comment on the blog.
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A Nation of Ratfinks article :
A Nation of Ratfinks
by Jim Fedako [Posted on Thursday, December 22, 2005] [Subscribe at email services and tell others]

Ludwig von Mises: "A free man must be able to endure it when his fellow men act and live otherwise than he considers proper. He must free himself from the habit, just as soon as something does not please him, of calling for the police."

Totalitarianism used to be the product of the Hitlers and Stalins of the world, but your neighbors are beginning to grasp the power of a centralized government that exists exclusively to metastasize its evils throughout every human endeavor — a government that never sleeps and is always ready to put its nose into anyone's business. Just give the feds a call, they're ready and willing to assist with any effort that increases their power and influence. 24/7.

Are your children whining over carrots in their school lunch bag? Are you tired of hearing that Mr. and Mrs. So-And-So down the street let their children eat Ho-Hos and Ding-Dongs for lunch? Does the local school cafeteria serve chocolate chip cookies to anyone with 50 cents to spare?

If the answer is yes, what do you do? Do you take control of your own family and lay down the laws of the household? Or do you blame this whole situation on those of the ilk of your neighbors, the So-And-Sos?

Taking control may cause some hard feelings for a few days, maybe even a week or two, but blaming the So-And-Sos gets you off the hook right away. See, if only the So-And-Sos joined you in your health crusade, your children would be forced to join; you know peer pressure and all of that. You hit the first bump in your road toward the Progressive Utopia when you realize that the So-And-Sos living down the street are not really that friendly with you and are unwilling to follow your marching orders. Ok, next option.

How about your best friend? He agrees that Ho-Hos are the devil's fruit but he's not certain about the Ding-Dongs; they do taste good with a tall glass of cold milk.

Your crusade just isn't working and your kids are still crying about their friend Johnny's lunch snacks.

How about petitioning the local school board? Ask them to ban all unhealthy foods — at least those foods that you deem unhealthy. What is to be considered unhealthy is simply those foods that you don't want your children to eat.

Alright, the list of foods has been defined, but how to get the school board to agree. Go to a meeting and call them all uncaring hypocrites. How can they sleep at night after claiming that they want the best for children all the while knowing that little Johnny crinkles the snack wrapper at lunch — in the school's cafeteria nonetheless?

Those crusty yahoos on the school board don't even smile as you speak, they've got their own agenda to push. Those who struggle with their own parenting somehow become omniscient once elected to a school board or hired as an administrator. Sure they pray that their own efforts will result in happy, health offspring, but they will not let that stop them from becoming the uber-parent of all who attend the local schools. Omniscient and omnipotent? Certainly. Free and compulsory? Absolutely. Interested in this specific agenda issue? Sorry, no.

A brick wall. Your crusade has stopped. Well, for a minute or two anyway. Then the idea hits; call your state representative. Put the pressure on him. Tell him that you are a strong party member who wants the best for all children. Doesn't he realize that a health crisis exists? Children are dying. Yes, dying. Not just those eating the snacks but also those experiencing the secondhand affects of snack attack. They are bound to suffer a lifetime of pre-snack-desire syndrome.

Your representative listens politely on the phone but really doesn't sound interested in tilting at this windmill. Come on now, there are more pressing concerns that can be used to further the interventionist agenda. This just isn't one of them.

So you are an unsatisfied constituent. Not to fear, you do have a congressman who delights in media coverage. He smells front page because the local paper likes to write about any Don Quixote who tilts for the masses. You've got the hook, time to land the fish. He'll gladly support your efforts because children are dying; it's all right there in the latest research by the Americans Against Unhealthy Foods Institute.

The congressman takes up the banner and enlists a eager bureaucrat in the Department of Health and Human Services to help craft the bill. This bureaucrat wants to make a name for himself. Sure he sneaks the odd Hostess cake at the gas station, but a statist career awaits him.

It is election time and enough House members are looking for the headline and public poll spike, and children are always a winner. Before you can find you way through the cellophane wrapper of a Twinkie, your bill is signed into law and now no one can serve their children snacks deemed unhealthy by a coalition of farmers, health food store owners, bureaucrats, and sundry statist do-gooders.

No longer can the school birthday party include cupcakes with icing. A vegetable tray with low fat dressing has to be served beneath the poster of Mr. Carrot and Ms. Broccoli stomping the Rat Snack.

Sounds unbelievable? Well it's real, and it is fast becoming the American Way.
I've seen a parent who was shocked that the average student in the local schools eats 10 candy bars at lunch during the school year. Can you believe that? Ten candy bars a year. Certainly she is correct in calling this a travesty and a crisis; the papers agreed with her. She soon caught the ear of state officials, for a while anyway. A bill was kicked around but the enthusiasm quickly waned. Bills like this never really go away though, they all return in a modified form when the timing is better.

The woman's crusade did not catch the current fancy of local and state officials but she is lucky enough to have a congressman who saw fit to work with FEMA so that three homes in Columbus, Ohio could be declared a disaster area due to minor land subsidence.[1] I fully expect her to be heard in Washington and the big paws of central government will find their way into all school lunch bags and boxes.

That neighborhood crank that we all try to avoid will most likely be testifying before a House committee about the health crisis she perceives to be affecting her neighborhood and the nation. You pay her no mind, at least until she receives a pen from the President at the signing of the Unhealthy Snack Food Act, to be known as Our Children Come First Initiative. Yesterday's crank is now your Gulag commandant.

Consider your options. Don't want to eat at a restaurant that allows smoking? You can either tell the owner that you are leaving because the smoke offends you, or you can work to force an outright ban on smoking. Approaching the owner is uncomfortable, but calling the local office of your congressman is easy. In fact, it will be a positive experience. Trust me, the elected ears want to hear your complaints. The constituent services worker in any congressional office loves these ideas. She'll listen attentively and be willing to work with you. Isn't it all about children, health, etc? No, it's all about interventionism and coercive power. But in this instance coercion is on your side.

Will your idea withstand judicial review? Certainly. The courts have already declared private property that exists for commercial purposes to be places of public convenience. The judges will have no problem accepting a law that bans smoking in all restaurants and bars. Nor will they consider a ban of Snickers in the lunch bag a violation of personal property rights.

You'll also be on the side of externalities and econometrics. Studies will appear that banning snacks in the school lunch bag will result in an annual x% increase in the local and national economies.

Don't believe them? Prove them wrong, or at least try to prove them wrong. You will find that their arguments morph as fast as those from a cornered Keynesian. Every time you think they're pinned, a new argument will wrestle itself free. No matter that each new argument refutes a prior one. Polylogism is the name of the game and logic for some ebbs and flows like tides in the Bay of Fundy.

All his in-print books: $394The National Bureau of Economic Research will host conflicting correlative studies that not only contradict each other but stand outside of a priori logic. With conflict and contradiction comes a new government panel or commission, or both. Something has to give, and that something is your liberty.

I have to admit that prior to reading Critique of Interventionism, my first book by Ludwig von Mises, I was apt to vacillate with the argument of the times. Fighting against the statists and their supposed concerns for children and the general heath and welfare are tough without strong backing. After reading that book, along with Human Action, Bureaucracy, and the Rothbard classic, Man, Economy and State, I gained the knowledge to see through the statist haze.

Unlike most schools of economics and philosophy, the Austrian School has stayed true to its beliefs. Mises, a cultured gentleman, did not advocate that all be forced to live as he lived his life. No, he believed that private property was the essence of liberty. He's right!

Now back to my Ding-Dongs and hot chocolate.

Jim Fedako is a former professional cyclist who lives in Lewis Center, OH. Comment on the blog.
[1] "Home on North Side Sinking into Ancient Bog: City agrees to spend $570,000 to buy, demolish houses that are in danger," Columbus Dispatch, June 20, 2005

Zoning is Theft

Lastest article:
Zoning is Theft
by Jim Fedako [Posted on Tuesday, March 21, 2006] [Subscribe at email services and tell others]

Zoning is theft, pure and simple. In his fantastic introduction to the Austrian School, Economics for Real People, Gene Callahan correctly identifies eminent domain as a form of property theft, especially noting the use of government condemnation in order to secure rightfully owned property for commercial development.

It is easy to see government as the crowbar that influence-seekers use to jimmy locks and force private property owners from their land. Here we have the clear picture of Ma and Pa Kettle and clan fighting the law and "progress" armed only with shotguns, corn squeezing, chewing tobacco and shear grit. The flip side to eminent domain, zoning, is not so easily seen. But as Bastiat revealed, the unseen is as important as the seen.

Zoning is typically defined along the lines of a government-regulated system of land-usage imposed in order to ensure orderly development. Zoning is usually a component of the larger conceptual ideal called regional planning. Of course, planned development is really the name of the road toward planned chaos.

Zoning uses all the standard interventionist lines of thought, most notably the concepts of externalities and utility. Those who advocate zoning really believe that acting man does not have the ability to create communities that are functional and prosperous. Without plans and maps drafted and drawn by the local elected elite, developers with knowledge and foresight, and a whole lot of money to gain or lose, would purposively layout communities that are sterile and functionless. Only the marginal vote-getters — those elected — and their appointed allies are omniscient enough to peer into the crystal ball and define the perfect setting for future life and leisure. The rest of us can only marvel at their visions.

Just as the developer can use government to roll over the rights of property owners, property owners — community members — can use government to roll over the rights of developers and fellow property owners.

In Ohio, townships create zoning maps and comprehensive plans that overlay development regulations on top of current properties. Prior to the establishment of zoning regulations, a farmer could simply sell his land to the highest bidder. No one had a voice in the proposed use of the exchanged land. The sale to a new property owner incorporated full development rights, including continued farming, residential and commercial development, or parceling off pieces for home sites. Land was a commodity similar to the crops grown on it. Just as no one had a right to control the final use of the corn and soybeans reaped from the soil, no one had the right to control the next use of the land. Property rights were secure.

Zoning changed everything. The future use of existing farmland will, with the stroke of a pen, be limited in some manner by zoning regulations. The regulations could restrict future land usage to its current use — farming in this instance — or it could restrict land usage to some other form of activity.

The free market has a tool that allows a property owner to align the future use of his property with his vision, the restrictive covenant. A property owner could, for example, create a legacy by selling his land contingent on the development carrying his family name. Should the property owner be too restrictive, the value of his property will fall. He will be exchanging a psychic good, a family legacy, for cash.

Zoning is another matter altogether. Zoning restricts current landowners based on the local power brokers. In the zoning process, someone gets hurt. Had the farmers of a township wanted to keep the area as farmland, they could have signed restrictive covenants guaranteeing crops instead of homes. Property rights, and the laws that purport to protect those rights, allow individuals to act in their own best interest. Zoning, collective decision-making, use the coercive power of government to restrict usage based on the whims of those in power.

The farmer who owns this land now has his potential property rights bounded within a specific range; future use is restricted to residential developments that have no more than one house per acre. The farmer may vote, and may have voted for some of those elected, but he never agreed to the change in proposed land usage. He was robbed, and there is no means for him to restore his rights and land value; they are gone with the stroke of a pen.

I know some of those in the Chicago School will claim that the farmer implicitly agreed to the loss of land-usage rights by being born in the United States, or of naturalized American parents, or by becoming a citizen through oath. By owning property in the United States, the farmer granted majority ownership in his property to those elected and appointed, the omniscient and omnipotent. This is no way to build and run a system of secure property rights, and no way to create a free market. Rothbard is correct when he constructs his political economy on secure rights to property; anything less is the beginning of the Hayek's Road to Serfdom.

Now we have a developer who is trying to satisfy the urgent wants of consumers, his development could include new homes, new stores, new factories, etc. The developer is a keen entrepreneur who sees a chance to turn a profit by creating a development that will be desired, and therefore profitable to him. The developer settles on a residential development and approaches the farmer from above offering to purchase his land, contingent on final zoning approval of course.

You see, the developer has been here before. He knows the ways of the local officials who approve and disapprove zoning changes on whim and fancy — or even the smallest of political pressure. The developer is not going to consummate the deal with the farmer until he knows that his proposed development is a go.

The farmer, old and worn-out, wants to retire and enjoy, along with his wife, his remaining years in leisure and comfort. This is certainly a reasonable request from someone who has worked the dirt in snow, rain, and blistering heat for decades. Who could reasonably question his desire? Commissioners and board members; those omniscient by vote and omnipotent by law.

Remember that the land was designated to be developed at only one home per acre, but the developer does not think he can make a go of it at that yield. Given the market in the area, there is no way for him to turn a profit due to the myriad of other regulatory hoops he will have to jump through in order to get approval for his development. A host of green-eyed bureaucrats see the proposed development as a tax revenue generator. The developer will have to build off-site roads and sewer improvements, donate a park or school site, and give away money to all those governments with their hands out. In addition, regional officials will balk at the proposal since it does not agree with their vision of the future.

So the developer, a Don Quixote at heart, decides to take on the zoning commission by proposing a variance to the zoning code and comprehensive plan. Mr. Developer needs to build one and a half homes per acre, a change that will require months of hearings where he will be badgered and attacked from the zoning commission and community members alike. The commissioners will request petty changes to the development's conceptual plan based on vague building standards that they most likely do not understand. Is stucco created from natural and man-made materials a natural or artificial exterior? Does 50 microns of aluminum create a better look than 49 microns? Should sidewalks be required? How high should the entrance sign stand? Is fire-red a natural color? Is a 30-foot setback sufficient for future property values? The answers depend on which commissioner has the mike at the time.

Residents with property adjoining the development will complain loudly of supposed lost property values, traffic, and crime. In addition, they will attack the developer as evil incarnate bent on destroying the community. But those same voices will lose the rhetoric as soon as the developer offers all adjacent homeowners landscaping allowances. A few thousand in new trees planted in their backyard is enough to forgive any supposed loss in value, additional traffic, and hypothetical break-in.

So the developer now agrees to build roads, upgrade sewer lines, donate parks with equipment, set aside a school site, and improve residential landscape. What is gently termed exaction is really extortion by another name. After zoning comes township trustees meetings and the process begins all over again. More exactions and more regulations, but trustee approval can be had if the developer does the dollar-dance long enough. Had the developer simply slid a rumpled paper bag of twenty's across the table, a law would have been broken. Instead, the process occurs in the sunshine for all to see, and all to agree that more should have been given — or taken.

All agreed, with the exception of the developer and the forgotten farmer. You see, lost in all this is the simple desire of a farmer and his wife to retire and enjoy life, and maybe leave a little for their grandchildren. Every hand looking for a piece of the development pie is not robbing the developer and redistributing supposed unearned profits; those hands are robbing the farmer and his wife of their property value.

The risk of not passing zoning, the exactions, and readily available alternatives for investment are all reductions to the value the farmer could have obtained for his land absent zoning. The loss of value is recognized at the time the developer makes an offer for the land; the theft, on the other hand, occurs in front of the community that the farm family lived in for generations. It shows what damage a little money and power can cause in a community. Zoning is indeed theft.

Jim Fedako is a former professional cyclist who lives in Lewis Center, OH. Comment on the blog.