Is the intentional killing of civilians okay? Thursday, May 5 2011 

First, let me apologize for the long delay between posts. I’m busy in life, and I am not afforded the free time to do research and write extensively that I had as a student at university. Also, I am posting this because it is a subject that particularly touched me, though I do have several posts regarding economics and democracy that I’ve had lined up for quite some time. There have been plenty of subjects I would have loved to write about since I put my writing on hold. But this I would like to address right now.

The question I pose in the title seems like an easy one to answer. To any decent human being, the answer should be no. The conclusion seems to go unquestioned. The idea that the killing of innocent lives is morally wrong and unjust is so embedded in the mores and norms of our culture, and countless others across the globe, the questions seems nearly absurd on its face. Yet, I’ve recently found myself asking the question and defending the forgoing conclusion in a Facebook discussion. Surely, though, the only opposition would be from a militant extremist, some brainwashed fascist, or simply a troll?

Actually, the tiff was with none other than Fouzi Slisli, a human relations professor at SCSU. (This is the same professor whom, by the way, I vehemently defended on this blog and in the SCSU University Chronicle regarding a presentation he and others had gave on the attack on Gaza in 2009, which was interrupted by professor Edelheit. This is also the same professor I praised, both here and in the University Chronicle, for their trip to Palestine and their presentation of that trip.) I do not pretend to admit that Dr. Slisli does not take outspoken stances on several issues, some of which I agree with, but this one goes beyond the pale.

This started when the professor posted a link to a Telegraph article titled “Muslim group claims royal wedding is legitimate terror target.” Seemingly approving the notion, he says, “They’re not saying they are going to target the wedding; they’re just saying the wedding is a legitimate target and might be targeted by others…” I reply, saying, “No such thing as a legitimate target that has as its essence a civilian population.” The conclusion seems obvious enough. But not for Dr. Slisli.

Dr. Slisli contends that the U.S.—and the West in general—has targeted civilians and has deliberately killed civilians. This is undoubtedly true. I agree with the professor here. In fact, I wrote on this blog about the criminal bombings of Nagasaki and Hiroshima, describing them as “One of the worst terrorist attacks in human history.” The intentional killing of civilians is a sad reality of U.S. foreign policy and is a reason why the U.S. is one of the leading terror states. However, the fact that the West attacks civilians in no way justifies the position that killing civilians is okay. It should seem obvious enough that the actions of the West do not dictate morality. A moral theory based on such a concept would be shallow, as only a few moments of thought and reflection evidences.

Certainly the West’s behavior vis-à-vis its rhetoric makes it hypocritical. But as logic might remind us, hypocrisy does not validate an argument. Tu quoque (“you too”) is a kind of fallacious argument that aims to discredit a conclusion because its arguer does not adhere to said conclusion. But the fact that the U.S. has engaged or is currently engaged in targeting civilians has no bearing on the question of its legality or its morality. As I stated to him, “The question, though, isn’t whether the West has attacked civilians. The question is what is the proper response? Is it proper to attack the civilians of the offending nation—say you or I? That is to say, is it legitimate [to] deliberately target civilians for any reason? The answer is no. And the answer doesn’t change just because Western governments have violated the rule. Sure, it tells us a lot about the moral culture of Western nations. But if it’s wrong for the West that also means its wrong for everyone else. That’s just the elementary principle of moral universality.” (Many readers know that I’ve repeatedly mentioned the principle of moral universalism on this blog, and I’ll return to it here later.) The principle of universalism dictates that you apply to yourself the standards you apply to others (more stringent ones, in fact) and vice-versa. If it’s wrong for the West to kill civilians, it is wrong for you and your cohorts to do the same; if it is right for you to kill civilians, it is right for the U.S.

Dr. Slisli contends that moral universalism, “lofty as it is, does not capture the complexity of the issue.” While I believe the principle is both basic and elementary (far from lofty)—the necessary basis for any decent moral theory—the professor takes issue with it. He claims I am “making the weaker sides to a conflict uphold a morality that you know full well the stronger side does not/will not uphold.” But again, that has no bearing on the question of either its legality or its morality. In any case, Dr. Slisli says Islam offers a “contingency plan” that universalism does not in situations for those who suffer the transgressions of others: “the law of equality.” This law states, “If then any one transgresses the prohibition against you, Transgress ye likewise against him. But fear Allah, and know that Allah is with those who restrain themselves.” Those from the Christian tradition can think of a similar idea found in the Bible (“an eye for an eye”). Thus, “if anyone transgresses this universal law against you, the Qur’an instructs, then Muslims are allowed to transgress likewise against the enemy,” posits Dr. Slisli. (Of course, “Allah prefers if Muslims have restraint.”) He therefore concludes that, while it’s preferable to have restraint, it is not necessary when “ONE HAS TO PROTECT ONESELF” (emphasis his). He does claim, however, “I am not stating my own opinion here” and that he is “merely explaining the legal frameworks that the Qur’an sets for the rules of war and the legal status of civilians and civilian infrastructure.” I’ll leave the latter claim for more competent scholars.

In any case, the phrase that Muslims ought to show restraint unless “ONE HAS TO PROTECT ONESELF” in an important one because it requires the person using force to demonstrate that in fact it is for the purpose of protecting oneself. So certainly the onus is on the attacker to demonstrate that attacking innocent civilians is an act of “protecting oneself.” And quite frankly I don’t think the onus can be met. In fact, I would venture to say that it would have the opposite effect: it would endanger oneself more. The reason should be obvious, but I’ll return to it later.

At this point, the discussions turns ugly. Dr. Slisli perverts my statements, saying my act of “Preaching non-violence while the powerful is sawing through the weak is, in practical terms, nothing but a complicity by inaction.” Careful readers will note that at no point do I ever “preach non-violence,” and most certainly not to those stricken by violence. In fact, I do believe violence is legitimate, but only under very certain circumstances, and the onus is on the perpetrator to demonstrate that violence is appropriate. So, for example, the use of force for the purpose of self-defense is legitimate. You can find this precedence in article 51 of the UN Charter. Self-defense has always been a legitimate act. Thus, I fully support the Quaranic injunction that allows for the use force to “protect oneself.” Again, though, one has to demonstrate that the use of force is, in fact, self-defense.

To attack innocent civilian populations under the guise of self-defense is an act reserved only for the most morally depraved. And I do not pretend that this is an uncommon excuse for violence and terror. Take, say, Hitler when he invaded Poland and began his slaughter of Jews and millions of others; he did so under the pretense of self-defense. That’s always the pretense. We could go through a long list, but I doubt that would be necessary.

So let’s summarize. According international law, Quaranic injunctions, and elementary morality, self-defense is legitimate. The use of force, violence, etc. is legitimate insofar as it can be demonstrated to be legitimate, for example for the purpose of self-defense. Attacking those who have not attacked you does not qualify as self-defense. Ergo, the killing of innocent civilian lives is illegitimate and is deeply immoral. It is for this reason that such acts are outlawed, condemned (nearly) universally, is considered terrorism, and is a grave abuse against human rights.

Yet, the professor is having none of it. He clings to the claim that, because the U.S. does it, it’s okay for everyone else to do it. He ponders, “If the West refuses to apply the universal laws of common decency with people A, B and C, why should people A and B and C apply the laws of common decency with the West?” He gives two reason why A, B, and C might. He says either they would because “the balance of power OBLIGES THEM to uphold the laws of common decency” while the other side does not—i.e., they are too weak to retaliate. The second is because “People A, B and C are ‘better people’ and although the West doesn’t deal with them decently, they CHOOSE to act and be better.” He admits the latter case demonstrates “admirable strength because it produces moral rectitude.” Yet, he says this is not the path to follow, because it is a deceit by the West to prevent its victims from retaliating. He wonders, “Is it a coincidence you think that intellectuals in colonial societies have always advised the colonized to use non-violence?” He claims the idea that we ought not attack innocent civilians has “sinister uses as a weapon to disarm populations …”

Therefore, Dr. Slisli concludes, the proper order of things is for A, B, and C to “apply common decency with People D, E and F and EVERY OTHER people who submit to the universal laws of common decency.” But should someone not adhere to the “universal laws,” then A, B, and C “also HAVE THE RIGHT TO DECLARE THAT COMMITMENT VOID IF THE OTHER SIDE FLAGRANTLY VIOLATES IT.” There’s a problem with this argument, though. A law is not “universal” if it is not applied universally. Of course, what the professor really meant to say, if he were being a little more honest, is, “it’s wrong for them to do it to me, but it’s okay for me to do it to them.” And it’s a demonstration of the sheer hypocrisy found in those defending the attacks on innocent lives. And that’s a vile maxim that operates nearly everywhere: it’s a crime if they do it, but not when I do it. If you think about it, that’s the exact opposite of what one might call a “universal law.”

Finally, an argument made by others (and hinted at by Dr. Slisli when he accuses me of “a complicity by inaction”) is that innocent civilians really aren’t innocent at all. (In a separate posting, Dr. Slisli contends the innocents being targeted by al-Qaeda, including Muslims, are “the Crusader-Zionist alliance and those who collaborate with them,” thus fair game. But, “At any rate, this is an inter-Muslim debate in which Americans have no business sticking their nose.” When innocent American lives are at stake, I believe this to be an issue in which we might have the right to stick our nose, so I’ll continue.) One commenter notes, “We are all party to what our government/military does until it stops,” as if it’s a valid argument for attacks on civilians. But if they commenter, whom I’ve also defended elsewhere, agrees with me that the bombing of Nagasaki and Hiroshima were wrong, as I suspect they do, then it is wrong for terrorists to bomb us here. Just because these were citizens of Imperial Japan make them no more a legitimate target than you or I simply because we are U.S. citizens. So in the same vein, the attack on the World Trade Center was no more legitimate than the U.S. and Israel’s punishment of Gazan citizens for voting the wrong way in a free election. They both represent an illegitimate and immoral use of force.

So back to the original topic of the royal wedding, just because the spectators of the royal wedding are citizens of the country, or merely residents, or merely tourists, or merely bystanders does not make them a legitimate target. And, as it was hinted in the previous sentence, attacks on civilian populations do not even assure one that those targeted are only nationals of that country, as there could very easily be non-associated agents within the same population. But even if we could assume it was only nationals within the civilian population being targeted, is nationality ever a legitimate basis for attack? I suspect the commenter who says we are all party to our government’s crimes also believes that other discriminations based on nationality are wrong. So if I asked her if it’s okay for us to make certain nationalities pay more in taxes or if it’s okay for us to put certain nationalities in internment camps or maybe even okay for us to toss certain nationalities into furnaces (because of the crimes their nations committed, of course), I’m confident she’d say no. Yet there is such a disconnect to the point that she see nothing wrong in the idea that it’s okay for innocent civilians to be subjected to terror attacks because of what their government has done. And that brings me to the final point, which I’ve discussed throughout this blog, which is that, even to the extent that I do live in a “democracy,” my influence on policy is basically near zero. Democracy is mostly nominal and is defined in procedural terms: I pull a lever every four years and keep quiet and to myself in the time in between. Does that make me responsible to some extent? Maybe one could argue so. But it certainly does not make me a legitimate target for attacks, nor does it make Dr. Slisli, nor the aforementioned commenter—neither of whom, I’m sure, are ready to admit they are vile war criminals deserving death.

I understand the importance of criticizing one’s own crimes. Again, to the extent that I do live in a democracy and free society, I can make some effort to address them. I take seriously Dr. Slisli’s argument that, “If you want to talk universalism, then you should make the aggressor stop aggression FIRST …” Those who have read my blog know well my critique of state crimes, particularly those of the U.S. That has always been my focus. A dishonest person is one who criticizes the crimes of others but does not reflect on his own. But that does not make the crimes of others any less of a crime. This is a moral truism we should not easily let escape from our minds.

Addition to the blog roll Sunday, Dec 26 2010 

I know it’s been a LONG time since I’ve written anything on this blog, but I would just like to inform everyone of a new blog that is out there. It’s called “Everything Else Not Being Equal” by Ming Lo, a professor of economics at SCSU. The name, which I love, is a play on the term “ceteris paribus,” which means “everything else being equal.” The term is used frequently in economics when we want to talk about how a variable affects some outcome without ever mentioning the other variables. So if we assume everything else stays the same, we can imagine how just one variable affects a particular outcome. The problem is that it’s almost never the case that “everything else stays equal.” So the concept of ceteris paribus can be abused in ways that do not accurately reflect reality, which is why I love the name of Dr. Lo’s blog, who also notes, “There is always a need to counter conventional wisdom.” I couldn’t agree more!

It should be very interesting to see the ideas posted there. More opinions and more ideas, especially from the SCSU community, is exactly what we need. Just for clarity (and I’ve mentioned it before in this blog), I did take a class with Dr. Lo while I attended SCSU. If the class is any indication of the honesty and thoughtfulness we can expect in the blog, I suspect the blog will be very good. Cheers to Dr. Lo and his new blog.

As for this blog, I really do apologize for the lack of activity. If I could have it any other way, I would. I’ve just been too busy to keep up with the research and writing time that I used to devote to this blog. I do have several unfinished posts that I at least want to get finished sometime within the near future. I’ll try to keep you guys posted. I can’t tell you how much I’ve appreciated the traffic and return readers, especially from within the SCSU community. My hope is to become active in writing again; my readers are my inspiration. So I hope to see you all again soon. Also, I am always looking for guest writers (don’t be shy!). You can be an anonymous writer if that’s what you want, but I don’t care to keep this blog focused on one particular opinion or viewpoint. The more diverse the better. Cheers to you all.

Notice Sunday, Aug 22 2010 

As I am sure you guys have noticed, it has been a long time since I’ve updated this blog. I have a lot of things on my mind that I would like to write about, but I haven’t got the time at the moment to address these ideas as carefully and thoroughly as I’d like. For the time being, this blog will be inactive. I do hope to resume posting some time in the future… For now, feel free to peruse the 116 posts I have made thus far; I’ve added contact information to the “About” page, if you’d like to get a hold of me. I’ll respond to all comments, questions, requests, or complaints. :)

What the Constitution does not say Tuesday, Jun 29 2010 

I’ve been reading on the Internet a bit about the recent Supreme Court decision in Christian Legal Society v. Martinez. (Opinion of the Court can be found here, and a New York Times article about it can be found here.)

At issue was whether the University of California’s Hastings College of the Law had to formally recognize the Christian Legal Society (CLS) as a student group on campus. The law school argued that it did not, because the student group did not conform to its nondiscrimination policy. The Christian Legal Society, which has 165 student chapters across the nation, disallows voting rights or officer positions to those who engage in “unrepentant participation in or advocacy of a sexually immoral lifestyle” (that is, homosexuals). The law school did not want to recognize a group that did not allow full membership to anyone who wanted it.

As evidenced by the opinion of the Court that I linked to above, the Court voted 5-4 in favor of the university.

As expected, this made conservatives, right-wingers, and even some proclaimed “libertarians” pretty unhappy. Students for Liberty declares that the ruling “undermines the freedom of association on campus.” The Foundation for Individual Rights in Education (FIRE) also declared that the ruling “undermines freedom.” These people and groups claim it is the CLS’s First Amendment right to bar homosexuals from membership from their organization. Ergo, the recent Court ruling is antithetical to liberty, free speech rights, and the right to “freedom of association.” Even Filip Spagnoli, a firm defender of human rights, states, “the discrimination that is imposed by the Christian group is real but not consequential enough to warrant a limitation of its freedom of association or religion.”

The question, as it always is, is, “Is it true?” (Bravo to me for using three is‘s a in a row. Apologies for poor prose!) Well, it certainly is true that the the CLS has the First Amendment right to bar whomever they please from membership, including homosexuals. Freedom of association certainly allows that, as Dr. Spagnoli keenly points out. However, as Dr. Spagnoli also correctly points out, “Withdrawal of recognition means that the group loses some subsidies and access to university resources, not that it has to cease to exist.”

While the student group certainly has the First Amendment right to exist, they have no right to public subsidy. The First Amendment gives people and groups the right to free speech and association, but not the right to have your speech subsidized. That is found no where in the U.S. Constitution. The Court affirms this view point. While affirming the CLS’s right to exist, the Court ruled that the U.S. Constitution offers the group no right to have their speech or views subsidized or supported by others.

Justice Stevens said that, while the U.S. Constitution “may protect CLS’s discriminatory practices off campus, it does not require a public university to validate or support them. . . . [O]ther groups may exclude or mistreat Jews, blacks and women — or those who do not share their contempt for Jews, blacks and women. A free society must tolerate such groups. It need not subsidize them, give them its official imprimatur, or grant them equal access to law school facilities.”

What I find to be hypocritical in the extreme is that those who claim to be defending “freedom of association” deny the university’s right to freedom of association. If the law school does not wish to associate with or subsidize patently discriminatory groups, that ought to be their right. So, in effect, I believe the Court’s ruling was a win for freedom of association rights.

Update: Dr. Spagnoli admits the following: “It seems I glossed over a crucial distinction: getting yourself banned and losing subsidies. The latter isn’t a rights violations and that is what happened. The former would have been but that’s not what happened.” I agree with him here.

Minimum wage, again Wednesday, Jun 23 2010 

A little less than a year ago, I wrote a rather long post about the minimum wage. I explained the “textbook model” of the minimum wage, which many students just beginning to learn economics are taught. The basic neoclassical model tells us that a minimum wage set above the equilibrium wage in a market creates a surplus of labor or, in other words, unemployment. I disputed some of the assumptions on which such an argument rests, for example, elastic demand for labor, the “one-sector” model, perfectly competitive markets, equal bargaining power, etc. I also looked at empirical evidence that suggests that the minimum wage may in fact be beneficial for employment or, in the very least, may only have a modest employment effect (primarily for teenagers). Finally, I looked at some ideological or pragmatic reasons why people support the minimum wage and why it is more favorable than other redistribution policies (e.g. welfare). Rather quickly, this post became the most looked at article on this blog, and remained that way for quite some time. Today, it remains the second most-read post I’ve written.

Last month, King Banaian, a professor and chairman of the economics department of SCSU, wrote about about a study that concluded people who accept “enlightened economics” are more conservative than they are liberal. These “economically enlightened” folk were required to believe, for example, that a minimum wage necessarily decreases employment. I disputed this type “enlightened thinking.” Dr. Banaian has again made another post about the minimum wage, this time explaining why a minimum wage is bad policy (it prevents people from coming to “mutually agreed” wages below the minimum wage) and how there is a “consensus” among economists about this issue.

In the first post, I responded by saying there is quite a bit of evidence in support of a minimum wage, even if neoclassical theory provide none. One of the most famous example is research done by Card and Krueger, who found that the minimum wage had positive effects on employment. This seems quite stunning, considering the standard neoclassical model predicts just the opposite. So, quite naturally, one becomes rather suspicious of this research, but I think a careful review of the literature will show that the underlying conclusions that Card and Krueger come to are solid and are supported by additional research. Of course, one wonders how increasing wages can, in fact, increase employment levels. It seems counterintuitive. David Switzer, a professor of economics at SCSU, said it “goes against all of neoclassical economic thinking.”

Fortunately, neoclassical economics (as well as a little bit of intuition) does provide us with an answer. It isn’t, after all, beyond one’s imagination that an employer might actually pay its laborers a wage below the market clearing (i.e. equilibrium) wage. A firm seeking to maximize its profits has this incentive if it has the ability to do so. One scenario that might bring this about is one in which the labor market is oligopsonistic. Oligopsony is a fancy word to describe markets where there are few buyers and many sellers. (A related term that is perhaps more familiar is monopsony, where there is only one buyer and many sellers; this is the opposite of monopoly, which is one seller and many buyers.) In the case of oligopsony, the small number of firms can distort the wages in a market (in a similar way a monopoly can distort prices in a market), such that wages can be set below the equilibrium wage. Oligopsonistic labor markets reduce the welfare of laborers and creates deadweight loss. Under such circumstances, raising the wage that employers must pay their labor actually increases employment, reduces deadweight loss, and increases efficiency in the market. (A simplified graphical representation of monopsony can be viewed here.) So, in this case, the minimum wage has some extraordinary benefits.

The question becomes whether particular low-skilled labor markets are oligopsonistic or not. If the New Jersey fast food industry was oligopsonistic in 1992, that might explain Card and Krueger’s findings. However, as Dr. Banaian points out, the research in this area is not robust and is still “very young.” He may well be correct, in which case it would be helpful to look at empirical evidence and other areas that are more thoroughly understood. As I said earlier, a little bit of intuition might be able to help us explain why the effects of minimum wage may not be consistent with the standard model. In a 2008 study, David Metcalf explores why the minimum wage in Britain has “had little or no impact on employment.” Some of these include changes in hours, tax credits, compliance issues (part of the two sector model that Gary Fields discusses in previously noted research), productivity changes, price changes, reduced profits, and so on. He also considers the existence of “modern monopsony” (oligopsony) “very likely” in British labor markets. I defer you to Metclaf’s research for a more thorough discussion on how these variables can effect employment levels following a minimum wage hike. Suffice it to say, how these variable change does have an effect on employment, and may help explain why the minimum wage might have “minor negative effects at worst.”

In fact, that’s what most research has concluded. The conclusion that I support is that the minimum wage has a modest adverse effect on employment, primarily for teenager workers. It may even have positive employment effect for older cohorts, consistent with research by David Neumark and Olena Nizalova. (Neumark, keep in mind, is a fairly notable labor economist who opposes the minimum wage.) I think this is what a majority of the published literature out there reports (I can provide plenty of references, if needed), and the reasons explaining these findings are quite reasonable. That isn’t to say that there is a “consensus” against the minimum wage, as Dr. Banaian contends there is. He thinks I am “wrong on this point in terms of where the profession is on the literature.” A few years ago, The Economist, the main establishment journal, actually printed an interesting story on the issue. They wrote, “Overall, economists have become less worried about the job-destroying effects of a modest hike in the minimum wage. . . . Today’s consensus, insofar as there is one, seems to be that raising minimum wages has minor negative effects at worst.” There’s a wealth of research to support these views, as I stated earlier. What there is not is a consensus against the minimum wage, as Dr. Banaian contends there is.

In defense of his position, Dr. Banaian cites research by Neumark and William Wascher, which stated, in its abstract no less, “Our review indicates that there is a wide range of existing estimates and, accordingly, a lack of consensus about the overall effects on low-wage employment of an increase in the minimum wage.” Even more stunningly, Dr. Banaian readily confessed these facts in a post on his blog post he made in 2006, stating, “Both studies find a lack of consensus on the minimum wage, which I simply find shocking.” He finds the lack of consensus among economists “shocking,” but he at least acknowledges the fact. Today, he has shrunk from the issue and maintains that there, in fact, a consensus. He cites, for example, a 1996 survey by Robert Whaples, which suggested that there is a consensus among labor economists that the minimum wage decreases employment. That’s already been established. What Dr. Banaian conveniently does not do is refer to Whaples’ 2006 survey of PhD economists from the American Economic Association, which found that only less than 47% of them disagreed with a minimum wage policy. Though he readily mentioned it four years ago, perhaps the 2006 Whaples study is too inconvenient for the Minnesota House Representative hopeful in 2010.

The question, then, becomes less about the employment effects of the minimum wage, since there does seem to be some agreement on that issue. As one study by the U.S. Congress revealed, “Historically, defenders of the minimum wage have not disputed the disemployment effects of the minimum wage, but argued that on balance the working poor were better off.” That’s always been at the heart of the issue. Richard Freeman, one of the foremost labor economists and a professor at Harvard, writes in a 1994 study, “The question is not whether the minimum distorts market outcomes, but how its distortionary effects compare with those of other modes of redistribution, or with the benefits of redistribution.” He concludes that the minimum wage is a decent redistribution tool for four primary reasons that are typically ignored in the textbook models. I think his conclusion is consistent with what a majority of Americans believe. An overwhelming majority, usually over 80%, support the minimum wage. People support policies that help those who work (you need to work to earn the minimum wage), compared to those that help non-workers (e.g. welfare). They also are comfortable with redistributing their income via higher prices to help the most disadvantaged of workers. As Gary Fields keenly points out in a 1994 study, “One’s views about the desirability of a minimum wage ought to depend on more than the size of the unemployment effect alone.” I think he’s correct.

Note Thursday, May 6 2010 

Sorry for the low amount of activity as of late. I’ve been busy with finals. I’ll be graduating this year, so there’s many things that I’ve got going on besides this blog at the moment. I am almost finished though. You can expect a post within the next few days. It will be about a topic that many on both the left and right can probably agree on, to some degree. Cheers. :)

Cooperate AND Compete Saturday, Apr 17 2010 

Yesterday, in my managerial economics class with professor Komai, we talked about “co-opetition.” Coopetition is a portmanteau of “cooperation” and “competition,” and it essentially means cooperative competition. This is the first time I’ve heard of the concept being formally introduced, and the first time I’ve ever heard of the concept was when Barry Nalebuff, a professor of management at Yale University, gave a speech about it at last March’s Winter Institute. (I wrote about his speech, briefly, here.) The idea that he introduced was that firms, even if they are competitors, work together in such a fashion that they can “expand the pie,” which he argues is better for both the consumer and the firms. He is careful to note that he does not advocate collusion or anti-competitive behavior. The difference between coopetition and, say, collusion is that the former is a strategy for expanding the market whereas the latter is a strategy to divide the market. In this sense, coopetition is not anti-competitive. I’m sure there are various examples that Dr. Nalebluff offers in his book, but I have not read it. One example might be if two newspapers share their distribution systems. In this way, they are not being anti-competitive, but are acting cooperatively to expand total demand (i.e. the size of the market).

What Dr. Nalebluff does brilliantly is take microeconomic and managerial economic theory and apply it to the real world. Too often, these theories focus on competition. How can oligopolies compete? Managerial economics gives many neat theories about how firms can set prices and quantities to compete effectively with their competitors. It also tells us how anti-competitive cooperation between firms is bad for society (e.g. when firms collude). But not often spoke about is how firms can effectively cooperate with each other and still compete at the same time.

This is why, I think, King Banaian of the economics department here at SCSU got so worked up last September about a note hung up on a board on campus that read, “Cooperate, DON’T Compete.” Dr. Banaian implied that such a comment was the result of “indoctrination” and was surprised by how remarkably “economically illiterate that comment was.” (Although, as I explain in the comment section, it’s not at all clear that the writer of this message was even talking about economics.) Even if the author of this message was talking about economics, is it true that such a comment is remarkably “economically illiterate”?

Everyone in economics is taught that competition is a good thing. We’re usually told cooperation is a bad thing. We can learn something from applied managerial economics though, which is that this conception of economics is not necessarily true. Competition in economics is good, yes, but cooperation can be too. Although economists seem to focus on how competition can be used effectively, there are other aspects to consider. Firms, after all, can cooperate with suppliers, can cooperate with governmental agencies, can cooperate with their employees, and can even cooperate with competitors (hence coopetition). More aptly, the comment should read, “Cooperate AND Compete.”

First Amendment Forum, again Friday, Apr 16 2010 

Today I was able to attend one of the presentations that was a part of the First Amendment Forum on campus, put together by the SCSU Society of Professional Journalists, the Department of Mass Communications, the St. Cloud Times, and others. The topic of the presentation that I attended was “Protecting Journalism in the Era of Dying Newspapers and Social Networking.” Though the topic was about the death of newspapers and the rise of online content and social networking, most of the panelists discussed how they were using or had used social media to complement their writings as journalists, reporters, or editors. However, once the discussion was opened to those in attendance, the issue of the death of traditional media was brought up.

Namely, the issue of charging for online content was brought up. This issue is the same issue that I had addressed in an earlier blog post and letter to the University Chronicle. I didn’t bring it up, but I believe the person who did was the same person I wrote my post in response to (that is, Kyle Stevens). The person asked the panel what they thought about the media charging for online content.

A salient point that one of the panelists (Ramla Bile) brought up was that charging for the news online introduces some problems in that doing so bars certain people (namely the poor) from accessing the news. Bob Collins, who works for Minnesota Public Radio (MPR), said he really wished the Star Tribune would start charging people to read online content, because he believed doing so would drive more people to MPR. Adam Hammer of the St. Cloud Times likened it to the music industry, and the challenges they faced with the digitization of music and the piracy of said music. He explained how people became accustomed to listening to music through digital media, and it was Apple who recognized this and created iTunes to provide a legal channel through which people could access this digital music.

Of course, there’s the other side of this issue. The content wasn’t produced without a cost. How are the media supposed to make money if they can’t charge people to view their content? Both views are valid. We need to balance the ability to make a profit through producing important news and the necessity of not pricing people out of the market for this important news. In other words, we want people to get paid for doing good journalism, but we don’t want to bar people from accessing this journalism simply because they can’t afford it.

Some people might just respond that if people can’t afford something, they don’t deserve it. If you can’t pay for it, why should I give it to you? The problem with this argument, however, is that important news is not just another commodity to be bought and sold. The news, as I have always said, is a cornerstone of democracy. (In economics, it might be called a public good.) Scholars and political theorists have long recognized that a free and vibrant press is the foundation of civic society and liberal democracy. This is what differentiates online news from, say, online music in Hammer’s example. Music is important, yes, but not necessarily a requisite for a functioning democracy.

The question, thus, becomes whether we want to limit the dispersion of knowledge and important news or if we want to make it as free and vibrant as possible. This is where I disagree with Stevens. He believed we should charge for online content, which would have the effect of pricing people out of the market for important news. As I said, though, we need to consider the fact that the content was not produced for free and there is a certain necessity to generate a revenue to at least cover the costs of making such important news available. The suggestion I made, basing my argument off the work of Robert McChesney and John Nichols in their book The Death and Life of American Journalism, was that there be a public subsidy for independent journalism. Both McChesney and Nichols present several convincing arguments in support of their case. A public subsidy for independent (that is, not corporate) news would solve the aforementioned balancing issue; the cost of producing important news would be paid for, and accessing this content would be kept free, allowing for the greatest number of people to access vital information.

Ron Paul is right a lot Tuesday, Apr 13 2010 

Some readers might not believe it, but there was a period of time when I considered myself a “Ron Paul libertarian.” Paul is who inspired me to explore libertarianism and, indeed, politics in general. His run for presidency last election got me to not only explore political concepts differently but to also be actively engaged in the issues of the day, so he has always been an influential person in my political understandings. However, not long ago, I became disillusioned with Paul and suffice it to say I disagree with Paul on several key issues. There’s no need to go into the details of that transformation, but I should point out that I still agree with Paul on many things.

One thing that I particularly like about Paul is that he’s quick to criticize both of the political parties in the United States (even when he belongs to one of them). I don’t usually like to get involved in party politics, as they are usually inane, but I think Paul raises some great points that are hard to ignore. One salient point that he highlighted at last week’s Southern Republican Leadership Conference, much to the chagrin of many of the conservative Republicans in attendance, was the hypocrisy of mainstream Republicanism. He blasted them for their neoconservative tendencies. In his speech that drew both applause and ire, Paul pointed out, “The conservatives and the liberals, they both like to spend.” He condemned how “Conservatives spend money on different things.” To wit, “They like embassies, and they like occupation. They like the empire. They like to be in 135 countries and 700 bases.”

Certainly the right-wing loves to pay lip service to fiscal conservatism, balancing budgets, and keeping spending to a minimum. In practice, however, they act just the opposite, as the record clearly demonstrates. Paul, despite being a member of the Republican party, has no qualms mentioning this. Paul is right in lambasting them for their costly endeavors, which include the expansionist foreign policy, two wars in the Middle East, Wall Street bailouts, tax cuts without spending cuts, and radical spending on military. This is all okay by Republican standards, and they see no inconsistency in their rhetoric for small government and limited spending.

Republicans actually tend to outspend their Democrat counterparts. It was, after all, Bill Clinton who created a budget surplus and George W. Bush who accumulated more national debt than every other president combined (to use the words of Stephen Frank of the political science department and supported by King Banaian of the economics department). While Democrats do spend, they typically “spend money on different things,” like social programs, science, aide, education, and infrastructure. They also don’t tend go on and on about deficits, limiting spending, and so on.

The pattern is familiar. Ronald Reagan, for example, championed free markets, but very rarely ever adhered to the doctrine. Noam Chomsky refers to this as the “really existing free market doctrine,” namely because it rarely is ever consistent with “the official doctrine that is taught to and by the educated classes, and imposed on the defenceless.” George H. W. Bush railed against taxes—before he raised them. George W. Bush touted “no nation building,” before he began his senseless adventurism in the Middle East. Perhaps we shouldn’t expect anything else from politicians.

Indeed, to bring it to the present, Michele Bachmann, the congresswoman from Minnesota, claimed yesterday, “we’ve gone from the United States having 100% of the private economy private, to today the federal government effectively owns or controls 51% of the private economy” over the past 15 months of President Obama’s presidency (this is why she believes Obama is “anti-American” and “the most radical president” in U.S. history). Of course, it’s not very difficult to see how patently absurd her claims are. One of her examples is the bank bailouts. However, as FOX News’ Chris Wallace was quick to point out, it was President Bush who started those bailouts, which Bachmann responded was “unfortunate.” Certainly unfortunate for her argument. Even more unfortunate is that Obama’s actions don’t actually constitute “nationalization.”

As Ben Chabot of the Yale economics department keenly pointed out to NPR in 2008, “it’s not nationalization because they didn’t buy common stock with voting rights, so they don’t have a seat at the table.” The business press is in accord, and believe “the Obama plan is working.” But even if it was nationalization, there’s nothing “anti-American” about nationalization, as Harvard’s Richard Parker is quick to point out. He mentions our long history of government intervention and nationalization, beginning with “the Northwest Ordinance of 1789, and then the Louisiana Purchase of 1803.” He continues with mentioning the vast amount of land, airspace, roads, and valuable infrastructure that the U.S. government owns. During the two world wars, the U.S. government took over sizable portions of the economy—one reason for the U.S.’s recuperation from the Great Depression. After 9/11, Bush “effectively nationalized the private-security firms at airports, and replaced them with the federal TSA.” Needless to say, no one moaned about “anti-Americanism.” As I have always liked to mention, the United States has always been heavily involved in markets (having a Republican president or Congress makes no difference); fantasies about the “American free market system” are just that.

In my opinion, all this says something about the intellectual and moral culture of today’s Republicanism and our society in general. The underpinning assumption on which all this works is that what’s wrong for you is right for me. It’s a poor reflection that we cannot rise to even a minimal moral standard.

Is Social Security in shambles? Saturday, Apr 10 2010 

The answer to this question requires some careful examination that goes beyond the platitudes that we are supposed to take as self-evident. What we’re constantly told is that Social Security is in shambles. It’s bankrupt. The elderly on Social Security are outpacing workers who contribute to it, and we’re headed for a crisis very soon. Even King Banaian, the chairman and a professor of the economics department at SCSU, says we suffer from “cognitive dissonance”; it’s “part of the angst that grips” us, though none of us “want to hear of big changes.” Ed Morrissey from the Hot Air blog says it was foolhardy to listen to those who “assured us that Social Security was safe for decades without reform.”

The reason for this maelstrom is because, as The New York Times reports, “the system will pay out more in benefits than it receives in payroll taxes” this year. The recession has claimed millions of jobs and, as a result, tax receipts are down. At the same time, the Baby Boomer generation is beginning to retire en masse and will be collecting their Social Security benefits. By 2016, “indefinite deficits” are expected. Naturally, we should be frightened.

Indeed, Social Security looks like it is in shambles. Save some major reforms, which may very well including privatizing the system, the entire program appears to be heading for collapse. In fact, we’re probably better off getting rid of it entirely.

That much seems like common sense. If you collect less than you handout, you’re eventually going to go broke and the system cannot continue as is. This common sense is what drives the usual iterations about how Social Security is doomed. But, as with everything claimed to be common sense and self-evident, we should force ourselves to ask if it’s true. The assumption, of course, is that you don’t question it. It’s easy to parrot what the demagogues and pundits are saying on television and blogs; it requires some effort to look a bit beyond the rhetoric and platitudes.

Is it true that a fiscal disaster is on its way? As it happens, it’s not. In fact, if we bother to compare our Social Security system to the pension systems of other highly developed nations, just as the OECD has done, we find that the United States has one of the least generous pension systems for the elderly. Yet the fiscal hawks keep pushing on us “the great deficit scare,” though prominent economist such as Robert Eisner have been telling us for a long time now how absurd their claims are. Eisner’s book is over a decade old now, but we can learn some valuable lessons from it. Moreover, Dean Baker of the Center for Economic and Policy Research warns that the policies deficit hawks want to push through, which are are not based on sound economics, would be much more devastating than any projected deficit.

It’s certainly true the American population is aging, and faster than the workforce is growing (or will be soon). In economics, the technical literature refers to this as the dependency ratio. It tells us the number of dependent people (children under the age of 15 and adults over the age of 65) for every 100 productive people (people aged 16 to 64). The United States does not have the largest dependency ratio—far from it, in fact. And when we actually bother to look, the dependency ratio is not currently at the highest it’s ever been (nor will it be for a long time). That was around 1965. There was a problem in the 1960s, a more significant problem than we face today, back when real GDP was almost a quarter of what it is today (i.e. when we were much poorer).

What did they do about it? Did they say the rights to a decent life in a highly developed nation simply “are not natural rights of the people,” and therefore we should just stop helping the young and the elderly find a more decent life? Actually, that’s not what they did. They increased expenditures. That’s how they dealt with the unprecedented dependency ratio, one we won’t come close to experiencing for a long time. The solution to the current “crisis” is the same. You increase expenditures to ensure disadvantaged people can still live a life that isn’t marred by poverty, sickness, and starvation—so that people’s basic needs are met. There’s a consensus in every rich and developed nation that safety nets are a society’s moral obligation. In fact, the world came together and agreed on the Universal Declaration of Human Rights, which affirms these rights, calling them “indispensable for [a person’s] dignity and the free development of his personality.”

When we actually look at the published literature, there is an almost unanimous agreement that there is no “crisis,” that the dangers of an aging society are being way overblown (it is argued, in fact, that an aging society is beneficial), and that the problems that do lie ahead are quite manageable (in the same way the bigger problems of the 1960s were managed). What’s pointed out is that any fiscal problem that might possibly arise is easily addressed. For example, the Social Security board of trustees report that future problems (because there isn’t one currently) could be remedied with a simple increase on the payroll tax. The estimated 75-year actuarial deficit for OASDI is just 2% of taxable payroll (so you increase it from something like 14% to 16%). The OECD also came out with a major report on easy solutions for any possible future problem that might occur with the pension system, none of which included abandoning the pension system. One reason is because it’s recognized that there is a moral obligation on our part and that there is in fact something that separates us from primitive animals that might simply “let nature take its course” (one of the more repugnant euphemisms I’ve heard).

So the solution, then, is quite simple. We don’t need to get rid of Social Security. Nor is there a need for “big changes” or major reform.

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