reboot the republic daily July 12, 2010 – Free Press Publications

Posted: 12 Jul 2010 03:20 PM PDT

By F. A. Harper

[Editor’s Note: Dr. Harper was a long time staff member of the Foundation for Economic Education, and founder/president of the Institute for Humane Studies. These excerpts are taken from his article, “Morals and Liberty,” published in the July 1971 issue of THE FREEMAN (pp. 426-441. Excerpts are from pp. 436-439).]

As a means of specifically verifying my impression about the basic, intuitive morality of persons, I would pose this test of three questions:

1. Would you steal your neighbor’s cow to provide for your present needs? Would you steal it for any need reasonably within your expectation or comprehension? It should be remembered that, instead of stealing his cow, you may explore with your neighbor the possible solution to your case of need; you might arrange to do some sort of work for him, or to borrow from him for later repayment, or perhaps even plead with him for an outright gift.

2. Would you steal your neighbor’s cow to provide for a known case of another neighbor’s need?

3. Would you try to induce a third party to do the stealing of the cow, to be given to this needy neighbor? And do you believe that you would likely succeed in inducing him to engage in the theft?

I believe that the almost universal answer to all these questions would be: “No.” Yet the facts of the case are that all of us are participating in theft every day. How? By supporting the actions of the collective agent which does the stealing as part of the Welfare State program already far advanced in the United States. By this device, Peter is robbed to “benefit” Paul, with the acquiescence if not the active support of all of us as taxpayers and citizens. We not only participate in the stealing—and share in the division of the loot—but as its victims we also meekly submit to the thievery.

Isn’t it a strange thing that if you select any three fundamentally moral persons and combine them into a collective for the doing of good, they are liable at once to become three immoral persons in their collective activities? The moral principles with which they seem to be intuitively endowed are somehow lost in the confusing processes of the collective. None of the three would steal the cow from one of his fellow members as an individual, but collectively they all steal cows from each other. The reason is, I believe, that the Welfare State—a confusing collective device which is believed by many to be moral and righteous—has been falsely labeled. This false label has caused the belief that the Welfare State can do no wrong, that it cannot commit immoral acts, especially if those acts are approved or tolerated by more than half of the people, “democratically.”

This sidetracking of moral conduct is like the belief of an earlier day: The king can do no wrong. In its place we have now substituted this belief: The majority can do no wrong. It is as though one were to assert that a sheep which has been killed by a pack of wolves is not really dead, provided that more than half of the wolves have participated in the killing. All these excuses for immoral conduct are, of course, nonsense. They are nonsense when tested against the basic moral code of the five postulates. Thievery is thievery, whether done by one person alone or by many in a pack—or by one who has been selected by the members of the pack as their agent.

“Thou Shalt Not Steal, Except….”

It seems that wherever the Welfare State is involved, the moral precept, “Thou shalt not steal,” becomes altered to say: “Thou shalt not steal, except for what thou deemest to be a worthy cause, where thou thinkest that thou canst use the loot for a better purpose than wouldst the victim of the theft.”

And the precept about covetousness, under the administration of the Welfare State, seems to become: “Thou shalt not covet, except what thou wouldst have from thy neighbor who owns it.”

Both of these alterations of the Decalogue result in complete abrogation of the two moral admonitions—theft and covetousness—which deal directly with economic matters. Not even the motto, “In God we trust,” stamped by the government on money taken by force in violation of the Decalogue to pay for the various programs of the Welfare State, can transform this immoral act into a moral one.

Herein lies the principal moral and economic danger facing us in these critical times: Many of us, albeit with good intentions but in a hurry to do good because of the urgency of the occasion, have become victims of moral schizophrenia. While we are good and righteous persons in our individual conduct in our home community and in our basic moral code, we have become thieves and coveters in the collective activities of the Welfare State in which we participate and which many of us extol.

Typical of our times is what usually happens when there is a major catastrophe, destroying private property or injuring many persons. The news circulates, and generates widespread sympathy for the victims. So what is done about it? Through the mechanisms of the collective, the good intentions take the form of reaching into the other fellow’s pocket for the money with which to make a gift. The Decalogue says, in effect: ‘Reach into your own pocket—not into your neighbor’s pocket—to finance your acts of compassion; good cannot be done with the loot that comes from theft.” The pickpocket, in other words, is a thief even though he puts the proceeds in the collection box on Sunday, or uses it to buy bread for the poor. Being an involuntary Good Samaritan is a contradiction in terms.

When thievery is resorted to for the means with which to do good, compassion is killed. Those who would do good with the loot then lose their capacity for self-reliance, the same as a thief’s self-reliance atrophies rapidly when he subsists on food that is stolen. And those who are repeatedly robbed of their property simultaneously lose their capacity for compassion. The chronic victims of robbery are under great temptation to join the gang and share in the loot. They come to feel that the voluntary way of life will no longer suffice for needs; that to subsist, they must rob and be robbed. They abhor violence, of course, but approve of robbing by “peaceful means.” It is this peculiar immoral distinction which many try to draw between the Welfare State of Russia and that of Britain: The Russian brand of violence, they believe, is bad; that of Britain, good. This version of an altered Commandment would be: “Thou shalt not steal, except from nonresisting victims.”

Under the Welfare State, this process of theft has spread from its use in alleviating catastrophe, to anticipating catastrophe, to conjuring up catastrophe, to the “need” for luxuries for those who have them not. The acceptance of the practice of thus violating the Decalogue has become so widespread that if the Sermon on the Mount were to appear in our day in the form of an address or publication, it would most likely be scorned as “reactionary, and not objective on the realistic problems of the day.” Forgotten, it seems, by many who so much admire Christ, is the fact that he did not resort to theft in acquiring the means of his material benefactions. Nor did he advocate theft for any purpose—even for those uses most dear to his beliefs.

[Editor’s Addendum: I continue to harp on the fact that taxation (for whatever purpose) is theft, and this piece reinforces my contention that even the most limited government must violate the stealing commandment. The purpose behind the stealing is immaterial. It does not matter if the stealing is for government protection from criminals or governmnet provision of welfare. Note Harper’s description that many have become “victims of moral schizophrenia,” meaning that such a person acts honestly in his day-to-day commercial activities, but sees no dishonesty when it comes to “forcing” people to pay taxes. I also like his declaration that one should reach into one’s own pocket – “not your neighbor’s pocket” – to finance acts of compassion and assistance. For further writings on this topic see my articles, “Moral Challenge,” and “Moral Challenge II,’ in Numbers 138 and 141 of THE VOLUNTARYIST.]

Video:The Myth That Without Government Monopolies Or Subsidies, Discoveries Will Be Hidden By Secrets

Posted: 12 Jul 2010 11:42 AM PDT

From TechDirt.com

Stephan Kinsella sends over a fascinating talk by Dr. Terence Kealey, a UK biochemist and professor, discussing why — contrary to what most people think, “science” is not a public good, and that government-funded science actually tends to do more damage than good for global economies:

Many of the points raised actually apply to issues related to patents as well. For example, he starts out by quoting Francis Bacon, who defended the idea of governments funding science by claiming (as we often hear about patents), that if an individual invests in research, it will cost a great deal to do so, but any competitor can then copy the results for free. And thus, Bacon concluded, science was a form of a public good which the government should fund. Sound familiar?

The problem, it turns out, is that as with patents there is no actual data to back this up. Kealey points out that there is no historical or econometric data anywhere that supports this claim. For example, he points to the OECD’s sources of economic growth report (pdf), where it found very high correlation between economic growth and countries that had high levels of private R&D. When it came to publicly supported R&D, the report found no impact on economic growth… but, more worrying, it found evidence that public funding of science tended to crowd out private funding of R&D, which (again) correlated highly with economic growth. Now, of course, correlation is not causation, and there may be many other factors at play here. However, it is interesting that there doesn’t appear to be any direct evidence that public expenditure in science leads to economic growth.

Dr. Kealey points out that many people believe in the importance of public funding of science based on the same thinking as Bacon above: the idea that science is a public good. That is, that once it’s out there, anyone can use it — and thus, it either needs to be enclosed and limited in some manner, or funded by the government. In the last couple decades, however, more and more economists have begun to realize that this thinking on public goods is not only overly simplified, but it’s often wrong. It appears to be the case here again. Kealey points out that science is not, in fact, a public good.

Why? Because of a combination of social mores and the need to do your own research to understand what others are doing:

The standard story… was that science was a public good, in the sense that anybody can go to the journals — or the internet today — and pick up the Journal of Molecular Biology and read the papers for free… We can get it for nothing. Or we can go to the Patent Office, which very kindly publishes all this stuff… and read all the patents… and get ideas, blah blah blah…. We all know that “science is publicly available,” and therefore is easy to copy and all the rest of that.

But hold on a second.

How many people in this room can read the Journal of Molecular Biology. How many people in this room can read contemporary journals in physics? Or math? Physiology? Very, very few. Now the interesting thing — and we can show this very clearly — is that the only people who can read the papers, the only people who can talk to the scientists who generate the data, are fellow specialists in the same field. And what are they doing? They are publishing their own papers.

And if they try not to publish their own papers… If they say, ‘we’re not going to get engaged in the exchange of information; we’re going to keep out of it and just try to read other people’s papers, but not do any research of our own, not make any advances of our own, not have any conversations with anyone,’ within two or three years they are obsolescent and redundant, and they can no longer read the papers, because they’re not doing the science themselves, which gives them the tacit knowledge — all the subtle stuff that’s never actually published — that enables them actually to access the information of their competitors.

This is a huge point that fits with similar points that we’ve made in the past when it comes to intellectual property and the idea that others can just come along and “copy” the idea. So many people believe it’s easy for anyone to just copy, but it’s that tacit knowledge that is so hard to get. It’s why so many attempts at just copying what other successful operations do turn into cargo cult copies, where you may get the outward aspects copied, but you miss all that important implicit and tacit information if you’re not out there in the market yourself.

He then goes on to discuss the Royal Society of London, which encouraged scientists to publish their own research, and points out that while initially, people might think that it was better to not be a member, not publish your information and just scoop up what others had done, in practice that wasn’t the case. Why? Because the members of the society beyond publishing themselves, also had much greater access to all the other members as well, allowing them to continually further their own knowledge. In other words, the argument that researchers or competitors will prefer to keep their inventions secret via trade secrets goes out the window when companies realize that by sharing more freely their own inventions, they also get greater access to the inventions of others.

What’s interesting here is that this story of the Royal Society and the benefits of membership actually fit — almost exactly — the research on why Silicon Valley became such a huge success when compared to other, similar arenas. What that research showed was that due to a lack of noncompete agreements in Silicon Valley (where they are outlawed), the rate of job shifting was much higher. And, partly because of that, information flowed much more quickly between competitors. While one might normally think this is a bad thing, what actually happened was it allowed all the companies in that space to grow much faster, because the knowledge sharing led to faster and faster advancements for all. Rather than being limited to just what one group could figure out, they could all effectively build on each other’s knowledge as well — and the end result was much greater growth for all.

But, still, as with the situation that Dr. Kealey describes, there had to be a level of expertise from everyone involved. It wasn’t as if some other party, with no knowledge of the space at all could just copy it. So too, it appears to be, with scientists:

You can’t access the science of others unless you’re part of the game. It is only the molecular biologist who is publishing his own papers, getting invited to the conferences, having the discrete conversations with other fellow molecular biologists, who can capture the work of others. And so you don’t get the information for free. You pay a very high price to access the information of your fellows. Science is not a public good…. It costs as much to access information as it does to make it. It’s just that the cost of accessing is the subtle parallel cost of the work you have to do before you’re ready to read it. And, as a part of that, you’re contributing to the common pool of knowledge.

From there, he discusses the famous story of how the Wright Brothers and their patents effectively killed the aviation industry in the US until the government stepped in to force them to open up. And from there, he makes the point that I was discussing above about the research on Silicon Valley:

What is really interesting about the exchange of knowledge, is the work of von Hippel and others at MIT Sloan Management School: industrial scientists collude — or I don’t know what word you want to use — exchange information all of the time. Even competitors. It’s a straight quid pro quo. Just like academic scientists. von Hippel showed, for example, the 12 leading steel makers in America… 11 of them routinely met discretely, and exchanged information as quid pro quos. It’s a very nice model, economically. There is actually shared knowledge amongst scientists. One of the leading economists of science — I’m not going to name all the names because it’s boring — but he’s showed that there are no industrial secrets in America or in Britain or in the West. Scientists at the level of research, in companies, exchange so much information, that no secrets exist more than about a year, a year and a half….

…

Scientists discovered a very long time ago that their own self-interest is assured if they share knowledge with competitors. Because the ones that don’t share knowledge, whether they’re academic scientists looking for their Nobels or business scientists looking for money, that if they don’t share, they will absolutely get left behind.

It’s great to see that there’s even more research on this particular subject than I had been aware of before, but which confirms many of the points that I’ve been making for years.

Checking on “Cash for Clunkers”

Posted: 12 Jul 2010 08:55 AM PDT

By John Stossel

—

One year ago, our “leaders” made grand promises for the Cash-for-Clunkers program. Senator Harry Reid claimed

“this program will stimulate other sectors of the auto supply chain like mechanics and auto parts manufacturers without adding to the deficit. By increasing sales we are bringing more revenue to the state and creating jobs for those who build and sell them. Cash for Clunkers is the kind of sound, innovative program that helps spur Americans’ confidence.”

What nonsense. It was insane that Congress would use your money to pay people to junk perfectly usable cars, and then buy new cars they would eventually have bought anyway. That doesn’t create wealth. As Fox Business Senior Editor Charles Brady emailed today:

“A major criticism of these targeted stimulus plans is that all they do is pull sales forward without providing any net gain in economic activity: a person who was planning to buy a new car in six months would be inclined to make that purchase earlier in order to get the benefit of the stimulus program, however someone who wasn’t planning on purchasing a car wouldn’t suddenly change his mind and buy one.”

Now, one year later:

“This is exactly what happened with Cash-for-Clunkers There was a big spike in automobile purchases when the program was in effect last July and August. Come September, though, sales plunged 35% right back to where they were before the stimulus was enacted. It’s true that auto sales have trended higher since then. But critics argue those sales would have occurred anyway, and that all Cash-for-Clunkers did was put taxpayers $3 billion further into debt.”