…and I said nothing, because I wasn’t a ‘terrorist’…

This morning it was reported that Anwar al-Awlaki and Samir Khan, both citizens of the U.S., were killed in Yemen by U.S. drones. For nearly two years al-Awlaki was targeted by the Obama administration, which had authorized his assassination, despite not having charged him with any crime, let alone convicted him in a court of law. His father, Nasser al-Awlaki, had filled suit with the DOJ in order to prevent his son’s killing, but a judge dismissed the case on procedural grounds.

Anderson Cooper interviewed Jeffrey Toobin on his show, asking under what legal justification the U.S. could have summarily killed one of its citizens, given a legal ban on assassinations. Toobin’s response was essentially that under the authorization of force, the U.S. is fighting al-Qaeda, and al-Awlaki was a member of al-Qaeda, therefore “this guy was fair game under our laws.” As for the prohibition on assassinations, Toobin says “it’s pretty much irrelevant at this point,” because he argues, “so many presidents have figured out ways around it.”

There is so much here to refute. The authorization of force is not a declaration of war, and therefore military action is not pursuant to the constitution’s delegation of war-making powers. Assuming it was, simply for the sake of argument, where in that bill did it repeal the 5th Amendment? It’s not even clear that he was in fact a member of al-Qaeda, as reported in Der Spiegel. And because no one really follows the rules anyway, so they don’t matter, is hardly a sound argument.

The executive branch and members of the media are assuring us all that he was a bad guy. After all he was a terrorist, you know. He spoke out in support of Nadal Hassan, the military officer accused of killing thirteen soldiers at Fort Bliss. He was said to have supported the efforts of those trying to ship bombs packed inside toner cartridges. The latest reports are that his next plans included the use of chemical weapons.

So what? As cruel and inhuman as it is, praising the deaths of other humans is not the same as committing the crimes against them. Furthermore, there is no evidence that al-Awlaki had anything to do with any other attacks. From watching the news, listening to the radio, and reading reports online, one might gather that reason free from emotion is lost in this country. Just as with Osama bin Laden, no one seems to consider the precedence being set, or the example being shown around the world.

How might Americans react if a Russian aircraft stationed in Mexico routinely launched missiles into a Dallas suburb, in an effort to kill a Russian citizen accused of no crime? What sort of reaction might we expect the families of the murdered to have? Will they praise Americans as just and good, or will they resent their presence, and forever seek vengeance? The questions seem to answer themselves. For more on this topic, see Glenn Greenwald at Salon.com and Michael Ratner of The Guardian.

 

Update:

I wrote the following comment on an article from the daily beast:

First, they starved the Iraqi people, and I said nothing because I was not Iraqi; 
Then, they tortured the Afghans, and I said nothing because I was not an Afghan; 
Then, they bombed Pakistan, and I said nothing because I was not from Pakistan; 
Then, they killed a “terrorist,” and I said nothing because I was not a “terrorist;” 
Then, they came for me….

But that’s not the half of it; it’s far worse. It’s one thing for people to be indifferent to the bloodshed and wanton disregard for justice, but instead they cheer it.

On Education

Like virtually every school district across the country, the one I live in has been experiencing budget problems.  Late last year they had to lay off some employees, close some schools, and, as some parents hoped, raise some extra tax revenue.  While the town I live in isn’t particularly wealthy, the county is among the most affluent in the state.  Some parents, upset over state laws that limit the amount of tax money any given district can raise, decided to file a lawsuit. Their argument was that it would be unfair to limit their ability to finance their children’s educations.

The lawsuit was filed in December, with the aim of allowing a local “voluntary” tax increase for the district. Essentially, the plaintiffs wanted permission from the state to expropriate their neighbors even more than present laws allow, in order to educate their kids.  Of course this tax is only “voluntary” in the sense that those who vote for it are willing to pay it.  For anyone else who disagrees, there is no choice in the matter, thus it is not voluntary at all.  This is the nature of democracy.  So long as a majority of people desire something, those who are opposed have the choice between acquiescing and being subject to the violence inherent in the system.

As one might expect, various groups were opposed to this scheme.  However, the loudest opposition wasn’t from whom we might have thought.  Normally such protest comes from libertarians, individuals without school-aged children, or private/homeschooled families.  This time it came from other school districts in the state.  Of course they weren’t concerned for the victims of this thievery; they were upset at the thought of not being able to share in the looting.  Under Kansas statute, education funds are supposed to be equally distributed among districts.  This is supposed to allow equal opportunity of education.

Why, if the under-privileged districts in rural Kansas had to rely solely on their own income for funding, then they would be at a disadvantage.  You see, the rich Johnson county children would have more money to spend, and logically it must follow that a more expensive education is a better education.  The first problem with this idea is that even if it were true, it is still immoral.  Taking from one and giving it to another is nothing short of theft, or legal plunder, as Frédéric Bastiat referred to it.  This is true regardless of whether the thief plans to donate the spoils to charity or spend the money on his own wants.  But secondly, and more importantly, at least for utilitarians, this argument isn’t supported by empirical evidence.

Nationwide, the average cost per student at government schools is more than $10,000.  For students at private schools, annual tuition costs are $8,549.  Homeschoolers have the most cost effective education, averaging somewhere near $500 annually.¹  This difference in education costs does not lead to poorer education either.  The opposite is actually true.

The results of standardized tests clearly show an inverse relationship between expenditures and results.  Homeschooled students’ test scores average near the 87th percentile, while the typical government schooled child scores at the 58th percentile.  So it appears that more money is not likely to have the desired effect for students of government schools.

If high-quality, low-cost education is the desired end, the means should be to completely privatize schooling.  Of course this cannot be accomplished overnight; instead, it would need to happen gradually.  This could be achieved by introducing competition to government schools.  First, government regulations dictating the curriculums of private schools and homeschooling should be eliminated.  Second, tax credits paid from education funds, should be given to parents who enroll their children in schools other than those operated by the government.

If parents believe their children are not learning as much as they should from government education, or the curriculum doesn’t suit their preferences, they can move to a different school.  If government schools fail to satisfy their patrons, the parents and students, they will incur losses.  Over time, the market signals of profit and loss (presently absent) will determine which schools remain in operation, and under what terms.

Parents and families should be responsible for the education of children.  Not a government employee, not the retired couple living on a fixed income, and not the twenty-something with no children.  So in addition, deductions for those without school-aged children should be phased in as well.  This way parents begin assuming more and more of the costs to educate their children, and those without children aren’t forced to participate in a socialized education system.

Education costs are the single greatest expense for state and local governments nationwide.  If the billions of dollars presently being siphoned away from the people earning it were returned, then I have no doubt that quality education would be affordable.  If nothing else, I see no reason why the parents of my district can’t make their own voluntary contributions.  At least that would be the moral thing to do, instead of trying to rob the rest of us to fund their kids’ poor education.

____________________

¹This estimate ignores the opportunity cost of a parent not in the workforce.  However, not all parents of children in government schools are in the workforce, so the same opportunity cost exists for them.  Also, many home-school families operate businesses from the home, and thus compensate for unrealized wages.

Economic Lessons from the Pawn Shop

[This essay was first published by the Ludwig von Mises Institute, Aug. 23, 2011]

I enjoy watching TV shows like Pawn Stars and American Restoration, in part because I have an interest in history and antiques. There’s something appealing about these cultural artifacts; they’re rich in character, and every piece has a story. The other thing I appreciate about these History Channel shows is how each episode demonstrates a number of economic principles. Subjective-value theory, time preference, comparative advantage, and mutually beneficial exchange are all there.

Pawn Stars follows the daily operations of a Las Vegas pawnshop. Each episode features people bringing in historical items they wish to sell, and the subsequent negotiations between them and the store owners. During the haggling we learn the history of the item and what factors affect its value. Of course, each hopes to maximize their profits, and will only agree on a price if he believes it to be in his interest. Rick Harrison, one of the owners, must be careful to buy only the items he can sell at profit, taking care to avoid counterfeit items or something that will sit in the store for too long.

Each trade centers on one question: How much? The answer can be found at the intersection of the subjective value placed on the item by each party. This price then becomes the objective value of the item. Carl Menger developed a theory, explained here, wherein individuals assign value to something according to their preferences. This is easily observed when a buyer and seller negotiate a price. Harrison knows he can profit only by acquiring an item for a fraction of its appraised value. So for him, a particular item is only valuable if he can keep its price below this margin. Eventually he and the seller will come to an agreement. In most cases the seller could command a higher price elsewhere, but to do so would require more effort and time. Most sellers see a greater value in short-term profits than in larger future gains.

This willingness to accept less for an item than one could get at auction illustrates a high time preference. Occasionally a seller will decide to hold onto his item, hoping to find a buyer willing to pay more; this person has a low(er) time preference. These different preferences help to ensure that the capital structure is properly aligned. Though time preference is perhaps not as important in the case of classic cars or antique firearms, living standards can be raised when a low time preference is applied to savings. When those with lower preferences forgo their current consumption, the savings allows others to invest, thereby increasing productive capacity.

In American Restoration, Rick Dale and his crew restore classic pieces of Americana including vending machines, toys, and old cars. Often, collectors bring their own items for Dale to repair, knowing his reputation for quality work. Customers spend anywhere from several hundred to several thousand dollars to have antiques returned to their original luster. Additionally, Dale acquires items from pickers (people who earn a living buying and selling unrestored antiques), then repairs the goods and sells them to other collectors.

Dale’s shop performs nearly all of the work, but he occasionally requires the expertise of another company. Here, the principle of comparative advantage can be seen. Though Dale could do all of the work, at times it’s more efficient to subcontract some of the restoration. In one episode he was under a strict time limit from one customer, and in order to ensure that all of his clients were pleased, he hired a neighbor to do specialized work. Comparative advantage is a crucial part of the production process. When individuals and firms are able to produce particular goods more efficiently than others, and trade the surpluses, wealth is created.

Owners of antiques are sometimes reluctant to part with their money in the beginning, but upon seeing the completed work, they find increased satisfaction in their property. This is yet another enjoyable aspect of the show: Dale’s primary focus is on creating a product that brings joy to its owner. Many of his clients bring childhood toys that are well worn, and the look on their faces when the toys are made to look new again is wonderful to see. Aside from the nostalgic value, another benefit of the work is that the items could fetch even higher prices if their owners decided to sell. So in a very real sense, wealth is generated in each exchange.

Both shows constantly focus on the concept of mutually beneficial exchange. Quite often, sellers on Pawn Stars walk away with as much or more than they hoped for. At times we see people accepting less, but they only do so willingly, showing they have gained something nevertheless. If neither party feels they are benefiting, the trade is off, and both leave peacefully. The same benefits of voluntary trade can be seen on American Restoration; no one is coerced, and no trade takes place where one feels he is being taken advantage of.

There are many great shows like these that feature the same basic economic principles. They entertain us, for sure, but they also demonstrate the benefits of trade, how prices are determined, and many other concepts that I am sure to have missed. When you examine the programs and see the concepts playing out in real time, you find that economics is more than a patchwork of disjointed theories. Each concept is neatly interwoven into ordinary life, as if to spontaneously regulate human activity in such a way as to maximize economic prosperity.