Category Archives: Economics

Those who oppose minor and perhaps reasonable expansions to the power of the government on the grounds that that power will inevitably be expanded abused are not necessarily committing the fallacy of the slippery slope.  Extensive precedent has shown that once any task is institutionalized in a government agency, it will forever have a lobby which is dedicated to expanding its purview and budget. No matter how rigidly and narrowly the original mission is defined, the continuing employment and power of the bureaucrats responsible for it becomes an end in itself. Perhaps one of the simplest examples of this is the list of United States Federal Agencies.

Operating independently of market constraints, the bureaucrat has no obligation to prove his efficacy or any continuing need for his services, nor any need to balance the value of the service he provides against the cost. He works tirelessly to find new crises which must brought under his control or to worsen (usually by means of perverse economic incentives) the very problem he is tasked with solving.

In the aggregate, the mass of bureaucrats in any given society work subvert the energy of the remaining productive people until civilization disintegrates into hyperinflation and bankruptcy. Their intentions may initially be purely benign, but their work requires ever greater degrees of evasion and mass brainwashing as they search for victims and enemies in ever wider circles of society.

No matter how trivial the problem to the solved, once a political solution is attempted, the issue can only be expected to become worse and more expensive. Can you think of a single instance when a bureaucracy resolved the issue it was tasked with solving and fired itself?

It should be noted that this trend also manifests in large corporations, whenever it becomes so large and vertically integrated that individual departments are able to operate outside the pressure of the market and thus outside the pricing mechanism as a means of valuing services.   Fortunately, the wealth destruction of corporations in a free economy is limited by its revenue, and it need not exhaust the entire wealth of a society in order to it collapse.

(You can skip to the lecture’s beginning at 5:40.)

By the way, the introductory quote is from Ayn Rand’s 1970 essay “The Comprachicos.” The text is:

Observe also the intensity, the austere, the unsmiling seriousness with which an infant watches the world around him. (If you ever find, in an adult, that degree of seriousness about reality, you will have found a great man.)

Earlier this month, Congress passed a law which will essentially force the public to switch to compact fluorescent lights. (CFLs)  Environmentalists and light bulb makers joined forces to boost power and profits, and perhaps sue the competition out of existence.Some people object to the narrow light spectrum and toxic Mercury content of CFL lights, but I don’t care about those things.  I have replaced most of the incandescent lights in my apartment, and plan to eventually replace the rest.  What I question is not the usefulness of CFLs, but the premise that switching to them will “save energy.”

As with most goods and services, the price of a utility influences the quantity I am willing to pay for.  When the price of gas doubles, I reconsider taking road trips, and try to be more efficient with my driving.  Likewise, when the price of electricity falls, I am more liberal with my power consumption.   Compact fluorescent lights lower the cost of lightning in two ways: they use one quarter of the energy, and they last ten times as long.  These innovations encourage greater usage of lighting.

I have a spiffy IKEA lamp behind my couch, but because I don’t have a light in my ceiling fan, it needs to be extra bright.  Furthermore, the geometry of my living room makes it annoying to walk behind the couch every day to turn it on.  By switching to a compact fluorescent light, I was able to get a 100 watt equivalent light in a 60 watt socket, and thanks to its efficiency and long life, I just leave the light permanently on.  I am enjoying greater convenience, but I don’t know if I am saving any energy.

If the average consumer’s monthly lightning budget is fixed, they might compensate for the higher efficiency and lifespan of CFLs by increasing their lightning usage to completely offset any energy reduction.  This would be especially true if consumers are forced to switch to CFLs by legislators rather than a desire to save energy costs.  Much as auto safety regulations can lead to reckless behavior, forcing consumers to switch to more efficient lights might actually increase their energy usage.

The Israeli government is trying to lure back some of the hundreds of thousands of Israeli expatriates with “tax breaks, employment and small business loans.”  The campaign is set to cost $36 million a year.  Israeli politicians must realize on some level that their best and brightest citizens are leaving in growing numbers because their grant experiment in utopian socialism has turned out to be a total failure.  What they failed to consider however, is that to the extent that the campaign is successful, it is will bring back the wrong kind of people: those who value a short-term bribe over freedom and entrepreneurship unhindered by the interventionist state.