Abundance and Trade

Yesterday, I noted my first objection to Peter Diamandis and Steven Kotler's book Abundance. My second is perhaps more technical. In Chapter Four, the authors make the (entirely true) point that progress is cumulative. The more we progress, the easier progress becomes, primarily because ideas interact and complement each other. Although not quoted in the book, Matt Ridley's quote on this blog's sidebar makes the same point:

"The more we prosper, the more we can prosper. The more we invent, the more inventions become possible. The world of things is often subject to diminishing returns. The world of ideas is not."

However, in making this point, the authors quote Dean Kamen (previously featured here as the inventor of the Slingshot water purifier, although better known as the inventor of the Segway):

"In a world of material goods and material exchange, trade is a zero-sum game. I've got a hunk of gold and you have a watch. If we trade, then I have a watch and you have a hunk of gold. But if you have an idea and I have an idea, and we exchange them, then we both have two ideas. It's nonzero."

While Diamandis & Kotler's overall point is true, Kamen's quote is just plain wrong. Even in a purely material world, trade is not a zero-sum game. Kamen looks only at the physical objects, not the value the traders place on those objects. By trading, both parties increase the value they place on the objects they have, so trade is positive-sum even if it's solely material trade.

Kamen is trying to speak of opportunity cost. When he and I trade material goods, I have to give up the material good that he wants, and vice versa. The opportunity cost of the material trade is the value of the material good that I'm giving up. But the value of the material good I'm receiving is higher than my opportunity cost, otherwise I wouldn't agree to the trade. The same is true on his side. Both of us increase the value of the things we hold, and our trade is a positive-sum game.

By contrast, if Kamen and I trade ideas, neither gives up the idea that we share with the other. The opportunity cost may include the time it takes to teach an idea, the effort to write it out, the cost to publish a book, etc., but the opportunity cost does not include the idea itself. This makes combinations of ideas far more likely, which is what Kamen seems to be getting at.

This is not just semantics. Much of our government's trade and economic policy is based in the idea that trade is a zero-sum game. Too many people think that if another country is getting richer, we must be getting poorer. The same applies within countries as well--if the rich are getting richer, the poor must be getting poorer. This is used to justify everything from import tariffs and export restrictions to higher taxes and complex regulations. Getting the public to accept that trade is positive-sum, not zero-sum, is the first step towards better economic policy.

Kein Eier für Kinder

I first learned about Kindereier back in my high school German class. If you've never heard of them, they are chocolate eggs with little plastic toys inside. It was always a bit of a mystery why something like this never caught on in the United States, home of the Happy Meal toy.

But it turns out, there's a simple answer--toys in chocolate eggs are illegal. Here in the land of the free, our government believes we could not handle the shock of opening a chocolate egg to find a plastic toy inside. The toys are considered a "non-nutritive component," and thus are forbidden by a 1938 law.

Anyone with a lick of common sense can see that Kindereier pose no threat to anyone. Even though some of the toys have small parts, they are hidden inside the quite large plastic capsule. But common sense runs up against federal bureaucracy for people who try to bring Kindereier into the U.S. from another country. Attempting to import Kindereier comes with a $2500 fine per egg, and tens of thousands are confiscated by border agents every year. The two Seattle men in the linked story above spent two-and-a-half hours in border detention because they tried to bring six Kindereier into the country. That would've been a $15,000 mistake if the agents hadn't let them off with a warning. (Thanks be to the Border Agents, the Beneficent, the Merciful!)

So when you see reports from the bipartisan immigration reform group, or Rand Paul, or anyone else insisting on increasing funding for the border patrol before even trying to reform any of the other problems in our broken immigration system, keep in mind that this is what they're doing with the money they already have. Do they really need even more?

Aftermath: Reflections on Obama's Re-election

Barack Obama has been re-elected President of the United States.

For starters, Gary Johnson was not a spoiler. While the results are still coming in, as of 11:30pm Pacific, there was not a single state won by Obama where Romney would have won even if every Johnson voter had voted for Romney instead.

Second, there is no mandate. While Obama won, he won with a far narrower lead in both the popular vote and the electoral college than he had in 2008. While Democrats increased their lead in the Senate, Republicans increased their lead in governorships, and the House is on track to be more or less the same as it was. This was very much a status quo election.

On the whole, will we be better or worse with Obama as president?

First of all, expect the fiscal cliff to stay in place. After all, we just re-elected most of the people who put it there to begin with. While I haven't spent too much time learning about the fiscal cliff, Wikipedia claims a 19.63% increase in revenue and a 0.25% decrease in spending, or a nearly 80-to-1 ratio of tax hikes to spending cuts. This will not end well-- and even if our new old government leaders manage to avoid the cliff, the re-elected Obama is in a prime position to extract concessions he was unable to before the election. Any compromise will include more tax hikes than spending cuts, if spending is actually cut at all.

Second, Obamacare will be implemented fully over the next few years. Expect the nation's health, freedom and balance sheet to all suffer. Although to be honest, I don't believe Romney would have done any better.

The national debt will continue to grow. If the fiscal cliff causes a second recession, expect more stimulus and bailouts, probably for Europe too. We may look back at $1.5 trillion deficits and laugh about how small they were. On the other hand, the same probably would've happened under Romney, considering his plan to index military spending to 4% of GDP.

On other long-term important issues, I don't expect Obama to do much of anything. He'll keep ignoring space (mercifully), Social Security will continue to stumble forward without reform, trade deals will be forgotten, immigration won't change. We'll mostly withdraw from Afghanistan on schedule, although the lack of attention the war gets these days means we'll probably keep troops there for the long haul, same as we've still got troops in Germany, Japan and Korea. On trade and Afghanistan, at least, Romney would have been even worse. While Romney may have avoided the fiscal cliff, his insistence to go after China on trade might have been just as bad for the economy.

The main difference between the two candidates in terms of our long-term welfare is this: With Obama's victory, 2016 will see another wide-open primary for Republicans, where we'll have another shot at nominating a true spokesperson for liberty. Had Romney won, we wouldn't get that chance until 2020. So hold onto your hats. It's gonna be a rough four years for liberty, but we made it through the last four. We'll make it this time, too.

Recent Reasons for Optimism V

The latest installment of recent reasons for optimism was a bit delayed on account of this being the tenth day of a ten-day workweek for me. But that doesn't mean there was any less good news! There's been lots of good news in health, but there's also reasons for optimism on the economy, civil liberties and even the threat of asteroid impact.

Health

1. First the bad news-- the cytomegalovirus (CMV) infects 50-80% of people in the US, UK and Australia, and decreases life expectancy as much as smoking or drinking because of its unique effects on the immune system. Now the good news-- researchers at the University of Birmingham are working on an antiviral drug to reverse CMV's effects, potentially adding years to life expectancy. The drug has shown promise in mice, and tests on humans will begin soon. Finally, the great news-- researchers at the University of Connecticut at Farmington have genetically modified CMV to take advantage of what it does to the immune system. The result is a self-reinforcing cancer vaccine. In a study on mice, an untreated control group died of cancer within 23 days; the CMV-treated group lived for the entire length of the study.

2. A new breathalyzer can detect some kinds of cancer on your breath (ht Jason Silva). Although currently less accurate than more complicated tests, it's also far less costly, and could provide cancer screening to the poor around the world who can't afford current tests.

3. One more on cancer: Researchers have developed a patch (that looks very much like the birth control patch) that completely eliminated a certain kind of skin cancer after wearing it just three times, for three hours each. It was a very small trial, with just ten patients, but three months later the cancer was still gone from all ten patients, and after six months, there was no cancer in eight out of ten patients.

4. In Sweden, doctors have successfully transplanted a vein into a 10-year-old girl without the use of immunosuppressive drugs. They accomplished the feat by removing all of the donor's cells from the vein and replacing them with the girl's own stem cells.

Cyborgs and Robotics

5. We're one step closer to brain implants, as a team from MIT has invented a fuel cell to convert glucose in the brain into electricity that can be used by implants or prosthetics. (ht MR)

6. Picking up different kinds of objects is difficult and expensive for robots, especially when the shape of the object may not be known in advance. In an amazing example of the simplicity of innovation, a team at Cornell has found a solution using a balloon and ground coffee.



Economics

7. I've mentioned before on this blog that world income is higher than ever before and steadily increasing. Matt Ridley shares a graph showing that not only is world income higher, it's also more equitable.

8. Great news for free-traders: Both Mexico and Canada have now joined the Trans-Pacific Partnership (TPP) negotiations. The TPP, originally an agreement between New Zealand, Chile, Brunei and Singapore, is now being expanded to include the three NAFTA countries, the US, Canada and Mexico, as well as Japan, Australia, Peru, Vietnam and Malaysia. If an agreement is reached between all these countries, the TPP would become the largest free trade area in the world, comprising a full third of world GDP.

Civil Liberties and Crime

9. The Canadian government has backed down from their plan to record private conversations at border crossings and airports. What makes this even more encouraging is that this rapid about-face came in a non-election year, with the Conservatives' majority solidly in place until 2015. And it may not be just the Canadian government-- the US Department of State has withdrawn a request for bids to develop a system to monitor social media.

10. New Yorkers are striking back against that city's "stop and frisk" policy with a new app that allows New Yorkers to easily record and share video of police encounters and report them to the NYCLU. This is a small example of advancing technology being used to protect civil liberties.

11. Crime is down across-the-board. Violent crime fell by 4% from 2010 to 2011, the fifth year in a row it's fallen. That's true across the country, with every region except the Northeast seeing a drop of 4.5% or more. Property crimes were also down for the ninth year in a row, down 0.8% from 2010.

Everything Else

12. NASA scientists say there is little to no threat of a civilization-ending asteroid strike. Lindley Johnson of the Near Earth Object Observation Program says, "We know everything out there that is that big, and there is just nothing right now that's in an orbit that's any threat toward the Earth."

13. Ed Krayewski at Reason lists the "top 5 pieces of good news in the bad news." Some of his reasoning is a bit strained, but it's nevertheless an interesting list.

14. For even more optimism, check out these "21 Pictures That Will Restore Your Faith in Humanity." Among the obligatory pictures of people rescuing animals, there's a Subway restaurant giving free food to the homeless, a dry cleaner's offering free cleaning for the unemployed for job interviews, and the story of the Japanese seniors who volunteered to clean the radiation at Fukushima so the young wouldn't have to.

Gary Johnson on the Issues

Last Sunday, I wrapped up my series of posts on Mitt Romney's positions in the debates. Now it's time to look at Gary Johnson, who initially ran as a Republican but has now secured the nomination for the Libertarian Party. Since Johnson was only in two debates, the first and the sixth, there's simply not as much material as there was for Romney, who was in 19 debates. While Romney got five entries, Johnson only gets this one.

National Security
In the first debate, he said he would withdraw from Afghanistan "tomorrow," was against the war in Iraq from the beginning, and was also opposed to intervention in Libya (Syria was not yet an issue at the time). He is solidly against war, saying in the 6th debate, "The biggest threat to our national security is the fact that we're bankrupt." As part of his promise to balance the budget, he supports a 43% cut to military spending.

Immigration and Trade
He said in the first debate that there was "very little, if any benefit" to securing the border, and that freer immigration would create "tens of millions of jobs." On trade, he said, "I'm a free market guy... I don't favor tariffs of any kind, whatsoever." In the two debates, he was only able to address trade with one country, Cuba, which he supports, because he believes that trade encourages friendship. 

Taxes and Spending
He supports the Fair Tax, a national sales tax that would replace the corporate and personal income taxes. On spending, he would balance the budget in his first year in office. Since he says current spending outpaces revenue by 43%, that's how much he wants to cut from all federal spending, including 43% each from the military, Medicare and Medicaid. To get it done, he would turn Medicare and Medicaid into block grants, veto any bill where expenditures exceeded revenue, completely eliminate the Department of Education and subject federal programs to cost-benefit analyses, then get rid of the ones that don't measure up.

The Economy
To get the economy growing again, he would restructure the tax code and greatly reduce federal spending as described above. He also sees freer immigration as a way to encourage "tens of millions" of new jobs. He would eliminate the federal minimum wage, and stop extending unemployment benefits.

Social Issues
He declined to describe himself as "pro-life," and said in the first debate that he supports abortion "up until viability." (While viability lacks a precise definition, that would allow abortions at least into the fifth month of pregnancy, and possibly later.) However, he opposes public funds for abortion, and favors parental notification and counseling. On drugs, he admits to having smoked marijuana, and supports legalization along with regulation and taxation of marijuana. While gay marriage didn't come up in the debates, on Twitter he often sells himself as the only candidate supporting "marriage equality" (at least, prior to Obama's recent conversion). 

Ron Paul
When directly asked in the sixth debate what made him a better choice for libertarian Republicans than Ron Paul, Johnson said, "I'm not going to presume to make that assumption." When asked who his running mate would be if it had to be someone at the sixth debate, he said Ron Paul. On Twitter, many of his public tweets are also directed towards Ron Paul. While I haven't seen anything explicitly laying this out, I suspect he looks at Paul's age and wants to be the next Ron Paul once Paul himself leaves public life. It will be very interesting to see how much support Johnson gets from Paulites once Paul eventually quits the race.

Mitt Romney on Foreign Policy

Now that Newt Gingrich has officially dropped out of the race, only Mitt Romney and Ron Paul remain. Paul up to this point has only gotten about 80-90 delegates depending on who's counting, while Romney has some 840. For all that I dislike Mitt Romney, the Republican nomination is now pretty much settled.

Now that we're entering the general election phase of the campaign, with Romney as the Republican standard-bearer, I think it would be useful to revisit the positions he took during the primary debates. My vote, at this point, is far from certain, and just as I used this blog to decide my vote in the primary, I will also be using it to decide my vote in the general election. While it's possible some or all of Romney's positions in the primary will be Etch-a-Sketched away soon, I think this is a good enough place to start.

My original coverage of the debates can be found under the debate tag and the 2012 primaries tag. Romney attended most of the debates, with the exception of the first, the Thanksgiving Family Forum and of course the one-on-one Gingrich debates with Cain and Huntsman. All my coverage of Mitt Romney himself, which is mostly just the debates so far, can be found under the Mitt Romney tag.

Over the 19 debates, Romney took lots of positions on lots of different issues, so I'm splitting this up into multiple entries. This one covers foreign policy, including immigration, trade, defense and policies toward some specific countries and regions.

Immigration

In the 3rd debate, he said, "We are a nation of immigrants. We love legal immigration." In the 8th debate, he said, "I think every single person here loves legal immigration." But only twice in 19 debates did he talk about encouraging legal immigration, once in the 3rd debate and later in the 11th, both in the context of high-skilled immigrants. For the most part, when Romney talks about immigration, he talks about discouraging illegal immigration. Unfortunately, discouraging illegal immigration by making legal immigration easier doesn't seem to have occurred to him. He focuses entirely on securing the border with a fence and lots of federal agents, and making it harder to hire illegal immigrants.

As for illegal immigrants who are already here, he says in the 19th debate, "Our problem is 11 million people getting jobs that many Americans, legal immigrants, would like to have." In early debates he held that any kind of path to legality, never mind citizenship, amounts to amnesty; later, in the 18th debate, he supported allowing illegal immigrant children to gain citizenship through military service. He would encourage self-deportation by requiring immigrants to present legal-status cards to be hired (and, since the absence of such a card would imply you're an illegal immigrant, the requirement for such a card would also necessarily extend to citizens). He mentions this card multiple times, in the 13th, 17th, 18th and 19th debates.

Trade

Mitt's trade policy leaves a lot to be desired. In the 3rd debate, he called our trade partners our "opponents," and I wasn't the only one to notice. In the 5th and later debates, he substituted "the other guys" for "opponents," but the sentiment still clearly remained. His primary trade policy is to "crack down on cheaters like China," which he mentioned, often with those exact words, in the 6th, 7th, 9th, 10th, 14th, 16th, 17th and 19th debates.

He did talk about expanding trade, but far less often than cracking down on China, and always in the context of "open[ing] up markets for our goods," as he said in the 14th debate. He seems to hold a typical mercantilist philosophy, where exports are good but imports are bad. Anything China or other countries do to encourage American imports should be punished, and the only goal of free trade agreements is to encourage American exports.

Defense

He opposes all cuts to defense spending, preferring cuts to entitlements and Obamacare. In fact, he wants to increase military spending, in particular by building more ships for the Navy (which he mentioned in the 13th, 18th and 20th debates) and recruiting an extra 100,000 troops (which he mentioned only once, in the 13th debate).

Specific Countries/Regions

China: Most of Romney's policy towards China focuses on trade, particularly "cracking down" on them for cheating. He promised in the 7th debate to issue an executive order on "day one" labelling China a currency manipulator, and to initiate action against China at the WTO.

Afghanistan: His Afghanistan policy is most charitably described as continually evolving. In the 2nd and 3rd debates, he preferred a timetable for withdrawal established by the generals in Afghanistan. In the 10th, he was fine with Obama's 2014 timetable for the general withdrawal, but not the September 2012 withdrawal of the surge troops. In the 11th, he said he wanted to keep the surge troops in Afghanistan until December 2012, and keep "ten thousand or so" troops in Afghanistan after 2014. In the 14th debate, he said he didn't yet have enough information to say when he would withdraw the troops from Afghanistan.

Iran: He is absolutely opposed to Iran getting nuclear weapons, going so far as to say in the 20th debate that re-electing Obama would lead to Iranian nukes being used against Americans, and that a Romney Presidency was the only way to prevent that. He said he would "of course" go to war "if all else fails" (in the 10th debate) and that Iran closing the Strait of Hormuz would "of course" be an act of war (in the 18th debate). He also wanted "crippling sanctions" against Iran in the 10th and 11th debates, and in the 14th criticized Obama for not supporting the Iranian protestors in 2009.

Iraq: Before going back into Iraq, he would want to "require significant, dramatic American interests" to be at stake, and said he would outline a specific endgame in terms of what would qualify as success.

Syria: In the 10th debate, he said, "Of course, it's time for the Assad dictatorship to end," but in the 11th said, "This is not the time for a no-fly zone over Syria."

Israel and Palestine: In the 19th debate, responding to a question from a self-identified Palestinian-American Republican, Romney said, "The best way to have peace in the Middle East is not for us to vacillate and to appease, but is to say, we stand with our friend Israel. We are committed to a Jewish state in Israel. We will not have an inch of difference between ourselves and our ally, Israel."

Europe: In the 7th, 9th and 16th debates, he opposed a direct bailout to Europe, saying they are big enough to solve their own problems. He would, however, be willing to provide assistance through the IMF and World Bank, and hinted he would bail out American companies affected by Europe's problems.

Canada: In 19 debates, Romney mentioned our largest trading partner and the country with which we share the world's largest land border once, and even that was indirectly through his support for the Keystone XL pipeline in the 17th debate.

Trade Partners

After the third Republican debate last Thursday, I graded the debate as I had the first two. I took exception to Mitt Romney's first answer of the night:

Third, have trade policies "that work for us, not just for our opponents." (Whoa. Why are our trade partners suddenly our "opponents"?)

I'm glad to see I'm not the only one who noticed that flub. Yesterday, Sallie James at CATO wrote the following (italics in original):

I’ll just interject here to say that by “opponents” I believe Mr Romney is referring to our trade partners. You know, the folks who sell us stuff and buy stuff from us.

Today, Don Boudreaux echoed the sentiment with a post titled "After Posting Here, I'll Buy Lunch and a Cup of Coffee from One of My Many Opponents." He also calls Romney an "ignoramus," a word which should be used a lot more often in public discourse.