Thursday, November 8, 2018

Stanford University Faculty, Staff, and Students Living in Campus Housing Voted 10.8% for John Cox Republican for Governor and 9.8% for Christine Russell Republican for the House of Representatives

Four precincts (Santa Clara County Precincts 2542, 2544, 2545, and 2546) circumscribe Stanford University.  Precincts 2542 and 2544 consist of undergraduate and graduate students.  Precinct 2545 consists of faculty and staff.  Precinct 2546 includes both students and faculty/staff.

The percentages supporting the Republican and Democrat candidates for Governor and House of Representatives District 18 in each of the four precincts were similar, ranging from a low of 87.1% to a high of 91.8% for Democrat Gavin Newsom for Governor and between 88.7-92.5% for Democrat Anna Eshoo for California District 18.  Democrats Newsom received 89.2% and Eshoo 90.2% of the votes for all four precincts taken together.  Newsom received 1,137 out of 1,275 votes cast and Eshoo 1,145 out of 1,270 cast.

To summarize, Stanford campus residents cast 9 Democrat BLUE votes for every 1 Republican RED vote for both offices.  Faculty, staff, and students voted almost identically BLUE and RED.  From a political point of view, Stanford enjoys 10% RED DIVERSITY from the 90% BLUE majority.

BTW, the BLUE vote declined from Hillary Clinton’s 91.6% share in 2016.  Put another way, political diversity increased almost 2%.

Wednesday, November 7, 2018

Dateline: November 7, 2018, Qo’noS (Kronos), Klingon Home World

On November 7, 2018, the Klingon High Council imposed an indefinite ban on visas to Earthling members, supporters, and donors of the Democrat Party to visit any settlement or planet in the Klingon Empire.

Responding to a question from an Earthling reporter at an interstellar press conference, the spokesman for the High Council replied that the central value defining Klingon Warrior Culture is honor.  The spokesman stated that Democrats have no honor as revealed in their treatment of President Trump and Judge Kavanaugh.  Accordingly, Earthling Democrats will be denied the privilege of sightseeing and interacting with Klingons.

Simultaneously, on the Vulcan Home World, the Vulcan High Command issued a similar ban on visas to Earthling Democrats for travel in Vulcan space.

Responding to an Earthling reporter’s question at an interstellar press conference, the Vulcan spokesman replied that the central value defining Vulcan Culture is logic and the suppression of emotion.  The spokesman stated that Earthling Democrats reject logic and resorted to mobs in their treatment of President Trump and Judge Kavanaugh.  Accordingly, Earthling Democrats will be denied the privilege of sightseeing and interacting with Vulcans.

Seeing a chance to profit from the Klingon and Vulcan bans on Earthling tourism, on November 8, 2018, at an interstellar press conference, the Grand Nagus and members of the Ferengi Commerce Authority announced incentives for tourist agencies that bring free-spending Earthling Democrats to Ferenginar and other settlements in the Ferengi Alliance.  The Ferengi are obsessed with profit and trade.  The 285 Rules of Acquisition is the basis on which Ferengi society is organized.  Ferengi strive to accumulate as may bars of gold-pressed latinum as possible, and take pride in swindling unwary customers.

Similarly, at an interstellar press conference, a spokesman for the Imperial Senate and the Continuing Committee of the Romulan Star Empire encouraged Earthling Democrats to visit their Romulus and Remus Home Worlds.  Romulans are a counterpoint to the logical Vulcan race, whom they resemble and with whom they share a common ancestry.  Romulans are characterized as passionate, cunning, and opportunistic, the exact opposite of the logical and cold Vulcans.  The press spokesman stated that Romulans and Earthling Democrats could learn duplicitious, deceitful, dishonest, and treacherous methods from each other.

Other humanoid extraterrestrials, including the Cardassians, Andorians, Bajorans, and Betazoid, have convened their political leadership on how best to capitalize on the exclusion of Earthling Democrats from Klingon and Vulcan space, and if they could benefit in some way by competing with the Ferengi and Romulans to encourage Earthling Democrats to visit their worlds.

Interstellar reporters on the home worlds of these other races were told that announcements would be forthcoming,

Tuesday, November 6, 2018

Economic Freedom, Part 3

The attempt to develop a rigorous, quantitative measure of economic freedom may strike some as a presumptuous undertaking.  The effort requires agreement on the conceptual dimensions of economic freedom, the indicators or data that fit or reflect each of the several dimensions of economic freedom, and the generation of a number (or numbers) that sums up all of the different dimensions, thereby permitting comparative ratings on the degree of economic freedom that exists both in the aggregate for each of the different dimensions of economic life in every country in the world at any point in time.  This post summarizes the initial effort.  I encourage you to read the full text of defining economic freedom and some possible measures, which appears in Chapter 4, Economic Freedom:  Toward a Theory of Economic Measurement (pages 87-108).  It lays a foundation for subsequent efforts to refine the conceptual elements of economic freedom, identify data requirements, and develop quantitative measures.  The ultimate objective is an annual report or yearbook, which has been produced annually by the Fraser Institute since 1996, rating economic freedom in every country around the globe, thereby upgrading the initial Freedom House Rating prepared by Zane Spindler and Laurie Still (Chapter 5, pages 135-171).

In Chapter 4 I tried to offer a preliminary definition, a check list, or a recipe of economic freedom ingredients.  I tried to identify the fewest number of dimensions that would be self-contained, consistent, and coherent.  Obviously, you could break them into many more.  This same set of seven dimensions could be subdivided into 10, 20, 25, or 30, as the case may be.  I compromised in the trade-off to produce something that is both meaningful and simple.

Some of the seven dimensions represent notions about individuals and others aggregate notions about the whole society.  For example, the schedule of marginal rates affects an individual’s decision to work, save, and invest, while an average tax burden may affect the society as a whole.

A second way to slice through these seven categories is in terms of institutions or rules and policies or incentives.  The first two, private property and the rule of law, I regard as institutional framework rules.  The others are public policies that governments undertake which have an effect on people’s capacity to do things economically and make them more or less free.

Two Institutions

My taxonomy is guided by philosophical considerations.  One cannot proceed without talking about private property.  A second area connected to private property is the rule of law.  In one community the rules are clear and one can expect fair and impartial treatment, and in the other the laws seem whimsical and decision making appears capricious.  The rule of law can enhance economic freedom through a written code, an independent judiciary, the structure of the legal codes, what kind of legal code it is, rights of appeal, and so on.

Five Categories of State Intervention

The first area of state intervention I examine is taxation.  Taxation can encompass high taxation, low taxation, the structure of taxes, composition of taxes, visible versus invisible taxes, rates of tax, whether taxes are used to redistribute income and wealth, taxes versus user fees to finance public services, and a broad-based proportional low tax scheme that promotes or enhances economic freedom as opposed to a loophole-ridden selective system with high rates on some kinds of economic activities and no rates on others.

A second area is public spending, the counterpart of taxation.  For centuries, the principle of balanced budgets regulated budget policy.  For the past 75 years, budget deficits have become a way of life in most advanced and developing countries. Until 1929, public spending in the U.S. consumed 10% of GDP.  Since then it has tripled.  The amount of spending, how it is spent, the amount of interest paid on a large and growing public debt, and the growing welfare state all have an impact on economic freedom, the ability of individuals to exercise responsibility for their own affairs.  What kind of spending enhances economic freedom and which doesn’t?

A third area is regulation of business and labor.  Regulatory agencies have dramatically increased in number and scope since 1960.  For business, important aspects of economic freedom include legal formalities required to set up a business should be few and inexpensive, free entry and exit into any line of production, absence or presence of monopoly practices that benefit specific firms or industries, and free movement of prices to equate supply and demand in the market place.  Other regulations are designed to control externalities such as air and water pollution, impose safety requirements on food, drugs, transportation carriers, the production of other goods and services that affect public health and safety, job safety inspections, equal employment opportunity enforcement, consumer product safety standards, and energy restrictions.  However, regulations can entail large expenditures to comply, or they can be imposed in a least-cost, minimally-interventionist manner.  How they are imposed affects both efficiency and economic freedom.

Labor regulations entail the rights of workers, choice of occupation, freedom to travel at home and abroad, unions (right to strike, compulsory payment of union dues, membership requirements), sick leave, vacation time, fringe benefits, hours of work, workmen’s compensation ordinances, pension fund requirements, and other measures.  All of these impact the economic freedom of workers and the overall labor market, raising the cost of production and reducing employment.

A fourth area is money.  The following policies, practices, and institutions, among others, should be examined to investigate a link between monetary policy and economic freedom:

The legal right of non-governmental entities to issue private currency;
The absence of legal tender laws;
The right to buy (free of sales and other taxes), own, and exchange gold (silver) coins;
An accurate description of the monetary system;
The successful conduct of monetary policy in terms of price stability and steady growth;
Convertibility of currency (into goods and services and other currencies);
Free inward and outward movement of capital;
Competition within banking and financial services sectors; and
Monetary policy rules.

The final area is foreign trade.  Free trade maximizes both efficiency and economic freedom.  It enables individuals to buy and sell freely on world markets, selling products at the highest possible price and purchasing goods and services at the lowest possible price and giving individuals the widest possible choice of consumer goods.  Free trade also permits specialization, division of labor, and the principle of comparative advantage to work to the benefit of individuals and firms in each country.

Those socialist and developing countries that pursued policies of self-reliance, self-sufficiency, import substitution, protectionism, and other inward-looking policies resulted in dismal records of economic performance and curtailed economic freedom.  Those that pursued policies in a milieu of free trade flourished.

Free trade means an absence of tariffs, non-tariff barriers, capital controls, restrictions on direct foreign investment, and government controlled marketing boards that fix the price of imports to consumers and exports to producers.

Summary

In the interests of parsimony here, I encourage you to read the full text of my paper and the subsequent discussion with the conference participants.

The measurement of economic freedom has been refined and improved since the Napa Valley Conference held in Vancouver in July 1988, both for the Fraser Institute Annual Report and the follow-on Heritage Foundation/Wall Street Journal Index.  I hope you will review the Fraser Institute Annual Report published in conjunction with the Cato Institute.

Thursday, November 1, 2018

Stanford Donates 99.3% BLUE

Stanford University has its own zip code, 94305. In addition to academic buildings and athletic facilities, the campus is home to about one thousand faculty and staff (with their families) and around 12,000 students.  Campus faculty/staff residents number about half of Stanford's overall faculty and top administration staff, with the other half living in neighboring towns and suburbs.  (It's likely that on- and off-campus faculty and staff have similar political predilections.)

The current election cycle (the 2018 mid-terms) began on January 1, 2017.  As of October 26, 2018, the Federal Election Commission reported that those living in the 94305 zip code donated $1,751,903 to political candidates and political party affiliated organizations.  Of that amount, $1,740,303, 99.3%, was donated BLUE to Democrat candidates and organizations.  A minuscule $11,600, 0.3%, was donated RED to Republican candidates and organizations.

Hoover Institution Fellows and their families donated $11,350, 97.8% of all RED donations.  However, Hoover Institution Fellows and their families donated $20,180 BLUE.  Even at the ostensibly "conservative" Hoover Institution, BLUE donations almost doubled RED.  In addition, more Hoover Fellows voted BLUE than RED in 2016 and will do so again on November 6, 2018 (my informal survey).  In 1971, all 11 Hoover Fellows Donated and voted RED.

On November 7, 2018, I will report the precise BLUE/RED Stanford votes for governor and local House of Representatives member for the four precincts, 2542, 2544, 2545, and 2546, that constitute Stanford's zip code 94305.

Wednesday, October 31, 2018

Dream Of The Red Chamber, Elections With American Characteristics For The Current Era

The night before the November 8, 2016 elections, I had  a Dream Of The Red Chamber with three rooms: a small one for the President, a medium-size room for the U.S. Senate, and a large room for the House of Representatives.  I knew for sure, as Joseph knew from his interpretation of the Pharaoh’s dreams in ancient Egypt that seven lean years would follow seven fat years, that Donald Trump would be elected president and that Republicans would control both houses of Congress. Even more important, for my peace of mind and America’s future, there would be no Blue Room inside the Red Chamber in which Hillary Clinton would sit as president.

I plan to dream again on Monday night, November 5, before the mid-term elections on November 6, 2018.  I am quite firm in my belief that all three rooms in the Red Chamber will remain RED!

If I am wrong (GHUA), and the large room hosting the House of Representatives is repainted BLUE, I dread the nightmares that will come from watching Maxine Waters preside over the House Ways and Means (tax-writing) Committee, Nancy Pelosi (gasp) as Speaker of the House, and so on up and down all the committees and sub-committees of the House.  YARGH!

Thursday, October 25, 2018

Economic Freedom, Part 2

Most of us have an intuitive or common-sense notion of the meaning of economic freedom.  A smattering of features or attributes includes free markets, private enterprise, voluntary exchange, capitalism, limited government, laissez-faire, free trade, low taxes, free movement of capital, and other dimensions of economic life.

But we want to go beyond these descriptors to measures of economic freedom.  How much more economic freedom does South Korea have compared with North Korea?  Hong Kong with China?  China 35 years ago with China today?  Has economic freedom increased or decreased in Sweden during the last 10 years?  It would be ideal to develop a rating system that permits quantitative comparisons across nations and over time.

A first step is to develop a philosophy or definition of economic freedom in order to identify common (as well as divergent) elements that should be measured.

Political philosophers and thinkers have explored the notion of freedom from the beginning of recorded history.  The first use of the word “liberty” is traceable to ancient Sumer.  Cuneiform writing on clay cones excavated at Lagash, in Sumer, contained the freedom laws of the good King Urukagina that he promulgated to rid the land of tax collectors.

Ancient and medieval philosophers were largely concerned with the political dimensions of freedom:  a voice in collective decision making (Greek democracies).  Political freedom meant self-rule, or the absence of external control.  It did not emphasize the rights of the individual to non-interference from the state or protection under the rule of law.

The modern notion of freedom signifies non-interference in the private affairs of individuals in a society governed under the rule of law.  The freedom to own a certain amount of property was seen as a necessary condition for being able to maintain personal independence.  The development of property rights went hand-in-hand with longstanding provisions of human rights that were proclaimed in the Magna Carta in 1215, in thousands of medieval charters in England and continental Europe, and in the procedural safeguards of person and property that developed in the common law.

Against this backdrop, economic freedom seriously developed into a coherent and powerful intellectual tradition with the publication of John Locke’s Second Treatise of Civil Government (1689). which emphasized freedom of association, private property, and the sacrosanct nature of individual liberty secured under the rule of law.  David Hume reinforced Locke’s emphasis on the right to property as the foundation of society and government.

Locke was followed nearly a century later by Adam Smith with the publication of Inquiry into the Nature and Causes of the Wealth of Nations (1776), which emphasized a system of individual and commercial liberty based on private property.  Nineteenth-century England was governed by the principles of Locke and Smith.  Its hallmarks were free trade, laissez-faire, low taxes, low state expenditure, and a minimally interventionist government.

Milton Friedman was a modern-day Locke,  He asserted the primacy of the individual as the ultimate entity in society, focusing on the role that private property plays in fostering economic and political freedom, and economic prosperity.  Friedman, with the assistance of his wife Rose, set forth  a coherent statement of economic freedom in 1962 in a collection of essays entitled Capitalism and Freedom.  The book explains the role of competitive capitalism as a system of economic freedom.  It also discusses the legitimate role of government in a free society, identifying those areas where government intervention in the private affairs of individuals is warranted, but also where it goes beyond the limited legitimate tasks of government harming both economic freedom and efficiency.

The legitimate tasks of government include the maintenance of law and order to prevent physical coercion of one individual over another, to enforce contracts voluntarily entered into, and to regulate activities where one individual’s economic activity imposes harm or losses on another (externalities).

In a later volume Free to Choose (1980), the Friedmans set forth an Economic Bill of Rights, a counterpart to the political Bill of Rights in the Constitution.  These include a tax or spending limitation as a share of national income, freedom to import and export (free trade), a ban on wage and price controls, a ban on occupational licensure, a requirement for proportional taxation (flat-rate tax), and others.

A third approach to economic freedom is embodied in the libertarian work of Murray Rothbard, the purest expression of economic freedom.  Rothbard grounded his political philosophy of liberty on a natural law foundation, especially Locke’s treatment of property and ownership.  His theory of liberty rests on the establishment of the rights of property, which determines each individual’s sphere of free action.  His society of pure freedom is based on free and voluntary exchanges.  The free market economy thus depends on upon a free society with a certain pattern of property rights and ownership titles.  He departs from Friedman on the need for the state to enforce contracts.  It is not the function of law to enforce morality or promises made to each other.  Enforcement is only appropriate when one party steals the property of another.

Going further, Rothbard defines taxation as theft.  The use of coercive taxation to acquire revenue and the compulsory monopoly of force and ultimate decision-making power over a given territorial area on the part of the state constitute criminal aggression and depredation of the just rights of private property of its subjects.  Rothbard also contends that the services generally thought to require a state, from the coining of public money to police protection to the development of law in the defense of private property rights (all part of Friedman’s legitimate role for government) can be and have been supplied with greater efficiency and morality by private persons.

Rothbard’s libertarian vision is more utopian than practical.  Other philosophers, from John Locke to Adam Smith to Milton Friedman, grant specific, if limited, powers to government or the state, including the power to tax, enforce laws, maintain order, and defend the nation, which reflects the real world activities of government.

A fuller discussion of this synopsis of the philosophical aspects or definition of economic freedom is found in the Books section of my website, alvinrabushka.com, in Chapter 2, pp.23-55, of Economic Freedom:  Toward a Theory of Measurement.  See my article “Philosophical Aspects of Economic Freedom” and accompanying discussion, which can be downloaded here.  I encourage you to read the chapter.

The next post sets forth possible measures with which to rate economic freedom.

Tuesday, October 23, 2018

Economic Freedom, Part 1

In October 1986, with support from the Liberty Fund in Indianapolis, Indiana, the Fraser Institute convened the first of four conferences in Napa Valley, California.  The Fraser Institute published the proceedings in 1988, Economic Freedom, Democracy and Welfare.  Edited by Michael A. Walker, Director of The Fraser Institute, and co-chaired with Milton and Rose Friedman, the conference was organized as a counterpart to do for economic freedom what Freedom House did for political freedom:  to calculate the amount of economic freedom that exists in various nations of the world.

Its origins can be traced to a conversation in 1994 at the Mont Pelerin Meeting in Cambridge, England, between Michael Walker and Milton Friedman, whose book Capitalism and Freedom had been extant since 1962.  However, there had been no serious attempt to explore the relationship between economic and political freedom in a scholarly way.  That conversation led to the idea of broadening the analysis to also include civil freedoms, which can often be more important than political freedoms.

The conference consisted of several conceptual, historical, and statistical papers, most notably those Nobel Laureates in Economics Douglass C. North and Milton Friedman.  These were fleshed out with case studies on economic freedom in East Asia (Alvin Rabushka), Africa (Lord Peter Bauer), Latin America (Ramon Diaz), and Sweden (Ingemar Stahl).  Another paper dealt with property rights (Svetozar Pejovich).  Discussants included Armen Alchian, Walter Block, Herbert J. Grubel, Arnold Harberger, Brian Kantor, Assar Lindbeck, Michael Parkin, Gordon Tullock, and Sir Alan Walters.  It would be hard to find a more distinguished group of scholars concerned with economic freedom, or any other economic subject for that matter.

A second conference was convened in July 1988 in Vancouver, Canada.  Edited by Walter E. Block, the proceedings were published in 1991, Economic Freedom:  Toward a Theory of Measurement.  (The volume is available for free download on my website alvinrabushka.com.)  This conference was designed to set forth the philosophical foundations of economic freedom and its conceptual definition that would provide a basis for measurement.

Michael Walker set the background for the proceedings with a summary of the preceding conference held in Napa Valley.  Alvin Rabushka wrote the next three papers:  “Philosophical Aspects of Economic Freedom,” “Freedom House Survey of Economic Freedoms“ (for comparative purposes), and “Preliminary Definition of Economic Freedom.”  I will discuss the contents of these papers in subsequent posts.  The final paper was an initial attempt by Zane Spindler and Laurie Still to calculate “Economic Freedom Rankings” for 145 countries on a five-point scale based on Rabushka’s “Definition” paper.

Conference participants, in alphabetical order, also included James Ahiakpor, David Friedman, Milton Friedman, Rose Friedman, James Gwartney, William Hammett, Henri LePage, Henry Manne, Richard McKenzie, Antonio Martino, Charles Murray, Ellen Paul, Robert Poole, and Gerard Radnitsky.

The third and fourth conferences were held in Banff, Alberta, Canada in 1989, and Sea Ranch, California in 1990.  The two were melded into the third volume in The Fraser Institute Rating Economic Freedom Project.  Stephen T. Easton and Michael A. Walker edited the volume, Rating Global Economic Freedom, published in 1992.

Papers in this volume focused on more precise measures of economic freedom for countries around the world for which data were available.

Authors and participants included James C.W. Ahiakpor, Juan F. Bendfelt, Walter E. Block, Jack L. Carr, John F. Chant, Edward H. Crane, Arthur T. Denzau, Thomas J. DiLorenzo, Stephen T. Easton, Milton Friedman, John C. Goodman, James D. Gwartney, Edward Lee Hudgins, Ronald W. Jones, Robert A. Lawson, Richard McKenzie, Joanna F. Miyake, Charles Murray, Alvin Rabushka, Richard W. Rahn, Alan Reynolds, Laurie Rubner, Gerard W. Scully, Bernard H. Siegan, Zane A. Spindler, Alan C. Stockman, Richard L. Stroup, Melanie Tammen, and Michael A. Walker.

The first comprehensive report based on the four conferences and three conference volumes was Walter Block, James Gwartney, and Robert A. Lawson, Economic Freedom of the World, 1975-1995, published on January 1, 1996.  Thereafter subsequent annual reports were published for 1997, 1998-1999, and then annually through 2018 (published in conjunction with the Cato Institute since 2001).  Separate periodic reports for North America were published from 2002 and for the Arab World from 2005.  Altogether, about a dozen individuals have helped to edit the series of annual reports on Economic Freedom.

In 1995, The Heritage Foundation, in conjunction with the Wall Street Journal, created a rival Index of Economic Freedom.  The Heritage/WSJ index was conceptually and empirically simpler than the Fraser Index.

Subsequent posts in this series will discuss in greater detail the philosophy, concepts, and measures of Economic Freedom that make up the Fraser Institute Annual Report