Category: Public Choice

Machiavelli Described the Methods of Tyrants

(p. C12) But anyone who observes politics, business or even the loftiest social institutions will know that the world is rife with backstabbers, hypocrites and ethical ne’er-do-wells all thriving at the highest levels—beyond the reach of law or hashtag.

. . .

Machiavelli’s gift, Mr. Boucheron argues, was “naming with precision that which was happening.” He explains the behavior of tyrants not to excuse them, but to show the rest of us what to look out for, in the clearest terms possible. Machiavelli’s “lucidity,” says Mr. Boucheron, was the “weapon of the despairing.”

Other political thinkers have read Machiavelli this way. Jean-Jacques Rousseau wrote in “The Social Contract” that Machiavelli was not advising tyrants but “instructing the people on what they have to fear.” John Adams credited Machiavelli for helping him think through the likely threats to a young American republic.

For the full review, see:

Philip Delves Broughton. “A Poetics for Tyrants.” The Wall Street Journal (Saturday, January 25, 2020): C12.

(Note: ellipsis added.)

(Note: the online version of the review has the date January 24, 2020, and has the title “‘Machiavelli’ Review: A Poetics for Tyrants.”)

The book under review is:

Boucheron, Patrick. Machiavelli: The Art of Teaching People What to Fear. Translated by Willard Wood. New York: Other Press, 2020.

Ford and Edison Tried to Build and “Gift the Nation” a “Utopian Garden City”

I have greatly benefitted from two of Hager’s previous books: The Alchemy of Air and The Demon Under the Microscope. A third one, Ten Drugs, was OK. I am looking forward to reading the new Hager book discussed in the passages quoted below from a WSJ review. I wonder if an inference from the book will be that more infrastructure could be privately provided, if the government would allow it? (By the way, I am by no means as convinced as the reviewer that the TVA was one of FDR’s greatest accomplishments.)

(p. A17) Henry Ford and Thomas Alva Edison were the twin wizards of the first decades of the 20th century in America.

. . .

The story of this pair’s vain effort to build a utopian garden city powered by a mammoth hydroelectric dam at Muscle Shoals, Ala., is all but forgotten. Now it’s been disinterred by Thomas Hager, in “Electric City: The Lost History of Ford and Edison’s American Utopia,” a well-researched, crisply written account tinged with irony.

. . .

During World War I, the government hatched a plan to dam the river and use the electricity generated to power two plants turning out nitrates for munitions. The dam was half built and the factories equipped when the war ended and the project was abandoned.

President Warren Harding didn’t want to spend the $30 million needed to finish the mile-wide 10-story dam and told underlings to lease the whole works to private interests. Ford had already been tempted to acquire the nitrate plants, which could be refitted to turn out the kind of fertilizer used by regional farmers. He envisioned the completed dam supplying cheap power for his blended new American community of garden cities strung for miles along the river. Worker-farmers would commute—in their Model T’s, of course—to small factories running on electricity from the dam. They would be given time off in planting and harvesting season to raise crops they could sell to supplement their incomes. It was a Jeffersonian vision of America updated to the age of the automobile and bounteous electricity.

Ford enlisted the prestige and smarts of his camping buddy Edison. They wanted, Mr. Hager writes, “to gift the nation they loved with a titanic, living example of how they thought America should work . . . The results would be new kinds of cities, new ways of making things, new approaches to labor and leisure, and improved lives for everyone.”

. . .

In the end, Edison faded from the picture, and Norris ended Ford’s hopes—passing legislation that made Muscle Shoals a federal undertaking, although Coolidge refused to sign it. And in the wondrous alchemy of American politics, when the Great Depression propelled Franklin D. Roosevelt into the White House, Muscle Shoals became the core of the TVA, the Tennessee Valley Authority, one of the first and greatest of FDR’s accomplishments.

For the full review, see:

Edward Kosner. “BOOKSHELF; Bright Lights, Big River.” The Wall Street Journal (Thursday, Dec. 23, 2021): A17.

(Note: ellipses between paragraphs were added; ellipsis in the middle of a paragraph was in the original.)

(Note: the online version of the review has the date December 22, 2021, and has the title “BOOKSHELF; ‘Electric City’ Review: Bright Lights, Big River.”)

The book under review is:

Hager, Thomas. Electric City: The Lost History of Ford and Edison’s American Utopia. New York: Harry N. Abrams Press, 2021.

Bret Baier Documents How Fauci and Collins Dishonestly Dismissed the Hypothesis That COVID-19 Originated in Wuhan Lab

Bret Baier gave a serious report on the substantial and growing evidence that Anthony Fauci, Francis Collins, and other “experts” and officials lied, early and intentionally, in their dismissal of the likely Wuhan lab origin of Covid-19. (The report aired on Bret Baer’s “Special Report” nightly news program on Tues., January 25, 2022 on Fox News.)

Taking “Capital Allocation Away From People Who Have Demonstrated Great Skill in Capital Allocation”

(p. 1) The richest people on earth typically devote a share of their vast resources to charity. That is the bargain and the expectation, anyway.

Jeff Bezos, until very recently the world’s richest human, has been applying himself dutifully if a bit cautiously to the task, giving money to food banks and homeless families while pledging $10 billion of the fortune he earned through the online retailer Amazon to fight climate change.

The latest richest human, Elon Musk, has taken a rather different tack. There was the public spat with the director of the World Food Programme on Twitter, for instance, announcing, “If WFP can describe on this Twitter thread exactly how $6B will solve world hunger, I will sell Tesla stock right now and do it.”

. . .

And, of course, there is the ongoing insistence that his moneymaking efforts, running both the electric carmaker Tesla and the rocket company SpaceX, are already better-(p. 8)ing humankind, thank you very much.

Mr. Musk is practicing “troll philanthropy.”

That’s what Benjamin Soskis, senior research associate in the Center on Nonprofits and Philanthropy at the Urban Institute, has called it, noting that Mr. Musk seems to be having fun with this novel approach.

“He doesn’t seem to care much about using his philanthropy to curry public favor,” Mr. Soskis said. “In fact, he seems to enjoy using his identity as a philanthropist in part to antagonize the public.”

. . .

“The particular barrier for donors from a tech background is they don’t just think their genius has made them good at what they do, they also think what they do commercially also makes society better,” said Rhodri Davies, a philanthropy commentator who wrote a piece on Mr. Musk called “The Edgelord Giveth.”

Mr. Musk, for instance, has said that getting humankind to Mars through SpaceX is an important contribution and has written and spoken acerbically about what he calls “anti-billionaire BS,” including attempts to target taxes at billionaires.

“It does not make sense to take the job of capital allocation away from people who have demonstrated great skill in capital allocation and give it to an entity that has demonstrated very poor skill in capital allocation, which is the government,” Mr. Musk said on Monday at an event hosted by The Wall Street Journal.

At the same time, Mr. Kharas said a more charitable reading of Mr. Musk’s exchange with the World Food Programme is possible. He could just genuinely want to know how the money will be spent and is putting in public, on Twitter, the due diligence work that institutional giving does behind closed doors.

“I think this idea that he was willing to engage was really good,” Mr. Kharas of the Brookings Institution said of Mr. Musk. “I think his response was extremely sensible. It was basically, ‘Show me what you can do. Demonstrate it. Provide me with some evidence. I’ll do it.’”

For the full story, see:

Nicholas Kulish. “Elon Musk, Trolling Away.” The New York Times SundayBusiness Section (Sunday, December 12, 2021): 1 & 8.

(Note: ellipses added.)

(Note: the online version of the story has the date Dec. 10, 2021, and has the title “Elon Musk’s Latest Innovation: Troll Philanthropy.”)

When Sri Lanka Government Banned Chemical Fertilizers, Yields Tanked and Prices “Shot Up”

(p. A4) RATNAPURA, Sri Lanka — This year’s crop worries M.D. Somadasa. For four decades, he has sold carrots, beans and tomatoes grown by local farmers using foreign-made chemical fertilizers and pesticides, which helped them reap bigger and richer crops from the verdant hills that ring his hometown.

Then came Sri Lanka’s sudden, and disastrous, turn toward organic farming. The government campaign, ostensibly driven by health concerns, lasted only seven months. But farmers and agriculture experts blame the policy for a sharp drop in crop yields and spiraling prices that are worsening the country’s growing economic woes and leading to fears of food shortages.

Prices for some foodstuffs, like rice, have risen by nearly one-third compared with a year ago, according to Sri Lanka’s central bank. The prices of vegetables like tomatoes and carrots have risen to five times their year-ago levels.

“I haven’t seen times that were as bad as these,” said Mr. Somadasa, a 63-year-old father of two who sells vegetables in the small town of Horana, just outside the island nation’s capital, Colombo. “We can’t find enough vegetables. And with the price hikes, people find it hard to buy the vegetables.”

. . .

President Gotabaya Rajapaksa cited health concerns when his government banned the importation of chemical fertilizers in April [2021], a pledge he had initially made during his 2019 election campaign.

. . .

The push for organic farming didn’t start with Mr. Rajapaksa’s current government, nor when another brother, Mahinda Rajapaksa, currently the prime minister, was president from 2005 to 2015. Some farmers and agriculture industry officials say they are warming to the idea of reducing dependence on chemicals in farming. But the shift was too sudden for farmers who didn’t know how to work organically, said Nishan de Mel, director of Verité Research, a Colombo-based analysis firm.

Verité found in a July [2021] survey that three-quarters of Sri Lanka’s farmers relied heavily on chemical fertilizers, while just about 10 percent cultivated without them. Almost all major crops grown in the country depend on the chemicals. For crops crucial to the economy like rice, rubber and tea, the dependence reaches 90 percent or more.

The April ban went into effect just before what is known as the Yala planting season, which lasts from May to August, and was felt almost immediately. The Verité survey showed that 85 percent of farmers expected a reduction in their harvest because of the fertilizer ban. Half of them feared that their crop yield could fall by as much as 40 percent.

Food prices shot up in September [2021], . . .

For the full story, see:

Aanya Wipulasena and Mujib Mashal. “A Plunge Into Organic Farming Brings Disaster to Sri Lanka.” The New York Times (Wednesday, December 8, 2021): A4.

(Note: ellipses, and bracketed years, added.)

(Note: the online version of the story has the date Dec. 7, 2021, and has the title “Sri Lanka’s Plunge Into Organic Farming Brings Disaster.”)

Climate Change Infrastructure Subsidies Mainly Benefit the Rich

(p. A9) Mr. Biden has insisted that at least 40 percent of the benefits of federal climate spending will reach underserved places, which tend to be low income, rural, communities of color, or some combination of the three.

But historically, it is wealthier, white communities — with both high property values and the resources to apply to competitive programs — that receive the bulk of federal grants. And policy experts say it’s unclear whether, and how quickly, federal bureaucracy can level the playing field.

. . .

The new climate provisions in the infrastructure bill inject billions of dollars into competitive grant programs. These are pots of money that towns, cities and counties can access only by submitting applications, which federal agencies then rank, with funds going to applicants with the highest scores.

That system is designed to ensure that funding goes to the most worthwhile projects.

But it also hinges on something outside the control of the federal government: The ability of local officials to use sophisticated tools and resources to write successful applications. The result is a process that has widened the gap between rich communities and their less affluent counterparts, experts say.

The disparity begins even before the application process begins. That’s because local governments must be aware of the grant programs in the first place, which means having dedicated staff to track those programs. Then they need to design proposals that will score highly, and correctly complete the reams of required paperwork.

Even if they are awarded a grant, communities are required to pay a share of the project — often 25 percent, which is unaffordable for many struggling towns and counties.

Governments that can clear those obstacles face a final hurdle: Demonstrating that the value of the property that would be protected is greater than the cost of the project. That rule often excludes communities of color and rural areas, where property values are usually lower than in white communities.

. . .

The Biden administration has touted the program, called Building Resilient Infrastructure and Communities, or BRIC, as a model that should be expanded. The infrastructure bill provides billions more to the program.

But most of the first round winners were wealthy, predominantly white areas in a handful of coastal states, federal data show.

More than half the money went to California, New Jersey and Washington State. The largest single recipient was a $68 million flood-control project in Menlo Park, Calif., where the median household income is more than $160,000, the typical home costs more than $2 million and only one in five residents are Black or Hispanic. The project is in line to get $50 million from FEMA.

For the full story, see:

Christopher Flavelle. $50 Billion Conundrum: Who Gets Climate Protection?” The New York Times (Saturday, December 4, 2021): A9.

(Note: ellipses added.)

(Note: the online version of the story has the date Dec. 3, 2021, and has the title “Billions for Climate Protection Fuel New Debate: Who Deserves It Most.”)

Communist China Pays World Bank for Higher Ranking in “Doing Business” Report

(p. A1) The World Bank canceled a prominent report rating the business environment of the world’s countries after an investigation concluded that senior bank management pressured staff to alter data affecting the ranking of China and other nations.

The leaders implicated include then World Bank Chief Executive Kristalina Georgieva, now managing director of the International Monetary Fund, and then World Bank President Jim Yong Kim.

The episode is a reputational hit for Ms. Georgieva, who disagreed with the investigators’ conclusions. As leader of the IMF, the lender of last resort to struggling countries around the world, she is in part responsible for managing political pressure from nations seeking to advance their own interests. It was also the latest example of the Chinese government seeking myriad ways to burnish its global standing.

(p. A10) The Doing Business report has been the subject of an external probe into the integrity of the report’s data.

. . .

The World Bank was in the middle of difficult international negotiations to receive a $13 billion capital increase. Despite being the world’s second largest economy, China is the No. 3 shareholder at the World Bank, following the U.S. and Japan, and Beijing was eager to see its power increased as part of a deal for more funding.

In October 2017, Ms. Georgieva convened a meeting of the World Bank’s country director for China, as well as the staff economists that compile Doing Business. She criticized “mismanaging the Bank’s relationship with China and failing to appreciate the importance of the Doing Business report to the country,” according to the investigative report’s summary of the meeting.

. . .

Ultimately, the team identified three data points that could be altered to raise China’s score, the investigative report said. For example, China had passed a law related to secured transactions, such as when someone makes a loan with collateral. The World Bank staff determined it could give China a significant improvement to its score for legal rights, citing the law as the reason.

World Bank employees knew the changes were inappropriate but “a majority of the Doing Business employees with whom we spoke expressed a fear of retaliation,” the investigative report said.

Although the data-gathering process for the 2018 report was finished, the World Bank’s economists reopened the data tables and altered China’s data, the investigative report said. Instead of ranking 85th among the world’s countries, China climbed to 78th due to the alterations.

For the full story, see:

Josh Zumbrun. “World Bank Cancels Report After Investigation.” The Wall Street Journal (Friday, Sept. 17, 2021): A1 & A10.

(Note: the online version of the story has the date September 16, 2021, and has the title “World Bank Cancels Flagship Report After Investigation.”)

Ray Dalio Lacks Principles in His Kowtowing to Chinese Communism

Ray Dalio has authored a book called Principles, but that does not imply that he has any. See the story below.

(p. B1) This year has been unsettling for Chinese business. The ruling Communist Party has gone after the private sector industry by industry. The stock markets have taken a huge hit. The country’s biggest property developer is on the verge of collapse.

But for some of the biggest names on Wall Street, China’s economic prospects look rosier than ever.

BlackRock, the world’s biggest asset manager, urged investors to increase their exposure to China by as much as three times.

“Is China investable?” asked J.P. Morgan, before answering, “We think so.” Goldman Sachs says “yes,” too.

Their bullishness in the face of growing uncertainty has puzzled China experts and drawn criticism from a wide political spectrum, from George Soros, the progressive investor, to congressional Republicans. Mr. Soros has called BlackRock’s stance a “tragic mistake” that’s “likely to lose money” for its clients and would “damage the national security interests of the U.S. and other democracies.”

. . .

(p. B5) Ray Dalio, founder of the hedge fund Bridgewater, wrote in late July [2021] that people in the West should not interpret Beijing’s crackdowns as “the Communist Party leaders showing their true anticapitalist stripes.” Instead, he wrote, the party believed those moves were “better for the country even if the shareholders don’t like it.”

The relationship has been good to Bridgewater so far. Mr. Dalio’s firm has raised billions of dollars from Chinese clients such as the China Investment Corporation, the sovereign wealth fund, and State Administration of Foreign Exchange, which manages the country’s currency reserves. (Bridgewater declined to comment.)

This is a balance that business has played with China for a long time: Say nice things to Beijing, lobby back home on China’s behalf, then ask for access to markets and capital.

Goldman Sachs became the first foreign bank to seek full ownership of a securities business in China in December. BlackRock, which describes China as an “undiscovered” market, hired a former regulator to head its China business. So many global financial firms are expanding in the country that there’s a talent war.

. . .

The Wall Street firms are apparently betting that China’s past successes will continue. They have a long track record on their side, but they would do well to remember what they constantly tell their customers: Past performance isn’t necessarily indicative of future results.

For the full commentary, see:

Li Yuan. “Uncertainty Is Rocking China. Why Is Wall Street Bullish?” The New York Times (Saturday, October 7, 2021): B1 & B5.

(Note: ellipses, and bracketed year, added.)

(Note: the online version of the commentary has the date Oct. 6, 2021, and has the title “China is Rocked by Uncertainty. Why is Wall Street Bullish?”)

Former Teacher Union President Says Charter Schools Give Black and Hispanic Children “Access to a Quality Education”

(p. A21) When I became a teacher, it seemed natural to become an advocate for the profession. Somewhere along the way I became more of a union leader than an educational leader.

. . .

I used to oppose charter schools, not because they were bad for kids, but because they were bad for unions.

. . .

I served as president of the Washington Teachers’ Union for six years and recognize the added value unions can bring in securing fair compensation and safe working conditions for teachers. I’m still a union member. But I now work on behalf of charter schools.

Charter schools are also public schools. All of them. They provide more than three million students, mostly black and Hispanic, access to a quality public education. They are innovative and student-centered. They break down barriers that have kept families of color from the educational opportunities they deserve. Another two million children would attend charter schools if there were space for them. How could I work against these kids?

For the full commentary, see:

George Parker. “How My Mind Opened to Charter Schools.” The Wall Street Journal (Thursday, May 27, 2021): A21.

(Note: ellipses added.)

(Note: the online version of the commentary has the date May 26, 2021, and has the same title as the print version.)

Insurers Are Paid More When They Negotiate HIGHER Prices for Patients

(p. A1) This year, the federal government ordered hospitals to begin publishing a prized secret: a complete list of the prices they negotiate with private insurers.

The insurers’ trade association had called the rule unconstitutional and said it would “undermine competitive negotiations.” Four hospital associations jointly sued the government to block it, and appealed when they lost.

They lost again, and seven months later, many hospitals are simply ignoring the requirement and posting nothing.

But data from the hospitals that have complied hints at why the powerful industries wanted this information to remain hidden.

It shows hospitals are charging patients wildly different amounts for the same basic services: procedures as simple as an X-ray or a pregnancy test.

And it provides numerous examples of major health insurers — some of the world’s largest companies, with billions in annual profits — negotiating surprisingly unfavorable rates for their customers. In many cases, insured patients are getting prices that are higher than they would if they pretended to have no coverage at all.

. . .

(p. A14) Customers judge insurance plans based on whether their preferred doctors and hospitals are covered, making it hard for an insurer to walk away from a bad deal. The insurer also may not have a strong motivation to, given that the more that is spent on care, the more an insurance company can earn.

Federal regulations limit insurers’ profits to a percentage of the amount they spend on care. And in some plans involving large employers, insurers are not even using their own money. The employers pay the medical bills, and give insurers a cut of the costs in exchange for administering the plan.

. . .

People carefully weighing two plans — choosing a higher monthly cost or a larger deductible — have no idea that they may also be picking a much worse price when they later need care.

Even for simple procedures, the difference can be thousands of dollars, enough to erase any potential savings.

It’s not as if employers can share that information at open enrollment: They generally don’t know either.

“It’s not just individual patients who are in the dark,” said Martin Gaynor, a Carnegie Mellon economist who studies health pricing. “Employers are in the dark. Governments are in the dark. It’s just astonishing how deeply ignorant we are about these prices.”

. . .

Health economists think of insurers as essentially buying in bulk, using their large membership to get better deals. Some were startled to see numerous instances in which insurers pay more than the cash rate.

. . .

“The worrying thing is that the third party you’re paying to negotiate on your behalf isn’t doing as well as you would on your own,” said Zack Cooper, an economist at Yale who studies health care pricing.

. . .

(p. A15) Hospitals and insurers can also hide behind the contracts they’ve signed, which often prohibit them from revealing their rates.

“We had gag orders in all our contracts,” said Richard Stephenson, who worked for the Blue Cross Blue Shield Association from 2006 until 2017 and now runs a medical price transparency start-up, Redu Health. (The association says those clauses have become less common.)

Mr. Stephenson oversaw a team that made sure the gag orders were being followed. He said he thought insurers were “scared to death” that if the data came out, angry hospitals or doctors might leave their networks.

. . .

The new price data is often published in hard-to-use formats designed for data scientists and professional researchers. Many are larger than the full text of the Encyclopaedia Britannica.

And most hospitals haven’t posted all of it. The potential penalty from the federal government is minimal, with a maximum of $109,500 per year. Big hospitals make tens of thousands of times as much as that; N.Y.U. Langone, a system of five inpatient hospitals that have not complied, reported $5 billion in revenue in 2019, according to its tax forms.

For the full story, see:

Sarah Kliff, Josh Katz and Rumsey Taylor. “Hospital Data Reveals Secrets Behind Billing.” The New York Times (Monday, August 23, 2021): A1 & A14-A15.

(Note: the online version of the story has the date Aug. 22, 2021, and has the title “Hospitals and Insurers Didn’t Want You to See These Prices. Here’s Why.”)

University of Chicago’s Milton Friedman Center Now Run by “Former Obama Staffers Who Cheer” . . . “Moves Toward Socialism”

(p. A15) Colleges’ ideological turn leftward has become sharper. At my own institution, a center dedicated to Milton Friedman is now run by former Obama staffers who cheer on the Biden administration’s moves toward socialism.

These policies reward professors and administrators who can then raise the price of their services. It’s basic economics that subsidizing demand increases the price of the product. Tuition rising as loan subsidies expand is no different. It isn’t a coincidence that education and health care, the industries in which government subsidies are most pervasive, took the highest price increases over the past 15 years—3.7% and 3.1% a year, compared with the 1.8% average across industries.

For the full commentary, see:

Tomas J. Philipson. “College Subsidies Are a Feedback Loop for Bigger Government.” The Wall Street Journal (Friday, June 11, 2021): A15.

(Note: the online version of the commentary has the date June 10, 2021, and has the title “College Subsidies Are a Feedback Loop for Bigger Government.”)