Month: September 2018

Short one.

Impartiality of judge and jury is one of the cornerstones of our legal system.  In a typical trial, the Judge is there to ensure that law and procedure are followed and the jury makes their decision based on the facts presented.  Both are supposed to be “impartial” in that they do not have a personal tie to either the plaintiff or the defendant.  That way they’re not tempted “to do my good friend over there a solid” or “now’s my chance to get even with that guy who cut me off.”

The judge and the jury, not personally connected to the case at hand are, therefore, supposed to be impartial.  And when a potential juror is found to have a personal tie to the case, that juror is dismissed and replaced with someone who isn’t.  When a judge has such a tie, the judge is expected to recuse him or her self and let another judge without such a tie preside over the case.  I believe that’s required in lower courts.  It’s more the “honor system” in the Supreme Court and there’s no way to enforce it if a judge refuses to act honorably in that instance.

This impartiality, this lack of personal connection to the case allowing the judge and jury to judge the law and the facts dispassionately is why justice is depicted as blind.

Nobody, however, expects the people who are  connected to the case at hand to be impartial.  We don’t expect the defendant to calmly and fairly consider the plaintiff’s case.  And we are unsurprised when the defendant instead examines the plaintiff’s case solely for the purposes of rebutting it.

So it is with some, not surprise but dismay that I see people looking at Kavanaugh’s reactions to the calumnies levied against him, the threats against himself and his family (dammit, even if Kavanaugh were guilty of everything he’s accused of, how can any sane, decent individual even consider harassing his wife and children who had no part in any of that?) and saying “see?  He’s not impartial.”

Of course he isn’t.  He’s not a dispassionate observer.  He’s the “defendant” in the issue.  He is neither expected nor required to remain calm and unemotional when accused of vile crime after vile crime with absolutely zero evidence, with the suppsed witnesses to the event cited by the accuser basically saying, in sworn statements, that it did not happen.

He acts like an aggrieved individual falsely accused and that’s supposed to disqualify him?  That’s not how it works.  Kavanaugh is not a judge in this case.  Indeed, because of his personal connection he would not be permitted to judge the case.  No judge sits over his own trial.

This just goes to show that folk aren’t interested in even giving him a fair hearing.  They are showboating for reasons that have nothing to do with law and justice and everything to do with partisan politics.

George Emory Sipes was my father.  For reasons I’ve never been entirely clear on, I ended up with a different last name.  Go figure.  He and my mother separated when I was about 3 years old and I only connected with him later when I was in my thirties.  I don’t know what the causes of the separation were and at this point it doesn’t really matter.

When I finally met up with him as an adult I found we had a lot in common.  In some ways that was a good thing in others, not so much.  We were both remarkably stubborn individuals and sometimes that got in the way of developing a fresh relationship.   Put us on opposite ends of the country and, well, we never got a chance to become close.  Still, from everything I know he was a good many.  Flawed, as all of us are, but on the whole a good man.  And he will be missed.

Served USS Sperry from 1955-1957,
then on the submarine Queen Fish from 1957 to 1960.

---

Eternal Father, strong to save,
Whose arm hath bound the restless wave,
Who bidd’st the mighty ocean deep
Its own appointed limits keep;
Oh, hear us when we cry to Thee,
For those in peril on the sea!

A devoted volunteer from 1987 to 2015

“Catching was always better than fishing.”

Music

Played french horn, saxophone, clarinet
and loved the “Big Band” tunes.

“Blue Water Cruising” was his dream

Passionate about VW design and
engineering, but nothing beats the
sound of a modified V8 engine.

Motorcycles

Riding with the guys was such a thrill,
especially on a vintage bike.

Family

Being with family always brought a smile to his face.

“Love of my life”

Gay Sipes is the wonderful lady my father married after he and my mother separated.  She is a sweet lady and has become a dear friend.

A one-of-a-kind love, together forever.

(George and Gay are Latter Day Saints.  One of the beliefs of that faith is that marriage continues beyond this life and into eternity.  So when they say “forever” they mean “forever.”)

Life is a journey of sweetness and sorrow,
Of yesterday’s memories and hopes for tomorrow,
Of pathways we choose and detours we face
With patience and humor, courage and grace
Of joys that we’ve shared and of people we’ve met
Who have touched us in ways we will never forget.

Rest in peace, Dad.  I only wish we’d had more time.

This is a bit more complex than some of the topics I’ve talked about here, not because the concepts are difficult, but because it brings together several seemingly disparate ideas.

First there’s “Economic Profit.” As defined in my Introduction to Microeconomics course it’s profit where you include not only the expenditure, but also the “opportunity cost”.  Allow me to expand on that a bit.  Opportunity cost is counting as a cost whatever would be the most valuable use for a given resource.  If the resource is money, it’s the “opportunity” you lose by spending it on one thing rather than another.  This is a little complicated, so let me illustrate with an example if you invest $100 in an investment that has a 5% rate of return your opportunity cost is the present value of the $100 plus what it would gain in interest.  First let me briefly address the idea of present value.  Present value simply means that some resource today is more valuable than having that same resource in the future.  See my telling of Bastiat’s The Plane for an illustration of how that works.  For instance, if we presume an interest rate for calculating PV of 3% (including both inflation and the loss of the use of the money in the interim) and invested that $100 in something offering 5% (compounded annually) for 10 years, the future value at the end of the 10 years would be $162.89 and the Present Value would be $121.21 (inflation eats up about $40 of that future value).  This assumes that there is no risk in the investment and that you can rely on inflation to be stable.  Investment risk and uncertainty in inflation would tend to reduce the present value to reflect the chance of lesser returns or greater inflation cutting into the value of that money.

So, if that 5% investment is the best you could do with that money the “opportunity cost” of using that $100 is $121.21 rendered as present value.  Whatever you use that $100 for doesn’t just cost you $100 (although it’s convenient to think of it that way).  It costs you the $121 of present value you could have had if you’d invested it.

With that idea in mind, an economic profit is one where the return is greater than the opportunity cost of the invested resources.  Basically, it has to return more (after adjusting for risk and uncertainty) than anything else that could be done with those resources.

Generally speaking and left to themselves, investments won’t be economically profitable, at least not for long.  If, for instance, you had a business that sells widgets at higher price, with a lower cost to produce, than other people, competitors will see that and say “I’m gonna get me some of that!” and start producing those widgets too.  This will increase the supply and tend to drive the costs down you’re back in line with everything else of similar risk.  This doesn’t happen in an instant, of course, so a business can be economically profitable for a while before others grab on.

Don’t confuse economically profitable with “profit” as a business considers it.  Balance sheets don’t generally show opportunity cost.  A business can be making money, making a profit as its investors and the IRS sees it, but only if it’s making a higher profit than businesses of similar risk is it economically profitable.

As I said, left to themselves businesses and investments won’t generally be economically profitable for long.  But there is something that can make them so.  That’s “Barriers to entry.” What prevents a business from becoming economically profitable is competition, others being able to see those profits and coming in, increasing supply until the market brings the profitability down to everyone else.  If you can prevent others from doing that, then you can continue being economically profitable.

One barrier to entry is if your business requires a talent or skill that’s in short supply.   Sports franchises are an example of this.   You can’t just pick up 53 people off the street and throw them (in groups of 11) at an NFL team.  Sports franchises aren’t the only example.

The big one, however, is government regulation and licensing.  If you can get the people who are allowed to use actual force to stop others from competing with you, then you’ve got one massive barrier to entry.  It may be a relatively porous barrier (pay a modest fee, sign your name, and get your license).  It may be a solid one (only a handful, or even a single, government chosen business need apply).  Those barriers can include such things as requiring long and expensive training before being allowed to work in the field (Doctors, Lawyers, Barbers).  Anything the government puts in the way that makes it harder for someone to enter a field is a barrier to entry.  And all barriers to entry, all licensing and regulation by government, act to stifle competition, limiting supply and therefore keeping prices high.  Attempts to alleviate the price problem by further regulation merely aggravates the shortages.  (Barriers to entry reduce supply.  Price controls reduce supply.  Both is a double whammy.)

This is why you’ll often find the strongest supporters of government regulation and licensing among those already in the field.  They can get the government to restrict future competition that might cut into their business?  What’s not to love (if you’re in that field wanting to make money.) It may not even be deliberate.  They may honestly believe their rhetoric about safety and protecting the public and the consumers.  But the incentive is there and will have an effect.

This is not to say that the regulation and/or licensing is always a bad thing on balance.  But all too often people proposing regulation neglect to consider the economic effects of that regulation.  One cannot ignore those economic effects however justified one may believe the regulation is on other grounds.  And since one of the effects is reduction of supply of the regulated good, the question then becomes if you’re really trying to protect people, ensure “exceptional quality”, or whatever legitimate reason you have for the regulation, the question becomes, what are the people who aren’t able to obtain the good because of the reduced supply supposed to do?  Just do without?  Are they really better off than if, say, some lower quality were available under less strict regulations?  Is “nothing” really the better option for those people?

These are questions everyone needs to ask themselves whenever new barriers to entry are proposed.  The whole package, not just the heartfelt rhetoric.

I hope so.  The “confirmation hearings” have been a farce from the beginning.  Nobody was going to change their vote on confirmation based on what anyone said there.  Sitting on accusations until after the hearings were ostensibly over was nothing more than a stalling tactic.   Bringing up new accusations serially, rather than together is a nice try to continue stretching things out.  And oh, this is rich, a person who couldn’t go to DC to testify on Monday because she’s afraid to fly has over 100,000 frequent flyer miles?  Is Contempt of Congress not a thing any more?

And calls for an FBI investigation?  He’s already undergone at least six in the process of getting security clearances.  And in those they go back and talk to teachers, classmates, neighbors in places you grew up in.  Nobody mentioned anything about any of these allegations?  Not one?  Why would anybody expect a seventh FBI investigation to produce different results?  The truth is no one does.  It’s another stalling tactic.

And the “hearings” today?  A lot of Grandstanding by folk looking for material for their upcoming last-minute campaign ads (and more for 2020), but, again, nobody interested in the truth.  All they were interested in was making their speeches and playing politics.

And then there’s this.

Yes, I’ll say that Graham too is playing politics, but we could have used some of this fire any time in the past decade.  Any time would have been nice.

Frankly, I have very mixed feelings on Kavanaugh, particularly the logical twists he’s willing to engage in to try to argue around the 4th Amendment.  But at this point I want him confirmed.  I’ll just hope Trump nominates someone stronger on the 4th (as well as the rest of the Constitution and Bill of Rights) to replace Ginsburg.

And I further hope that Kavanaugh has a long memory of how he was treated when he’s sitting on the Bench.  But I expect instead of ruling vengefully he’ll rule according to the law and the Constitution. (And maybe he’ll straighten out on that 4th Amendment thing.)

Very busy day today so here’s a musical interlude.

This whole Brett Kavanaugh thing is getting out of hand.  It was pretty clear from the start the “sexual assault” allegation was merely a delaying tactic, an attempt to “run out the clock” until a hoped for “Blue Wave” in November gives the Democrats a majority in the Senate, allowing them to continue blocking any additional Trump nominations until another hoped for success in 2020 returns the Presidency to the Democrats.  That’s leaving aside whether that supposed “Blue Wave” will materialize.  And while it was pretty clear from the start as time progresses and the demands become more and more unreasonable any benefit of the doubt that this is based on real belief of wrongdoing and not simply cynically applied stalling tactics gets washed away.

The mantra, the “script” is that Kavanaugh is “credibly accused” so we need to hold things up while this is investigated.  Everybody’s saying “credibly accused.” What part of this is in any way credible?  Is it the part where Ford has had different conflicting versions of her story?  Is it the part where every single one of the witnesses she named has said the events she described didn’t happen?  Is it the part where she demands more and more onerous conditions before she’ll appear before Congress to testify?  Which part was in any way “credible”?

One of the things demanded is an FBI Investigation.  The FBI has already investigated Kavanaugh’s background six times and found nothing wrong.  As for this particular allegation, what’s to investigate?  At this late date, there’s no physical evidence to collect.  There’s no security footage.  All there is to possibly take evidence from is the statements from possible witnesses.  And Congress already has that.  None of them, not one, corroborates Ford’s story.  Not.   One.  The only part of any investigation left is taking Ford’s own official statement–you know one where she could be charged if found to be lying to investigators (see the Martha Stewart case for how that works)–the one part that Ford is resisting making.  Now, normally, taking the alleged victims statement would be the start of an investigation but we can go with it being the last part this time because it’s really all that’s left.

But wait, there’s more.  Once it started looking like Ford’s incredible (as in “not credible”) accusation was losing traction another one comes out, this one even more outlandish and less credible.  More stalling.

So, what’s next?  What are they going to accuse Brett Kavanaugh of next?

I have some suggestions:

Brett Kavanaugh violently suppressed the Spartacus slave revolts (just ask Corey Booker since he claims to be Spartacus).

Brett Kavanaugh was the shooter on the grassy knoll.

Brett Kavanaugh shot the sheriff (investigate his claim that he did not shoot the deputy).

Brett Kavanaugh kidnapped the Lindbergh baby.

Brett Kavanaugh was the kidnapped Lindbergh baby.

Brett Kavanaugh betrayed West Point and framed Arnold for it.

Brett Kavanaugh opened fire on Fort Sumter.

Brett Kavanaugh caused the Apollo 13 fire.

Brett Kavanaugh rejected an Austrian artist’s application to art school.

Brett Kavanaugh started the Chicago Fire

Come on Dems.  I came up with these off the top of my head.  I’m sure you can be much more creative.  Let’s see what you’ve got.

And then we’ll see what you’ve got in November.

 

This is a hard one for me to write.

Forty-Five years ago I was 13.  I lived in Cambridge, OH with my mother, sister, and stepfather.  My mother had a job that often had her working nights and my stepfather…well, he was an abusive bastard whom I hope is now freezing in Niflhel.

My mother was working at NCR (National Cash Register, the “big employer” in Cambridge then) at the time  but she’d also frequently worked as a waitress and some of the friends she made that way stuck with her over the years.  One of these friends had family up in Canton, Ohio and the friend and my mother would visit them from time to time, taking me and my sister along.

Even back then I had the huge social awkwardness and shyness that I would carry with me all my life.  I never really knew who these people were except that they were family of one of my mother’s friends.

One time, when we went up there we spent the night.  I was assigned to a room and a bed.  Shortly after I went to bed one of the younger sons of the family–he was about 16 or 17 at the time–climbed into bed with me.  I didn’t think much of it at first.  This wasn’t the first time I’d had to share sleeping accommodations with someone in an overcrowded household.  Only this proved to not be a typical case.  The person in the bed with me reached over, put his hand in my underwear (I had always slept in underpants) and began to fondle my genitalia.  Shocked me right down to my bones.

He then “suggested” that we fellate each other.  I found the idea repugnant, not in a “homosexuals are icky” way but in a naive kid who is barely figuring out that there’s something attractive about girls way of “you want me to put that in my mouth?” I would have been just as horrified had it been a girl asking me to…yeah. (Got to remember I avoid explicitness of that nature on this blog.)

He relents to the extent of putting my hand on his genitalia.  And…well, remember that I was a scared kid of 13 and this guy easily outweighed me two to one.  I was too scared to say “no”.  And getting out of the bed was right out–Bed abutted the wall and getting out would have meant climbing over him.

Eventually, he finishes getting his jollies and I finally go to sleep.  He’s gone when I get up in the morning.

I’m too ashamed to say anything at the time.  Turns out that this was the last time we visited that place and in time my mother and the friend drift apart.  I never saw those people again.

Years later I tell my mother about the incident.  She looks shocked and asks why I never said anything before.  Could it be because you and my sister would frequently talk about how it was physically impossible to rape a man and seemed very skeptical even of the idea of sexual assault?

And some years after that, I talk about it with my then bishop in the church I followed at the time.  The bishop’s response was “well, it was only the one incident and never repeated so I don’t think we need to have a church court (to decide what/if censure the church might need to make against me”.  What?  I’m the damned victim here.

That may have been the starting point of my own eventual departure from the church.  It would be some years yet before I finally said “no more” but looking back, I think that path started at that point.

However, while I never even really knew the names of those people–they were just “family of my mother’s friend (not naming the friend who I have reason to believe is dead now anyway),” the events are vivid in my memory.  To this day.  More than that, I can still see the rural place they lived.  I can still see the Jeep they had out in the yard, with the turn signal that seemed to be strapped onto the steering column as an afterthought.  There was this little “wheel” inside the gadget that when you flipped the turn signal lever would press against the steering column and be rolled by turning the steering wheel.  Turn the steering wheel back and the little wheel would pop off the steering column and the lever would recenter.  I remember the donkey they had in a small pen, with hooves so overgrown that it was walking (such as it was) practically on the fetlocks.  I remember the 18 year old daughter, still living at home, who was 7-8 months pregnant from a boyfriend who showed up from time to time.  I remember the “adults” sitting around the kitchen table playing Euchre well into the night.

These memories are crystal clear.  There is no “maybe this, maybe that.”  I have no idea what I would have done had we gone back there again afterward.

 

Local store had a sale on center cut beef ribs so I grabbed a bunch to cook out in the charcoal smoker.  I’m not even going to call this an “active writer” recipe because, yeah, a lot of time was required.

Ingredients:

• 1 or more racks of center cut beef ribs.
• 2 Tbsp onion powder
• 2 Tbsp garlic powder
• 2 Tbsp coarsely ground pepper
• 1 Tbsp Rosemary
• I had intended to include about 2 Tbsp coarse kosher salt but I just forgot to add it.  The result was good enough that I’m not sure I would add it in the future.
• 1 jar of G. Hughes Smokehouse Sugar Free Barbecue Sauce, Hickory Flavor

Start the smoker and get it heated to about 225.

Mix the onion powder, garlic powder, pepper and rosemary.  Spread it over and rub into the ribs.

Place the ribs in the smoker.  To get them to fit, I placed them diagonally on the grill running from the firebox end to the far end.

Close the smoker and add some apple wood chunks (it’s what I had and I’ve found I like the results) in the fire box to generate some nice smoke.

Check the vents and fire from time to time.  Add charcoal and/or apple wood as needed.  Try to keep the heat at about 225.

Every fifteen minutes or so “rotate” the ribs.  By rotate I mean take out the one closest to the fire box.  Move the second one into the place of the first, and so on until all of them are moved up, then flip the first one over and put it at the end of the row.  This helps keep them cooking in time rather than having the ones closer to the fire done long before the others in the cooler part of the smoker.

Continue until the meat is close to “done”.  I used two basic tests to determine doneness this time.  The first is to insert a toothpick into the meat between the bones.  When it goes in with only minimal force, the meat is almost done.  The other check is the meat cracking when handled during the rotation.  When it starts cracking easily, it’s getting close.

Once the meat is almost done, thickly slather the barbecue sauce onto it.  You’ll want to do two cycles of rotating the meat so both sides get a good coating.  Here’s one rack with a freshly applied coat of sauce:

Okay, my camera shows that upside down.

Once you’ve got the sauce on, you cook farther to let the sauce caramelize and cook into the meat.  It’s truly done when you start worrying bout the racks falling apart in handling.  And here it is after final cooking:

And oh, my, but those were so very good.

Practically since the November 6, 2016 election, folk on the Left have been talking about using the 25th Amendment to remove Donald Trump.  They know they don’t have the votes for impeachment in the House, and certainly not for removal from office by conviction in the Senate so they present this as an end run around that problem.

The problem with that is that they are picking a method that’s actually harder than impeachment.  Allow me to explain.

Amendment XXV
Section 1.
In case of the removal of the President from office or of his death or resignation, the Vice President shall become President.

Section 2.
Whenever there is a vacancy in the office of the Vice President, the President shall nominate a Vice President who shall take office upon confirmation by a majority vote of both Houses of Congress.

Section 3.
Whenever the President transmits to the President pro tempore of the Senate and the Speaker of the House of Representatives his written declaration that he is unable to discharge the powers and duties of his office, and until he transmits to them a written declaration to the contrary, such powers and duties shall be discharged by the Vice President as Acting President.

Section 4.
Whenever the Vice President and a majority of either the principal officers of the executive departments or of such other body as Congress may by law provide, transmit to the President pro tempore of the Senate and the Speaker of the House of Representatives their written declaration that the President is unable to discharge the powers and duties of his office, the Vice President shall immediately assume the powers and duties of the office as Acting President.

Thereafter, when the President transmits to the President pro tempore of the Senate and the Speaker of the House of Representatives his written declaration that no inability exists, he shall resume the powers and duties of his office unless the Vice President and a majority of either the principal officers of the executive department or of such other body as Congress may by law provide, transmit within four days to the President pro tempore of the Senate and the Speaker of the House of Representatives their written declaration that the President is unable to discharge the powers and duties of his office. Thereupon Congress shall decide the issue, assembling within forty-eight hours for that purpose if not in session. If the Congress, within twenty-one days after receipt of the latter written declaration, or, if Congress is not in session, within twenty-one days after Congress is required to assemble, determines by two-thirds vote of both Houses that the President is unable to discharge the powers and duties of his office, the Vice President shall continue to discharge the same as Acting President; otherwise, the President shall resume the powers and duties of his office.

The first couple of parts, motivated by the assassination of John F. Kennedy, deal with the succession of the Presidency clarifying some issues left undefined in the Constitution.  Part 3 makes provision for the president to resign office if, for whatever reason, he believes he is incapable of discharging his duties as president (exercised by Richard Nixon in the wake of the Watergate cover-up scandal).

Part 4 is the one that the Left makes so much of, specifically the first paragraph:

Whenever the Vice President and a majority of either the principal officers of the executive departments or of such other body as Congress may by law provide, transmit to the President pro tempore of the Senate and the Speaker of the House of Representatives their written declaration that the President is unable to discharge the powers and duties of his office, the Vice President shall immediately assume the powers and duties of the office as Acting President.

Ah hah! They say, they can get the VP and a majority of the Cabinet to agree that the president is unable to discharge his duties then…

Excuse me?  The Cabinet appointed. by. Trump. is going to declare Trump unfit basically because you don’t like his politics?  That strikes me as a tad…delusional. (Sorry.  I tried to find a softer word but none really fit.)

But let’s go with that just to see where it leads.  The VP and 8 cabinet members all agree that Trump has got to go and send a declaration to the Speaker of the House and the President Pro Tempore of the Senate to the effect.

The folk touting a 25th Amendment removal of the President seems to think it stops there.  But if you continue into the second paragraph you get:

Thereafter, when the President transmits to the President pro tempore of the Senate and the Speaker of the House of Representatives his written declaration that no inability exists, he shall resume the powers and duties of his office

Unless:

unless the Vice President and a majority of either the principal officers of the executive department or of such other body as Congress may by law provide, transmit within four days to the President pro tempore of the Senate and the Speaker of the House of Representatives their written declaration that the President is unable to discharge the powers and duties of his office.

So…for the 25th Amendmenters, there’s still a chance, right?  Well:

Thereupon Congress shall decide the issue, assembling within forty-eight hours for that purpose if not in session. If the Congress, within twenty-one days after receipt of the latter written declaration, or, if Congress is not in session, within twenty-one days after Congress is required to assemble, determines by two-thirds vote of both Houses that the President is unable to discharge the powers and duties of his office, the Vice President shall continue to discharge the same as Acting President; otherwise, the President shall resume the powers and duties of his office.

So, if there is a dispute between the cabinet plus VP and the President on whether or not he’s able to exercise the powers and duties of the Presidency, it goes to Congress which requires a 2/3 majority of the House and a 2/3 majority of the Senate to remove the President.  Note that for impeachment you do need a 2/3 majority in the Senate for conviction and removal from office but you only need a simple majority in the House to impeach.  In short, unless the President willingly acquiesces or is incapable of communicating his disagreement with the assessment it’s actually harder to remove a President via the 25th Amendment than it is to simply impeach.

That’s if you get the VP and Cabinet to agree in the first place.  That “of such other body as Congress may by law provide” that could, in principle make such a declaration instead of the cabinet?  No such body exists.  Congress could, perhaps, create one.  But “by law” means passing a law.  That means passing both houses and either getting a Presidential signature to make it law or overriding a veto–and we’re back to 2/3 of the House and 2/3 of the Senate again.

When people want to use something like the 25th Amendment it would behoove them to read it, and read it all the way through.

A common thread in many of the, missteps shall we call them, in economics and politics stems from the fallacy of composition.  This is where one assumes that just because something is good for a part it must in turn be good for the whole.

Thomas Sowell is fond of the analogy of a spectator in the stands at a baseball game.  If he stands up, he can see better.  It does not, then, follow that if everyone stands up, then everyone will see better.  Furthermore, if the one man stands up, he may see better, but it is at the expense of blocking the view of those behind him.

So it often is in economics.  An example I use is steel making.  There have been times where steel workers, their unions, and the organizations of businesses engaged in steel making all join with one voice to decry the evil of low cost imported steel, cutting into those businesses’ market shares and putting those poor steel workers out of work.  They call on the government to do something.  And so the government, seeing a powerful political block that can influence elections, does something in the form of tariffs or import restrictions that reduce or even prevent entirely the influx of cheap steel from overseas.  Steelworkers keep their jobs.  Steel making businesses keep their profits.  Everyone is happy.   And the economy is helped, right?

Not so fast.  The steel making industry might be helped by such a tariff but assuming, without examination, that means it helps the economy as a whole is the fallacy of composition.  And if we make that examination, what do we find?  The first thing we see is that steel as a raw material is more expensive than it would be if the market were allowed to operate undeterred and the American companies were either forced to find a way to compete at the lower prices or were supplanted by the lower cost sources–or maybe going into niches where they provide particular grades and alloys that the foreign companies do not reliably produce.  In any case, more expensive steel.  That means that the costs to everyone who uses steel to make everything from butter knives to locomotives has their cost of materials increased.  And that works its way around to the consumer and higher prices to them.  Which means that for a given income people are able to buy less goods.  And that means that everyone is poorer than they would be were the market allowed to operate freely.  So while the tariffs or other restrictions helped the steelworkers, it was at the expense of everyone else.

Another area where the fallacy of composition comes into play is in so-called government “stimulus.” The government hands out money to various individuals, businesses, or industries with the expectation that they will use that money in ways that will benefit the economy.  Maybe they will and maybe they won’t.  The people who receive the “stimulus” certainly benefit, but what about the economy as a whole?

The first thing one has to ask is where that money the government is handing out came from.  There are only one of three ways the government gets money:  taxes which means taking it from someone else, increased government debt, or increasing the total money supply made even easier in the modern day with so much “money” existing as not even paper but computer records.  Both increasing public debt and increasing total money supply are effective increases in the money supply (See Thomas Sowell’s discussion of fractional reserve banking and credit and how it increases the effective money supply in his book Applied Economics) and in so doing they cause prices to be higher than they would be absent that increase in money supply.

So, any way you look at it, government stimulus is money that is taken from other people either overtly through taxes or covertly through inflation of the money supply reducing the buying power of the money they have.  And those people, if they retained their buying power would also use that money in the economy–even in the simple case of putting it in a bank where it can be loaned to other people for various purposes.  The assertion made by those who advocate government stimulus is that the government will use the money “better” than private individuals.  This assertion, however, is hard to justify empirically.  Indeed, advocates of such stimulus generally predict far greater improvements than ever actually materialize in the economy.  The excuses are many but the results speak for themselves.  And when one considers that a part of any government stimulus is a parasitic bureaucracy both to collect the money (or manufacture it out of thin air) and to disperse it to the “deserving” parties, one sees that the government spending would not only have to be “better” but much better than private individuals using their own money in order to compensate for the extra cost and be a net gain.

In both of these cases:  import restrictions/tariffs and government stimulus, a part of society does benefit.  But that benefit is at cost to the remainder of society that outweighs the gain to those specific parts, that, indeed, must outweigh the benefits to the part.

So when someone proposes a policy to “help the economy” take a moment to look beneath the surface and see if what it actually does is help a small part at the expense of everyone else.