What is best for equality? Markets or democracy? Roderick Long:

In its modern form, libertarian class theory identifies the ruling class in western democracies as a partnership between the state on the one hand and the private, mostly corporate, beneficiaries of state privilege on the other – big government and big business, or statocrats and plutocrats – and the dominant form of economic and political organization as one of corporatism. Given the concentrated character of corporate interests and the dispersed character of the broader public interest, corporatism is regarded as a virtually inevitable result of democratic institutions, as per Butler Shaffer’s definition of democracy as “the illusion that my wife and I, combined, have twice the political influence of David Rockefeller.” (Hence libertarian class theorists’ skepticism toward all forms of monopoly government, not just undemocratic ones.) Vast inequalities of wealth are difficult to achieve or maintain in a free market, since successful ventures are quickly imitated; competition serves as a levelling factor.But such inequalities can most definitely be achieved and maintained when competition is restricted by regulation.

Seneca:

Religion is regarded by the common people as true, by the wise as false, and by the rulers as useful.

It’s about American studies, but there is no reason to believe that the results of European studies - like this, or this one - aren’t bogus too:

We’ve all seen the studies trumpeting massive losses to the US economy from piracy. One famous figure, used literally for decades by rightsholders and the government, said that 750,000 jobs and up to $250 billion a year could be lost in the US economy thanks to IP infringement. A couple years ago, we thoroughly debunked that figure. For years, Business Software Alliance reports on software piracy assumed that each illicit copy was a lost sale. And the MPAA’s own commissioned study on movie piracy turned out to overstate collegiate downloading by a factor of three.

Can we trust any of these claims about piracy?

The US doesn’t think so. In a new report out yesterday, the government’s own internal watchdog took a close look at "efforts to quantify the economic effects of counterfeit and pirated goods." After examining all the data and consulting with numerous experts inside and outside of government, the Government Accountability Office concluded (PDF) that it is "difficult, if not impossible, to quantify the economy-wide impacts."

More specific studies that focus only on single industries don’t fare much better because "the illicit nature of counterfeiting and piracy makes estimating the economic impact of IP infringements extremely difficult." And when it comes time to choose a substitution rate (how much of the infringing activity should be counted as a lost sale), we’re left only with "assumptions... which can have enormous impacts on the resulting estimates.

(...)

(T)hese studies ignore the obvious points that pirating goods leaves consumers with more disposable income, which is likely spent elsewhere in the economy. Effects on the economy as a whole, then, are terribly speculative and seem more likely to be simply redistributive.

None of this is to say that piracy and counterfeiting aren’t real problems. The GAO accepts that the problem is "sizeable," but it also points out just how much bad data is used to produce these studies. Actual dollar figures and job loss numbers should be handled with extreme care and a good bit of skepticism; the GAO also noted that numerous experts told it that "there were positive effects [from piracy on the economy] and they should be assessed as well."

Robert Higgs explains the differences. And you can’t do it any more clearly. Key difference: the rate of interest.

The vulgar Keynesian may care about the rate of interest, but only in a restricted sense. For him, the rate of interest is the “price of money”—that is, the rental rate paid on borrowed money. Such borrowing is always good, and more of it is always better because individuals use borrowed money to purchase consumer goods, thereby “creating jobs,” and a job is the finest thing in the known universe. Hence, the lower the rate of interest, the more people will borrow and spend, and the better the economy will function, again so long as any unemployment exists anywhere in the country. Because some unemployment always exists, the vulgar Keynesian always wants the rate of interest to be lower than it is. If it can be lowered artificially by central-bank action, he strongly favors such action. The Federal Reserve System has recently pushed its target for the interest rate on “federal funds”—overnight balances the banks borrow from one another—to a range that begins at zero, and esteemed  economists have toyed with the crackpot notion of aiming for a negative rate of interest (...). (Where do I sign up for a loan?)

The vulgar Keynesian does not understand what the rate of interest really is. He fails to comprehend that it is a crucial relative price—namely, the price of goods available now relative to goods available in the future. Remember, he does not think in terms of relative prices at all, so it is entirely natural that he fails to recognize how the rate of interest affects the choice between current consumption and saving—that is, acting so as to make possible more future consumption by not consuming current income. In a free market, a reduction in the rate of interest reflects a desire to shift more consumption from the present to the future.

A free market would comprise private suppliers and demanders of loanable funds, and the prevailing market rate of interest would be that at which the amount demanders want to borrow equals the amount suppliers want to lend. Both borrowers and lenders, however, are making their choices in the light of their “time preference,” which is to say the rate at which they are willing to trade present goods for future goods. People with a “high rate of time preference” are keen to consume now rather than later, and to induce them to give up present consumption, borrowers must compensate them by paying a high rate of interest for the use of their funds.

Although vulgar Keynesians recognize that a lower rate of interest will spur business firms to borrow more money and invest it, they imagine that business investment plans are naturally volatile and essentially irrational—driven, as Keynes said, by the entrepreneurs’ “animal spirits” (...). Hence, the degree to which investment responds to a change in the rate of interest is small and may be more or less disregarded. For the vulgar Keynesians, the importance of the rate of interest is that it regulates the amount that individuals will borrow to finance their purchases of consumer goods. Those purchases, in their view, are the essential element in the determination of how much firms want to produce and how much they want to invest in expanding their capacity to produce. Again, however, in this framework, it matters not what kind of investment takes place: investment is investment is investment.

Cory Doctorow:

Since the text of the Anti-Counterfeiting Trade Agreement (a secret copyright treaty being negotiated by a members’ club of rich countries, out of sight of the United Nations) leaked, scholars and public interest groups have been poring over its clauses. (...)

(In) Knowledge Ecology International analyzes the Provisions on Injunctions and Damages (the authors) conclude that ACTA goes way, way beyond the TRIPS (the copyright/patent/trademark stuff in the World Trade Organization agreement), creating an entirely new realm of liability for people who provide services on the net. Since liability for service-providers determines what kind of services we get, increasing their liability for copyright infringement will make it harder to invent new tools like web-lockers, online video-hosting services, blogging services, and anything else that’s capable of being used to infringe copyright.

This matters because various governments, including the EU, Canada, and the USA, have argued that there is nothing in ACTA that will change domestic law -- that it’s just a way of forcing everyone else to adopt their own laws. What we see here, though, is a radical rewriting of the world’s Internet laws, taking place in secret, without public input. Public input? Hell, even Members of Parliament and Congressmembers don’t get a say in this. The Obama administration’s trade rep says that the US will sign onto ACTA without Congressional debate, under an administrative decree.

James Choi writes:

According to a recent paper by Lee S. Friedman, Donald Hedeker, and Elihu D. Richter, the lifting of the federal 55 mph speed limit in 1995 was responsible for 12,545 deaths between 1995 and 2005. That’s about 45 percent more American fatalities than we have suffered in 9/11, Iraq and Afghanistan put together. And all those human tragedies are due not to weighty national security imperatives but to the fact that we all want to go just a little bit faster. ...

None of the papers I’ve seen have calculated the economic benefits we derive from going faster, in large part because they vary so widely. (Benefit of high speed limit to driver on lonely rural highway: potentially large. Benefit to driver on congested urban freeway: zero).

But nevertheless the benefits are there. If cancer researchers can save a few minutes a day on their commutes, some of that time will go to finding a cure for a dreaded disease.

Plus, going faster is fun. I admit I like it, and I don’t even like driving. ...

Is the trade-off of safety for speed worth it? This may be more of a question for a philosophy professor than a transportation scholar. ...

Even though partisans on either side of the political spectrum sometimes take the position that every human life is priceless and cannot be sacrificed no matter what the circumstances (the left wants to abolish the death penalty; the right wants to abolish abortion), politicians of all stripes make decisions that take human life all the time, often with little scrutiny. The issues surrounding automobility are an important example.

From the buffoonery-in-action departement:

With the UK’s Digital Economy Bill rushed through with little real debate, it’s worth looking at the ignorance behind those who supported and pushed through the bill. The more you look, the more you realize they didn’t even understand the very basics of what they were talking about. As some have noted it was "a bill proposed by the unelected, debated by the ignorant and voted on by the absent."

And yes, it was proposed by the unelected Lord Mandelson, who has had to resign from the Government twice before due to accusations of corruption or influence peddling. And, of course, as many have noted, he only became interested in the whole Digital Economy Bill thing after vacationing with David Geffen, the former recording industry and movie industry mogul. After that, he suddenly pushed through the bill which went directly against the recommendations of the Gov’t’s own Digital Britain committee.

Then we get to the ignorant. Perhaps the most stunning is that, via Kevin Marks, we now learn that Digital Britain Minister Stephen Timms, who was in charge of pushing the bill through, didn’t even understand what an "IP address" means. In a letter to an MP, he explained "IP" as an "Intellectual Property Address."

Now, yes, IP is used for both Intellectual Property and Internet Protocol, but if you actually know what you’re talking about, you don’t mix up the two. And Carlo points us to a message from Will Tovey noting that the Digital Economy Bill originally called an IP address an "Internet Portal" address. These are the people you want deciding the basic internet setup in your country?

And the folks involved in the debate don’t seem to be too keen on understanding details either. During the debate, one MP, Michael Connarty had a bizarre take on the situation:

"People are not talking about co-operating and sharing their own thoughts and content, but are stealing someone else’s content and sharing that. There is an Armageddon, which has partially arrived in Sweden, where the Pirate Party, whose leader is in jail, won seats in the European Parliament on the basis that everybody’s work--including MP4’s--should be free."

Can you count the number of mistakes there? Of course, the big one is the idea that the leader of the Pirate Party in Sweden is in jail. He’s not. My guess is that Connarty thinks The Pirate Bay and The Pirate Party are the same (they’re not even connected) and that the jail sentences handed down to some of the folks who worked on The Pirate Bay applied to The Pirate Party’s head and that someone was actually in jail (they’re not). But, you know, who needs details when you’re just setting the framework for all internet connectivity and rights across your country?

And, finally, there are the absent. During the little time put forth for debate -- where many were vehemently opposed to the bill, notice that the House of Commons was basically empty: But when it came time to vote? Suddenly over 200 MPs showed up. It makes you wonder why they’re allowed to vote if they haven’t even heard the debate. Especially when the guy in charge of convincing them to vote on this bill doesn’t seem to even understand what’s in it or what it will do.

But was it really only a matter of incompetence? Barry Ritholtz:

As noted last night, Alan Greenspan has blamed the crisis on a lack of regulation rather than ultra-low rates. (You can find his Brookings institute paper The Crisis here).

While the lack of regulatory enforcement — ironically, mostly notably by the Greenspan Fed — was no doubt a large part of the problem, his exoneration of ultra low rates is belied by history.

I detail all of this elsewhere; but perhaps the impact of low rates would be more easily understandable to the Maestro if we put it into numerical bullet point form:

1. Starting in January 2001, the FOMC began lowering rates, eventually to 1%. They kept rates below 2% for 36 months, and at 1% for over a year. This was unprecedented.

2. While these rates had myriad effects, lets focus on just two: The impact on Housing, and on global bond managers.

3. Since homes are (typically) a leveraged credit purchase, lowering the cost of that credit has an inverse effect on prices — i.e., cheaper mortgages = more expensive houses. Since most people budget monthly, carrying costs are more important than actual purchase prices. Hence, a big drop in interest rates can cause a spike in home prices, with monthly payments remaining fairly similar.

Bottom line: Ultra low rates were the initial fuel sending home prices higher.

4. At the same time, bond managers were scrambling for yield. Pension funds, trusts, foundations require a certain annual gain, and without it, they have issues. Note that most of these managers by their own charters cannot purchase junk, they can only buy investment grade paper.

5. Wall Street had been securitizing collateralized debt for years. They turned credit cards, student loans, auto financing, and of course, mortgages into paper.

6. Making loans to people with weaker credit scores, lower incomes, or more debt was a risky proposition, and hence, generated higher yields for that risk. By collateralizing these subprime mortgages, Securitizers could generate higher yielding paper for the managers of bond funds. And because the rating agencies — Moody’s, S&P, and Fitch were totally corrupt — the securitizers could purchase AAA ratings. Hence, all manner of unqualified junk paper could be sold to these funds that were only allowed to purchase investment grade paper.

Here is the first point where lack of oversight comes in (vis-à-vis the ratings agencies). But we never would have gotten to that issue BUT FOR the ultra low rates.

7. The triple AAA rated junk paper sells well, increasing demand for more of it. Huge Wall Street demand for more junk to feed into the maw of the securitization beast compels all manner of non-bank lenders to issue even more sub-prime mortgages. And since they was a finite number of people who afford mortgages, they got creative with ways to make mortgages even cheaper. First came the 2/28 variable loans, with a cheap teaser rate the first two years.

Then came Interest Only (I/O), where there was no principal repayment.  I called these loans “Rent with an option to default.”  Lastly, we had the Negative Amortization (Neg/Am) mortgages, where the borrower paid less than the monthly interest charges, with the difference added to the principal owed. Hence, with each passing month, the mortgagee actually owed more on the house than the month before, rather than less. These loans defaulted in enormous numbers.

8. The lack of regulation of these non bank lenders was a key factor. Ironically, it was the Fed’s job to regulate them, and moving beyond irony to surreal absurdity, it was then Fed Chair Alan Greenspan who called these non bank lenders “innovators” and refused to regulate them. (This was around the same time, with rates at record low levels, when he was advising people go for variable mortgages). Their innovative business model was lend-to-sell-to-securitizers.

9. Numerous states had on their books anti-predatory lending laws. These made it illegal to make loans to people who could reasonably not afford them (nor could they charge usurious rates or excessive fees that would make defaults much more likely).

The Bush White House issued its doctrine of “Federal Pre-emption,” which essentially told the States to step out of the way of these lenders. The data shows that states with anti-predatory lending laws had much lower defaults and foreclosures than states that did not; the Federal Pre-emption significantly raised default rates in these states.

Hey, where were all those States right advocates back then? My Spidey-Sense is tingling! I suspect these new states rights people are not at all concerned with states rights at all, and are more likely little more than hypocritical partisans.

10. The lack of regulatory enforcement was a huge factor in allowing the credit bubble to inflate, and set the stage for the entire credit crisis. But it was intricately interwoven with the ultra low rates Alan Greenspan set as Fed Chair.

So while he is correct in pointing out that his own failures as a bank regulator are in part to blame, he needs to also recognize that his failures in setting monetary policy was also a major factor.

In other words, his incompetence as a regulator made his incompetence as a central banker even worse.

Eliminate government subsidies for fossil fuels:

One model estimates that eliminating fossil fuel subsidies in the major non-OECD countries alone would reduce greenhouse gas emissions by more than 7 billion metric tons of CO2-equivalent, enough to fulfill almost 15 percent of the agreed-upon G-8 goal of reducing global emissions by 50 percent by 2050 (Organisation for Economic Co-operation and Development 2009). In the United States, these subsidies—including tax credits, deductions, expensing practices, and exemptions—are worth about $44 billion in tax revenues between 2010 and 2019.