Perhaps the sentiments contained in the following pages, are not YET sufficiently fashionable to procure them general favour; a long habit of not thinking a thing WRONG, gives it a superficial appearance of being RIGHT, and raises at first a formidable outcry in defense of custom.

-Thomas Paine, Common Sense

Vocally opposed to raising the income tax, Tea Party supporters realize that Americans are already overtaxed and that present and future budget problems result from an overly large, inefficient, ineffective government rather than insufficiently high tax rates. Often criticizing “class warfare” and standing firmly against raising the top income tax rate above 35%, these angry Americans embrace liberty and limited government, at least with regards to economic affairs.

Despite their opposition to raising the income tax and their support for decreasing taxes somewhat, these limited government advocates rarely assert for the abolition of the income tax. In their view, the government simply spends too much money, so the deficit should be reduced by cutting waste, fraud, and abuse in the system. On the more fundamental question of how to finance the government, whatever it does, these proponents of smaller government rarely question the assumptions underlying the status quo.

On the issue of how to finance the government, consider the following thought experiment:[1]

1)      Pretend that you are a slave. Your master abuses you and whips you and makes you work long days for no pay. In the worst possible way, you are a slave.

2)      Pretend that your master no longer beats you or abuses you, but otherwise you still have to work long days without pay and obey all of his commands. Are you still a slave?

3)      Pretend that your master no longer requires you to work or do anything else. However, if you do work, you are required to give all of the fruits of your labor to your master. Essentially you have a 100% income tax rate. Are you still a slave?

4)      Pretend that your master realizes that his revenue will increase if he lowers your income tax rate, creating greater incentives for you to work.[2] Consequently, he reduces the income tax rate to 99% to incentivize your work. Are you still a slave?

5)      Pretend that your master keeps lowering your income tax rate so as to increase your work and your master’s revenue. Your master reduces the rate to 94%, 91%, 77%, 70%, 50%, 39.6%, and eventually 35%.[3] Are you still a slave?

6)      Pretend that your master reduces your income tax rate to 0%, enabling you to do whatever you want and keep all of the fruits of your labor. Are you still a slave?

In considering the above questions, supporters of the income tax need to address the ethical question of whether or not a tax on labor is compatible with the notion of a free society. In answering it, they must determine what demarcates the divide between freedom and slavery.

When trying to answer this question, supporters of the income tax should consider other rationales that lead to the conclusion that the income tax makes people tantamount to slaves or, to use more modest language, serfs. From a simply historical perspective, serfs paid 25% of their income to their lords. In return, their lords had an obligation to protect them from harm. Among the people who condemn the depraved state of serfdom and proclaim the morality of freedom, very few of them realize that serfs kept a larger percent of their income than many Americans and an even greater number of Europeans today.

For those with a Christian background, the Book of Samuel describes what a tyrannical king will do to a previously free people. In condemning the idea of a king, Samuel remarks “he will take the tenth of your seed, and of your vineyards,”[4] and “he will take the tenth of your sheep: and ye shall be his servants.”[5] From the biblical perspective, a 10% income tax represents an injustice tantamount to tyranny that should be avoided. One has to wonder what Samuel would think about today’s allegedly free society.

As another means of drawing the same conclusion, consider a simple mathematical interpretation. Someone is a slave when another person forces him/her to work against his/her will, often under the threat of punishment and with the consent of the law. If someone has a 25% income tax rate, then s/he necessarily spends 25% percent of the year, or three months, working for someone else’s benefit under the threat of punishment. The income tax mathematically makes an individual a slave to the state for some fraction of the year, a veritable state of serfdom.

For those who have yet to agree with these lines of reasoning, simply listen to politicians talk. They fundamentally agree with this claim, though they would not phrase it in such obviously unethical language. For example, President Bush cut taxes in 2001 by about $1.6 trillion over time. How has this tax cut been recorded, especially by the opponents of the tax cuts? Politicians, especially Democrats, describe the tax cuts as costs to the government. This decision to record tax cuts as a cost holds an underlying assumption: the government owns you and the products of your labor. Rather than the servant of the people, the government owns everything you make and, by cutting taxes, simply chooses to give back to taxpayers the property of the government. Whereas no business would assume revenue reductions are costs, the government proclaims that the products of the people, years before the products are even created, are owned by the government. As the servants of the state, the people simply keep what the government considers fair.

When Thomas Paine wrote his pamphlet Common Sense, he condemned the entire notion of a king as inconsistent with liberty as well as a threat to it. Whereas immediate necessity may sometimes make things, like a king, expedient, he knew that “expedience and right are different things.” Just as a king both contradicts and threatens liberty, so does the income tax. As both an inherently unethical practice and a means of financing other evils, the income tax must be abolished to bring freedom back to this country. Hopefully, one day, after the outcries in defense of custom have expired, the United States will embrace once again its underlying principles, the income tax will be abolished, and the people will be the masters and the government their servant once more.

Unlike free markets that function through voluntary exchange within a decentralized order, the socialist paradise dangerously concentrates power into a single entity with a monopoly on force. By centralizing the means of production into a state with the authority to force its will on the people, socialists place the lives and choices of everyone into the hands of a small group of dictocrats. In Federalist No. 51, James Madison warned of the threat posed by such a centralization of power, noting that the danger could only be ignored “if angels were to govern men.” In recommending this concentration of power, socialists disregard that men far from angels, like communist Russia’s Joseph Stalin and communist China’s Mao Zedong, often abuse their power, resulting in the murdering of millions of people and the virtual enslavement of many more.

When responding to the history of oppressive dictatorships that has plagued communist nations, socialists lament the past oppressions but assert that the ideal socialist state managed by compassionate leaders would be free of such problems. By focusing on this ideal, they gloss over the inherent dangers associated with such a concentration of power. Certainly, as the socialists claim, a “benevolent dictator” may sometimes exercise his power and discretion without misuse, but the hope that a new “benevolent dictator” will perpetually replace a deceased one contradicts the reoccurring abuse of authority among leaders throughout several millennia of history. In a real socialist society, the government with its concentrated power and its control over all economic affairs can always abuse its authority, posing a constant threat to its inhabitants.

For the sake of argument, assume that men were ruled by angels at present and forevermore, hypothetically resolving the problem of power. Next, consider the incentives of each individual in a socialist society. Due to the egalitarian underpinnings of socialism, every citizen receives an equal share of society’s output regardless of the amount of work the individual contributes. By working harder, people receive a very small fraction of the benefit of their work while they experience the entirety of the cost—such as stress and foregone leisure. As a consequence, work involves a highly concentrated cost coupled with a diffused benefit. Although some people may be self-motivated or motivated by a sense of duty to the community, experience shows that most people deprived of monetary and other similar incentives work significantly less hard. With the majority of people seeking to minimize the amount of work they do, the overall product of the nation plummets, making everyone equally poor. Largely due to this problem of interest, the majority of the production within communist nations has come from the very small percent of land privately held by individuals. Without a suitable interest in working, most people greatly reduce their efforts, resulting in widespread poverty and rampant starvation.

In commenting on the problems of power and interest, socialists bemoan human nature, considering these criticisms proof that, if it were not for the selfishness and evil of humans, their grand designs would work. Even opponents of socialism often comment that it looks good on paper but fails simply due to the ethical shortcomings of humanity. According to its defenders and many of its opponents, socialism fails solely due to human nature rather than any inherent defect of the project. Holding firmly to this belief, socialists contend that their ideal state will arise after the capitalist system collapses and the ethical underpinnings of humanity change for the better.

To disprove these socialists, assume that humanity changes in such a way that the problems of power and interest disappear. Imagine a socialist state that has a complete control of the means of production, and assume the leaders of this state seek to use the accumulated resources to promote best the welfare of the people. How would they fulfill this task?

In attempting to allocate resources efficiently, the dictocrats in power confront an insurmountable problem of knowledge: how does one figure out what the people want? In a free market, businesses determine whether they are fulfilling the interests of consumers by comparing their revenue to their costs. Through these accounting methods, entrepreneurs use profits to guide their actions towards certain endeavors and losses to guide them away from others. Consequently, money and profits—albeit imperfectly—provide businesses with an objective measure of the subjective preferences of the people. In contrast, socialism has no profits and no losses; everything is produced, owned, and distributed by a single monopoly: the state. In such a system, the state has no way of determining the subjective preferences of individuals and no way of determining the costs of what it produces. Without this objective measure of benefits and costs, it cannot determine what individuals most value given a finite set of resources.

To try to resolve this problem of knowledge, the socialist state could distribute money equally to all of the citizens of the state and enable them to bid for what they want, enabling people who greatly value a product to bid higher than those who value it less. Through this method, the state can effectively determine who values what product the most; however, this method fails to determine the costs of resources, making a cost-benefit analysis impossible. Since the state owns all of the means of production, no competition for these resources exists, so no prices for them can exist. As a result, the socialist leaders cannot answer simple questions like: how much wood should be allocated to pencils and houses and chairs and its many other uses. Or, even simpler, what resources should be used to make these types of products in the first place?

For a simple example, devoid of a price for gold and a price for plastic, how could a socialist society determine whether to make plates out of gold or plastic? Although gold might be a better material than plastic in making plates, nobody in a capitalist society seriously believes that most plates should be made from gold rather than plastic since the price of gold far exceeds the price of plastic. With prices, this type of question seems trivial and obvious; however, when devoid of a price for gold and plastic, this otherwise easy judgment no longer has a clear solution. This problem of knowledge applies to the creation of every product, disabling the dictocrats running a socialist society from determining the economically sound combination of resources they should use when producing anything. Without free market prices, the socialist state guided by angels ruling saints still cannot create prosperity.

Rather than due to circumstances or leadership or any of a plethora of excuses, communist nations collapsed due to inherent defects in their design. Instead of wishing away the defects of socialism, its defenders must satisfactorily resolve the problems of power, interest, and knowledge that derail it from successfully working. For the opponents of socialism, they should consider to what extent government interventions in mixed economies experience similar shortcomings. Though to a lesser extent than in socialist states, the problems of power, interest, and knowledge create problems for all government interventions. As a result, the government’s involvement in the marketplace should be kept to a minimum, and individuals should be allowed to create prosperity in a free market.

I don’t dispute his argument that the Chinese government has done a lot of good for the Chinese society, and I do think that they probably deserve more credits than they are usually given by other countries. However, some of his points do seem biased. For example, he argued that the Chinese government is meritocratic because the Chinese society is meritocratic, and wrote :”A visit to any top university campus in China would make it obvious to anyone that the Communist Party continues to attract the best and the brightest of the country’s youth. In fact, China’s Communist Party may be one of the most meritocratic and upwardly mobile major political organizations in the world — far more meritocratic than the ruling elites of most Western countries and the vast majority of developing countries. What is wrong with self-perpetuation through merits?”

I’m curious–meritocratic, for whom? Most students who were born in villages still have no access to quality education, residents of big cities (Beijing, Shanghai, Shenzhen, etc) still get preferential treatment for Gao Kao. The cutoff for Peking University, arguably one of the best in China, is 566 if you are applying from Shanghai, 655 if you are applying from Beijing, and 677 if you are applyling from Xinjiang. Students in the cities often receive better education to begin with, but still, they can get into the Chinese Harvard with fewer points than students from rural regions.  If Mr. Li’s “meritocracy” merely means that the best student in every province will have a chance of attending college, then sure, this goal will always be possible. However, a system where the rich gets to go further with fewer requirements really doesn’t seem meritocratic or fair to me.

In addition, he also quoted that  ”fifteen out of 35 living artists worldwide who command seven-digit sales for their work are Chinese. If these facts do not demonstrate innovation, what does?” well, Ai Wei Wei’s name comes to mind when I read this paragraph. Technical innovations are very well supported in China (much better than how they are treated in the US, especially when it comes to renewable energies), but artistic innovation that points to the “wrong direction” will never be tolerated nor allowed to exist. I’m surprised that he actually brought this point up–if you live in China, it would be pretty obvious that innovations are only allowed if they head into certain “desirable” directions. As someone who works there, Mr. Li should know this better than anyone else.

In all faireness, I think the CCP is more competent than how they are usually described in the US. China didn’t get to where it is today just by being lucky. The country has been doing something right (opening up, controlled capitalism, open-mindedness and lack of ideological fights like the ones in the US), but it’s also been blessed by a huge population, vast geography, and a strong leadership. CCP’s efficiency is a large part of China’s success; as much as they have improved the life style (of most people, at least) in China, there are still problems that need to be dealt with. China’s recent history of economic success isn’t necessarily indicative of the future, where the population mix, international balance, and consumer habits will have changed dramatically.

In his concluding paragraph, Mr. Li wrote: “Hypotheses that do not stand up to facts and yet still dominate people’s consciousness are specious and harmful. It is especially dangerous in this case because one cannot imagine a peaceful world order when the political and intellectual establishment of today’s world powers holds views that are built on falsehoods”. I agree that it is probably better for everyone to view China with less predetermined distain. However, it is also harmful to be blinded by current success to the point that you refuse to see your own weaknesses. China has done well, and it will probably do even better in the next few decades. However, it is probably in China’s (and everyone else’s) best interest to recognize its shortcomings as well as its strenghts, and to improve itself when the economy is still going strong.

You can find his op-ed here: http://www.nytimes.com/2011/07/19/opinion/19iht-edli19.html?emc=tnt&tntemail0=y At any rate, I’m still glad that this is on NYTimes–I feel like a few years ago, an op-ed with such pro-China tone wouldn’t have been published on a main-stream newspaper like NYTimes.

In deriding the “inherent” instability of a free-market economy, Krugman neglected to indulge in any self-reflection regarding his role in forming the housing bubble. For example, Krugman failed to mention that, on August 2, 2002, he remarked:

To fight this recession the Fed needs more than a snapback; it needs soaring household spending to offset moribund business investment. And to do that, as Paul McCulley of Pimco put it, Alan Greenspan needs to create a housing bubble to replace the Nasdaq bubble.

Despite directly calling for the Federal Reserve “to create a housing bubble,” Krugman defended himself in 2009, stating that the above comment “wasn’t a piece of policy advocacy, it was just economic analysis.” In other words, his statement wasn’t stupid; it was just “analysis.”

If Krugman’s statement diverged markedly from the rest of his writings, then people should forgive him for a transient moment of foolishness. However, since it reflected a trend in the Noble Laureate’s thought process, Krugman should not be exonerated from his consistent advocacy of policies that ruined the American economy. Explaining his economic thoughts during an interview in Germany in the late 90s, the Laureate said:

During phases of weak growth there are always those who say that lower interest rates will not help. They overlook the fact that low interest rates act through several channels. For instance, more housing is built, which expands the building sector. You must ask the opposite question: why in the world shouldn’t you lower interest rates?

Today, there are very few economists who will ask a rhetorical question like: what could possibly go wrong if the government stimulates housing? Experience has answered that question.

Yet, to be fair, the above remark did not specifically deal with what to do during the recession in the early 2000s. Perhaps, some of his supporters might believe, he supported keeping interest rates low to create a short term boost in housing, but he advocated discontinuing the policy before it contributed to the “irrational exuberance” that brought about economic disarray. Under this line of reasoning, the blame for the housing bubble would not have been temporary government interventions but instead keeping interest rates “too low for too long.” For people of this view, they would be surprised to know that, on August 10, 2004, the economist wrote:

Oh, and on a nonpolitical note: even before Friday’s grim report on jobs, I was puzzled by Mr. Greenspan’s eagerness to start raising interest rates. Now I don’t understand his policy at all.

According to Krugman, rather than keep interest rates too low for too long, Federal Reserve Chairman Alan Greenspan increased interest rates too quickly. In the view of the Noble Laureate, the economic climate justified the Fed stimulating housing more than it already had. If the Fed had followed the columnist’s advice, housing would have become an even larger bubble, which Krugman would have still blamed on the shortcomings of a “laissez-faire” economy.

Of course, everyone makes mistakes sometimes, especially economists. Many economists who advocated low interest rates during the early 2000s have since realized the detrimental effects of this policy, leading them to retract their statements and, in hindsight, criticize the policy. To vindicate Krugman, his devotees might contend that the Laureate made an understandable error in judgment, as sometimes happens to everybody. Rather than a defect in the policy itself, they could claim, the shortcomings of the policy still emerged from a misguided overstimulation of the housing market, as agreed by almost everyone now.

Unfortunately, despite agreement that the government actively stimulated housing and that housing prices subsequently soared and plummeted, not everyone does agree that active government efforts to promote housing contributed to the bubble in any significant way. On March 2, 2008, Krugman commented:

One argument I’ve been hearing a lot lately runs as follows: “Low interest rates got us into this mess, so it’s crazy to think that low interest rates are the solution.” Now, I don’t actually buy the first premise: I blame Greenspan for ignoring warnings about subprime and housing, but I still think keeping the Fed funds rate at 1% for a long time was justified by the economy’s weakness, which lasted until late 2003 or even beyond.

In making this statement, Krugman claimed both that it was a good policy to stimulate housing and, simultaneously, that stimulating housing played virtually no role in creating a housing bubble, a remarkable case of doublethink. In the economist’s view, the economic problem ensued from that the concerted effort to promote housing not being coupled with regulations to restrict the concerted effort to promote housing. Amazingly, the economist considers the lack of regulations to deal with the shortcomings of a government policy to be a “free-market failure” that shows how an unregulated market can self-destruct due to the irrationality of its participants.

After reflecting upon this remark, his most devout supporters might attempt to shift the blame from low interest rates and active government interventions to the excesses of unregulated capitalism and corporate greed. In response to this shift, these anti-capitalists should reconsider the first quote above, in which Krugman called for the Fed “to create a housing bubble.” Even without interpreting this line literally, Krugman’s supporters must agree that the Laureate supported a government plan to actively promote housing and, as it turns out, the government succeeded. To blame the problems in the housing sector on unregulated capitalism directly contradicts that creating a housing bubble—whether interpreted literally or understood simply to mean the creation of robust growth in the housing sector—was the goal of the government interventions. Rather than due to a lack of oversight, the problems resulted from too much oversight, with the government interferences creating a housing bubble that inevitably collapsed.

In returning back to the first quote, this completes the contradictory cycle about which Krugman needs to self-reflect. Instead of writing about the merits of Keynesianism and the deficiencies of the rest of the economics profession, the Laureate should devote his time to reflecting on the harmful policies that sprung from his own mind. If he would do so, he might change his reflective column “How Did Economists Get It So Wrong?” to a self-reflective piece “How Did I Get It So Wrong?”

Of course, this process has shortcomings. When buying new products, consumers may spend money they later consider wasteful. Sometimes, the products bought will be defective or damaged; at other times, changes in the preferences or circumstances of the buyer transform what appeared to be a wise purchase into a wasteful expense. In response to new knowledge, tastes, and situations, consumers recast their votes the next time they shop, getting different carts reflective of their new demands. Although the market process, like all human institutions, diverges from perfection, changing consumer preferences result in adjustments that create an imperfect but constantly perfecting system.

Now imagine Wal-Mart finally responds to all of its protestors and decides to model itself off the democratic system. In advertising its change, it announces that it has designed its new methods to “promote the general welfare” and “ensure the public good.” Rather than allowing selfish individual preferences to dictate the market process, the public as a whole will now determine purchases in the same way it casts ballots in elections. How different would the transactions in the market look?

Immediately, the ability of consumers to choose what to put in their carts disappears. Rather than allowing consumers to choose carts full of both everything and only the things they demand, Wal-Mart provides consumers with two choices: Cart D and Cart R.[1] Both carts contain a large variety of goods, and both of them have a large price tag. For most customers, regardless of their vote, they will end up buying things they do not want and unable to buy things they do want. Unlike when Wal-Mart embraced the democracy of the marketplace, the “will of the people” offers only two choices.

Just as the consumer is considering the merits of both carts, the entire neighborhood walks into the store, seeking to exercise their democratic rights. Rather than the individual consumer choosing among Cart D and Cart R, Wal-Mart now lets consumers as a whole choose by a majority vote, ensuring that the final decision reflects the “will of the people.” In doing so, each voter realizes that, except in the extremely remote chance of a tie, no person’s vote will affect the outcome, meaning everyone else will choose for the consumer which cart to buy. In enabling everyone to choose, no individual’s choice matters.

To prevent any selfish consumers from disrupting the general welfare, Wal-Mart decides that, even if consumers do not vote for a cart, they will still be forced to pay for the cart and receive all of its contents. Whether wanted or not, everyone must accept whichever of the two options the majority chooses. To ensure no loopholes to this rule exist, Wal-Mart closes all of the stores of its competitors, making it a monopoly that provides only two choices. In defending this decision, Wal-Mart explains that its system improves markedly over that of Red-Mart, which has a monopoly in China and Russia. Whereas Red-Mart only offers Cart C, Wal-Mart, in providing for the will of the people, offers twice as many choices.

After the people cast a vote for their product, Cart D wins a large majority of the votes, making it a clear reflection of the “general will.” As a result of its victory, for the next four years, Wal-Mart will provide every member of society with Cart D, after which time a new election will be called to determine the will of the people once again. Some customers wonder why they choose their cart so infrequently, and Wal-Mart explains that it creates stability in an otherwise chaotic market. Additionally, as Cart D represents all consumers, they can hold the cart accountable, so there is no need for regular voting.

Almost immediately after the election, the contents of Cart D change drastically, offering substantially different products at a much higher cost. Remarkably, the most appealing items in the cart were the first to be eliminated, and the shiniest items in the cart turn out to be defective. The people who voted for it mumble angrily, but they concede the legitimacy of the change, realizing that Cart D represents the public welfare. After all, “everyone” voted for Cart D, so everyone owes unconditional allegiance to it.

Pondering over the imperfect system that has arisen after a true democratic system replaced the vagaries of a market democracy, the consumers consider their alternatives. They wonder what better and more accountable ways exist for determining what people should receive and at what price. After much thought, they resolve to continue the status quo, concluding that Wal-Mart’s democratic system succeeds far better than any other alternative. After all, look at the horrid results of Red-Mart.

On December 14, 2005, prior to the reauthorization and extension of the Patriot Act at that time, Senator Obama remarked:

In the last week of the session, the Senate is being asked to reauthorize the Patriot Act without adequate opportunity for debate…We appreciate that since Thanksgiving, the conferees agreed to include four-year sunset of three controversial provisions rather than seven-year sunsets. But we should not just make permanent or, in the case of three provisions, extend for another four years the most controversial provisions of the Patriot Act. The sunsets this year provide our best opportunity to make the meaningful changes to the Patriot Act that the American public has demanded. Now is the time to fix these provisions.

In his comprehensive statement, the Senator also detailed very specific unconstitutional and unethical components of the Patriot Act that he wanted to see altered. Despite his familiarity with Constitutional law and his previous belief that aspects of the Patriot Act are unconstitutional, unethical, and dangerous, President Obama chose to reauthorize the Patriot Act for several more years. More change we can’t believe in.

Later that week, on December 17, 2005, the Democrats filibustered an extension of the Patriot Act on the grounds that it violated basic civil liberties. On that day, a Washington Times article stated:

“We killed the Patriot Act,” boasted Minority Leader Harry Reid, Nevada Democrat, to cheers from a crowd at a political rally after the vote…Republicans privately marveled that Democrats would open themselves up to being blamed for the Patriot Act’s demise.

Returning to the present, with another four-year extension of controversial components of the Patriot Act, Republicans must marvel in a different way at how remarkably similar the Democrats have become to them.

As has been noted throughout this week by observant commentators, such as in an Atlantic article:

President Obama has now stopped talking about the civil liberties violations he once knowledgeably identified. If all goes as expected, he’ll soon sign a four year extension of the PATRIOT Act, quadrupling down on an earlier mistake. This is particularly notable due to the way this latest extension is being passed: Senator [sic] Majority Leader Harry Reid had promised a week long debate on the legislation so that abuses identified by civil libertarians could be addressed. The fact that Reid’s word proved worthless means that Sen. Rand Paul’s worthy amendments may or may not be considered depending upon his adeptness at procedural maneuvering.

One has to wonder, how can Democrats keep complaining about President Bush’s policies while continually passing, supporting, and reauthorizing extremely similar or identical policies? This week has replayed almost identically to the reauthorization in 2005, except with a handful of members of the Republican minority—like Republican Senator Rand Paul—trying to stop or moderate the Democrats in power rather than the other way around. Regardless of any personal beliefs about the usefulness or constitutionality of the Patriot Act, it should trouble everyone when the elected party so blatantly ignores its previous pledges without any justification or explanation. Overall this week, this country experienced three losers: the Constitution, democracy, and liberty.

Rand Paul proposes eliminating all foreign aid. U.S. support for HIV/AIDS and malaria medication keeps hundreds of thousands people alive each year, but inhabitants of third world countries who are going to lose their lives as a result of this budget will at least have some American company: Rand Paul is going to slash funding for agencies that protect consumer safety including the FDA and EPA, and eliminate entirely the Consumer Product Safety commission. If the budget cuts stopped there, America would no longer be innovative and it would more dangerous, but it would still be America.

The budget cuts do not stop there. The budget eliminates Federal work-study and student loans and reduces Pell Grants, putting college out of reach for much of working and middle-class America. The poor on the other hand will not get a grade school education once the Federal Department of Education that provides much of the funding for impoverished school districts in abolished. However, they wont’ really worry about the end of social mobility in America, since the end of public housing and slashing of food stamps means they will be much more worried about food and shelter. Putting millions of people out onto the streets and denying them food and any chance to better their station will very likely result in America’s cities to erupt with riots and high crime, especially since the assistance that the DOJ provides to impoverished and high crime communities will be terminated. The ensuring flight of social stratification, and collapse of social services will cause the U.S. to look kind of like Brazil where the rich live in gated communities and fly to work over the slums in their helicopters. Actually that might be too rosy of a picture since Brazil has extensive social welfare system and its economy isn’t dependent on ever more expensive imported oil. However, Rand Paul is right: we have to balance the budget and his plan is far preferable to the alternative,which consists of the horrors of Clinton-era tax rates and Canadian style health-care.

But they can’t prove it, yet. They do, however, have the evidence they need to indict you on smaller crimes. They can put you behind bars for 10 years for some of the hacking you did in college, when you were a little less careful, left behind more traces. If you keep your mouth shut and Julie keeps her mouth shut — and that wouldn’t be too hard because you’re both quiet, computer-nerd types — the feds will prosecute you for those.

You start to cry, thinking that the last blushes of the flower of your youth will be spent behind bars, in a low-tech prison, surrounded by blue-collar types. But then a cop with a cigarette — you think he’s a good-cop type — says he’s a nice guy, so he’ll offer you a choice, he’ll make you a deal. You give him the evidence he needs to prove that Julie stole the classified documents, and he’ll find a way to get you out of prison in one year flat.

You always wanted a year off, you tell yourself, to lift weights, and read real books, get back in touch with blue-collar America, and live austerely anyways – and the whole thing was always Julie’s idea, she was the master-mind and the force, yes she was. You’re ready to do with it. You’ll turn her in.

But wait. Espionage! It carries the death penalty! How could you do that to Julie, that genius, your leader!

You affect a courageous posture and tell the cop no deal. You won’t let Julie die.

He chuckles. The thing is, he says, he made Julie the exact same deal 10 minutes ago, and she’s already left her answer in the slot of her prison cell. If she squawked, he says menacingly, you die — unless you give him what he needs to indict her. But if you squawk back, he adds, that’ll show some real repentance, you’ll both live out your natural lives in prison. Together.

You’re a quantitative type, so you do some quick calculations. It’s pretty clear you need to squawk. And Julie’s a quantitative type and is thinking the same thing. She knows that no matter what she does she’s better off squawking, so you know she’ll do that, and you’ll die if you don’t squawk back.

The good cop just offered you a nice-sounding option that actually, when the options are aggregated across two players, guarantees you both life in prison. The cop with the cigarette doesn’t seem so good anymore. When you alone are offered a choice, it’s always theoretically good — you can always choose the thing that makes you better off. But in this and analogous situations, when everyone is offered a choice that affects others everyone is guaranteed to be worse off.

If you’ve ever studied economics, this tale is worn, familiar, even obvious to you. It is the “prisoner’s dilemma,” the quintessential conundrum at the heart of game theory. And it’s an analog for the millions of situations in life in which every person doing a small thing to give himself a small edge creates a circumstances that hurt everybody — including those of us who just went for that small benefit.

Modern journalists face a prisoner’s dilemma right now.

We journalists have more choices about when, where, and how to publish, and when, where, and how to get information. We have more freedom. For any individual journalist, that should be a great thing. And there is no shortage of extremely talented and intelligent young people entering the field. But the quality of journalism is, despite this, declining. How can that be?

Suppose there’s some movement in some hot topic — Harry Reid announces a revision in his immigration policy, for example. You’re a smart, well-read journalist. You think you could — given six hours — bang out something really smart. Call a couple friends on Capitol Hill to find out what really happened behind the scenes, open up that “Immigration: For and Against,” anthology from UChicago Press, start writing, establish some good metaphors, edit, compress, polish, and create something very streamlined, intelligent, powerful, and even persuasive. Something that could last. You could do this. And the world would be better for it.

Or you could react. You could start by tweeting, and then string those tweets together in a blog post, and move on no the next topic du jour (and e-journalism has created a world in which topics literally are du jour).

And as you think about it, you realize that’s precisely what you need to do. Because you know 30 rival journalists have already gotten the news. And the first one to publish will be linked by subsequent bloggers who will be linked by others. Those who love or hate the news will retweet and link the first guy to post it. Six hours from now, the issue will have washed over major insiders.

So you decide to be quick. But there’s something else. No matter how quick you are, you know somebody has already tweeted the news and it’s been retweeted ‘round the world. If you want your tweet to be read, and retweeted, you can’t just relay the news. You need an edgy perspective on it, something to make people sit up and focus their attention on you and your words out of the millions being produced on the internet every moment. You need something a little angry, maybe heavy with sarcasm, maybe hyperbolically adjectival — anything that will raise blood pressure enough to make eyes pause on your words a bit longer than on others’.

A journalist is supposed to have a kind of explanatory role. But you don’t have much time for deep explanation. So you could just kind of make something up — something that you know can’t be disproven enough to discredit you as a journalist. But within that boundary, the more fabulous your explanation of events or your description of their importance, the more attention you’ll get, both from those who agree and those who disagree. Uncovering the real explanation for things is hard, but constructing an explanation out of a canned ideological world-view or perspective is easy. The easiest thing for you to do is to place the news event into the context and prior ideas of what you and your audience already believe.

So there’s more pressure to make that instant reaction snarkier, more opinionated, more devious from a reasoned and moderate consensus-building opinion. And, less challenging to you, your “side,” and your audience.

That is, you, the journalist, gain a small edge by making your reaction to an event more rapid and opinionated. Maybe you didn’t start out as an opinionated type. Maybe your whole idea was to be balanced and universally sympathetic, to do considered, and wise long-form journalism. You think it would be a superior world in which we were all less snarky and fast, and were more reasoned and long. But that world doesn’t exist, and you’re in a system in which if you want any cachet as a journalist or intellectual, you’ve gotta react, snark, and publish — fast.

The sum total effect of this? Is the world any better for having ideas about Harry Reid’s latest immigration policy “out there” a few hours earlier? Surely not. Are journalists better off? Surely not. Every journalist I talk to would prefer it wasn’t this way. And the sum total of journalism is worse. An extra two hours of editing a piece could increase its quality by, say, 60%. But those two hours may decrease its relevancy by some 80%. The journalist faces a clear incentive to reduce his quality of output. And each individual journalist risks descending into e-irrelevancy if he doesn’t get on board.

I have described a problem to which I do not think there is any solution. There is a long and ignoble tradition of opposition to new media. Doubtless when the printing press was invented, Thomistic scholars had similar concerns to mine. Perhaps in 100 years my concerns will be considered ridiculous — evidence of the stodginess and anti-innovation fervor of my generation. But perhaps that will be because future generations will have less of a sense of what has been lost.

In an interview prior to the mid-term elections, the CEO of General Electric, Jeffrey Immelt, criticized the absence of a US energy policy, saying “It’s just stupid what we have here today … The rest of the world is moving 10 times faster than we are … Without a market signal of some consistency, the right investments aren’t going to be made.”[2] Without those investments, American leadership in the competition to produce the next generation of clean energy technology is at risk of being usurped by challengers, namely China, who are investing tens of billions in their domestic clean energy industries. And with that potential loss of leadership goes the “green jobs” and revitalization of the American manufacturing industry that this country so greatly needs.

The most effective such market signal to spur investment in green energy would be a carbon tax or cap-and-trade bill, the kind of legislation stalled in Congress. But there are other means of catalyzing clean energy investment. Earlier this year, several captains of industry, including Immelt and Microsoft co-founder, Bill Gates, lent their names to a report by the American Energy Innovation Council, which called for increasing government-sponsored green energy investment to $16 billion from its current level of $5 billion, alongside a new, independent national Energy Strategy Board.[3]

I propose that President Obama, by invitation to the oil industry, an act of Congress, or potential regulatory powers under the EPA, allow consumers to have the option to pay a voluntary 10 cent per gallon climate tax each time they fill up at the pump. Funds generated would be used to finance increased national investment in clean energy.Would consumers sign on to pay an extra 10 cents per gallon? While direct survey data is scarce, indications are favorable. A June 2010 survey conducted by Yale and George Mason University found that 61% of Americans would “somewhat” or “strongly” support requiring 20% of electricity come from renewable energy sources, even if it cost the average household an extra $100 per year.[4]

How much would such a measure generate? According to the Energy Department, America consumes 378 million gallons per day of motor gasoline.[5] If the figure of 34% of the American people who believe that global warming is a “very serious” problem, as polled by Rasmussen[6], was used as the starting point for estimating who would voluntarily pay 10 extra cents at each transaction at the pump, the measure would raise almost $13 million per day or $4.7 billion per year. (Of course, it is likely that the 34% of Americans most concerned about global warming use a disproportionately smaller amount of gasoline.) This would almost double current clean energy investment.

Or, like the voluntary presidential election campaign fund checkoff that taxpayers can elect on their tax return forms, consumers need not directly pay the tax at all: Congress would simply appropriate the money as directed by consumers – a sure-fire way to raise more than the estimated $4.7 billion a voluntary direct tax would generate. Bring in the nation’s largest utilities for good measure; perhaps calling on them to invite their customers to pay an extra half-cent per kWh consumed, for example, would add another several billion to the fund.

Perhaps the most important effect would be the voluntary climate tax’s implications for reshaping national opinion about climate change. A strongly worded statement at the gas pump before asking Americans if they’d like to contribute to the voluntary climate tax fund along the lines of “Gasoline consumption produces carbon dioxide which is responsible for climate change that may result in …” would be the climate movement’s equivalent of the Surgeon General’s warning on cigarette boxes and could quite possibly have a profound cultural impact. In time, public opinion could be shifted to such an extent that there would eventually be strong enough support among voters for passing climate change legislation. It is this latter long-term possibility that would likely most resonate with the Obama administration, which has expressed support for the libertarian-paternalist policies designed to change public behavior articulated in University of Chicago professors Richard Thaler and Cass Sunstein’s book Nudge.[7]

For those skeptical of the potential of a “soft” environmental policy such as the one outlined in this column, one should consider the impact of the Toxic Release Inventory program, passed as part of the 1986 Environmental Protection and Community Right to Know Act. Solely mandating the public disclosure of firms’ pollution, supplemented by a voluntary target program for emissions reductions, led to 73% and 58% reductions in surface water and air emissions respectively over a 10 year period.[8]

Why would the nation’s top oil and electricity firms be inclined to sign on? The oil industry knows that even with these investments (and perhaps subsidies for hybrid cars, building modernization, or nuclear loan guarantees) the United States would remain dependent on petroleum for years still to come. And with many of the industry’s corporate tax breaks under assault, a quid pro quo agreement not to eliminate these tax breaks in exchange for implementing the voluntary climate tax would undoubtedly go a long way in swaying the industry’s doubts.

A voluntary climate tax could be a powerful means of catalyzing green energy investment in this country, securing its place as a manufacturing leader, generating green jobs, reducing long-term dependence on foreign oil, and, most important, combatting global climate change.

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Kyle Hutzler is a freshman in Calhoun College and a member of the Federalist Party. Contact him at kyle.hutzler@yale.edu.

[2] GE’s Immelt says US policy deadlock holds back clean energy development. Peter Behr. New York Times. 24 September 2010. http://www.nytimes.com/cwire/2010/09/24/24climatewire-ges-immelt-says-us-policy-deadlock-holds-bac-86164.html

[3] A business plan for America’s energy future. American Energy Innovation Council. http://www.americanenergyinnovation.org/

[4] Climate change in the American mind: public support for climate & energy policies in June 2010. Anthony Leiserowitz, Edward Maibach, Connie Roser-Renouf, Nicholas Smith. Yale University and George Mason University. 2010. http://environment.yale.edu/climate/files/PolicySupportJune2010.pdf

[5] Petroleum statistics (2009). Energy Information Administration. U.S. Department of Energy. http://www.eia.doe.gov/energyexplained/index.cfm?page=oil_home#tab2

[6] Energy update. Rasmussen Reports. 15 November 2010. http://www.rasmussenreports.com/public_content/politics/current_events/environment_energy/energy_update

[7] The real “third way”: Sunstein and Thaler offer a new model for policy design. Robb London. Harvard Law School. 10 October 2008. http://www.law.harvard.edu/news/spotlight/faculty-research/sunstein-and-thaler.html

[8] The selection and design of policy instruments: applications to environmental protection and natural resource management. Thomas Sterner. Resources for Future and World Bank. See also Public disclosures: using information to reduce pollution in developing countries. Vinish Kathuria. 2008.

Resolved: America Should Abide By International Law