Thursday, December 18, 2014

The Moonshiners' Lament

In early July of 2019, I was subpoenaed for a Senate subcommittee hearing on S.2025, the Home Distillery Reform Act. Here is a partial transcript of the proceedings.

Sen. Jabroney (D-WI): Mr. Wilson, thank you for joining us today. I understand you are a, uh, expert on the, uh, economics of home alcohol production. Is that correct, sir?

SLW: Yes, your honor.

Jabroney: It's "Senator," thanks. Now, isn't it true that you're here today to argue that... let me see here... that moonshine, that is to say, distilling operations performed in the home... that this should be legal in the 50 states? Is that correct, Mr. Wilson?

SLW: Yes, that's correct. Um, Mr. Senator. Correct.

Sen. Rumplebottom (R-MS): Mr. Wilson, you are aware, aren't you, that illegal moonshine can be a poisonous substance and that in 2018 alone, over 250 Americans died from ingesting so-called "home-distilled spirits?" You did know this, Mr. Wilson, did you not? Or how about the fact that this unregulated black market alcohol often ends up in the hands of children, and that they don't know just how potent this stuff can be? You are aware of the negative effects of alcohol consumption on children, Mr. Wilson?

SLW: Yes, Senator. Those are all excellent reasons to legalize home distilling.

Rumplebottom: Excuse me? Did I hear you correctly? Did you just say that those are reasons IN FAVOR [emphasis in original] of passing this bill?

Sen Terdenhare (R-TX): Mr. Chairman, if I might, we did see that legalizing homebrewing of beer did not produce general lawlessness in America or that it led to the moral decay of the youth. If anything, the statistics have shown a decrease in underage drinking since the ban was lifted [2011 CDC findings], and that drunk driving fatalities have dropped from over 15,000 in 1991 to just over 10,000 in 2012, and that's with more young drivers on the road. Isn't that true, Mr. Wilson?

SLW: It is true, but it could be spurious to link the two. Other factors could have contributed to the decline in underage drinking and drunken driving. The best reason to legalize home distilling is to improve product quality.

Rumplebottom: Hold on a minute. Did you just say "product quality?" Mr. Wilson, this governing body has no interest in this product being available at all. Professional distilleries have the tools and expertise needed to produce safe spirits at reasonable prices. Can you sit there and guarantee me that the... the... the hooch coming out of a still in someone's garage won't be poisonous? Can you sit there and tell me that a home distiller wouldn't put bleach, or... or arsenic or some other adulterant into the mash to give it some extra kick? These aren't new practices, Mr. Wilson.

SLW: That's correct, Senator. When the homebrewing of beer was illegal, vendors were prohibited from selling the airlocks, carboys, and brewers' yeast needed to safely prepare beer in the home. As a result, the quality of homebrewed beer suffered. Now that homebrewing supply is a fairly large industry, hobbyists can easily and cheaply obtain high-quality equipment and ingredients to produce beer safely. The same logic applies to distilling.

Rumplebottom: Correct me if I'm wrong here, Mr. Wilson, but the brewing of beer is far less complicated than the distilling of alcohol, is that not so? If the temperature inside the still is just a little too high, impurities from the mash will carry over into distillate. Furthermore, if there's pesticides in the corn, those can be... [leans over to whisper to neighbor] ...volatile and end up in the final product. Is that not correct, Mr. Wilson? I can't tell you how many of my constituents have ended up in the hospital from drinking moonshine that either hasn't been distilled properly or has been made on the fly by some... some yokel trying to evade taxes. Is that not what you're trying to encourage with your support, Mr. Wilson?

SLW: It's true that distilling spirits is more technically demanding than brewing beer. Just as it's more technically demanding to build a dining room set than it is to build a bird feeder. The science and technology behind distilling is not all that complicated. Electric heating systems can maintain constant mash temperature in the required range much more reliably than the campfire methods commonly used by today's moonshiners. If this bill is passed, never again will anyone have to pull an old radiator out of a junked car in an ad hoc still. Kits, complete with instructions, as well as mash base, will be sold freely by vendors with tax id numbers who can be tracked down in the event that they sell defective or dangerous products. In an above-board, legal market, consumers have legal recourse.

Terdenhare: Thank you for your testimony, Mr. Wilson. This committee appreciates your cooperation.

Chair: This hearing is now in recess.

Three weeks after this hearing, the AP ran a story about how Senator Rumplebottom had received a sizable campaign donation from DISCUS, aka the Distilled Spirits Council of the United States, a lobby organization representing the commercial interests of the distillery industry. No charges were filed.

[This post and all the events depicted herein are fictitious. Any resemblance to any persons, living or dead, is purely coincidental] Euvoluntary Exchange, 2014.

Wednesday, December 17, 2014

Black List Down

Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances.
Twenty-nine states have enacted statutes against blacklisting. Each and every one of them restrains employers from preventing former employees from being hired elsewhere. Each and every one of them owes its pedigree to anti-conspiracy jurisprudence. The economics are easy enough to understand: blacklists destroy the implicit wealth of targeted individuals, obliging them to accept lower wages at no substantial cost to the conspirators. If you're a regular reader, you should instantly pick up on the BATNA disparity tucked neatly away there. If you're an employer, workers are easy enough to replace (or so goes the legislative intuition), but if you're a worker, you could be completely barred from your profession. Yikes!

As you know, the Supreme Court has roundly rejected prior restraint.


These 29 legislatures, in an uncommon fit of forward induction, have therefore been sharp enough to limit blacklisting bans to actual employers, and not to private citizens. Walter Sobchak is still at liberty to carefully write down the names of everyone who's offended him and publish it in the local paper. He might still be liable under defamation statutes, depending on what else he writes, but unless he's an employer, he won't trigger blacklist statutes.

The question I found myself asking yesterday after Popehat patiently and carefully explained all this to a #GamerGate activist is whether or not the moral intuition, if not the actual jurisprudence underpinning anti-blacklist statutes applies to privately-maintained lists. If I, a private citizen, create a public list of people who are heretical in mine eyes, and this list becomes extremely popular, perhaps even gaining a universal following among leaders of the industry I work in, isn't the effect to the people on the list exactly the same as if an employer had done it? Wouldn't I be just as complicit in ruining the career prospects of the people who've offended me?

A few possible differences:

  1. Employers can maintain hidden blacklists, and there's no way to tell for sure whether or not the names on it constitute a protected class. Publicly visible blacklists kept by ordinary citizens are open to review and scrutiny.
  2. Corporate blacklists can be used to sustain anti-competitive collusion. One of the solutions to a repeated PD game (at least on the margin) is to have a coordination mechanism. A blacklist can serve precisely this function. Put a name or two on there strategically to punish conspiracy defectors, and you raise the ex ante probability of sustainable cartel behavior. Private individuals have no incentive to dally in boardroom shenanigans.
  3. My list is entirely opt-in. It's merely an offer. Acceptance of its elements must necessarily be voluntary. I am unable to withhold significant future commerce in the event that an employer crosses the picket line so to speak. I have precious little market power, in other words.
Perhaps you might add to this list. Perhaps not. Perhaps you'd quibble with the logic of the items in this list. I know I would. I'm not all that fond of the idea of protected classes, for example. Still, I am at no more liberty to influence the public jurisprudence than I am to influence the public taste for television programming. What I can do is attempt to parse the prevailing sentiment in an effort to predict what sort of legislative tomfoolery we might see rollin' down the pike.

On the one hand, social media does seem to be increasingly salient in employment selection/termination practices (Pax Dickinson, eg). On the other hand, it's dang hard to muster much public sympathy for the low-caste males that end up on mass Twitter block lists. What legislator would go to the mat for some douche cannon who takes preternatural glee in leveling vague (or sometimes very clear and targeted) rape and murder threats at women? My best guess? Privately-maintained block lists aren't likely to be non-euvoluntary enough to incite legislation unless and until someone starts a practically effective one (i.e. one that employers begin to honor) that actually targets people who are in an honest-to-Jim protected class.

No one would be stupid enough to do that though, right? 

Right?

h/t K.W. (Patrick maybe? Naw, Ken for sure. Like 90% sure it's Ken.) and Randi Harper.

Tuesday, December 16, 2014

Uber, but for Title 32 Mobilization of Army National Guard and Reservists

Uber makes the news yet again when surge pricing kicked in after the recent Sydney siege. Responses have been fairly predictable. Gawker ran (another) smear piece, offering arguments lifted nearly word-for-word out of the EE corpus: it's simply wrong to charge extra during an emergency situation. I'll let Russ Roberts counter:
Sometimes prices help. Sometimes.

If you'll indulge me, I'd like you to consider for a moment what the underlying trade is here. Ignore the livery branding and what we have is a dangerous situation that bystanders need to flee—need in the sense that their BATNA could be disastrous if not fatal. Asking strangers to ferry folks away from danger is great, but unless you make it worth their while, consider that the answer might well be "no." Remember that most folks sensibly run away from danger.

Most folks.

If only there was a well-funded organization with the expertise and equipment needed to perform the dangerous task of evacuating civilians in emergency situations (apologies to Garett Jones). If only this organization already pre-selected for the type of people who intentionally run into danger. If only this organization enjoyed the sort of longevity encoded into the highest law of the land (Article I, §8; Clause 16), allowing for intertemporal resource allocation smoothing. You've probably already read the title of this post, so you know to which organization I refer. The problem with using Uber drivers to evacuate civilians in emergency situations is that Uber drivers are also civilians. They're generally not trained to deal with extreme situations, and they've not already pledged to put themselves in harm's way. Guardsmen have. Furthermore, your local armory probably has a deuce-and-a-half or two gassed up and ready to roll. The ARNG is the ideal organization for civilian evac.

Unfortunately, individual constituents are unable to invoke Title 32 mobilization by their lonesome. Only the governors of the 54 states, territories, and districts can do that (50 states + Washington DC, Guam, Puerto Rico, & the US Virgin Islands). So an app to call out for your local 88M to pick you up directly probably won't be forthcoming. But something to quickly and directly notify the governor's office is probably fairly reasonable. Think Yo, but with a few extra bits of information, like geodata, type of emergency, number of affected civilians, status of emergency (ongoing, etc). That sort of thing. By quickly crowdsourcing all the relevant characteristics of the emergency, supplemental responders can more rapidly coordinate an appropriate response.

If the problem is, "we need more people to run towards danger to help" then adding a surcharge to a peacetime livery service is one way to get there. But it ain't the only way. Before we set to thrashing Uber for their particular solution to a thorny problem, let's consider some other reasonable alternatives.

Monday, December 15, 2014

Area Man Demands You Pay for His Breakfast

Perhaps you've already encountered the unlovely neologism "hangry." If you haven't, it's an unfortunate portmanteau of "hungry" and "angry," and it describes the irritability that naturally accompanies low blood sugar and elevated cortisol. Even if you've never heard the term before, you've almost certainly experienced the phenomenon. We've all skipped breakfast once or twice for one reason or another, and we've all delayed lunch. We've all felt the comforting tide of digestion ebb to expose the craggy rocks underneath, and even if we're scrupulously diligent about minding our food intake, we all know someone less cautious.

My crabby mood can ruin your good day. If my crabby mood is the direct result of skipping my morning bagel (cream cheese and lox are the only proper toppings for a bagel; anyone who utters otherwise shall be branded a heretic and shunned) then there's an uncompensated externality there. My failure to exchange makes you worse off. You should be willing to subsidize my breakfast, right?

No? You don't owe me breakfast you say? You don't want to reward my inattentiveness you say? You don't want to encourage future episodes of reckless fasting you say? You don't want me to take advantage of you you say? I see. Even though my mood has certain public goods aspects to it, namely that it is not excludable (and indeed, non-rival to some extent). it's still pretty widely recognized that my mood is my own responsibility.

Of course, when I say "widely recognized" I mean in the culture in which I live. It's a social convention. Contrast forager cultures in which the entire day's haul is shared proportionally among the entire group. And like other social conventions, they are subject to change. Terms and conditions apply and all that.

So it goes, it seems, with education. Education, like nutrition, is largely a private good: through my education, I earn higher wages, enjoy greater productivity, and so forth. There are many happy outcomes of education for which I am well-compensated. However, I am not well-compensated for my refined mannerisms (don't laugh), my keen ability to vote responsibly (okay, that one you can laugh at), nor my new-found propensity to conform to those social conventions that are coeval with an advanced university education. My college education unintentionally benefits you the same as my Moons Over My Hammy™.

As a fraction of total expenditures, higher education is subsidized (chiefly through non-dischargeable-in-bankruptcy lending) far more than food (SNAP, food banks & al). Unfortunately, just like me being a crankypants hold-out, subsidized students have less incentive to behave prudently in higher education.

So the Andrea's Question puzzle: we want students to be prudent in their decisions to seek education. Shuttering Sallie Mae is a political non-starter, and I struggle to imagine how to overcome what seems like an impossible pro-college bias among high school guidance counselors. I have faith in the power of rhetoric, and I give all the applause I have in my frail mortal form to Mike Rowe for doing his best, but I worry that attempting to raise the relative status of skilled physical labor is up against some extreme institutional barriers. What do you suppose the most effective prudence-enhancing approach still in the choice set might be? Suggestions welcome in the comments, because I confess myself with very few ideas of my own here.

Friday, December 12, 2014

White Hat vs Rent Seeking

Firms will often test security measures before rolling them out. They'll subcontract so-called "white-hat" hackers to test the systems to see how easy it is to gain entry. The White Hats then report back to the firm the results of their investigations so that changes can be made, patches applied, and systems secured.

Public Choice economists, along with a number of other disciplines, have noticed that quite a bit of regulatory legislation ends up benefiting the industries under regulation. Sarbanes-Oxley, for example was ostensibly intended to discipline naughty firms engaging in naughty accounting practices. The result of SarbOx, instead, is that it puts an enormous regulatory roadblock in front of any firm seeking to grow beyond the capacity that will trigger its requirements. It creates, in the parlance of economists, a barrier to entry, allowing incumbent firms the latitude to behave more like the textbook monopolists your econ 101 professor warned you about.

White Hat hacking is quite euvoluntary indeed. It's an excellent service that helps enhance customer confidence and reduces risks inherent in electronic commerce. Well, at least when it works as advertised. What do you think about a legislative equivalent? Politics is exchange, after all. Right? How about having a few independent contracting firms take a stab at finding all the "unwanted" loopholes in a piece of legislation and showing how to exploit them so that bills can head back to committee before they hit the floor? Wouldn't that be in the public interest?

Well, if you agree with Zach Weiner, yes. If the purpose of the legislature is solely to act in the public interest, then it'd be great to dot all the i's and cross all the t's before voting. But if I'm right and the legislature is chiefly Humean, there will be absolutely no interest in independent regime arbitrage hacking prior to the release of legislation, as it is not in the unspoken interests of the political elite.

At least, this is my prior belief. I'm not exactly sure how you could test it unless you actually had a legislator's ear. I could say "I bet that within 25 years, there will be no equivalent to a legislative white hat org vetting proposed legislation," but that wouldn't really vindicate the Humean model of political economy, would it? In the meantime, I thought it might be a cute little thought exercise. A what-if to keep in mind for when Andreessen finally funds my comet utopia.

Thursday, December 11, 2014

Toward A Theory of Euvoluntary Political Exchange

I had a fun little back-and-forth with SMBC cartoonist and BAHFest organizer Zach Weiner yesterday on Twitter. You can read it here if you're so inclined, but be forewarned: it got silly and a bit scatological pretty quickly. The non-silly modified transcript went something like this:

Z: Are any lawmakers going to do anything about the CIA torture report?
S: What would you have them do?
Z: Punish transgressors. Credibly commit to punish future transgressors.
S: Torture has been around for thousands of years. How will a little extra punishment help?
Z: WTF are you talking about? We successfully outlawed slavery. We can successfully outlaw torture.
S: Slavery still exists, all we did was force it underground.

And then Adam G joined the conversation and it quickly devolved into jokes about the political economy of seasteads (check for yourself if you don't believe me).

It struck me that Zach and I must have very different game theoretic models underpinning our views of how and why the state exists. By suggesting that punishing torturers would produce better behavior, I think Zach basically subscribes to the notion that the telos of the state is to govern, that the sovereign is generally the product of Lockean bargaining, Hobbesian entrepreneurship, or Rousseauian foresight. Zach appears to hold a wildly popular view, both inside the academy and among the general public, that people who hold political power—the power to coerce others—are endowed according to the Enlightenment-era principles described by Jefferson in the DoI:
Governments are instituted among Men, deriving their just powers from the consent of the governed
To Zach, and indeed to any American you'd poll with probably greater than 95% likelihood, this sentiment is accurate. The government is legitimate if and only if it serves the interests of the people, if perhaps not always their direct will. How widespread is belief in this model? I've heard my patron here at EE [obliquely] reference it more than once. If there's anyone in the world I most closely agree with on matters of political economy, it's Michael C. Munger.

But on this matter, I part a bit with first-principles theories of political organization. It might be that the sovereign arises to solve some thorny collective action problem, but that doesn't say very much about what it does once it sticks around. In this sense, I find myself much more closely aligned with Hume, that the continued existence of the sovereign is to encrease his own opulence and dominion. If good public law and order happens to arrive along with this pursuit, all the better, all the more euvoluntary if you will. However, a lifetime of casually following politics, of noting the periodic lapses in ethical behavior of the political elites, of surveying historical episodes of malfeasance, of noting the curiously acceptable practices in politics that are outright illegal in the private sector (insider trading is the most benign example that springs to mind), I find it nearly impossible to conclude that the state exists to serve anyone other than itself.

If the popular model is correct, if Zach is correct, the CIA (and whatever other organizations who've not had extensively-redacted reports publicized) is acting aberrantly when its agents force food and water into the rectums of prisoners with sufficient vigor to result in hemorrhoids, anal fissures, and rectal prolapse. Punishing those who are not acting in concert with the fundamental principles of the organization is sufficient to ensure compliance. Contrarily, if my model is correct, if Hume was right, and the state exists to encrease the dominion of the sovereign, there was no wrongdoing. At least not in the hidden, hermeneutical mission statement of the agency. If I'm right, the only person committing heresy is the whistleblower. If I'm right, Snowden is a criminal, not Rogers. If I'm right, whistleblower statutes need to (a) exist and (b) have no real capacity to protect whistleblowers. If I'm right, prosecutions would be Soviet-style show courts. If I'm right, the only way to ensure that torture is ended is to abolish the CIA entirely, along with the numerous other unaccountable federal agencies that enjoy wide discretion and little Congressional oversight.

However, I am not the hegemon of Plato's Cave. I do not have the luxury of indoctrinating the young while calling it "social studies." I cannot convince you that my model is correct and the popular model is as fanciful as a chocolate unicorn riding a pumpernickel skateboard across a peppermint half-pipe. All I can do is gently encourage you to revisit from time to time the basic model you have for political authority and to ask if the patterns you see in political activity reflect your hypothesis or if they might be better explained by an alternative.

We all want a more euvoluntary relationship with those vested with political authority. To get there, it might be worth reconsidering the terms of the implicit contract. T/F, explain.

Wednesday, December 10, 2014

The Political Economy of Ham Sandwiches

A grand jury will indict a ham sandwich.

A torture victim will confess to being a ham sandwich.

When I was in middle school in the midlands of California, I enjoyed the peculiar fortune of living on a now-closed Army base, Fort Ord. At Fort Ord, there were I believe five residential subdivisions, each named after a general of note. Mine happened to be named after Ol' Blood and Guts himself, George S. Patton. Our ticky-tacky on-base clapboard house in Patton Park was maybe a five minute walk from the elementary school through the typical Central California scrubland you'll see on any randomly selected stretch of I-5 between Modesto and Bakersfield (Mythbusters uses my old neighborhood for road tests from time to time if you want to see it for yourself). Sure, you could take the winding sidewalk along the hilly roads, but that would tack on an extra five minutes to the hike, which is five minutes of after-school cartoons you'd miss. If memory serves, my younger brother was in the first grade at the time, and I was in the sixth. Even though the bus ride to my school was longer, it let out a little earlier, so I typically got home just before he did.

One fine, sunshine-drenched day, in the interval between shucking my backpack and switching on some Looney Tunes, I heard a warning from my brother outside the door: "Sam, don't get mad." An odd thing to hear, for sure. Concerned, I went into the wee courtyard formed by the toolshed, some fencing, and the side of the house to find my brother standing there, face bloodied, a ragged (if small) gash above his ear staining his Members Only jacket scarlet. Concern turned to fear as I, to the best of my 11 year old ability, assessed the extent of his wounds and launched an impromptu criminal investigation. Luckily for the field medic in me, he appeared to be otherwise uninjured. Luckily for the gumshoe in me, the case was pretty quickly closed, as the culprit who had thrown the rock at him came sniveling around the corner hot on his heels.

I'm just shy of five years older than my brother. The kid who threw the rock was a couple years older than him. I had a good twenty pounds and probably half a foot on the brat, and I was seeing red. For a brief moment, I entertained a righteously justifiable fantasy of pummeling this little twerp unconscious. I could have done it (so I thought): I could have bowled him over and pounded his mewling, craven little face into the concrete slab until it resembled old uncooked hamburger. I could have broken every single solitary tooth he had out of his simpering jaw and kicked him in the ribs until he couldn't breathe. I was protective rage incarnate, the sort of simian fury you can see when you get your hands on chimpanzee footage that shows what a pack of males will do to a stray non-tribe male when they catch him foraging alone. I literally wanted to tear this prick's arms out of the sockets and beat him with them. Obviously, something stayed my hand. It's now been close to 30 years since the incident, but I still remember pretty clearly what it was. It was, for lack of a better term, my conscience. I knew that beating up a kid three years younger than me would not mend the gash on the side of my brother's head and that any sense of vengeance I could summon would have no practical value other than slaking the incoherent beast that leapt from my darker sentiments. I even recall the intuition that pummeling the boy would do little to deter future attacks, noting as I did in that brief moment his genuine terror and honest remorse. I, age 11, stayed my hand and told him to go home.

I find at age 40 that the moral clarity I summoned that day when my brother came home from school bloody-faced and beset is somehow missing from some of my fellow Americans' response to the recently-issued Senate Select Committee on Intelligence's Committee Study of the Central Intelligence Agency's Detention and Interrogation Program, aka the CIA torture report. If you'll permit some paraphrasing, I've heard on the radio (the local classic rock station WBIG, no less!), read on Twitter and Facebook, and overheard in conversation the following sentiment: what the CIA did to those prisoners isn't any worse than what ISIS has done to journalists; we have to be willing to do what it takes to make Americans safe.

Some issues with that sentiment:
  1. If the national moral compass is aligned to the actions of terrorists, we should think long and hard about continuing to utter the blasphemous falsehood that the United States is a Christian nation.
  2. Centuries of evidence—centuries—reveals in no uncertain terms that torture does not produce useful information. Hiring psychopaths to pump food and water into the rectums of prisoners to yet again verify a very-well established empirical result is not an especially productive use of government employees' time and talent.
  3. If your model of human behavior is that by torturing prisoners, you deter future acts of terrorism, consider the alternative hypothesis promoted by the early Catholic church, wherein the tortured and executed faithful were sainted and canonized to act as inspiration for the flock. If Christianity can have martyrs, can't Islam?
It should be terribly obvious to anyone who's sat through even a cursory lecture on Torquemada or POW camps in Vietnam or... hell, take your pick—history is chock full of instances of false confessions obtained by cruel men with crude implements—that the telos of torture is torture. It should be terribly obvious to anyone with the moral sense of an 11 year old boy in the throes of a family-protecting rage that succumbing to intemperate fits of retribution is probably unwise.

It should be terribly obvious to responsible citizens of a democracy that there should be a default presumption of non-violence and that constituents should grant government agents license to wield violence only when the benefits clearly outweigh the costs. By supporting the actions described in the report, the morning WBIG DJ (for example) appears to subscribe to the peculiar moral theory that petty vengeance inflicted by proxy is more valuable than honoring elementary conventions about the treatment of prisoners, 

Politics is exchange. I find myself experiencing buyer's remorse. I want my money back, please.