Why International Organizations Are Good

International Organizations are, in general (not denying there are some bad ideas out there), good because the vast number of them tackle the problem of asymmetric information that is necessary for Capitalism to operate freely and for political collective action conundrums to be solved.



One of the key factors that is necessary for capitalism to work is information, perfect capitalism would need perfect information. What is this? In order for me to buy the cheapest good I need to know what is the cheapest good, in order to produce the cheapest means of production I need to know where to produce and with what (along with a host of other examples). The degree to which we deviate from perfect information is the degree to which we stray from perfect capitalism.
This occurs as some people know the cheapest means of production/purchase while others don't. This results in producers being able to charge higher prices than the "invisible hand" would price (since other producers don't know how to produce as cheaply or have access to the resources the advantaged producer does). We allow this to occur in certain circumstances, inventions/new management techniques, etc, as a reward for innovation. But even these protections are given a limited temporal protection since we recognize the greater good of society is served by allowing every producer to eventually use previous innovations and adapt them to make new ones. This is why a Copyright doesn't last forever. Secondly, if we come up with a common set of rules that businesses have to follow, we need something capable of ensuring that everyone is complying to prevent collective action collapse. In order for all of this to occur we need some type of regulatory body. If it's domestic, it's a type of government organization, internationally, it's a supranational org. Otherwise, none of the above would occur. The concept of the "unfettered market" is misleading in the sense that without regulatory bodies, the producers will exploit information advantage and the market wouldn't be able to operate at its maximum capacity. People wouldn't innovate since everyone else would steal the idea; countries would allow their businesses to compete unfairly relative to their competitors which would compel countries to institute stiff protectionist measures. In the international state of nature, everyone would be acting in their own self interest and we would be worse off. Short of conquering the world, we need international organizations.

(the other instances in which they help the asymmetry of information is standardizing various international goods making it easier for everyone to compete, see the UN's International Telegraph Union , or all the work the World Bank and the IMF do to shape the economies of the developing world to be more open to globalization)

So how does this translate into International Organizations (IOs) and the hypothesis that IO's grow beyond our capability to control? (For some reason, this seemed to be important when we were talking about Copenhagen back in November)

I say, IT IS ABSOLUTELY NECESSARY for market oriented bodies to grow beyond our perceived ability to control. I'll deal with the phantom menace of Copenhagen and the UN after I drive this home.

In order for actors/nations to be willing to buy into an IO, they have to believe in the legitimacy of the organization in question. If I'm po-dunk country X trying to join the WTO, I have to believe that my goods will be treated just as fairly as US/European goods, otherwise, it makes absolutely no sense for country X to open their markets while being excluded from ours (and if it were the case, they would be justified in remaining closed to us). It's real easy for us to SAY we are going to be fair, every treaty since the dawn of time pledges fraternity between nations, but only the ones with teeth are able to fulfill their purpose. The teeth are the bureaucrats that are more concerned with their organization over their nationality. This is why the Dispute Mechanism in the WTO is viewed to be fair by everyone: China, US, EU, etc. We've won and we've lost (in fact I think we've lost a little more than we've won in quantity of cases) losing is neccessary to make it fair: fairness = legitimacy (which means other nations participate in the face of the Collective Action problems), fairness = loss of our national sovereignty (when we comply with WTO arbitration), fairness = Capitalism.

In another example, the European Court of Justice created within the European Coal and Steel Community was given authority over the member state governments pertaining to lawsuits that would inevitably arise from the construction of the Coal and Steel free market, small members (the Benelux Countries) had to believe that their interests would be just as equitable as the large ones (Germany/France). And despite de Gaulle's best efforts, the supranational authority of the court has proven very successful in ensuring that the ECSC, the EEC, and the EU operates relatively fairly. Any perception that is different, that is, the large and powerful country's are able to "control" an IO would make it prohibitive/expensive for smaller countries to participate in. They're willing to surrender their sovereignty to an IO, but not necessarily, to the IO that is perceived to be a stooge of the powerful. If the WTO couldn't defy the US, what would be the point in opening up competition to free trade yet allow the US to skew the rules? If the EU common market primarily benefits France and Germany, why would Slovakia, Poland, and Romania want to join? Only those organizations that provide an enforcement mechanism that is capable of enforcing the equitable distribution of goods to members will be able to get countries to overcome collective action problems and induce countries to surrender their sovereignty to join. That means there needs to be checks on our own as well. Yet such checks are preferable to the economic "state of nature" that would exist without them.

How does this translate to the litany of failed organizations and Copenhagen?

Easy: it has to profit the big countries as well. We don't allow organizations to exist that will cost us more than we will gain. All the biggest countries in the world have a vested interest in ensuring that the UN doesn't check their power and that is why they have a veto. When Coophenagen couldn't agree on a mutual payment/enforcement mechanism (because the Europeans were unwilling to pay without China opening itself to inspections), there was no point to the summit. This is why non-economic organizations are so difficult to establish and generally fail if they do so: there's is no benefit (in Europe's case through harsh payments for C02 reduction, or China --> inspection teams). In order for organizations to have meaning, the major powers have to participate, this gives them the ability to ensure that rules of the road won't injure them, or at least, that it won't injure them more than they will gain. But people won't simply hand over sovereignty because we ask for it, we actually have to make something productive.

Our Congenitally Kowtowing Commander-In-Chief

Speaking of bowing: here we have Dear Leader bowing subserviently to...wait for it...The Right Honorable Mayor of Tampa.

What's up with this guy?  I mean, come on, this is getting ridiculous.  Click on the link to Ace of Spades to see the full range of jokes this generates, and yet, comedians say there is nothing funny about this president.   Hmmm...

Now, I'm clearly no psychiatrist, but it seems to me that what we have here is a man that is not a product of American culture, where while we are raised to treat each other with respect, we are to do it as equals.  He is rather a product of a culture with a severe caste system, where you treat them with the deference due them whereever they or you fall in the social pecking order.  I believe we are seeing our president treating people as he was raised to treat them in Indonesia.  That probably also explains why he is so often insulting to women, and why he treats the common folk of the US as ignorant peons. 

Just my pop-psy analysis.

Whoa! I'm Surprised Again: US Arms Sale to Taiwan

But for Obama's relatively decent job so far in Iraq & Afghanistan, it's my opinion that his foreign affairs performance has been pretty much a total failure: pulling out of the ABM deal with Poland and the Czech Republic, insulting allies and bowing low to 3rd world shitheads, playing nice to the mullahs while Iranians fighting for democracy are slaughtered in the streets.  Kowtowing to Communist leaders in China, while dissing the Dalai Lama showed that he wasn't going to do anything to piss off our nation's primary bankroller.  That may be the economically prudent course of action, but it has not been America's stance regarding Tibet until now.

I expected him to behave in a similar way towards our long-time Cold War ally, Taiwan.  I figured he'd let the alliance die on the vine for fear of pissing off the ChiComs.  But, today we hear of a $6.4 billion arms sale to Taiwan, similar to a sale the Bush administration did in 2008:

It would include 60 UH-60M Black Hawk helicopters, 114 Patriot Advanced Capability-3 missiles, mine-hunting ships and information technology.

A pretty significant poke in the eye to the ChiComs (and proof Obama intends to continue America's alliance with Taiwan).  It'll help the budget as well.  This takes more balls than I figured Obama had.  China has responded by suspending military exchanges with America.

Vice Foreign Minister He Yafei warned U.S. Ambassador Jon Huntsman that the sale would "cause consequences that both sides are unwilling to see."

We'll see if they do anything else to preserve their all-important face, my bet is nothing significant. My guess is the Chicoms are more bluster than brawn. But, I figured that Obama would be easily intimidated by their economic and military bluster as he was at the Copenhagen Climate Conference. Kudos to Dear Leader on this one!

Way to go Oregon!

It looks like Oregon citizens have decided to raise taxes on businesses and the evil rich,

It's not often that citizens vote for higher taxes, but 54% of Oregonians have done precisely that. In a rolling month-long referendum by mail that ended Tuesday, they approved some $700 million in tax hikes on business and wealthy residents.

The highest income tax rate in the state moves to 11% from 9%, which will give Oregon close to the highest rate in the nation. (New York City residents pay 12.6%.) This ballot outcome runs contrary to the current public mood about spending and taxes, so it's worth exploring how it happened.

First, a deluge of money. Local and national public employee unions bankrolled the 'yes' campaign, with a $6.5 million blitz in TV and radio ads. That was $2 million more than the business community and taxpayer advocates raised. The cash helped the tax increase roll up a 71% margin in the liberal precincts in and around Portland, even as it lost in most of the rest of the state.

The union message was also as clever as it was disingenuous: All of these taxes will be paid by someone else, such as Wall Street bankers, out-of-state credit card companies, CEOs. Only the richest 2.5% will pay a little more in taxes, the unions also claimed.

The reality is that these taxes will be absorbed by employers who sign worker paychecks—from Nike Inc. to the corner grocer. Two-thirds of those hit with the new 11% tax rate are small and medium-sized business owners. Phil Knight of Nike dubbed the tax initiatives Oregon's 'assisted suicide" for business. The real victims of these taxes won't be wealthy business owners, who can always move away or shelter income, but less mobile Oregonians who will find it harder to get or keep a job.

One national consequence of the Oregon vote is that we are likely to see unions finance more of these tax-the-rich campaigns in other states with big deficits. Public employee unions have a lucrative racket: They essentially leverage the tax dollars they receive in dues from the salaries and benefits of their members to lobby for more tax dollars to secure even fatter pensions and pay.

The teachers unions exulted yesterday that Oregonians voted to 'protect our schools and vital public services.' What was really protected was the $83,402 a year average in pay and benefits to Oregon state workers, 30% higher than what private workers receive. This is bankrupting states like Oregon, California, New York and New Jersey. On the other hand, Oregon's folly will be some other state's gain. [bold is my emphasis]

I guess it is easy to vote for tax increases when you think you won't be the one that is going to pay for it. In reality, it is the very people who thought that they weren't going to be paying this tax that will be paying for it. You can tax the rich and not have it hurt everyone else. I guess Oregon's unemployment, which are some of the highest in the nation, will be creeping up. The article states that the unions convinced people into voting for this tax increase with Oregonian's tax dollars so that state workers and union members can protect their high salaries. The effects of over taxing the rich have been seen in places like New York City. Hopefully this won't happen in other states like the article states that this could led to.

State of the Union Address...Do we care?

I watched bits of the speech and heard critics from both sides. Sounds to me like he was pretty vague about his messages. I dont think he said or revealed anything ground breaking.

My question is, does any RTPers care? Should we care about this speech? Did it tell us anything we dont already know?

This is Rap #1: Keynes vs Hayek

Watch and be blown away.

This is rock #7

I'm not sure if this is the seventh edition of "This Is Rock" but it'll have to do.

I have always loved the Dead Kennedys. I don't just like them for the funny lyrics either, they have some good shit that has a lot of passion. Jello Biafra puts on quite a show.

http://www.youtube.com/watch?v=R11x32WoxrM&feature=related

When Hitler Found Out Brown Won

I remember Dad sending me something similar during the last Superbowl. This is better I think.

Hope 'n' Change 2010

Brown: "The age of Obama is over. The time of the Tea Party has come.

Fear. Washington is rank with it. Move into the city. Kill all in your path."

* My apologies for being such a lame cut-and-paster.

Scott Brown Wins!!!

Epic, epic, epic! 
I can't sum it up any better than commenter 'Monty' at Ace's:

The Donk spin is inevitable, but it isn't going to work in this case. If it were any other state, any other Senate seat, then yes; they could spin it. But this was Saint Teddy the Blessed Savior's seat! Which he had held for more than four decades! And declared that health-care was his signature issue!

...and was just roundly defeated by a GOP candidate named Scott Brown.

This is not spin-able. This is a catastrophe, a calamity, a chasm the Democrats are still struggling to fathom. The "setbacks" in North Virginia and New Jersey are now looking like the vanguard of the slaughter to come, with tonight's debacle freezing the hearts of every at-risk Democrat in both houses of Congress. No Democrat seat is safe; they suspected this before but they know it now.

Obama's touch turns things to lead rather than gold; he is a lame-duck from now on. A failure. (And this is about Bammer, no doubt about it: by going to Mass to stump for Coakley, and failing, he made it about himself rather than Coakley. And he belly-flopped, just like every other time.) Democrats are going to trample each other rushing to the center to avoid the coming electoral bloodbath (much good it may do them), which means that the health-care bill, amnesty, card-check, and the KSM show-trial are probably all dead.

It has been a great day, my fellow Morons. A great day indeed.

Damn Straight! And, Way To Go Massachusions!

This is just stupid.

(This is a good images that pertains to this topic of chaining everybody to the lowest common denominator.) I have been thinking about buying the Kindle reading device by Amazon for some time now. The only thing that is holding me back is the fact that there are some issues that need to be worked out with this technology. Well it looks like some universities have decided to test the Kindle. This is paving the way for the future as electronic readers are the future of reading and will largely replace printed media and could help reduce the cost of college textbooks.

These Universities can not pave the way to the future because the technology can not currently be used by the blind,

Three universities testing Amazon's Kindle in the classroom have agreed to shelve the electronic book readers until they are fully functional for blind students, under a deal struck Wednesday with the Justice Department.[...]Two organizations representing the blind had sued after universities announced a pilot program to use the Kindle in classrooms.

Officials say the version of the Kindle being used in the pilot program has a text-to-speech function, but the device's menu does not, so it is impossible for blind students to navigate through different electronic books or within an electronic book.

The agreement takes effect as soon as the spring semester ends -- giving the schools time to finish the pilot project with the Kindles, but preventing them from continuing or expanding their use until the blind and visually impaired can use them as easily as students who can see.

The agreement covers other similar electronic book readers, including those made by Sony and bookseller Barnes & Noble.

'Advancing technology is systematically changing the way universities approach education, but we must be sure that emerging technologies offer individuals with disabilities the same opportunities as other students,' Assistant Attorney General Thomas Perez said in a statement. "These agreements underscore the importance of full and equal educational opportunities for everyone.'

Talk about chaining everybody to the lowest common denominator and using the banner of non discrimanition to hold the advancement of everybody back--in other words, a throwback to the primitive. This is preventing the advancement of everybody to include the blind. This is the age we live in. To read more about this topic one should read the article 'Multicultural Nihilism' by Peter Schwartz that is in the book "Return of the Primitive: The Anti-Industrial Revolution" by Ayn Rand.

This Actually Happened

Estimated 100,000 dead. This is crazy.

It is easy for us to go on living as if nothing has happened. I don't think there is much wrong with that but it is important to remember how much tragedy has occured. This is an already miserable country and I can't imagine what this might do to their morale. I think it is important that we pray for the victims of this tragedy. Prayer might be the easiest and most important thing we can do.

Watch This Election

Teddy Kennedy died in August, '09.  This was as the national debate over the Democrats' National Health Care Plan kicked into high gear and Republican resolve against it began to harden.  Democrats realized they were going to need every single vote they had to push the thing forward, and Obama as well as Teddy Kennedy himself shortly before he died, pressured Mass Gov. Deval Patrick to bend Massachusetts' own rules and fill the spot with an interim senator until elections could be held.   A Democrat named Paul Kirk was appointed.  He is not important as he is ineligible to run as the successor.  He was only there to rubber stamp anything Dems wanted him to rubber stamp until the election for Kennedy's replacement could be completed.

Since then, the only mystery has been which Democrat would be nominated to succeed Kennedy.  After all, this heavily blue state voted for Obama 62%-36%.  Massachusetts hasn't had a Republican senator since 1979.  The Special Election being held this month to fill Ted Kennedy's seat ought to be a gimme for Democrats; and that's been the thinking for most of this six month campaign season.  But, with the great rise in anger over Democrats' determined efforts to push America farther into Socialism, the standard thinking may be about to be turned on its head: Republican State Senator Scott Brown has been under the radar most of the campaign season, as Republicans always are in Massachusetts, but, in the first poll for this race, Rasmussen showed him trailing the Democrat Martha Coakley by only 9%.  Sounds like a lot, but not for a Republican in Massachusetts.  Since that poll, it appears that the race has been tightening.  Check out Ace for an analysis.

OK, I'm getting repetitive with my superlatives, but the implications of a Brown victory on Jan 19th (I think) would be huge: A Republican taking 'The Liberal Lion's' place in deepest blue Massachusetts, who would be the 41st filibustering vote on any new version of the Health bill sent to the Senate, enabling the blockage of the bill Harry Reid named "the Kennedy Health Bill", would confirm that a tidal shift to the Right far bigger than the shift to the Left that occurred in '08 is about to happen, or actually is in-process. 

Conversely, even a close Brown loss (by less than 10%) would show that the electorate is turning, but just not as extremely fast as a victory would indicate.

Pray for Change RTPrs!

More government policy that is leading to the takeover of the private sector and possibly an economic collapse.

(Things are a little slow so I will touch up this post on the economy. It should be enough to last for a while.) I read this bit of news last week and I thought that it was interesting because the Obama administration is expanding a policy that is similar to the one that caused the recession, " The Obama administration’s decision to cover an unlimited amount of losses at the mortgage-finance giants Fannie Mae and Freddie Mac over the next three years stirred controversy over the holiday." I also read this article today,

Mortgage giants Fannie Mae and Freddie Mac are now basically a 'public policy instrument' of the government, Rep. Barney Frank (D-Mass.) suggested Tuesday.
Frank, the chairman of the House Financial Services Committee, asserted that the companies, which were taken over by the U.S. in September 2008, have become an extension of the government's policy-making tools.
'Remember now that Fannie and Freddie have been converted," Frank said during an appearance on CNBC. "Part of the losses of Fannie and Freddie are that since the housing collapse, Fannie Mae and Freddie Mac have become a kind of public utility.'[...]'They're not what they used to be — that inappropriately hybrid, private stock company, public policy instrument," Frank said. "They have become the public utility that finances housing in America to a great extent. Part of the loss is a public policy decision that it would be worse to not have some support for the housing market.'

The housing mortgage industry has basically been taken over by the government and is being used as a way to carry out the public policy of reshaping our economic system. They are using the cover of social engineering that claims to be helping out the poor and minorities. All of this is happening before our eyes and is receiving little publicity or attention.

To see how the government is able to exert so much influence in the private sector, we need to look at how the government has been able to take over such a large part of our economy.The government created easy money which created an artificially high amount of credit by keeping interest rates artificially low.(Read the "House that Uncle Sam Built under the required reading.) This created a bubble by creating an artificially high demand for home construction, and this artificially inflated home prices. Too much capital was borrowed and too little of it was backing up hard assets. The government also forced the banks to loan out money to people that were obviously unable to repay these loans back; and as a result, banks then had a bunch of worthless loans or assets. The banks then took these worthless loans and packaged them into investment items, in an attempt to make an evil profit, which spread bad assets throughout the country and the world--everybody invested in worthless investments. The economy was build on a foundation made of sand. When delinquencies on these loans rose due to a slow down in the economy and the bank's capital assets dried up, the credit markets and banking system seized up. (Most businesses rely on credit to continue to operate.) The government caused this near economic collapse to happen. After this happened, the government came along and forced banks to take government money. This gave the government a foot in the door of the private sector. Now they are telling bank how much they can pay their CEO's. The government created a bubble and an economic recession. From the first article above, we can see that the government is going to pump an unlimited amount of money into the mortgage industry. So the government is forcing the Nation to put bad money into the economic system and build the foundation of our economy on a weak foundation. The government is backing up failure. Put the taxpayer in the place of the banks from the previous illustration. This policy is forcing the taxpayer to back up worthless loans. When these loans can not be paid back because homeowners become increasingly delinquent, which they are already, due to high unemployment or an overall bad economy; it will be the the taxpayer and the country at large that will fail. Who will be there to bail these last two out? Overall, capital--which America is running out of--is being taken by the government and being wasted on non productive purposes.

Also put nations in the place of the banks, and one can see a global economic problem.

Is Sovereign Debt the New Subprime?

That’s a question many on Wall Street are asking as 2009 comes to a close. Just as many subprime borrowers were unable to make their mortgage payments in 2007 and 2008, investors now fear certain nations will be unable to pay their debts in the year ahead. Rising mortgage defaults and credit card delinquencies put many banks on the brink of bankruptcy in 2008, sending the global economy into a tailspin. But sovereign debt defaults are potentially even more catastrophic as they can lead to geopolitical instability, societal unrest and even war. And there will also be economic ramifications for investors worldwide, putting America’s (and the globe’s) fragile recovery at great risk. To varying degrees, Greece, Spain, Ukraine, Austria, Latvia, Mexico are just a handful of the nations viewed at risk of defaulting. Meanwhile, Dubai only just avoided a similar fate thanks to a $10 billion bailout from their oil-rich neighbor Abu Dhabi.

The economies of the world are being built on a foundation of debt. Is this leading to a world-wide economic problem that would force a realignment of the world economy?

This move of backing up unlimited losses of Freddie Mac and Fannie Mae by the government will have this effect according to Joe Weisenthal,

The above actions would preserve and strengthen the government’s involvement and control over the country’s housing finance system and make it harder to reintroduce substantial private sector involvement later on. They would also continue distortions in the marketplace leading to who knows what unintended consequences. Finally these steps would do nothing to deleverage the housing finance system, a key step in returning it to any degree of normality.

I read this from the Hot Air blog titled "The New Housing Bubble?". The two links at the top of the page on the link above explains all of this fairly well, so I am not going to simply copy and paste it. The bottom line is that the same bad policies that led to the recession are being carried out on a much larger scale and the government has increased its manipulation and scope of influence in the private sector. It is amazing that policies that led to the greatest economic disturbance since the Great Depression--some say the seventies, I don't know the statistics--are not only being continued but are being implemented on a much larger scale. Of course this is all for the purpose of collapsing the system so that a new one can be created. One can easily see how the misguided government is creating the conditions for an economic collapse. This is a short piece. Another interesting article would be on how the economies of the world are in danger of being collapsed as indicated in the yahoo news article. If this happened, what kind of system would emerge?

Electoral Vote Changes

Just a quick link to pump some life into this New Year!  Amplifying the electoral tidal wave that may be on the horizon in 2010 is the near fact that after the 2010 census, Red states will gain and Blue states will lose a net of eight Electoral Votes/Congressional Districts:

Of the states gaining House seats -- Texas (three) and Arizona, Florida, Georgia, Nevada, South Carolina, Utah and Washington -- only Washington is reliably Democratic, having last voted for a Republican presidential candidate in 1984.

Of the states losing seats and electors -- Ohio (two), Illinois, Iowa, Louisiana, Massachusetts, Michigan, New Jersey, New York and Pennsylvania -- only Louisiana is reliably Republican. And the fact that there are 170,000 fewer residents of New Orleans than before Hurricane Katrina has made the state even more reliably red.

What are the consequences of this?  Well for one, in the 2004 election, Ohio was the swing state.  In a close call, it went to George Bush.  In 2012, with the same results in the other states, George Bush could have lost Ohio and still won the election.  It means Republicans will have the advantage in races that are close.

I repeat my mantra: Demography is Destiny