When Should an Industry Be Nationalized?

Bryce Covert calls for the entire credit bureau industry to be nationalized in an op-ed in the New York Times:

These private institutions hoover up our data, often without our knowledge and consent, and then sell it off to banks, landlords and even prospective employers. The companies rake in some $10 billion in revenue every year. They wield enormous power to ruin our lives — if not through a data breach, then through errors on our credit reports. One in four consumers has an error on his credit report that could affect his scores, yet it can be very difficult to correct the record.

Although they call themselves bureaus, there is nothing governmental about what these private companies do. We let them take on a role that can have outsize consequences. And the free market doesn’t work here, because none of us can refuse to be a part of this system and opt out if we don’t like how we’re being treated. There’s no legal right to ask Equifax to remove your data from its registries or to stop it from getting more in the future.

Why should we continue to allow private companies to make money from us while ignoring our needs? Let’s nationalize Equifax and the other two major credit reporting companies, Experian and TransUnion. We could follow other countries’ example and hand the duty of tracking our financial histories over to a public registry instead of a private profiteer.

I found Ms. Covert’s reasoning mostly incoherent. If revenue, influence on our lives, or a lack of accountability were justifications for nationalizing companies, it seems to me that Google, Facebook, and Apple would be prime candidates for nationalization. What large company wouldn’t satisfy the criteria Ms. Covert is applying?

I agree with her in one particular: I see no reason that we should subsidize the credit bureaus’ business model. There is a ready solution for that: strict liability. Under strict liability it wouldn’t be necessary to demonstrate wrongdoing, intentional harm, or recklessness for a lawsuit to succeed. All you’d need to do is be able to demonstrate injury.

In her zeal for expanding the role of government she does give us one thigh-slapper:

The United States government is, of course, not impervious to data breaches, nor does it have a perfect track record of fending them off. In 2015, it announced that hackers had stolen “sensitive information” on 21.5 million people. But the government is at least accountable to public pressure.

The civil bureaucracy is completely immune from public pressure and, as we have seen over the last eight months, is highly resistant to influence from elected officials. The surest way of making the problem intractable is to nationalize it.

The more you consider it the idea, the worse you realize it is. Credit bureaus’ primary customers are lenders. Any nationalization of credit bureaus would inevitably lead either to additional subsidies for banks, state capitalism at a level we’ve never seen it before, or both. Can anyone reasonably say “the problem with the United States is that we’re not subsidizing banks enough?”

I also see no way of enforcing a ban on collecting data. No, liability is the best recourse.


Thirteen Simple Rules

Investor Jeffrey Harding provides thirteen simple rules for deciding who to trust in understanding the economy:

  1. Free market economists tend to be contrarians and you should listen to them—but if they are selling you something, run for the door.
  2. Contrarian investors are worth listening to—but if they are selling you something, run for the door.
  3. Because someone was right before doesn’t mean they’ll be right again.
  4. There are permabears and permabulls. Simple Internet searches will reveal who is who. Avoid both.
  5. If you increasingly hear experts say we are not in a bubble, we probably are.
  6. If you get advice from someone who says, “this time is different”, run for the door.
  7. If the stock market is making all-time highs, such as the present, it probably is too high.
  8. If home prices are at an all-time high, such as the present, they may be too high.
  9. If commercial real estate prices are at all-time highs, such as the present, they may be too high.
  10. If personal and corporate debt is at an all-time high, such as the present, there may be more risk to asset values.
  11. A lot of debt at this stage in the cycle will kill you on the downside.
  12. Booms can last longer than you think.
  13. Be patient.

My own experience is that everybody is selling something even if it’s only their ability to offer advice. Consider that in the contexts of #1 and #2. Also, the prevailing wisdom is the prevailing wisdom for a very good reason. That being said there’s a lot of money to be made by voting against it. Also lost.


The Public Mood

I’d be interested in hearing your reactions, other than ad hominem reactions, to David Frum’s Atlantic piece in which he finds considerable resonance between two seemingly different books, Mark Lilla’s The Once and Future Liberal and Henry Olsen’s The Working Class Republican:

What Lilla and Henry Olsen, the author of The Working Class Republican, both see and recoil from is the weakening of the appeal of American nationhood—and the strengthening of subgroups: identity groups on the left; plutocratic possessing classes on the right. Instead of the broad messages of Roosevelt and Reagan, they hear the narrow claims of victim-group grievance and purist ideology.

The article does have one good turn of phrase:

Politics must be affirmative. Opposition—whether to “big government” or “white supremacy”—is a mood, not a program.

In my opinion both political parties have entered culs de sac from which there are no obvious exits and which lead inevitably to violence and misery.


He Was Almost One of Us

There’s an old joke about a man who moved to a small town in Maine when he was two weeks old and lived there all of his life. When he died his friends and neighbors put the following inscription on his tombstone: “He Was Almost One of Us”.

The essay of Andrew Sullivan’s in the New Yorker to which I referred yesterday is now on online. It’s interesting as many of Mr. Sullivan’s writings are. I have a couple of quibbles with it.

First, I disagree with his characterization of American politics in the 1960s:

The re-racialization of our parties began with Barry Goldwater’s presidential campaign in 1964, when the GOP lost almost all of the black vote.

Mr. Sullivan is too young to remember the period and in my opinion he has swallowed the popular wisdom on the presidential election of 1964 hook, line, and sinker. Goldwater had little to do with Johnson’s ability to solidify black support around the Democrats to a greater degree than ever before. The Civil Rights Act had nothing to do with it. Fun fact: a higher percentage of Congressional Republicans voted for the Civil Rights Act of 1965 than Democrats. More Southern Whites, almost all of whom were Democrats, voted for Johnson than for Goldwater.

The strategy that yielded the Democrats 90%+ of the black vote was the nasty, deceitful campaign against Goldwater and the Republicans conducted by Lyndon Johnson. You’ve probably heard about the “Daisy” political advertisement. Yes, Lyndon Johnson warned about the danger of electing Goldwater president while building up our forces in Vietnam to three times the size of the D-Day invasion force and preparing to drop more bombs on the Vietnamese than were dropped on the Japanese during World War II.

You probably don’t remember this ad, in which an implied link between Goldwater and the KKK was created. Goldwater was Jewish, a libertarian and strict constructionist, and probably didn’t have a racist bone in his body. It was just a smear campaign and it worked. The “Southern strategy” came later, in the 1970s.

I didn’t vote for Goldwater and I’m a Democrat but I can identify a nasty political campaign when I see one.

My other quibble is with Mr. Sullivan’s use of the word “tribe”. Tribes have bonds of kinship, of blood. You can’t just sign up to be a member of a tribe. You’ve got to be adopted.

Historically, becoming an American or a member of an American political party was more like joining a religion like Christianity, Buddhism, or Islam. If you subscribed to the religion’s beliefs and performed the religion’s rites, you were a member.

I think the word that Mr. Sullivan is looking for is “clique” rather than tribe.


President Rorschach

I didn’t listen to or read President Trump’s address to the United Nations General Assembly yesterday. I think he’s a boor, dolt, and provocateur and I doubt that he said anything that would change those views. Judging by the reactions I’ve read the speech like the man himself was a Rorschach test—your reaction is more dependent on the views you came in with than what you actually took from the speech.

The editors of the Wall Street Journal express grudging approval for the threats issued to North Korea in the speech:

The President abandoned any nuance, even by his standards, in denouncing the “rogue regimes” in North Korea and Iran. He was especially unabashed in describing North Korea’s offenses, calling it a “depraved regime.” These aren’t words typically heard at Turtle Bay, where others among the depraved sit on the Human Rights Council, as Mr. Trump also had the effrontery to point out.

But he really rattled the seats with his threat to act against North Korea if the U.N. fails to do so. “No nation on Earth has an interest in seeing this band of criminals arm itself with nuclear weapons and missiles,” Mr. Trump said. “The United States has great strength and patience, but if it is forced to defend itself or its allies, we will have no choice but to totally destroy North Korea. Rocket Man is on a suicide mission for himself and for his regime.”

The threat to destroy the North offended the foreign affairs cognoscenti, who view Mr. Trump as a barbarian. And at first hearing the “Rocket Man” reference to dictator Kim Jong Un does sound like an insult better left to teenagers in the school yard.

Then again, Mr. Trump inherited the North Korean nuclear crisis, and he is trying to get a cynical world’s attention that he intends to do something about it. Traditional diplomacy isn’t getting through to Mr. Kim and his entourage, or to their patrons in Beijing. After years of Barack Obama’s diplomatic niceties that ducked the problem, maybe the world needs to be told some unpleasant truths about an evil regime with a weapon of mass murder and the means to deliver it.

but they didn’t care for his notions of sovereignty:

“We do not expect diverse countries to share the same cultures, traditions, or even systems of government,” he said, “but we do expect all nations to uphold these two core sovereign duties, to respect the interests of their own people and rights of every other sovereign nation.”

How about the rights of their own people? Defined in such narrow terms, “sovereignty” and “interests” don’t include room for how nations govern themselves, which matters to how dangerous they are to their neighbors. In his own speech Mr. Trump rightly spent many sentences deploring how North Korea and Iran treat their people.

I wonder what rights they have in mind? The United States is an outlier. Freedom of expression, the press, and of religion are all much more expansive here than in other countries including countries which are our closest friends and relatives, e.g. the United Kingdom, and, as I noted in an earlier post, they’re under assault here. Many European countries recognize a “right to roam” which is called “trespassing” here.

As I have pointed out before there are more slaves worldwide today than there were in 1860 and the country with the most slaves? India, notionally a free and liberal country.

I think that the editors are responding to the U. S.’s bad habit of forcing their own notions of rights and government on other people. The “spheres of influence” they decry are the way of the world in the absence of American hegemony.


Liberalism’s Decline

The editors of the Wall Street Journal report on a Brookings survey that found that students at American institutions of higher learning are rejecting liberal values:

‘Freedom of speech is a principal pillar of a free government,” wrote Ben Franklin. “When this support is taken away, the constitution of a free society is dissolved.” Imagine what Franklin, James Madison and the other Founders would make of a new Brookings Institution survey showing that American college students have no clue what the First Amendment means.

John Villasenor surveyed more than 1,500 undergraduates, and among the alarming findings: Most American college students do not know that even hate speech is constitutionally protected; half agree that it’s okay to shout down a speaker whose views they don’t agree with; and nearly one of five believe it is acceptable for a student group opposed to a speaker to use violence to keep him from speaking. Some of the answers vary by political identification, but overall the findings suggest great confusion.

Mr. Villasenor’s conclusion is blunt. “Freedom of expression,” he says, “is deeply imperiled on U.S. campuses.” We’d take that further. Given that a functioning democracy rests on free expression, what do these results say about America’s future when these students leave school and begin to take their places in public life?

This survey provides additional evidence that the deeply illiberal incidents that have occurred at various colleges and universities around the country are indicative of something that’s more than anecdotal.


Split Personality

I’ve made no secret of my skepticism about intellectual property, an Orwellian term if ever there was one, particularly in the notion that the creation of intellectual property as an alternative to making stuff and performing services that people are willing to pay for is a viable growth path for the United States. One of the things that makes me skeptical is the remarkable double talk and maybe even double its proponents deploy.

Consider this post at RealClearPolicy by Andreas G. Elterich. Its title alone is enough to set my teeth on edge: “Don’t Antagonize China Over IP Theft”. Can anyone imagine writing “Don’t Antagonize Dillinger About Bank Robbery” or “Don’t Antagonize Timothy McVeigh Over Mass Murder”? Either he believes that intellectual property is property or he doesn’t. If he does, its theft is a crime.

And predictably he hauls out what he presumably thinks are the big guns:

Instead of chancing a trade war and further eroding the reputation of the U.S., the administration should take steps toward trade liberalization, thereby spurring economic growth.

Here’s a suggestion for him. Instead of trying to use quiet diplomacy, why not use shame? The Chinese authorities need to come to understand that their actions are shameful and those who do them are not worthy of respect. I believe that’s more likely to change their actions than any amount of quiet diplomacy.


The Thing With Feathers

If you’re looking for hope, you might, as I did, find a little in Jason D. Hill’s open letter to Ta-Nehisis Coates at Commentary. Here’s a snippet:

Mr. Coates, you write that the American Dream is the enemy of so much that is good: “The Dream thrives on generalizations, on limiting the number of possible questions, on privileging immediate answers. The Dream is the enemy of all art, courageous thinking, and honest writing.” The pursuit of this Dream saddens you and all the people in America you describe as being lost “in a specious hope.” The Dream, you say, was built on “the progress of those Americans who believe that they are white,” and that progress was built on looting and violence. You write: “‘White America’ is a syndicate arrayed to protect its exclusive power to dominate and control our bodies. However it appears, the power of domination and exclusion is central to the belief in being white, and without it, ‘white people’ would cease to exist for want of reasons.”

I am saddened by your conviction that white people wield such a great deal of metaphysical power over the exercise of your own agency. In making an enemy of the Dream that is a constitutive feature of American identity, you have irrevocably alienated yourself from the redemptive hope, the inclusive unity, and the faith and charity that are necessary for America to move ever closer to achieving moral excellence. Sadder still, you have condemned the unyielding confidence in self that the Dream inspires.

The portrait that he paints is a lot more like what I see around me than the picture of Dorian Gray that others are portraying.

As I’ve noted before, I’m an empirical sort of guy and I don’t expect you just to take my word for it. Look at the direction the canoes are paddling.


Columnists Search for Meaning

There’s an odd sort of resonance between David Brooks’s New York Times column on two contrasting views of “human development”:

I’d like to offer you two models of human development.

The first is what you might call The Four Kinds of Happiness. The lowest kind of happiness is material pleasure, having nice food and clothing and a nice house. Then there is achievement, the pleasure we get from earned and recognized success. Third, there is generativity, the pleasure we get from giving back to others. Finally, the highest kind of happiness is moral joy, the glowing satisfaction we get when we have surrendered ourselves to some noble cause or unconditional love.

The second model is Maslow’s famous hierarchy of needs. In this conception, we start out trying to satisfy our physical needs, like hunger or thirst. Once those are satisfied we move up to safety needs, economic and physical security. Once those are satisfied we can move up to belonging and love. Then when those are satisfied we can move up to self-esteem. And when that is satisfied we can move up to the pinnacle of development, self-actualization, which is experiencing autonomy and living in a way that expresses our authentic self.

and Michael Gerson’s Washington Post riff on a recent essay of Andrew Sullivan’s:

A provocative new essay by Andrew Sullivan, “America Wasn’t Built for Humans,” describes the emergence of two American phyles. One is more racially diverse, urban, secular and globalist. The other is largely white, rural and exurban, religious and nationalist. Their conflict is the context of American politics. At stake is the idea that “American” describes a single people.

In Sullivan’s description, the “myths” that used to help unify the country — the ideal of assimilation, the idea of America’s founders as exemplars of constitutional values — have been weakened. “We dismantled many of our myths,” he argues, “but have not yet formed new ones to replace them.” The result is the dangerous triumph of cultural identification over unifying political ideals.

Both are in their own ways about the search for meaning in life. I found the discussion of Andrew Sullivan’s essay interesting, not interesting enough, however, to purchase a copy of the New Yorker, the only place, apparently, where the essay may be read.

Turning to Mr. Brooks’s observation, I think that as a society we’ve been stuck at the first stage of the “Four Kinds of Happiness” for decades and it isn’t working. Rising suicide rates and abuse of opioids, anger, high homicide rates in Chicago, Baltimore, and St. Louis all point in the same direction.

Imagine if the headlong push to erode every form of economic activity in this country until the only people who are employed are artists, teachers, politicians, and physicians is successful. Most people derive their sense of achievement from their jobs. If you don’t believe that, read Csikszentmihalyi’s Flow. Truly happy people, even those in the most menial and repetitious of jobs, find happiness in their work. What if that is foreclosed?

The notion that people will jump from hedonism directly to generativity is laughable. The rate of voluntarism has declined even as the rate of long-term unemployment has risen.

This passage from Mr. Gerson’s column caught my attention:

Sullivan also urges “mutual forgiveness” as the basis for genuine reconciliation. “No tribal conflict,” he says, “has ever been unwound without magnanimity.” We need the spirit of Abraham Lincoln and Nelson Mandela in our politics, which is essentially to call for a miracle.

It is not merely a miracle but unthinkable. The Blue Phyle’s conviction of their own rectitude, that they are, to use a favorite phrase, “on the right side of history”, and their belief in the utter vileness of any who disagree with them even as their own views turn on a dime all tell us that we should not expect forgiveness or reconciliation to emerge as a driving force any time soon.

I couldn’t care less whose fault it is. IMO assigning blame depends entirely on your horizon and how strongly you believe that you’re right. I care much more for what works and what we’re doing now isn’t working.


What If…?

Bear with me on this and keep in mind that I’m no particular fan of Donald Trump’s.

What if it turns out that the Trump campaign was being wiretapped and he wasn’t “colluding” with Russia to fix the election? Go a step farther. What if there’s proof positive that there was massive vote fraud and he did actually win the popular vote?

My guess is that none of these would have any effect whatever. He’d still have the lowest approval rating at this stage of his presidency of any post-war president, the highest disapproval rating, and the tenor and tempo of agonistic criticisms would continue.