Archive for April, 2011
It is sobering to reflect that one of the best ways to get yourself a reputation as a dangerous citizen these days is to go about repeating the very phrases which our founding fathers used in the struggle for independence.
Charles A. Beard
- Rights belong to individuals, not groups; they derive from our nature and can neither be granted nor taken away by government.
- All peaceful, voluntary economic and social associations are permitted; consent is the basis of the social and economic order.
- Justly acquired property is privately owned by individuals and voluntary groups, and this ownership cannot be arbitrarily voided by governments.
- Government may not redistribute private wealth or grant special privileges to any individual or group.
- Individuals are responsible for their own actions; government cannot and should not protect us from ourselves.
- Government may not claim the monopoly over a people’s money and governments must never engage in official counterfeiting, even in the name of macroeconomic stability.
- Aggressive wars, even when called preventative, and even when they pertain only to trade relations, are forbidden.
- Jury nullification, that is, the right of jurors to judge the law as well as the facts, is a right of the people and the courtroom norm.
- All forms of involuntary servitude are prohibited, not only slavery but also conscription, forced association, and forced welfare distribution.
- Government must obey the law that it expects other people to obey and thereby must never use force to mold behavior, manipulate social outcomes, manage the economy, or tell other countries how to behave.
One of my simpler pleasures is to soak in a tub while reading short stories and essays. Mencken, Wodehouse, Konrad and lately quite a bit of the always profound Argentine writer, Jorge Luis Borges.
A line from his story The Writing of the God (in the altogether excellent Penguin classics collection The Aleph) struck me as highly analogous to the many tenacious problems now tormenting the global economy. And that line is…
“… in the languages of humans there is no proposition that does not imply the entire universe; to say “the jaguar” is to say all of the jaguars that engendered it, the deer and turtles it has devoured, the grass that fed the deer, the earth that was mother to the grass, the sky that gave light to the earth.”
The analogy I drew was that virtually every major challenge humanity is now facing traces its roots back to overreaching government.
While that observation may seem a stretch, if true, it is of no small importance to how we as individuals, and as investors, chart our course.
So is it true? Is the government the root of all that ails?
Certainly it isn’t responsible for the Japanese tsunami and, if you’ll excuse the pun, the fallout from that?
Tsunami, no. One must make exceptions for the uncontrollable convulsions of planet Earth.
But nuclear problems – absolutely.
For two reasons. First and foremost, back in the developmental dawn of nuclear power, no private insurance company, or even consortium, would offer early-stage nuclear plants insurance. As a consequence, in stepped the Nuclear Regulatory Commission with government-backed insurance.
An old-time nuclear engineer I met told me that the early-stage plants were actually quite dangerous, pushing the envelope as they did on man’s engineering capabilities at the time. Private insurers, seeing the risks for what they were, made the risk/reward calculation and sat on their hands. The government, however, felt no such restraint.
But does that mean that, absent the government, nuclear power generation would have been stillborn? Not at all. Given the size of the potential prize at stake – a good share of the market for base-load power – the companies involved would have gone back to the drawing board, and stayed there, until a safer model could be designed. Which is to say one that could garner the stamp of approval of private insurance.
While this would have delayed the ramp-up to nuclear power, the plants that were ultimately built would have been safer and some of the early incidents that defined nuclear power as unstable and dangerous could have been avoided.
Secondly, in response to Three Mile Island and Chernobyl, the government unleashed a mass of regulatory goop over the industry… goop that effectively gummed up the nuclear power industry to the point where further development was made uneconomic and downright painful. The net result was to effectively freeze the industry in time.
The Fukushima nuclear power plant currently grabbing headlines was commissioned in 1971 – 40 years ago.
That the aging plant didn’t just blow up after a 9.0 earthquake and a tsunami should be used to confirm the technology, not refute it. But just imagine how much safer nuclear power would be if government hadn’t meddled in the first place – by offering insurance when no one else would, and then tossing the baby of its own creation out with the bathwater at the first sign of trouble?
It is not a stretch in the slightest to think that, absent the government’s intrusions, pebble bed reactors or even something better would have already been widely deployed and nuclear power would be recognized for the nearly perfect energy source it is. Instead, it is still struggling to shrug off its bad reputation – a reputation that has just taken another huge setback thanks to the problems at Fukushima. Problems that coulda, shoulda been entirely avoided.
Adding to the problems confronting nuclear is the government’s insane meddling with the storage of nuclear waste. The most incredible example being the selection of the Yucca Mountain nuclear waste repository and the conditions the government put on the operators. Namely, before approval, the facility had to be proven to be able to contain the waste safely for 10,000 years.
What a dim view of humanity’s future these members of officialdom must have if they think that over the next 50 years, humanity can’t come up with ways to either reprocess the waste and/or avoid it altogether. Simply sealing the waste in lead-lined cement blocks alone would hold it very safely for the next 50, 100… 200 years. More than enough time to address the situation.
Trying to meet its arbitrary standards at Yucca, the government spent over $10 billion – before coming to the conclusion that it is impossible, and so it needs to find an alternative site. Therefore, like Borge’s jaguar’s connection to the universe, the problems nuclear energy is facing, including that of the current crisis in Japan, are easily traceable to the consequences of past governmental actions.
What about the current economic issues now weighing so heavily on the world?
Readers of even more than a few days know our view that the blame belongs almost exclusively at the feet of government.
From trying to control the economy by controlling the money supply and artificially dampening interest rates to produce “loose money”… to stealing money from current and future generations in order to bail out stakeholders in banks… to setting up the equivalent of a Nuclear Regulatory Agency for mortgages in the form of Fannie Mae and Freddie Mac – then agreeing to buy any loan, no matter how bad… and… and… and…