"There is always a philosophy for lack of courage."—Albert Camus

Thursday, October 06, 2005

The Spin Zone

Cato Institute received a call this morning inviting me to appear on Fox TV’s O’Reilly Factor. For a moment, that seemed odd. In my experience, the only way you get invited on that show is if you agree beforehand to (1) keep repeating “you’re absolutely right” to O’Reilly or to (2) take some absurdly extreme position that will be easy for him to shoot down. This unique exception to those two rules was because my new column, “The Foolish Factor,” got someone’s attention.

I couldn’t possibly appear on TV tonight. There is a not-to-be-missed black tie event tonight celebrating National Review’s 50th Anniversary. Bill Buckley and the late James Burnham discovered me back in 1971, recruiting me to be NR’s economics editor for several years.

To avoid being exposed to a familiar O’Reilly stunt – namely, “we invited him to appear” (but he was too chicken) – I agreed to do a radio interview instead. But the President said something and that got me bumped. For the record, I’m not intimidated by O’Reilly’s inclination to call his critics pinheads, even though he is a foot taller than I am.

What is being tested here is the thickness of his skin. In his September 9 show, “Feeling Sorry for O’Reilly,” he said, “After I criticized the price gouging by the oil companies, ‘Bill O'Reilly is an Economic Fool,’ headlined one blog. Well, take out the word "economic" and you'd be more accurate.” That showed his sense of humor, which is fine, but the truth is that leaving in the word “economic” would be more accurate. O’Reilly is wise and clever about many issues, but not economics. He has degrees in history, journalism and public administration, but must have slept through basic economics.

He concluded that show saying, “Feeling sorry for me yet? Look, all this dishonest nonsense is ideologically driven. And it appears all day every day in this country, there are no standards anymore in the media. But the good news is that folks are seeing through the propaganda and coming into venues that tell the truth and deliver opinion backed up by fact.” My "ideologically driven" (?) column claims Bill O’Reilly has not been telling the truth about price gouging by the oil companies and he has not been backing up his arrogantly ignorant opinions with any facts.

Don’t feel too sorry for O’Reilly. He has his own column with the same syndicate that carries mine, and his own newsletter, so he is welcome to try answering me in print if he likes. Or, he could simply confess that he has no idea how gasoline prices are set or by whom. The rest of us print corrections when we make mistakes. There's no dishonor in that.

33 comments:

The Classic Liberal Anonymous said...

Great article ... now if we can just get people to take the time to understand the problem.

In the crowd (far left) that I work with, profit is a four letter word. They are intelligent people but they all seem to have left their brains at the door during Economics 101.

Hunter Baker said...

Way to go, Alan. I became unable to watch O'Reilly after just a few tries. Way too pleased with himself and way too impressed with his modest intellect.

Kathy Hutchins said...

Now, if we could clone Alan about 1000 times (using a prolife method, natch), arm them all with large wooden mallets with copies of this article attached to the striking head, and send them out into the world to smite the foreheads of the armies of economic nincompoops.....we still wouldn't make any headway. The Maryland press and airwaves, not to mention the offices of Annapolis bureaucrats, are full of this price-gouging nonsense....yet back in May, our AG was going after people for predatory pricing of gasoline. And we've got an otherwise sane (well, except for his infatuation with Peter Angelos) Republican governor -- it's sure to be worse in other places.

I have a question for all the media mouths who think upping the price of gas sitting in the storage tank under the service station is just "ripping off the customer." Radio and TV stations set prices for advertising based on their Arbitron ratings, and raise their rates if the Arbitrons go up. It costs not a penny more to produce the spots. Aren't they "ripping off" the sponsors? Maybe Annapolis knows how much 30 seconds of radio time should cost, since they seem to know how much a gallon of gas should cost.

I got really griped at CNBC when they moved Kudlow and Kramer out of the time slot opposite O'Reilly. Now there's nothing good to watch at 8 (when I'm usually cooking dinner). Hey, I know -- let's bombard CNBC with demands for an Alan Reynolds show!!

The Classic Liberal Anonymous said...

Mr. O'Reilly,

If you bought 5 gallons of water for $1 each, and then a hurricane hit and detroyed all fresh water supplies, how much would you sell the first gallon for? The second? What is the value to you, in dollars, of the last gallon?

Tlaloc said...

Unfortunately price gouging is hardly nonsense. I've read the National Review article on the topic and the TCS article on the topic and they are so hideously badly reasoned they should never have seen print in the first place.

TCS actually argues that price gouging actually helps refugees and suggests the following scenario:
Hotels drasticaly raise their rates and so the traveling businessman declines to stay while the refugee who needs the room more gets the lodging.

Yeah that's great if you happen to imagine that refugees are all flush with cash, certainly more so than lowly business travelers who will be comped by their companies for the outlay. You'd have to be incredibly ignorant of reality to float this argument (that or incredibly scornful of your reader's intelligence).

Price gouging exists and it's an ugly aspect of "free market" economics (one of many). It's no wonder then that economists spend so much time denying it exists or pretending it's a good thing.

There's a simple way to distribute scare resources without gouging the most needy: it's called rationing. The hotel manager can choose to turn away businessmen while allowing refugees to stay at normal or een (GASP!) decreased prices. It's a good idea and humane and hence counter-economic.

Tlaloc said...

"If you bought 5 gallons of water for $1 each, and then a hurricane hit and detroyed all fresh water supplies, how much would you sell the first gallon for? The second? What is the value to you, in dollars, of the last gallon?"

God what a loathsome example. Is this really how you think? You'd force your friends and neighbors to pay $20 for some water JUST BECAUSE YOU COULD? My god how can people who followed a guy who DEMANDED you be charitable not condemn that vigorously?

In case the idea of charity has completely vacated the premises let me explain how I'd handle that situation: First I'd figure out how much water I had and how much if any of it I could spare. Then I'd GIVE the water I could spare to the people I knew were in the most need.

I guess I'm wierd in that I wouldn't let people die to make a few lousy dollars.

Congratulations, CLA, you've managed to thoroughly disgust me.

James Elliott said...

I was waiting for this place to jump on the price gouging thing. I was starting to feel disappointed.

John Stossel's defense of price gouging was perhaps the most inhumane thing I've read since Thomas Sowell's "It's a living wage so long as they're alive" piece.

James Elliott said...

Tlaloc, as far as I'm concerned, a dehydrated mother is morally justified in beating the theoretical water-hoarding CLA into unconsciousness in order to give his water to her children.

Of course, I'd rather see her beat John Stossel unconscious and then shave his ridiculous mustache.

The Classic Liberal Anonymous said...

So, would you prefer no water at $1 per gallon or some water at $20 per gallon?

Your water would be long gone before the pregnant woman and/or elderly showed up, them not being able to rush to the front of the line.

You would also cause a stampede, killing innocent, and thirsy, children.

I, too, am disgusted.

James Elliott said...

Again, CLA, you're assuming a perfect world in which the poor had a reserve of cash in-hand.

Guess what? Doesn't exist. For example, most of the poor in New Orleans do not have bank accounts (and it would avail them to little good if they did, with ATMs and debit systems down). Their reserves of cash, if they had any, were often destroyed along with their dwelling. Whoops! How are they going to pay for the $20 dollar water in the first place? Guess what? They're not going to be able to!

So, in your fictional world, it's all well and good. In the real world, it's rather dumb.

The Classic Liberal Anonymous said...

" Again, CLA, you're assuming a perfect world in which the poor had a reserve of cash in-hand."


I asked an ECONOMIC question. The knee-jerk reaction of some here was to:

1) be disgusted with me;
2) be disgusted with John Stossel;
3) be disgusted with Thomas Sowell;
4) RATION.

I'll take 1-3 as compliments; #4 speaks for itself.

Tlaloc said...

"So, would you prefer no water at $1 per gallon or some water at $20 per gallon?"

I'd prefer to give what water I can to those who I can. If I run out I run out. I can't control that. What I can control is whether I let adversity lead me to depravity.



"Your water would be long gone before the pregnant woman and/or elderly showed up, them not being able to rush to the front of the line."

Possibly. Of course your water would be long gone into the radiator of Donald Trump's Mercedes. He after all could afford to pay whatever price you deemed fitting for the water while the elderly and pregnant mothers went without.

I swear for a party that tries to shuck the image of evil rich bastards you guys are terrible at PR.



"You would also cause a stampede, killing innocent, and thirsy, children."

Certainly if everyone operates by your mercenary standards. Of course if people were a little more cooperative they just might share the water with the most needy. We saw that in New Orleans with groups of stranded people working together and sharing resources to get by. We also saw your sort of exploitation of people in need in order to make a profit. Lets just hope there's few of you in the world when things really go to hell.



"I, too, am disgusted."

I'm glad you've started looking inward then.

Tlaloc said...

"I asked an ECONOMIC question."

No you asked a "what would you do" question. And your answer was to take whatever you could from your neighbors. A shining example of unfettered capitalism.

As for Rationing speaking for itself what exactly does it say?

And as an open question to all reform clubbers: As supposed christians do you support or oppose the idea of charging as much as possible for a life essential to destitute people? Before you answer just pause a moment and think about Christ's views. Okay go ahead and answer now.

James Elliott said...

"Certainly if everyone operates by your mercenary standards."

Curiously enough, research shows that people in adverse situations behave in a communitarian, mutual-aid fashion that belies the popular "rampaging mob" or "everyone for themselves!" imagery.

The Classic Liberal Anonymous said...

"And as an open question to all reform clubbers: As supposed christians do you support or oppose the idea of charging as much as possible for a life essential to destitute people? Before you answer just pause a moment and think about Christ's views. Okay go ahead and answer now."

I'll take a stab at this, even though there are others here who are much more qualified (it hasn't stopped me before!)

I think that Christ's teachings are very clear, "love your neighbor as yourself" and "love the lord your God with all your heart, soul and strength"

This applies to ME.

Now, are you suggesting that the government mandate this to all? I mean compulsory resource sharing (rationing)? Who decides what resources are rationed?

See, God gave us free will, and we must make decisions ourselves. If we deny our fellow man that decision we are pulling the rug out from under him.

We MUST make the decision to follow Christ freely.

Now, are you suggesting that there is a philosophical inconsistency between being a Christian and a capitalist?

Kathy Hutchins said...

Paraphrasing Tlaloc: What Would Jesus Charge?

Christians are commanded, as one of the Corporal Works of Mercy, to give drink to the thirsty. They are not commanded to force the person who had the foresight to stockpile water in advance of a natural disaster to give that water away.

If you attempt to solve the problem of the thirsty masses by telling the water seller that he must sell his now far more precious water supplies at the pre-disaster price, you are shortcircuiting the mechanisms by which the market quickly gets more water to the area in need. The time and space frame where supply is completely inelastic, where no change in price is big enough to bring forth an increase in quantity, is very small. If the seller gets $20 for his $1 water, he turns right around and ships in 20 more. He sells it for $1, he ships in one more. Which scenario leads to thirstier people?

You also sabotage the market's signals to stockpile ahead of the disaster. For days ahead of a landfall, people are being warned to buy bottled water. But hurricanes are unpredictable -- there's always a chance it won't hit, and then my effort was a waste. If I know that the water will, by law, be the same price after landfall, I just might wait to see if I really need it, and therefore put myself in competition with all the people who couldn't afford to stockpile water ahead of time.

48 hours after Katrina hit, the left couldn't yell loud enough about how incompetent the government was at getting food and water to New Orleans. But now you want to scotch the market's mechanism for directing food and water where it's most needed? What is your solution, to pray for manna? Isn't that a rather strange policy position for an atheist?

As for what I personally would do in this situation (and this insight is courtesy of my five waterless days thanks to Hurricane Isabel): I'd install the new pump handle that I had the foresight to pick up at the Farm & Fleet this time around, pump water for everyone, and put out a tip jar for donations to defray the cost of the handle. In so doing, I'd lower the market price of water. Until Maryland's AG came around to cite me for predatory pricing, that is.

James Elliott said...

I think Tlaloc was referring to Jesus's admonition to forego your worldly possessions and give them to the poor.

"Jesus said to him, "If you would be perfect, go, sell what you possess and give to the poor, and you will have treasure in heaven; and come, follow me." (Matthew 19:21)"

"Now, are you suggesting that there is a philosophical inconsistency between being a Christian and a capitalist?"

Not to put words in Tlaloc's mouth, but I'd say it makes a whole lot more sense to be a Christian and a socialist.

Then there's the exceedingly famous Matthew 19:24:

"Again I tell you, it is easier for a camel to go through the eye of a needle than for a rich man to enter the kingdom of God.""

James Elliott said...

"If the seller gets $20 for his $1 water, he turns right around and ships in 20 more. He sells it for $1, he ships in one more. Which scenario leads to thirstier people?"

The one where the market-based shipping of water is impossible because of the natural disaster that caused the problem in the first place?

Tlaloc said...

"Now, are you suggesting that there is a philosophical inconsistency between being a Christian and a capitalist?"

Absolutely. Capitalism is a philosophy of using and exploiting others. Christianity is a philosophy of altruism and charity. The conflict is rather obvious I would have thought.

The Classic Liberal Anonymous said...

"Not to put words in Tlaloc's mouth, but I'd say it makes a whole lot more sense to be a Christian and a socialist."


Here is a short treatise on why I believe you are wrong.

Tlaloc said...

"Christians are commanded, as one of the Corporal Works of Mercy, to give drink to the thirsty. They are not commanded to force the person who had the foresight to stockpile water in advance of a natural disaster to give that water away."

Cute but irrelevent since the question has been framed in the form of "What would you do" if you had the scarce reasource. So Kathy would you follow Christ or your economics degree? DO you give water away or charge an inflated price. And if there is an apparent contradiction isn't it time you explored whether free market capitalism is really compatible with your professed faith?



"If the seller gets $20 for his $1 water, he turns right around and ships in 20 more. He sells it for $1, he ships in one more. Which scenario leads to thirstier people?"

We never posited that the person could acquire more water, indeed in a disaster situation such an assumption is pretty suspect. Besides even if we allow for shipping in more water we are still left with a scenario where the destitute go without while the wealthy drink. Gouging yourself a healthy profit doesn't magically give the desperate the money to pay. Stop resorting to reflexive economic answers and use your brain.



"48 hours after Katrina hit, the left couldn't yell loud enough about how incompetent the government was at getting food and water to New Orleans. But now you want to scotch the market's mechanism for directing food and water where it's most needed?"

Your professed market mechanism feeds only the wealthy. Yes you are damn right I'll yell about that. The market cannot ever look out for the poor because they lack the only thing that gives a person worth within capitalism: capital. No money, no worth, no water. That's the only lesson the free market has to offer and we've learned it all too well.



"As for what I personally would do in this situation (and this insight is courtesy of my five waterless days thanks to Hurricane Isabel): I'd install the new pump handle that I had the foresight to pick up at the Farm & Fleet this time around, pump water for everyone, and put out a tip jar for donations to defray the cost of the handle."

So you do pick Christ over economics. Good for you. If you truly believed gouging people was in the best interest of all involved you wouldn't have given water away. Now why do you argue for Mammon when you won't serve it of your own choice?

Hunter Baker said...

The whole problem is pretty simple. Why did we nearly extinguish the buffalo, while the cow is in massive abundance? Because one was owned, cultivated, and sold for a market price. The other was a common resource. Markets make sure we have the things we need.

Tlaloc said...

"Here is a short treatise on why I believe you are wrong."

The author is typical of mission oriented christians. That is to say he ignores what Christ directly says in order to find passages that he can interprete as going his way.

I see the same thing all the time amongst Christians who are pro-war. It's a fact that many times Christ admonishes any violence, and says to comfort the enemy that strikes you. Not once does he say anything about a justification to kill. And yet pro-war christians try to find liitl things they can use to support the idea that it's IMPLIED that it's okay.

Furthermore the author rests his case on the psychologically questionable idea that people are inherently bad and that this is never a factor influenced by their society. Hence they say that greedy people abuse capitalism rather than capitalism encouraging greediness in people. While this perspective is frustratingly true to christian beliefs of original sin it's factually rather weak.

He also relies upon Genesis and the concept of dominion. It bears repeating that the old testament is no longer in effect. It was completed and ended. And anyway the old testament was only with the jews and hence only the jews would have dominion. Trying to use the old testament as an argument for modern christian activities is a common but still major mistake.

James Elliott said...

An interesting treatise, CLA, thanks for the link.

However, both you and the author of the article make the mistake of confusing socialism with communism. This is rather common among Americans.

The treatise is riddled with logical flaws and inconsistencies that it simply glides over or ignores. Most glaringly is the requirement of the acceptance of the Christian concept of the duality of man (both in God's image and inherently sinful). Much in the manner of Aquinas and Lewis and others, the author assumes on faith the inherent rightness of his preconceived notions and relies upon them to make his argument. Really, the whole of his argument is based on the Old Testament.

Tlaloc said...

"The whole problem is pretty simple. Why did we nearly extinguish the buffalo, while the cow is in massive abundance? Because one was owned, cultivated, and sold for a market price. The other was a common resource. Markets make sure we have the things we need."

Really? Sucks to be the Native Americans who needed the buffalo. I guess they weren't invited to our "markets." The difference between the cow and the buffalo is that we used both but we chose to domesticate and breed one mainly. Is that due to some market genius? No. It was an arbitrary decision. A decision made without thought or intelligence. That's precisely what's wrong with the market.

Let me ask you this: do clean air and water count as things we need? Because the market certainly isn't bringing them to us. Rather government regulation has been needed to restrain companies from polluting both to the point of toxicity.

The Classic Liberal Anonymous said...

JE ... you may be right about the link I gave, but there is justification in the New Testament as well; the parable of the talents (Matthew 25:14 and the following) being one.

I'd supply a link, but you can google it yourself and find plenty to read.

I wish I had more time here today ...

James Elliott said...

"The whole problem is pretty simple. Why did we nearly extinguish the buffalo, while the cow is in massive abundance? Because one was owned, cultivated, and sold for a market price. The other was a common resource. Markets make sure we have the things we need."

Which came first, the domestication of the cow, or the market for the cow? I'd have to say it was the domestication of the cow. Did we domesticate the cow because people would buy it? No, we domesticated it because it was useful.

And lo, there's the answer to your question: Why domesticate or worry about breeding the buffalo when you've got whole herds of cows running around? You ALREADY HAVE a beast capable of fulfilling all the same requirements. If economics entered into the buffalo-slaughtering equation at all, it was at the thought of the immense profit the sale of buffalo bits could garner in the short-term. Who needs long-term buffalo when you've got the Texas Longhorn?

James Elliott said...

Is it just me, or is Matthew 25:14-15 about a man giving away his worldly goods to his servants before departing on a journey? I'll go out on a limb and guess that the "to each according to his ability" is the part you're referring to.

Seems to me that it's a parable against the poor.

James Elliott said...

"For unto every one that hath shall be given, and he shall have abundance: but from him that hath not shall be taken away even that which he hath." (Matthew 25:29)

Isn't this later contradicted by Matthew 25:31-46?

He's saying that when you take from the poor you do unto the Lord what you do unto the poor! As I read it, it rather refutes your contention.

Please elucidate further.

James Elliott said...

Is it just me, or is Matthew 25:14-15 about a man giving away his worldly goods to his servants before departing on a journey? I'll go out on a limb and guess that the "to each according to his ability" is the part you're referring to.

Seems to me that it's a parable against the poor.


No, wait, I'm wrong. Or at least, only partially on to something. That parable's one complicated bit of work.

The Classic Liberal Anonymous said...

I don't think there is any question whatsoever on this thread as to whether a Christian ought to give water to the thirsty; of course we ought to.

Tlaloc has also done a nice job of reframing a discussion into a moral one. My question that started this was without a doubt ECONOMIC; read it again and you'll see that I specifically state "in dollars"?

But thats OK, because the moral question is answered again by injecting universal moral law.

To quote mister Elliot:

"Curiously enough, research shows that people in adverse situations behave in a communitarian, mutual-aid fashion that belies the popular "rampaging mob" or "everyone for themselves!" imagery."

The Classic Liberal Anonymous said...

In regards to Matthew 25:14-30 (the parable of the talents), it does have many meanings.

Yes, the owner gave unto each according to his abilities, but he expected a return on his investment, nonetheless.

(Isn't the the Marxist creed "to each according to his need?" ... maybe this is why you retracted)

The meaning on the surface is, however, quite simple:

even if you are given little, it is expected that you will do with it wisely.

James Elliott said...

But thats OK, because the moral question is answered again by injecting universal moral law.

To quote mister Elliot:

"Curiously enough, research shows that people in adverse situations behave in a communitarian, mutual-aid fashion that belies the popular "rampaging mob" or "everyone for themselves!" imagery."


That's quite a far-fetched leap in logic. I don't really think you can make an argument for universal moral law out of self-interest survival-based behavior. But whatever. We've debated this a gazillion times.

In answer to your question about the retraction, I was going there because "to each according to his ability" is the inverse of the Marxist "From each according to his ability, to each according to his need." But, I decided that the parable was way too complex for me to just wade in there like that.

Interestingly enough, I take the parable to be a lesson about always being prepared for the return of the Lord and the life you lead in the interim, not an economic lesson. The "good" slaves believed their lord would return and were constructive with his "gift" (i.e. the time between his departure and return). The "bad" slave had faith but no deeds (just buried the talent). It's a parable about good deeds and their symbiosis with faith. One can be faithful (of the "flock") and be prepared for the Lord's return, but not have done good deeds (a "goat") and therefore is doomed to suffer eternal darkness, gnashing of teeth, yadda yadda yadda ouch hot! and so on. It's a lesson about how your actions count more than mere faith, and that they who do good acts while keeping the faith will be rewarded with what would have gone to the other faithful had they also done good works.

It's one complex and layered parable. I may not believe in his divinity, but that Jesus was a clever guy. No denying that.