Friday, September 28, 2007

A Tale of Two Grids

Airplanes are stuck on the tarmac, waiting to take off. The weather is clear and open, but the invisible traffic lanes in the sky are improbably congested. Planes wait for hours, passengers get frustrated, they call their congressmen, and the airlines get blamed.

An overloaded electric transmission line sags and touches a tree in Ohio. It shorts out and a cascade of overloaded lines radiates eastward, across into Canada, and down into New York City, blacking out everything in its path. First Energy, the utility in Ohio who owned the power line that triggered the blackout gets blamed. Fifty million people are without power.

What is the connection between millions of man-hours of air traffic delays and millions of people suffering power blackouts? The answer is an ossified grid.

The air traffic control system and the transmission grid are both stuck in the 1950s. Very little innovation or new investment has improved these systems, while the other parts of these industries, the airplanes and the power plants, have grown apace to keep up with demand that has doubled and re-doubled since then. As people travel more by air and use electricity ever more widely, the grids have became increasingly overburdened until breakdowns – massive delays and blackouts – are now commonplace.

A common element ties these two grids together, and it is not strictly government ownership. The air traffic control system does belong to the federal government; it is operated by the Federal Aviation Administration. However, the long distance transmission grid is largely owned and operated by private electric utilities. The common element is not government ownership as such, but government control. Both grids, whether nominally owned by the government or not, in all essential decisions are operated by the government. Both are effectively government-controlled and operated.

The air traffic control system is stuck with ancient technology. As recently as the 1990s (and possibly still true today), key systems such as the TRACON radar in Long Island that controls the majority of international traffic entering the Northeastern United States, still used vacuum tubes. The invisible air traffic lanes that get congested in clear skies are air traffic routes that were devised in the 1950s and never updated. Air traffic controllers operate as members of a surly union that went on strike in the 1980s and had to be fired.

Satellites using global-positioning satellite (GPS) technology that could permit air traffic to go anywhere, using the entire sky as its "road,” have not been tried. An integrated system that ties airplanes' onboard radars into a central grid, permitting planes to travel closer together, has not been tried.

Government ownership of the airports complicates the problem. Airports are not managed to efficiently optimize takeoffs and landings and to integrate the schedules of all of the airlines. This can be accomplished very simply, and without any form of centralized control, through pricing. If airports were operated by private owners, those owners could set fees for landing slots that bring supply and demand into equilibrium at every point in the day. High landing fees during peak times will ensure that airlines do not over-schedule flights. They will schedule as many flights as the airport can handle, and no more, with the market price for those slots guiding their decisions.

When the airlines were ostensibly deregulated in the late 1970s, only the owners and operators of the planes themselves were freed from government controls on the pricing of airfares and on the scheduling of their routes. The rest of the infrastructure that makes the airline industry work, including the air traffic control system and the airports, remained in the hands of government. The government operators of this vital infrastructure have not kept up with the growth of the deregulated airlines. The government run air traffic control system and the airports have ossified. Growing delays on the tarmac have been the inevitable result.

The power grid suffers from similar problems. Although the transmission grid remains nominally in private hands, every important decision concerning the operation of that grid is dictated by government officials. All important decisions of pricing, construction of new lines, and even the permissible level of profit, are dictated by government boards that require many years of expensive hearings for the utilities to make any significant changes. The expense of such bureaucratic sclerosis and the lack of the opportunity to make a free market profit – in other words, the lack of an incentive to innovate – have conspired to stall grid construction. As a result, expansion of the grid has not kept up with the growth in electricity demand. It also means technological ossification, as the grid fails to use modern computerized technologies to operate more efficiently.

The grid today operates largely as a mechanical system using 1950s-era technology. In the same manner that water flows downhill, electricity travels solely down the path of least resistance. New technologies, such as solid state electronic control circuits to regulate power flows, are very seldom employed on the grid. These technologies can make the grid work more efficiently, driving more power through existing lines, more reliably, preventing problems in one area from cascading into large-scale blackouts. Such control circuits would have prevented a transmission line failure in Ohio from cascading until it became the 2003 Northeast Blackout.

A private owner competing to maximize profits does not run his business in such a lazy, slipshod manner as today’s utilities. The utilities in Ohio and elsewhere are legal monopolies, insulated from competition by law. For every one of their major operating decisions, they must ask permission from a dis-interested bureaucrat.

Like slaves, the regulated utility monopolies move slowly and at every opportunity look to shirk responsibility.

When slaves were freed, they could use their minds to pursue their self-interest. For the first time, they could aggressively and eagerly advance their own lives in a manner that they alone determined.

The only answer to air traffic delays and power blackouts is a similar abolition. It is the abolition of the shackles of government control. It is the freeing of the human mind to creatively come up with better ways of managing the grids. Government should simply get out of the business of air traffic control and the operation of the airports. Let private, profit-seeking individuals enter this business and watch them aggressively build out and innovate this infrastructure to keep up with the growth of the airlines.

Government should also simply get out of the business of managing the electric transmission grid. Recognize the true ownership right of the utilities that today ostensibly own the grid, and then get out of the way. Profit-seeking individuals will build new lines, run existing lines more efficiently with new technology, and the whole grid will more reliably and cheaply transmit power. Blackouts will not completely go away, just like airplane crashes and delays will not completely end. Human errors and natural disasters will happen, but human ingenuity will be free for the first time to make the system work at its best in reality.

Wednesday, September 26, 2007


The caption says,

When you love strangers so much that you're willing to have government steal money from another stranger to help them out.

I can't say it any better.

Thank you, Truth, Justice, and the American Way for capturing the essence of welfare.

Friday, September 21, 2007

What Is Religion For?

Dr. Michael Hurd in his Daily Dose of Reason quotes actress Kathy Griffin at the recent Emmy Awards:

"A lot of people come up here and thank Jesus for this award. I want you to know that no one had less to do with this award than Jesus."
Dr. Hurd then comments:
People are frightened by much more than Griffin's seeming snideness about Jesus. I think they're much more terrified at the possibility that she's right: That people are the authors of their own destiny, for better or worse. Let's be honest. Wasn't it this idea that religion was designed to extinguish?
My answer to Dr. Hurd's question is: that is exactly what religion was designed for.

Observe how cheaters, drunks, liars and crooks of every stripe are drawn to religion, Christianity in particular. Of course, those are the obvious ones. The less obvious ones are those who just don't try too hard to pursue their values. They seek out Christianity for the moral anesthesia it provides. Numb to the full reality of their abnegation of self, like a stuporous drunk they stumble through life in mediocrity until they die.

They raise their arms to praise Jesus. Indeed.

On one occasion many years ago I was dragged to a fundamentalist Christian service. What a motley crew they were who sold their souls to the two-bit preacher. Now I know why the church and everyone in it looked so cheap. Afraid of the responsibility of living, they eagerly sold their souls for chump change to the first con artist who came along who told them that everything really would be okay.

Grim Reaper to Descend on Manhattan

On Tuesday, "President" Ahmadinejad of Iran will again enter U.S. territory, ascend to a podium paid for more by the United States than any other country, part of an institution protected by New York City police officers and New York City taxpayers, and insinuate his Holocaust-denying, Jew-hating, Western-civilization denouncing ghoul-of-Hades voice from beyond the grave to an audience of pampered bureaucrats in a light, air conditioned auditorium on a prime piece of Manhattan real estate, overlooking a vista of green gardens and inspiring river and city views.

The obstacles against his entry into the heart of capitalist, individualist, selfish America were cleared two millennia ago by the peace-loving "philosopher" who teaches us to love our enemies and sacrifice ourselves to our tormentors.

While we endure our spiritual sacrifice on Tuesday, I will look away from Turtle Bay and towards the Empire State Building, the tallest building left standing in Manhattan.

Sunday, September 16, 2007

Greenspan Argues Against the Fed

Former Federal Reserve Chairman Alan Greenspan has not explicitly argued against the Federal Reserve Bank or any other central bank, except in his long-ago essay on gold in the collection of essays entitled Capitalism: The Unknown Ideal. As Chairman of the Fed for 18 years, I find it unlikely he has contemporaneously and explicitly disavowed the institution he helmed for such a long period of time.

Nevertheless, he did make quite an effective, albeit unintentional, argument against the Fed on his 60 Minutes interview Sunday night. The interviewer asked whether he was to blame for the sub-prime mortgage crisis by making credit too easy. Greenspan said that he was aware at the time that questionable mortgage credit was being extended by banks, but he admitted he was unaware how pervasive it was or how impactful on the economy. He just didn't see the problem as it was developing.

That is his argument against the Fed, whether he realizes it or not. No central banker, no matter how good, can possibly hold in his mind all relevant information to centrally manage the money supply and credit of an economy. Such is the fallacy of central planning. It doesn't work in banking, just as it has never worked in any other area of an economy. The collapse of Communism is proof of that. So is the failure of the centrally managed parts of our mixed economy, such as public schooling and public housing.

Greenspan is smart, but no single man or woman is smart enough to be a central planner.

Musings on Taxation

I posted a version of this post in answer to a question about the "Fair Tax" on Dr. Hurd's blog. The questioner asked whether voluntary taxation is feasible. If not, is the Fair Tax a good alternative?

A cultural sea-change must occur first that will make limited government politically feasible. Then, voluntary financing of government could emerge. It is a worthy topic to consider now, but it is a backburner topic given that it will be many decades before it could even be attempted.

Regarding the idea of a Fair Tax, it is a contradiction in terms. No tax is fair because it involves the forcible taking of one person's property to give to another. Moreover, a more efficient or "fair" form of taxation (if it were possible) will not make government smaller. Quite the opposite is likely. It will be viewed simply as another source of revenue by government officials. Currently, there is no federal consumption or sales tax. Impose one as the Fair Tax would do, and the other taxes will not go away. Government will simply have obtained a new method of extracting money from us, with the result that they will find it easier to spend more of our money.

Government will get bigger, not smaller. I think it is important to resist any new mechanism of taxation. If our current system of income taxation is inefficient, great. That inefficiency in collecting taxes will limit the size of government. I would rather government were truly limited on a principled basis. Until that is possible, even a crude check on government from an inefficient form of taxation is desirable.

Getting back to the idea of voluntary financing of government (I hesitate to use the word "taxation" since it implies coercion), there are two important points to remember:

(1) A small government that focuses on protecting our rights -- i.e., the police, the courts, the jails and the military, and nothing else -- would be very small indeed. Even in today's messed up world where our military and prison systems are unnecessarily large, all of these functions probably consume under 5% of GDP. If we had no irrational laws such as the drug laws that account for more than half of our prison population, and if we had an assertive defense that vanquished our enemies instead of appeased them in endless, expensive wars, these expenditures in a laissez faire society would be much less. I suspect that all of this apparatus of government would consume less than 2% of GDP. This is a very tractable amount to be voluntarily financed by Americans.

(2) Without coercive taxation, destructive regulations, and the theft of our incomes for welfare payments, Americans in the future will be far, far wealthier than they are today. Just as today's technological achievements, such as antibiotics, the internet and jet travel, would be barely believable science fiction to an American of the 19th century, America of the laissez faire capitalist future would be even more highly unimaginable science fiction to Americans today. (Note that all of the achievements I mentioned happened despite a high level of government intervention in the economy. Imagine the unleashing of human ingenuity that would occur if government stayed out of the economy.)

Financing the essential functions of government for such wealthy people of the future would be an afterthought that Americans would voluntarily and easily do, without any sacrifice to themselves.

Finally, I will add a third point. Voluntary financing of government does not necessarily or exclusively mean donations of money to government. Most, if not all, of the expenses of government could be financed through the payment of fees for certain services where that would be practical. In particular, I could imagine a fee paid if parties to a contract want government to stand behind it with their enforcement powers. For example, if you sign a contract to buy a house and you want access to the courts for enforcement, you pay a 2% fee on the transaction. This is a voluntary payment for an essential government service. This principle can be extended to cover many other activities and functions of government.

Also, in a free, entrepreneurial society, imagine the ingenuity that could be applied to solving the problem of financing the (small) government. One idea I particularly like is corporate or individual sponsorship of pieces of government. Sponsor a jail, and you get to name it. Better yet, sponsor a battleship or a missile and you get to put your name on it. Heck, if I knew our missiles would be used to defeat the Muslim terrorists, I would love to have my name on that missile (assuming I could afford it!). I would be a good Dr. Strangelove. I would not be on the missile, but my name would be, as it arced across the sky on its way to Tehran or a terrorist training camp...

Okay, enough dreaming for now, but today's dreams are the beginnings of tomorrow's reality.

Friday, September 14, 2007

Nuclear Fun

This is the new television advertisement from Areva, the French maker of nuclear power plants. This is great pro-capitalist, pro-business, pro-technology, and pro-cheap energy propaganda. It quickly and effectively makes the connection between production and enjoyment. You start with the uranium mine, process the uranium, and produce electricity from it in a nuclear reactor which, in turn, powers the dancing floor and the cool music the couple is dancing to.

Most (ignorant) people think electricity comes from a wall outlet, and know nothing more about what makes it possible. This ad, in a few seconds, connects the electricity in the wall outlet all the way back to the nuclear reactor and the uranium mines that make it possible. It also reminds us that electricity powers the good life that we all enjoy.

Truthful, clever propaganda that validates a complicated technology feared by many. Every time I see this ad on TV I want to dance.

Sunday, September 02, 2007

Christian Warfare

To visualize the principle of "turn the other cheek" in practice, in warfare, read this article (link below) from the Washington Times. It describes a first-hand account of American soldiers in Afghanistan, sent on a mission behind enemy lines, and confronted by rules of engagement that are based on the Christian principles of "turn the other cheek" and "love thy enemy." Our Christian President has imposed these rules on our soldiers. "Killed by the Rules" could be more broadly stated as "Killed by Altruism." Altruism is the philosophical belief that you must sacrifice yourself to others. It is the philosophical root of Christianity, and the root of this policy.

Our political leaders extol the virtue of sacrifice. See its results on the battlefield.

The alternative to altruist-Christian suicide is Objectivism, the philosophy that validates the morality of rational self-interest. We have the strongest military in human history. If we do not learn that it is moral to defend ourselves, we will never use that military properly. We will keep turning the other cheek until we can no longer do so.


Hat tip for article.