I’ve exchanged several messages with Mark Luetke, a challenger candidate for Sylvania City Council, regarding his position on the Lathrop House, eminent domain, and Issue 16. I’ve concluded from his responses that Mr Luetke would be a Councilman we friends of limited government can support, and I encourage a vote for Mr Luetke on the upcoming City Council ballot, in addition to votes for Borell, Flynn, and Hayman.

Mr Luetke’s position on the matter is much more nuanced than the short Toledo Blade article I referred to would suggest. He doesn’t personally support Issue 16, but has refrained from issuing a public position on the matter as part of his campaign, from a consideration for his current elected post as a member of the Sylvania school board, and his belief that it's not appropriate for an elected official to try to influence public support in either direction. I share this belief. I’ve concluded from our correspondence that Mr Luetke’s intention would be to honor the spirit of the voters’ will, as reflected in their vote on Issue 16, regardless of his own opinion of the Issue.

Part of Mr Luetke’s objections to Issue 16 as it stands is that whether it’s approved or not, it won’t really represent a permanent solution to the dispute. I wrote the other day about one additional source of delay the City might introduce, regardless of passage of Issue 16 (rejection of St Joseph’s zoning permit). And Mr Luetke doesn’t support eminent domain as an end to itself, preferring a negotiated solution to actual seizure of the property.

It’s clear from what he writes that there is still considerable scope for discussion of the matter, and that Ms Sears’ proposal to reconstitute the City’s negotiating team with the idea of actually reaching a solution need not have been fruitless. That the Gang of Four rejected it suggests that they would rather seize the property than negotiate a solution; although Mr Luetke doesn’t support Issue 16 his preference for negotiation over appropriation of the land makes his candidacy far preferable to any of the incumbents who are up for re-election.

I appreciate Mr Luetke’s preparation of a thoughtful reply to my inquiry; which, incidentally, was provided promptly in response to my request. Mr Luetke was also kind enough to grant permission for me to post his replies in full, which are given below:

On 10/29/2003, JKS wrote:
Mr Luetke,
I am certain you've received a disproportionate number of questions regarding your position on the Lathrop House, but as I'm sure you know this is among the most controversial issues enacted by our City Council in recent memory. Consequently, for many voters, like myself, this has become largely a one-issue election.

I read a summary in the Toledo Blade of your position on the matter, and I feel it needs clarification. As I understand it, your position is essentially that whatever solution is finally implemented should above all be a negotiated solution, and that satisfying this requirement is actually more important than whatever that compromise may happen to be.

From what I've read, a compromise solution which could be negotiated seems reasonably readily available by implementing the City's original position that the house be moved. The church supports that, and from my correspondence with some of the participants in the matter, it seems that at least three Council members support moving the house in principle: Mr Kriner, Ms Sears, and Mr Backus (though I understand Mr Backus may not support the specific site proposed).

Simply calling for compromise is easier, of course, than actually reaching one. Would you, as a councilman, support the proposed relocation of the house and support abandonment of the eminent domain proceedings?

I publish a weblog called Electronic Countermeasures, at which I have written about this matter at some length, and at which I tentatively offered an endorsement of a vote for you as a challenger candidate. I have promised my readers at least a summary of your response to the above question, and I would request permission to post your response in full to my weblog.

Respectfully,

Sylvania, OH
10/29/2003

On 10/30/2003 Mark Luetke replied with an email and an attached Word document as follows:
Email:

Attached is a long-form summary of my position on the Lathrop House matter. It may be more of a statement of principles than you requested–but I think a complicated matter such as this requires a bit of background and rationale. I am not sure where you came to the understanding that a negotiated solution "is actually more important than whatever the compromise may happen to be." The context is important to help you understand that any negotiated outcome would not be acceptable to me–that I would push an outcome in the directions I describe.

I do not want to address the background at the expense of your specific questions, however. So let me be clear on the points you asked about.

First, I do not support as a first step moving the house to some of the alternate sites discussed publicly by the City (early) and the church (consistently)–that is, "behind the yellow house" at the north side of the parking lot. I believe keeping it on the Ravine is important to its historic and educational use. I could support a proposal made by several members of Council to move it to a site on the ravine in Harroun Park–as long as proper public access is provided and costs are shared beyond just the City. Or, I could support any number of other solutions that more broadly address the location of the house vis-a-vis future church plans.

Second, I do not support eminent domain as the ultimate long term solution to this issue. It was put in place originally to permit additional negotiation, but that has not happened. The litigation has become an end in itself. But I personally do not support the solution to end the eminent domain contained in the Issue 16 referendum. It prohibits any city participation for two years–tying the hands of future elected officials on a broad array of related matters. I would work to end eminent domain litigation through a negotiated process as a member of Council.

Finally, a point you did not ask about but I believe is important. I would support the will of the Sylvania voters on Issue 16 no matter what the outcome. This means–win or lose–no further legal or legislative interference from Council to change the impact of the vote. I say this because I anticipate all sorts of plans will come forward to short-circuit the outcome–and I believe the people's vote needs to stand. I have purposely not taken a public position in Issue 16 because I do not believe it is appropriate for an elected official (member of school board) to use a position to influence an outcome. But I will support the result.

Hope this helps. If you have any questions you can feel free to call me at work–although I will be in and out today. The number is [snipped]. And please feel free to e-mail me at this address in the future–I get the messages a little quicker this way.

Mark
10/30/2003

Attached document:

Electronic Countermeasures

I am pleased to respond to your questions about my position on the Lathrop House issue. Here is essentially a summary of the conversations I’ve had with dozens of residents over the past few months–which were also reflected in my comments at the League of Women Voters Candidate Forum several weeks ago.

I am basing my position on four basic concepts.

First, that St. Joseph has been badly served by the City’s lack of consistency and leadership–essentially doing a 180-degree flip-flop on its original position regarding the House. Further, only the parish knows what is best for the parish; it is inappropriate for the City to make claims about which of its solutions should be acceptable to St. Joe’s.

Second, the Lathrop House has historic value and should be preserved on a Ravine site if at all possible. I can’t imagine a situation where it should be demolished.

Third, eminent domain was initially employed by the City to buy time for further negotiations. This has not happened, and eminent domain now has become an end in itself. The community is being held hostage by the legal proceeding.

Finally, any outcome of the Issue 16 vote will likely not resolve the Lathrop House matter for good. More legal challenges, legislative initiatives, zoning hearings (as you pointed out earlier at Electronic Countermeasures), and other delays could drag on for years. The Sylvania community (and, arguably, the St. Joseph parish community) are not well served by this extended process.

Therefore, only a solution that is worked through with the agreement of all sides can end the dispute in a timely manner and allow Sylvania re-focus on critical long-term issues. Dispute resolution within the boundaries of the concepts noted earlier is where I intend to focus my attention. I have no illusion that I can do this by myself. It needs to involve productive conversations with other members of counsel, the mayor, representatives of all sides and, perhaps, use of an outside facilitator.

(I have seen this approach work a number of times during my four years on the Board of Education: the Central Elementary environmental issue, potential budget cuts in the face of a levy loss, contract negotiations with our bargaining units.)

Several other considerations should play into any collaborative approach, specifically: the need to make St. Joseph financially whole on any solution that departs from its existing land ownership and land use plan; the need to spread financial cost of any solution away from the City of Sylvania alone in favor of partnerships with other governments and non-profit organizations; and the need to assure public access to the House and Harroun Park.

My experience is that both sides in the debate have become entrenched advocates of their respective positions (which is not wrong in a ballot issue campaign.) But my intent after the election would be to use a seat on City Council to bring a swift and fair resolution to any outstanding issues – no matter which way the vote goes–and allow Sylvania to get on with its other business.
10/30/2003

On 10/30/2003, responded as follows:
Mr Luetke:

Thank you for your thoughtful reply. There are a few points I'd like to follow up on briefly:

I gleaned the "compromise above all" summary from the admittedly short Toledo Blade article I linked to in my first email to you. Clearly that summary provided by the Blade was a bit superficial, which is why I thought I needed to ask you for clarification. From your responses here, it's plain that your position is much more nuanced than I was able to discern from the Blade, which was what I had hoped to learn.

I appreciate your abstention from establishing a public position on Issue 16 from a respect for your current elected post. I agree that public offices should not be used to influence voter support one way or another. And I do especially respect your intention to respect the will of the voters, regardless of your personal position on Issue 16. I do suspect that Council, as currently composed, may well attempt to circumvent the voters'will even if Issue 16 passes. That wold be an abuse of power, in my opinion.

It's interesting that you point out that the eminent domain was not originally intended to be followed to its ultimate logical conclusion. I have mixed feelings on that point: on the one hand, that means the City was not really intending to be as heavy-handed as it currently appears to be, which I guess would be preferable. But, conversely, if Council doesn't really believe they should seize the land, they are using the eminent domain tool in a situation where it would seem they themselves acknowledge it isn't appropriate. Eminent domain is a tool to acquire land for public use, not a tool to introduce a relatively open-ended delay to the process. As a supporter of limited government I find this–shall we say–creative construction of government authority somewhat troubling. Keep in mind that it costs a private party time and money to maintain two years of negotiations with the City, a cost which the City itself really doesn't incur from its part in the negotiations.

As far as some of the particular proposals of the precise new location for the house–and the sticky details of who pays for the move–these are probably best addressed after the election with the new Council. I wish you luck in the election as I conclude that you would be a Councilman friends of property rights and limited government can work with.

Thank you again for your answer to my inquiry. May I post your reply in full (without your work email and telephone number, of course) at Electronic Countermeasures?

Sincerely,

On 10/30/2003 Mark Luetke responded:

Feel free to use all or part of the response. I look forward to continuing this dialog with you after the election.

Mark

Update: A little fact-checking never hurts.
A few updates to my crib sheet for voters (yesterday) with respect to this Sylvania City Council election are in order.

I wrote yesterday in support of voting for challenger candidates Borell, Flynn, and Haynam; I would tentatively extend that to support for voting for challenger candidate Mark Luetke as well.

It turns out that Patrick Kriner is not standing for re-election to Council this year, so four positions need to be filled. Mr Kriner will be missed, and this means that only two friendly voices amenable to limited government will be returning next year: Sears and Backus. Also returning is Milner, a proponent of the eminent domain proceedings.

So there are four other seats to fill on council, and seven names on the ballot. Those seven names include three incumbents: Billis, Haddad, Scheibel, all members of the Gang of Four who rammed this whole eminent domain thing through an often divided council. The only way to boot all three of them from office, which would be the best outcome, is to elect all four of the challengersin their places.

I discussed the first three challenger candidates yesterday, and the reason why supporting changes to Council itself are so important.

Mr Luetke seems to have adopted an approach to this eminent domain question from the Kofi Annan school of thought. His position, as summarized by the Toledo Blade, is that "both sides of the dispute should have been able to work out a solution to the Lathrop House problem. He said anytime a new personality is involved, the dynamic changes, and he would advocate for areas of compromise. He said he would look for that solution as a member of council." So, whatever the solution eventually is seems less important than that it be a negotiated solution. If he's willing to work constructively toward compromise--and as I've written, a compromise seems quite naturally available--he'd be an improvement over any of the three incumbents on the ballot.

Mr Luetke's main angle is a promise to improve Council's responsiveness to citizen concerns. In fact, on his campaign literature he provides his home phone number and email address, and promises to respond to all calls within eight hours. I'll email him for a clarification of his position on Lathrop House, and post here either a summary (or, with his permission, the full text) of whatever reply I get.

Now for one fact correction. In my original article on this subject, I cited a newsletter paid for by public funds to advocate support for Council's actions. I incorrectly stated that the cost for that newsletter had been $15,000; that amount refers to a second newsletter, prepared by the City and being mailed this week; the original newsletter I linked to cost $6,300. My apologies for the misstatement.

I understand that in a recent lawsuit a citizen argued that the use of public funds for such advocacy was illegal, and the court agreed. As a consequence the second newsletter from the City will supposedly be equally balanced and educational, not advocational. I'll post a few thoughts on it when I receive it, once I have the chance to see whether they have operated within the confines of simple educational motives. I'm not especially optimistic on this point.

JKS.

Eminent domain revisited, and why simply passing Issue 16 isn't enough.
As I wrote the other day, citizens in our fair city of Sylvania, Ohio will soon have the opportunity to terminate one of the more flagrant abuses of political power in recent memory. The City Council has begun eminent domain proceedings to seize land owned by a local church, on which the church intends to build a school expansion. Citizens for Sylvania has gathered enough petition signatures to obligate the City to place an issue on the November ballot: Issue 16. A yes vote, which I am hopeful will be the result, will obligate Council to abandon its eminent domain action. This would be good, but by itself it will not be the end of the story.

The process of building most anything in a non-rural community involves two distinct steps, handled by different parts of the city or township government. The first is to obtaining zoning approval (which may require any number of combinations of Planning Commissions, Zoning Boards of Appeal, and City Council approvals to obtain, depending on the community and circumstances); the second is to obtain a building permit. Building permits are easy to get, and the biggest source of rejection is incomplete engineering drawings. This step is sometimes tedious, but the outcome is rarely in doubt.

Zoning approval is different. Each community one works in will have greatly varying zoning laws and processes for obtaining this approval, but the goal is the same: to ensure that new construction is appropriate for the neighborhood it’s being built in. This has some good intentions behind it and is probably indispensable; it’s the zoning process that prevents noxious industrial facilities being built in the middle of residential neighborhoods or downtown commercial districts, and constructions similarly offensive to existing neighbors.

Most cities have a dozen or more zoning designations: several each residential zones; agricultural zones; commercial zones; industrial zones; and one called Planned Unit Development. The last one is used in special cases which would otherwise require a zoning variance, and is extremely restrictive of future changes which might be considered by the owner.

The property the Lathrop House currently stands on is likely zoned either Residential-1 or Residential-2 (both medium density residential). Typically R-1 and R-2 have permitted uses which include single family dwellings (SFDs); accessory outbuildings like garden sheds; and public utility lines and wires and so forth. A building like a school would likely be a conditional use, meaning the zoning approval should eventually be issued unless, well, there’s a good reason not to.

Now with non-permitted uses either a zoning variance or a zoning change would be required, neither of which is usually easy to get, and it's often more sensible simply to buy a different property to begin with. A conditional use zoning approval is much easier to get, but unlike a permitted use, it’s not a slam dunk.

To get a conditional use permit, it’s necessary first for the Planning Commission to review the application and vote to approve it. In most cities the Planning Commission can only recommend, not grant, approval, and the matter is ultimately decided by a vote by the City Council. Council, in my experiences, has much of their own political agenda tied up in how they ultimately vote on the matter; whether the review of the facts by the Planning Commission resulted in a favorable or unfavorable vote often isn’t primary. Even if the use is conditionally permitted, and the Planning Commission recommends approval, Council can overrule them and deny the permit if they are disposed to be hostile to the applicant, and if they can find a good reason.

Those “good reasons” are pretty easy to find. Most city ordinances allow for the rejection of an otherwise acceptable conditional use application for any number of reasons, often including a catchall judgment provision at the end. If Council concludes, without proof, and solely in its judgment, that the issuance of the conditional use permit would have some adverse effect on the neighbors or the neighborhood, or that nearby property values may be diminished, it can reject the application based solely on that.

This means that the passage by the voters of Issue 16 won’t really be adequate by itself. After being thwarted by the church’s appeal over Council’s head, I rather doubt that Council would be inclined to approve the conditional use permit. If Council thinks that Lathrop House is really a historical treasure, surely they would be likely to conclude that approving the church’s conditional use application would have an adverse effect on the neighborhood if the approval is granted. In that case it could take a long court struggle to get the rejection overturned, even if the effort was ultimately successful, which it likely wouldn’t be. The church isn’t likely to gain approval in that environment for a conditional use permit any time quickly.

I’ve exchanged a couple of interesting emails with a gentleman who has been in a position to be familiar with the ongoing negotiations in the matter, from St Joseph’s side of the table. Once I realized that the project would still be in jeopardy if the current council members had any say in the matter, I asked for a few details about the positions of the individual members. Much of what follows below was gleaned from this correspondence, for which I am grateful.

Sylvania City Council is comprised of seven individuals: Keith Haddad; John Billis; Todd Milner; Bonita Scheidel; Read Backus; Patrick Kriner; and Barbara Sears. My first question was whether Council had acted unanimously throughout the proceedings over the past two years, making all members equally complicit in this fiasco. Here’s a crib sheet for interested voters considering their Council votes:

All seven members of council unanimously approved the eminent domain proceedings.
Haddad, the Council President, has supported the City’s actions at every step.
Billis has supported the City’s actions at every step.
Milner has supported the City’s actions at every step.
Scheidel has supported the City’s actions at every step.

Backus, Kriner, and Sears are somewhat less complicit than the above Gang of Four, who I believe should be voted from office with extreme prejudice for their roles in this mess. The other three have some reduced culpability, though none is blameless:

Sears made a motion to reconfiguring the city’s negotiation team with the object of getting an agreement before the election, which seems to represent a final good faith effort to solve this amicably. The Gang of Four, above, voted it down by a 4-3 vote, preferring to stay their course.
Sears and Kriner both say they are sympathetic with the church’s position, and find the proposed move to be an acceptable outcome.
Backus is not opposed to the move in principle, but finds the particular site proposed as the house’s new location to be objectionable.

From all this I conclude that a vote for Haddad, Billis, or Scheidel, is a vote for aggressive, bullying, busybodying in our City government. I recommend you do not vote for any of them. Milner is not standing for re-election on this ballot, so we will have to wait till next time to try to unelect him.

Sears, Kriner, and Backus, all of whom have conducted this business basically acceptably, are not standing for re-election this time.

Of the four challenger candidates on the ballot, three have specifically endorsed a termination of the eminent domain proceedings and a Yes vote on Issue 16. They are Doug Haynam; John Borell; and Patrick Flynn. I recommend a vote for all of them, and only these three. Voting for a fourth candidate dilutes support for the only three on the ballot who have aligned themselves with responsible limited government.

More, surely, to follow on this business as it evolves with only a week to the election. Please vote!

JKS.

Fiscal Conservatism vs Libertarian Laissez Faire
I've uploaded all the previous posts and other messages on this subject exchanged between myself and Mark Peters, the last of which I posted the other day on this page.

I may post a better linking index here eventually, but for now the previous posts are easy to find; they're the only posts in the July-August archives.

7/18/2003  Mark A Peters In which the subject is introduced

7/18/2003  JKS In which my hackles get slightly raised by this whole Laissez faire business

7/19/2003  MAP In which Mark convinces me he's serious...

7/19/2003  JKS ...And in which I suddenly don't know if that's a good thing

7/20/2003  MAP In which Mark makes some excellent points...

7/21/2003  JKS ...Which pique my curiosity and prompt many questions

7/22/2003  MAP In which we finally understand each other, and get down to brass tacks

7/24/2003  JKS In which the employment of brass tacks is continued...

7/30/2003  MAP ...And concluded

7/30/2003  JKS In which a few concluding remarks and reading recommendations are made

8/1/2003   MAP In which more of the same

10/17/2003 JKS In which Hazlitt is discussed in some detail


Bringing us, thusly, to the present.

JKS.

Everyone's from somewhere. And today you get to hear about my somewhere.

In my little suburban corner of Ohio we have a budding controversy wending its way through the courts--which wending will hopefully conclude soon as the matter will actually be put to referendum on the upcoming November ballot. St Joseph's Church in Sylvania, OH owns a bit of property which contains a ramshackle building of some alleged historical significance: the Lathrop House. This property is across the street from their main facility and is, according to the Church (which operates a Catholic school K-8 at the site as well) an essential part of their master strategic plan for the next 50 years. They intend to build a school expansion on the site where the Lathrop House currently stands, and the main argument is over what to do with the house.

There's been a lot of fairly passionate discussion from both sides on this issue. It seems that most parties are in agreement that preserving the house is generally preferable to tearing it down, and there has been much talk of dismantling the house and moving it to a nearby plot of land already owned by the city. For some reason the city has adopted--fairly late in the process--the position that the site itself is equally essential, and has begun eminent domin proceedings to seize, or at least forcibly purchase, the land from St Joseph's. It's at this point that I became interested, as can think of maybe one or two situations where eminent domain is not morally repugnant, and the preservation of a run-down house isn't normally one of them.

The house was evidently used as a stop on the Underground Railroad back before and/or during the Civil War; the ravine behind and below the house was evidently the main path of traffic for this activity. I used the word evidently twice in that sentence for a reason, and that is because this activity is alleged or believed to have occurred, but I've not seen any authoritative conclusions drawn on the matter; the City of Sylvania points to a single paragraph in a 1939 (!) issue of the Quarterly Bulletin of the Historical Society of Northwest Ohio as the only written proof of the matter they choose to mention. In this, some house called "Colonial House," presumably the same one presently in question, is identified as having been found to contain a secret basement room with beds in it, which could have been used for housing fugitive slaves. It's on page 3, second column, third paragraph of the excerpt of the Bulletin posted by the City here. In the City's Resolution 28-2001 , the City describes the "local legend" (the actual resolution language) that the house was part of the Railroad, and cites some architectural findings which may tend to grant more credence to that legend. It's really not very conclusive, and it's not as firm a basis as I'd like to see from a city government about to commit an eminent domain land seizure; read them and judge for yourself.

The retention of physical history is important, and the desire to see the house preserved is understandable. But before the city council of our quaint little community violates the most fundamental tenets of the rule of law and the private ownership of property, a fairly close examination of the facts and the recent history of the matter is warranted.

The church bought the property fairly recently, in October 2001. Before that, according to the City of Sylvania'stimeline, the private owner of the building had asked the City whether it might be interested to buy the property for $750,000, which frankly is more than the property was worth. The city not surprisingly did not make an offer based on this discussion, and instead aligned itself with a group of private investors who wanted to renovate the house into a bed & breakfast. The City did offer to spend up to $175,000 to buy property surrounding the building for a park, presumably in order to allow the investors to come up with a smaller amount to offer for just the building and a small parcel of land. The City says an offer was submitted by this group (but doesn't discuss terms of the offer) at about the same time the Church submitted an offer for $350,000, which was accepted by the previous owner. I expect that the other offer (which the City was indirectly a party to) was for less money, or it would have been accepted instead. The Church immediately applied for a demolition permit upon closing on the property, which application was reviewed by the City and a permit was issued on 11/5/2001.

At this point in the narrative the waters become murkier. The Church expressed a desire for everyone to just get along, and a willingness to do its part to ensure that happened; to that end, they agreed not to excercise their demolition permit while discussions were ongoing. The City seemed to consider moving the house and acceptable solution, and on 11/17/2001 passed a Resolution (the same one referenced above) calling on the Church to not demolish the house and to instead consider relocating it. A few months later, on 3/4/2002, Council even passed an Ordinance providing partial funding for the move: the City claimed, in this ordinance, that the total cost to move the house was estimated at $115,000; acknowledged that Friends of Lathrop House had come up with $25,000 themselves, and directed the Mayor to spend "an amount not to exceed" $50,000 as the City's contribution. Just two weeks later the Council reversed themselves, passing a Resolution which stated emphatically that the house should remain standing on its present site.

It's hard to say precisely what's happened since then. During the remainder of 2002 there were evidently several offers and counter offers for a land swap, where the Church would take position of a nearby parcel of City property and build its school expansion thereon; and there was discussion of moving the house to a plot of City property 100 yards north on Main St. Both parties seem to make some vague and somewhat contradictory claims over the intermediate steps during th rest of the negotiations, which aren't really particularly important as they didn't go anywhere.

Evidently the Church tired of all the interminable negotiations, and stated that without an executed written agreement being concluded by 3/31/2003,the building would be razed on 4/1/2003. The City sought a restraining order preventing this action, but was denied on the grounds that the demolition permit had been legitimately issued by the City. So the City revoked its duly issued permit, essentially by fiat. On 3/26/2003 the City Council resolved to appropriate the property from the dioscese, and two days later they filed their complaint of eminent domain and deposited $400,000 (their estimation of the value of the property) with the court as the down payment against the eventual forced sale of the property.

Leaving aside certain questions such as whether $400,000 is a fair price and whether the relocation of a historic house from its original to a nearby site destroys the historical value of the structure, Council actions in this matter are disappointing. The City could have purchased the property when it was for sale had it believed it to be so valuable. While the City, in its recent newsletter on the issue, sniffs that the buyer's original asking price of $750,000 was not acceptable and that the City was "not afforded any opportunity to purchase the house at the price St Joseph's paid," this is somewhat duplicitous; property negotiations are not conducted as an auction, where everyone has one last chance to better their previous offer before they lose the opportunity to buy. If multiple prospective buyers are negotiating with a single seller concurrently, both would-be buyers are well aware that it's a bit of a poker game. The buyer asks a price, both sellers offer a counter, and--clarifications of terms and details aside--everyone gets just one shot in these cases. The first time a seller has an offer he'd like to accept, he either takes it or allows the other would-be buyer a blind chance to beat the first price by completing and submitting his bid, if one is already in process (meaning the second prospective buyer knows he has to beat some price, but he doesn't know what that price is). If the second bid is not as high, the first bidder wins--end of discussion, period. It's terribly, grossly unethical for a seller to fudge around the confidentiality of the bids or to offer second chances to one but not both. Council naturally understands this but omits it from its argument.

I also find the City's revocation of a duly issued permit, merely because the excercise of this legally-issued permit would displease Council, to reflect an attitude of self-importance unbecoming a council of elected public servants. That our civilization follows the rule of law, not the rule of men, is the very first principle upon which liberal democracy is based. Council has disregarded its own laws by revoking a permit it had issued as a result of its own due processes.

It also, through the Church's negotiating in good faith, gained a two-year delay from when the Church bought the property, to when the City may forcibly expropriate it from them. During that time the Church has been paying the interest on the bank note; spent (by their claim) $50,000 on engineering, surveys, and plans; and fantastic amounts of time dealing with Council meetings, Council Executive sessions, ad hoc meetings with Council and Friends of the Lathrop House, etc. I've ushered building plans through a number of Planning Comissions, Zoning Boards, and City Councils in Ohio, and even when they are disposed to be friendly toward a project it sometimes requires really unfathomable amounts of time and patience. Dealing with a Council disposed to be antagonistic toward a project results in all the above, plus it's then unpleasant too. Interminable negotiations are essentially free from the City's perspective, since they'd have to pay whatever Councilmen and Planning Comission members are involved to do that sort of work anyway. But it costs a private organization money, and the City allowed this to go on for seventeen months until the Church finally called their bluff and threatened to actually demolish the building. I'm disappointed in Council and I intend my vote in the November elections will reflect that.

Citizens for Sylvania circulated a petition to request the City abandon its eminent domain proceedings, among other things (such as pay the Church's legal fees incurred up to that point in this matter). I was pleased to be one of the roughly 1700 signators to the document, but which request was ultimately rejected by Council. The matter has now been scheduled to be put to a popular vote as Issue 16 on the November ballot. City Council has spent $15,000 from the City Treasury (a smallish sum, sure, but that's hardly the point) to print the newsletter mentioned above, to influence voters into supporting Council actions throughout these proceedings. Council referred to them as educational, which I suppose is an allowed purpose; but the newsletter doesn't seem impartial and educational to me, but rather reads like an advocacy paper. Read it and judge for yourself. Voters may have elected this Council to represent them, but probably did not intend to elect them into positions where Council would then spend the voters' own money to influence the otherwise gullible sensibilities of, well, the voters. I'm sure that's not what I voted for.

But the most fundamental and important issue is the eminent domain itself. I hate eminent domain, even when it makes sense to use it. And it only makes sense to use it when there's no hope of compromise, otherwise it's wielded far too casually. If a city wishes to built an airport, and needs to purchase and demolish 100 homes in order to do it, and there's one holdout who says he won't sell for any price--maybe then it makes sense, but I still don't feel good about it. But otherwise the project comes unglued, as you can't build most of an airport on most of the desired land, and leave one house right between the runways. But if a compromise is possible to keep all of the parties mostly happy, or at least somewhat happy, it is immoral and unacceptable to execute eminent domain instead of compromising. And in this case the compromise is to preserve the building but not on its current site. No one's quite happy if that happens--not even the church, which has dealt with this issue at considerable time and expense for two years now. But it allows everyone to get something out of it. If you're willing to endorse eminent domain just because the government doesn't like the offered compromise, that grants far too much authority and discretion to the government, which is not a positive precedent. Permitting excessive discretion to the government--any government--allows all manner of pernicious mischief to follow. It's important to have the system itself be the solution, and not rely on the integrity or competence of whomever happens to occupy an office.

I'm disappointed in my City goverment and I will tell them so, and I mean to vote against the authors of this debacle (in addition to voting for Issue 16 itself). I'll let you all know how it turns out. And now that you know more than you probably wanted about the internecine struggles of a suburban Ohio community, I imagine you can't wait either.

JKS.

So you knew I'd get around to talking about Kobe Bryant eventually. And I won't disappoint, with a quick preliminary take on some of the elements of the case and what it says about us as a nation.

There are several issues here which seem important to consider. The always trenchant Steven den Beste discusses one of them today: the perception that the standard of proof (and hence, the presumption of innocence) is much less rigorous in rape trials than others. He observes that in most violent crimes, if a victim and an accused offer testimony which contradicts one another, acquittal is the normal result in the absence of additional evidence. This is a good thing, otherwise the entire criminal justice system is reduced to the rigor of a good-old-fashioned witch trial, where conviction requires nothing generally more than an accusation to be offered. In most civilized nations that sort of criminal justice system is known as a "kangaroo court."

From the portions of the Bryant proceedings which I've been unable to ignore, despite my most strenuous efforts, I can gather that (a) this young woman voluntarily joined Mr Bryant in a forum--shall we say--outside her normal professional duties; (b) both parties agree sexual intercourse was consummated; (c) this young woman says the sex was not consensual; (d) Mr Bryant says it was. I've not heard of any hard proof except that it can be forensically demonstrated that the two did, in fact, have sex.

Now rape is a difficult crime to prosecute for a lot of reasons, not least because additional eyewitnesses are often not available, and victims are sometimes reluctant to confront their alleged attackers. But prosecution is made easier by the unusually broad definition of the crime. I would suggest there is a grave difference between forcible, violent, coercive rape; and a situation where a woman suddenly feels uncomfortable and maybe changes her mind in the midst of a previously consensual encounter and her partner is not overquick in adapting to her new mindset. Yet both are treated essentially identically under the law. It's mainly the latter type, acquaintance rape, that most of what I'm saying here applies to.

That such an offense as this, which is nearly unprovable, is criminal does suggest a willingness on our nation's part to have our criminal justice system produce convictions even in the face of an utter absence of proof--just an accusation, and a jury's decision that the accuser and her accusation are more credible than the accused's denials. And in a trial for an alleged crime with no witnesses and no physical evidence, the jury can't take two opposing statements from individuals they don't know and decide beyond a reasonable doubt that the woman accuser is being truthful without the defense having a chance to counter with attacks on the accuser's credibility. The manner in which the crime is alleged and (attempted to be) proven allow the defense no other avenue, no matter how unfair this may seem to women in general and to the accuser in particular. It's unpopular to say, but if a woman really does have sex with three different men in three days then she's less credible an accuser, with her protestations of innocence of her intent, than one who doesn't. If an accuser can offer no proof at trial but her word, she has to be prepared to have the credibility of her word examined vigorously.

None of this absolves rapists of anything. But there's a balance between victim's rights and accuser's rights, and assigning automatic credibility to an accuser in a case without physical evidence--just because she's a woman, and women wouldn't lie about such things--reflects an unfortunate shift away from the presumption of innocence.

The enactment of laws pertaining to special crimes, with special standards for prosecution and conviction, from which only a portion of the population can obtain easy convictions, seems decidedly contrary to the spirit of American jurisprudence. But my biggest objection to all of this is that the range of penalties, at least in Colorado, is also so broad as to possibly be unconstitutional. My understanding is that if Mr Bryant is convicted of this crime, on the mere strength of his accuser's word, the judge can impose any penalty he damn well pleases, from simple probation up to and including life in prison. Felonious assault--having some scumbag beat the crap out of you, with a weapon capable of inflicting fatal harm--doesn't usually have a range of penalties which include life in prison.

Laws which are draconian all out of proportion to similar-sounding offenses are usually the result of disproportionate influence or corruption in the bodies making the laws. In Ohio it's a misdemeanor to lie to police in reporting a theft; but God forbid you should repeat that same lie to your insurance company, or you are suddenly guilty of a felony. I'm left to wonder what rational standard could produce the belief that lying to a private company with which you conduct voluntary business is worse than lying to law enforcement while they attempt to investigate a crime. Insurance companies and their interests are, shall we say, extremely well-represented to lawmaking bodies in this country.

I would warrant that women, long considering themselves an oppressed minority, have achieved similarly excellent representation among lawmakers. Recall the American Political Axiom at the top of this page; a certain group of politicians emphasises special treatment or consideration for women, or racial minorities, whichever. This can take the form of affirmative action, or reduced threshholds of proof in prosecuting felony cases. That demographic group votes disproportionately for the politicians urging their cause. That same group of politicians, recognizing the best source for perpetuation of their own power, panders to that demographic all out of proportion to justice.

Out of proportion to justice? For no other type of crime but date rape is the burden of proof so low, and the discretion of the judge so broad, as to enable largely arbitrary "justice" to be dispensed based on the disposition of the judge. I think our culture of sensitivity and empowerment of women has become guilty of overreach on this one.

Naturally this may result in a large number of flaming angry emails; but I'd ask you to regard this in the spirit of an honest inquiry of gender equality issues before you label me as a pig of some sort (whatever the current nom-de-oppression is these days). If Mr Bryant did rape that young woman I hope they find him guilty and he goes to prison. If he had done it forcibly and she had the results of medical exams to back up her claim that she had been violated by someone with Mr Bryant's DNA I'd agree wholeheartedly that he go away for a very long time. But I lack confidence in the proceedings to actually marry justice to the outcome, and fear that the scales are tilted such as to almost require active proof of innocence in these cases of accused date rape--again, cases where eyewitnesses and hard proof are already in short supply. This is not a standard consistent with historical American jurisprudence. Even in cases involving conspiracy and the notoriously elusive charge of racketeering, there is a fundamental presumption of innocence of the accused, and the charges need not be met with an active proof of innocence to result in acquittal. The noble causes of equality before the law, and gender equity, are poorly served by adopting specially lowered standards for prosecution of date rape, no matter how difficult.

Special treatment under the law is often a strong indication of early signs of tyranny, and even a tyranny of the majority is still tyranny. I'd urge everyone to pay attention to this case (though the media will ensure that at any rate), and to consider how they would respond to such a circumstance as a "he said/she said" when summoned to serve on a jury.

JKS.

On one of the comments boards over at Eject! Eject! Eject!, a new conspiracy theory surfaced about the "true motivation" of the administration's decisions to wage war in Iraq. One of the central points of this new thesis is that the administration sees a threat to American economic "hegemony" in Iraq's decision to sell oil denominated in Euros rather than US dollars. The true threat, as evidently perceived by the administration, is that the rest of OPEC has expressed some interest in doing the same.

The motivation for OPEC here is not difficult to discern: the dollar has been dropping against the Euro. This means that if recent oil sales had been denominated in Euros instead of dollars, the sellers (OPEC) would have seen increased revenue from their exchange rate gain; instead, what has happened is that those buyers who first convert their Euros to dollars have seen reduced costs of oil. The main beneficiary of the current state of affairs are those European nations who are members of the Euro zone and who are net importers of oil. This is a simple reflection of exchange rate risk, which sometimes benefits and sometimes harms Europe, OPEC, and the rest of the world (though not the US). And it is possible to hedge adequately against this risk if one is truly concerned about it.

But the manner in which this reform has been suggested suggests something beyond a reduction in exchange rate risk. Consider, for example, the following:

>>Prime Minister Datuk Seri Dr Mahathir Mohamad has proposed for oil to be traded in the euro equivalent of the dollar to protect producers from currency manipulation and hedging against the weakening greenback. He said oil-producing countries are feeling the impact of the weakened dollar which had depreciated sharply against the euro.

"[But] should the euro depreciate against the dollar, then payment should be made in dollars. This is a kind of hedging," Dr Mahathir said.<< (Business Times in Malaysia, "PM Argues That Oil Should be Traded in Euros," 6/17/2003)

The damning aspect of this is that OPEC's suggestion is that they be allowed the "flexibility" to resume trading in dollars if and when that becomes more to their advantage. Note that a hedge is simply a means of reducing or eliminating risk, not a maneuver designed to produce a gain. It is clear that this effort as proposed above is not really designed to simply eliminate exchange rate risk, so much as ensure that all exchange rate fluctuations, of whichever direction, benefit OPEC. That is emphatically not a hedge, despite what the Malaysian Prime Minister would suggest. And no rational buyer of any product would allow themselves to be trapped or cajoled into such a contract relationship.

A commenter at Eject!3.com pointed to an essay in support of his theory that George Bush went to war in Iraq over this whole dollar-denomination issue, rather verbosely entitled
The Real Reasons for the Upcoming War With Iraq: A Macroeconomic and Geostrategic Analysis of the Unspoken Truth, by an author by the name of William Clark. It's sponsored by Indymedia, which immediately gives the reader cause for concern. But the mere fact of its origin is not sufficiently compelling an argument to discredit the theory, so I did read it and gave it some thought. The paper is well-written enough to seem superficially credible, and the mistakes (though many are present) are not obvious, so I prepared a few remarks on it which were also posted at Eject!3.com. A lightly edited version of these is presented below.

This was at least one of the more interesting conspiracy theories I've encountered, so I'm glad I read it. If you're interested in giving the left a fair hearing before offering rebuttal, you could do worse than to follow the link I provided above and give the essay a quick read. I believe what I've said below sufficiently discredits Mr Clark's analysis to an objective reader, though I did not get too much into some of the technical details. If there's any element you'd be interested to see treated in more detail, drop me an email and I'll see what I can do for you.

If I've missed something and am myself completely mistaken, please take the opportunity to give me a free education!

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Short version: the author makes a few good points which I agree with, but makes some mistakes in his economic analysis, and ultimately I think his final conclusion is not rational.

Longer version:
The author is correct in saying that it is to the US advantage to maintain the status quo with respect to the standard currency for oil transactions, all things considered. But he greatly overstates how valuable this is; the main benefit here to the US is the elimination of the exchange rate risk, though even here it often works to our disadvantage, not our advantage.

I still maintain that the only reason you're hearing about this Euros-for-oil idea right now is that the dollar is dropping against most other currencies right now. If the dollar starts to rebound you'll stop hearing about this right quick, as it would then cost the sellers of oil money to sell in Euros. I warrant that as much as most of the oil-selling nations dislike the US, they don't dislike us enough to engage in financial transaction disadvantageous to their own interest, just to hurt us too.

And US economic policy is not simply to make the dollar as strong as possible, as the author seems to think; rather, given the dollar's basic fundamental strength, US policy is generally to keep it basically stable. Understand that dollar movements against other currencies cut both ways, and that the US Treasury Secretary recently (misguidedly, in my opinion) applauded the dollar's recent fall for the boost this would provide to US exports (and hence, US GDP, and US employment figures). The flip side is that the fall in the dollar tends to discourage foreign investment in US assets, and capital is harder to raise; this means to US companies that capital-intensive projects to improve efficiency and cut costs must be forgone or postponed, and therefore large and permanent drops in the dollar have elements which are depressive in the long term to US GDP. The whole situation is much more complicated than Mr Clark suggests.

The increase in dollars in circulation by virtue of the oil currency denomination isn't all that significant. Many nations get their oil-buying dollars direct from US consumers via US purchases of foreign goods, so it's not like foreign nations have to go out of their way to buy dollars they'd otherwise not need just so they can consummate their oil purchases. Remember that big US trade deficit we hear so much about; this tends to greatly increase foreign holdings of dollars compared to US holdings of foreign currencies. The holding of dollars by foreign nationals is good for the US in the long run, as it represents foreign investment in US capital, but it's financed largely by the trade deficit, which was $536 Billion in the 12 months ended June 2003. The huge trade deficit itself is less good for the US, though ultimately it's somewhat self-correcting; if eventually we buy so much from foreigners and sell so little in return that the whole world is just saturated in US dollars, demand for the acquisition of additional dollars will decrease. This means the value of the dollar will decrease (and this may be what we're observing now), reducing US consumption of foreign goods and facilitating (via that weak dollar) increased export of US goods, till some equilibrium (or cyclical range, at any rate) is achieved.

The author advocates pegging the dollar and the euro in a "trading band with reserve status parity," which is a fancy was of saying he wants to artificially force exchange rates to be confined within a narrow range, rather than allowing the market to determine it freely; and that we pronounce that the euro is just as good a reserve currency as the dollar. Fixed exchange rates are good policy in some really narrow circumstances, like when a nation with a tremendously weak and volatile currency is trying to artificially encourage foreign investment beyond that which the market has already resulted in, while it works earnestly on its fundamentals. This works reasonably well for a while, provided the weak nation's fundamentals don't proceed to get worse; if this happens, the currency will ultimately collapse horribly and the exchange rate pegging only will have intensified and postponed the collapse. Pegging a major country's (or bloc's) currency to the dollar would essentially be an acknowledgement of the dollar's superiority and would be very unusual policy.

Contrary to what the author suggests, European economies (which may be large in absolute size) have some considerable structural deficiencies, and will not grow faster than the US economy in any sustainable way any time soon. As long as the US continues to have faster average growth than Europe, with low inflation and a stable government, merely saying that the Euro is just as good as a reserve currency doesn't do anything. As long as the US economy offers better growth prospects than the Euro zone, the dollar's long-term trend will be upward against the Euro. And pegging two currencies with an ever-widening gap in fundamentals will ultimately not prove helpful. It is this that makes the dollar useful and attractive as a reserve currency.

Since we didn't buy any oil from Iraq prior to the recent war, and we stopped selling/giving oil to North Korea, those two nations' decisions to stop using the dollar to denominate their oil transactions didn't do anything really to hurt us. The trivial amount of reserves ($10B) held by Hussein would do nothing really to weaken the dollar by virtue of their mere conversion into Euros; consider that this amount is similar to the amount of reserves held by Peru or Columbia, and that by comparison China holds $365B and even Poland holds $30B. Dropping $10B on the exchange market is no big deal.

Now, I don't want to be gratuitously negative about this, but I noted that the essay was posted on Indymedia. Indymedia is well-known for its tremendously liberal slant. The author of the essay even goes so far as to suggest that the media are willing participants in a conspiracy to suppress the information contained in the Clark essay, though he doesn't point out what the media gets for its end of the bargain in suppressing the information. I feel obligated to regard any unsubstantiated conspiracy theory proffered by a biased source (whether liberal or otherwise) with extreme skepticism.

One other general, fundamental issue I take with the essay is the ruthless, godlike competency that Mr Clark rather surprisingly ascribes to the Bush administration. I have not been impressed with either Treasury Secretary appointed by President Bush; Paul O'Neill is a decent man but was clueless as Treasury chief, and Snow seemed downright pleased with the dollar's weakening (leading as it does in the short term to a boost in US exports but causing a decrease in foreign capital investment in the long term). And we all know liberal opinion surrounding Mr Bush's personal intelligence.

Despite this, the author would have us believe that this administration has adopted a long-term strategy centered around an economic subtlety which is difficult to understand, which they don't intend to explain, and that they will pursue this (in their first term!) via a war that the liberals would have us understand no one wanted. I'm not sure most government officials (in this administration or any other) work amid such certainty of their methods. Not all of them even agree on the best practices to achieve a basically agreed set of ends. To suggest that there is some ultra-efficient, essentially infallible, monolithic "corporate-military-industrial network conglomerate" (Clark's actual term; hereafter CMINC) pulling all the strings with absolute certainty that the actions they influence will produce the results they want is, I think, to ascribe far too much competence to our government officials. What was this omnipotent CMINC doing during the Clinton administration? Was Clinton a tool of the CMINC as well? If not, and by Clinton merely winning an election the CMINC was thwarted for eight years, I'd suggest that maybe it's not really so powerful after all.

All things considered, having read the argument offered by Mr Clark, I am respectfully unconvinced.

JKS.

Over the past couple of months I've been having an ongoing discussion with a gentleman by the name of Mark Peters. He’s a well-read amateur economist with a strong free market inclination, so we have much in common. In fact, the discussion has been particularly interesting because we do share so much similarity in economic policy preferences, and I actually find myself engaged in a discussion with someone who’s arguing economic policy slightly from my right, which is most unusual.

Now as much as we agree on the basics, we’ve managed to run on to some considerable length about some of the details, and in our most recent exchange Mr Peters recommended a book called Economics in One Lesson, by Henry Hazlitt. The following is my reply, and though it is tailored to our previous discussion in particular, it may be of some interest to a wider audience, so I’m posting it here.

I will be posting all our previous exchanges in the archives in the next day or so, to provide some context for all this.

Thanks again to Mr Peters, who has kindly granted his permission for me to re-post his previous messages on this site.

------------------------------

Mr Peters,
I had been interested to continue or previous discussion, and thought the best preparation for doing so would be to read the book you recommended by Hazlitt. I’ve read most of it, and I find myself agreeing with the great majority of what he has to say. I was a bit surprised by finding the bulk of the book so agreeable to my opinions, as you had recommended it to me based on it being a fuller explication of your point of view on a few of the matters we disagreed on.

I had only a few objections to the book, leaving aside its obvious and unavoidable appearances of age: many of his chapters were dedicated to fighting off arguments you don’t hear much of any more, while Kerry and Gephart and company offer somewhat more subtle arguments which are equally preposterous and equally destructive. But it doesn’t seem to cover any really new ground (for me, anyway). I have a modest amount of college economics background, and the book clearly is aimed at an audience which (a) doesn’t; and (b) believes a bunch of silly things about protectionism, minimum wages, and general intervention in the markets. I am also a staunch fiscal conservative, and I found that for me the book was essentially preaching to the converted, and doing so without much new supporting detail.

I also thought it was surprising to read several approving references to Wealth of Nations in the Hazlitt book you recommended, as I thought you had said you found classical economics too riddled with errors to be useful.

I recall that you protested that you’re not a libertarian, but Hazlitt certainly was. I hope you’ll forgive me for continuing to refer to your essential argument as being libertarian (small “l” anyway) in what follows.

It’s been my observation that libertarianism is primarily a philosophy, and that like most other philosophy studies, discussion of it centers on logic and the absence of any internal contradictions. I said before that I think that’s what libertarianism has going for it primarily: it is one of the only systems for which its application never results in contradictory results. Unfortunately it does this by maintaining a simple premise and insisting on its universal applicability, which produces results that are admittedly self-consistent, but sometimes a trifle simplistic. But part of the problem with employing a simple argument and insisting on its universal applicability is that it invites refutation of the whole system simply by disproving one of its elements (or citing one instance where its application produces unacceptable results). I really don’t claim to have “refuted” libertarianism, of course, in any logically rigorous way. But I’ve identified enough outcomes which seem like weaknesses or errors to me, to say that I remain therefore unconvinced of the system as a whole. I think consequently the philosophy will never be dominant in the US, though it will likely continue to influence fiscal conservative policy—and that generally in a good way.

I agree that our main differences here are that you’re using philosophical arguments and I’m using economic arguments. I think it’s possible to carry on the discussion that way without both parties pointlessly talking past one another, because I agree with you that good economics depends on good philosophy. But I’d take your assertion one step further and point out that philosophy is just a group of ideas until it’s experimentally confirmed, and in this field economics is the experimental science. Aristotle, for all his obvious genius, was philosophically convinced (which was good enough for everyone till Newton) that a heavy object must fall faster than a less weighty object. Philosophy diverges from truth if it is never checked by experiment.

I recently pointed out to another correspondent that there is a difference between policy and philosophy, and that it’s important to know when to argue which. Economics is neat in that good philosophy (free capitalism) almost always results in good policy. But some of what I’ll discuss below is explicitly a policy decision, since we would ask the taxpayers of the United States whether and how to invest their money, and the outcomes will have significant economic consequences to total societal wealth. In these cases, I would suggest that allowing a philosophy argument to dictate an economically suboptimal policy is a poor decision.

If you want to argue that in cases of government intervention, the invisible opportunity cost is more expensive than the benefit, we can at least discuss that sensibly. But if you would argue that there should be zero cost to a program which provides a clear benefit, just because it’s the government implementing it, then you’re making an argument that doesn’t talk to me as an economist. To that I’d suggest that the argument is not well suited to a policy discussion.

Now, less generally, about the book:

I agree that minimum wages create inflation and unemployment; that tariffs hurt the consumers and economy they purport to protect; that redistribution of wealth (beyond a very minimal safety net, which as a taxpayer I do find myself willing to pay for) is fundamentally unjust. Our main disagreements in our previous series of essays eventually were reduced to some fine points, at what I called the extreme edges of capitalism—exactly where things get a little messy and I start to doubt the workability of a monolithic libertarian solution. I was hoping to see those particular cases treated in the book, since you had recommended it as a more elaborate treatment of your main thesis (which, if memory serves, we were debating primarily via monopolies and trust-busting activities by the government). I was therefore a little surprised to see that monopolies are not defended in the book anywhere that I could see. It’s not in the index, it’s not in any of the chapters I read in their entirety, and I didn’t happen across it in the chapters I skimmed. If it’s in there somewhere, please point it out to me.

I did find one specific point in the book I disagreed with—again, endangering the logical validity of the whole all-or-nothing premise. This didn’t surprise me, as I had expected to find one or two around the edges of the argument, even though I agreed with the great bulk of it. In the chapter “Credit Diverts Production,” Hazlitt essentially makes the argument that government loans always distort markets and should never be made. I disagree, having myself benefited from the loan guarantees provided by the Federal government for me to attend college—and, I hope, having benefited society in some small way in return. As I think that observing a single instance where libertarian philosophy produces suboptimal results sufficiently justifies my skepticism of the system as a rigorous basis for economic policy, I want to examine this case of Federally guaranteed student loans with some particularity.

There is a clear benefit to society for this program: a more-educated workforce will certainly produce economic benefits compared to a less-educated workforce (more inventions, more scientific basic research, a cure for the common cold to allow more days spent at work, whatever). More people with more knowledge allows more wealth to be created than the converse. I hope that idea is sufficiently self-evident I don’t need to really elucidate it further, but I hope you’ll tell me if we disagree here.

The trouble is that college is expensive, and college students don’t normally have much in the way of established credit or demonstrable ability to repay a loan from an independent financial institution. The government’s provision of a guarantee for a loan I could otherwise not have gotten has allowed me to finish a degree, get a good job, help both myself individually and therefore also the economy in general, and (incidentally) pay back the loan to the bank with interest.

Now I would expect that your main objection to this is in opportunity cost—what else society (meaning collectively the taxpayers who essentially all chipped in to guarantee my loan) could have done with the money. As it was only a Federal guarantee, and the Federal government itself didn’t issue me the money, the opportunity cost is initially with the bank who lent me the money at lowish interest rates. But the bank’s loan to me always yields a higher interest rate than (say) Treasury securities, while still being nearly risk-free. And if the bank really doesn’t need to add more low-risk, low-yield securities to its portfolio it can (and often does) sell the loan to another debt service agency who is actively seeking to add such assets to their portfolio. So it’s essentially voluntary on the part of the lending institutions, at zero cost to the US Treasury until someone defaults.

Yes, some people default on these loans, but we’ll get to that in a minute. So far we’ve established that many students are helped and therefore the economy benefits; and that the banks making the loans aren’t really out any kind of opportunity cost since they can rebalance their portfolios easily if they want to. I’m interested in considering how Hazlitt’s argument of “crowding out” more efficient and creditworthy loan applicants works in this case.

Hazlitt illustrates this argument by example of a pair of farmers who want to get a loan to buy a new tractor, or possibly an entire farm. One farmer has good credit, by having “efficiently” managed his affairs; the other farmer, presumably by being “inefficient,” has poor or borderline credit. Under the bank’s normal credit standards, the second farmer will not qualify for a loan. The Federal government guarantees his loan on his behalf, and the bank is thereafter willing to make the loan to either farmer.

Now Hazlitt’s point, if I understand it correctly, is that this has the potential to crowd out the efficient farmer, since there are only so many farms and so many tractors to go around, and now the less efficient farmer has an equal shot to be the one to get it. I was frankly shocked to read Hazlitt suggest that only farmer A or farmer B can get the tractor, but not both: our whole economic system creates wealth by creating things, and this capacity is essentially infinitely expandable in the long run. I think Hazlitt makes a fundamental error here; tractor production is not a zero-sum activity.

I think this makes no sense when talking about buying a tangible item like a tractor, but it makes some sense admittedly with respect to buying farmland. Now the important aspect of this is that he suggests what is really being lent is the farm or the tractor itself, rather than just the money, since there are only so many farms to go around. Now that we’ll have all these inefficient farmers getting the loans to buy one of the fixed populations of farms out there, while relatively fewer efficient farmers can get theirs, capital is therefore less efficiently employed. The efficient producers are crowded out.

So, to return to our particular modern example, how does this “crowding out” phenomenon hurt the “efficient” population of students with good credit? It makes their less-efficient peers more able to get loans to finish college, yes; but this doesn’t really prevent the students with good credit from also finishing college in most cases. The worst it might do would be to render a good student with good credit equally likely to get into and finish at Harvard, as the good student with bad credit (though I recall reading that Harvard considers “an applicant’s ability to pay” as one of its criteria when considering who to accept). And once everyone’s enrolled into whatever college they’ve chosen and which has accepted them, nothing hampers the good students from outcompeting their classmates (making valedictorian, therefore getting that fabulous job, etc) regardless of what everyone’s credit score is.

So there may be some small amounts of crowding out in some pretty unusual cases in the student loan guarantee program. But we’re looking for enough hidden opportunity cost to override the benefit to society provided by the program as a whole, and the small crumbs of opportunity cost we may have uncovered in the “crowding out” argument don’t make it. If those crumbs are enough to convince you to tank the entire program, then I respectfully redirect you to the philosophy vs policy discussion above.

Now for the defaulters, and the case for opportunity cost here is much stronger. The default rate is (not unexpectedly) pretty high for these programs, though it has dropped below 6% for the past several years (see this graph from the Department of Education), aided by low interest rates and an improving process of loan selection by the Federal government. This selection process is evidently based on certifying an entire school as an institution whose students are eligible for Stafford loans, and disqualifying entire schools which have too high a default rate. From just a cursory Googling I turned up an article about this, here, just as one example.



I’d agree that the early 1990s default rates according to that first graph above were unacceptable, and even current default rates are expensive: a 5.4% default rate on a loan program issuing $48B per year in loans (refer to the 2004 OMB budget in the Dept of Education section, here) amounts to a budgetary expense of $2.6B annually. While this undoubtably a lot of money, it’s important to keep it in context: it comes out of a Federal budget of $2298B (OMB again), and goes to support an economy worth $9837B in 2002 (The Economist Pocket World in Figures, 2003 edition, pg 222). By contrast, we spend $748B a year on retired folk via social security and medicare. Although I think those programs are horrible and not affordable, again we have to talk policy from where we are right now; and the cost for the student loan program is trivial in comparison. I think that in order to keep the US university system, and by extension American workers in general, the highest quality and most productive in the world, the $2.6B annually is affordable. Surely at least 0.02% of our annual GDP can be ascribed to having an excellently educated workforce.

So I saved the strongest argument against for last and came up with some comparative figures which (to me) make the student loan program look reasonable and affordable. I guess I would prefer to have hard figures as to what specific incremental contribution the loan programs make to the economy, but I am not aware of any immediately and the case seems persuasive to me even without it. It seems to me that the “productivity miracle” the US has experienced the past decade cannot be wholly unrelated to the education of our workforce.

As much as I’ve enjoyed our discussion (and would welcome another of your consistently thoughtful replies), I conclude that I still find rigorous libertarianism to be kind of troubling at its edges. I think it’s a good guide to policy, but I don’t find the philosophy itself sufficient to blindly use it as policy. I hope my tedious and detailed treatment of this one particular case can illustrate why.

Regards,
JKS.
10/17/2003

Return to the index for this subject.

Why I Hate Baseball.
I love baseball. I have loved baseball since I was introduced to it in 1984, when I first became interested in sports in general. I first became aware of the game listening to Tigers games on the radio with my mom and dad, usually in the living room or on the back porch, and I became a Tigers fan simply because my parents were. They may have been fans for similar reasons, and that the Tigers were the only team whose games could consistently be heard on Toledo radio certainly disposed us in that direction. I think most kids become fans like this, of the teams their parents support, except those kids who become fans of the rivals of their parents’ favorite teams. But those are the bad kids, and I certainly wasn't one of those.

In 1984 the Tigers started the season a preposterous 35-5 and never looked back, so my very first season of baseball started out with my newly adopted favorite team holding a commanding lead all season, with a World Series title seeming inevitable after about the end of May. In October the Tigers delivered on that promise when Kirk Gibson hit a three-run homer in the seventh inning of game 5 against relief ace Goose Gossage of the San Diego Padres; Lance Parrish followed his at bat with a solo homer, adding insult to injury. Larry Herndon made the game's final put out in left field, and the Tigers had made it look easy despite using only a three-man rotation in the series: Jack Morris, Dan Petry, Milt Wilcox. As a new 12-year-old baseball fan, I was completely spoiled, and was inclined to suspect that “my” team was a juggernaut which might never be seriously challenged in my lifetime.

Now this whole baseball thing was kind of a new endeavor for me, as I had been mainly a football fan for several years prior to that—mainly NFL ball, with only the lightest interest in the college game to leaven the mix. In the runup to the 1982 Ohio State-Michigan game, when I was in the sixth grade, I recall distinctly one of my classmates asking me whether I was for Ohio State or Michigan. All the cool kids seemed to have an opinion on this matter, and I became conscious that I really didn’t; it seemed I should have some nominal alliance in the matter, just so I wasn’t—you know—weird. So, acting matter-of-fact about it, I selected Ohio State then and there as "my" team forever, since, after all, I lived in Ohio. So why not? Simple as that, I was a Buckeye.

Although Ohio State beat Michigan that year, I don’t think I actually watched the game; I was really still not that interested in college ball. The first time I remember watching OSU-UM was in 1984, a month or so after the Tigers won their World Series title. Ohio State won that game and went on the Rose Bowl that year, leaving me to generally feel some vague expectation that no team I ever liked would really ever suffer disappointment. I was rather shocked to see Ohio State actually lose that Rose Bowl game to USC by the score 20-17. But OSU had won three of four from Michigan, and the program was stronger than UM—and everyone knew it. It surely would be only a matter of time before they won a Rose Bowl and a national title. Their last national championship had been (gasp) sixteen years ago.

Then the most puzzling thing happened as Ohio State began a long slide. Earle Bruce was fired after the 1987 season for failing to produce a national championship, despite a string of competitive and reasonably good teams (“Old 9-3 Earle,” so called from his consistent annual record). And Michigan began in 1988 a string of some 450 consecutive conference victories, just as John Cooper began his reign of terror at Ohio State. It got so bad, in the midst of a span where Ohio State won but three games from Michigan in a sixteen year period, that when the teams played to a tie in 1992 Ohio States's university president gushed that that had been one of the "greatest victories" in the history of the school. A tie, described thusly.

I graduated high school in 1989, and spent a pleasant vacation week in Chicago the summer before starting college. Cubs fans will recall 1989 well, and two months before Will Clark broke the city's heart, my friends and I decided to attend a Cubs game. I wasn’t a Cubs fan, but I figured that any self-respecting baseball fan needed to experience Wrigley at least once. It was standing room only, as the Cubs were leading their division, and though the game itself was a rather forgettable loss to Montreal, I fell in love with the whole experience—the atmosphere, the enthusiasm, the old-school ball park (still with no lights then). It was all infectious, and I adopted the Cubs as a co-favorite team. I’ve attended several additional games in Wrigley even though I live in Ohio, and I still find the Wrigley experience to be the finest in all baseball. And I realize that a true Cubs fan would in no way consider me a fan, and I can live with that.

I concluded that summer by moving, naturally enough, into the Den of Thieves that is Ann Arbor, MI, to attend Eastern Michigan. I settled in an apartment around the corner from the University of Michigan's "Big House," from where I could hear the crowd and the band on football Saturdays. I could barely leave home on Saturday during the season with all the traffic. All my new friends (such as they were) found my Ohio allegiances amusing and rather touching, and reminded me of this daily as I went about my business between annual season-ending embarrassments. In 1989, 1990, and 1991 Michigan beat Ohio State three times, by a combined score of 277-0, or something like that. Even my friends taunted me, to say nothing of the way the general population of Ann Arbor regarded me as I'd wear my block O Woody Hayes hat. I considered myself a pilgrim in an unholy land.

Once Cooper returned the program to some state of proficiency, the team flirted with national championships (or at least Rose Bowls) almost every year, before again crashing and burning like the Hindenberg against Michigan in the season’s final game, which they did with maddening frequency. In 1993 OSU went into the Michigan game ranked #5 and sporting a 10-0-1 record and was slapped down, with extreme prejudice, in a 28-0 debacle in Ann Arbor. Cooper did actually beat Michigan in 1994 in sort of a consolation game, as both teams had had disappointing seasons and Penn State had beaten them both en route to its first Big Ten championship.

In 1995 Ohio State took Heisman winner Eddie George and the nation’s best rushing attack into the Den of Thieves itself, possessed of an 11-0 record and national #2 ranking. I was sure this was the year for OSU to return to the Rose Bowl, maybe win their first national championship in 27 years. And I had the thrill of watching my first major college game in person, with middling seats in the northeast corner of the stadium. I got to personally witness Michigan’s Tim Biakabatuka run for 360 yards and fourteen touchdowns, dropping a 31-23 turd in Ohio State’s championship punch bowl yet again.

But 1996, finally, would surely be different. New coaches, new approach, much more solid defense, many returning veteran players. The defense allowed only 9 points a game—possibly the best Ohio State defense ever. There really was no question that this team was superior in every way to the 1995 squad. And the game would be played in the Heart of the Holy Land, Columbus, OH. Ohio State had even clinched a Rose Bowl berth by beating Indiana in the penultimate week of the season, eliminating some of the pressure to beat Michigan. This was good, because the string of season-ending chokes against what was often an objectively lesser team had become embarrassing, and Cooper had started to look afraid of Michigan; his 1-7-1 record against them did nothing to dispel that fear.

Ohio State was 10-0 and ranked, again, #2 nationally. The Rose Bowl was already assured, and possibly even OSU’s first national title in 28 years was in the making. Then the best player on the best defense in the land, Shawn Springs—a cornerback who boasted that “two-thirds of the earth’s surface is covered by water, the rest is covered by me”—had a Bill Buckner moment as he slipped and fell in the third quarter, allowing Michigan’s Ty Streets an easy catch for the game’s only touchdown. Michigan won 13-9.

Again, in 1997, #4 Ohio State took on #1 Michigan, with the winner to go to the Rose Bowl. Ohio State again stumbled, losing 20-14 as Michigan went on to claim the national championship. The program more or less fell apart after that, and spent the next four years playing .500 ball. All my Michigan friends found my sufferings endlessly amusing, of course, and I became quite a bitter little man until I finally managed to graduate college and move back to Ohio post haste.

Now somewhere in the middle of all this I stopped watching baseball, and that somewhere was in 1994. It didn’t help that the Tigers sucked all the air out of their own stadium when they took the field, and lost twice as often as they won. But the player strike that year, and the cancellation of the World Series, iced it. It was my first real look as an adult at pro baseball players. I recalled the heroes of baseball of my youth, and the heroes and legends who populated my baseball card collection which dated back to the 1960s. I had thought those guys from the ‘60s were legends, more-or-less rightly idolized, and I had looked up to the modern players as much as I had adored my team. I suddenly looked at modern baseball and saw a bunch of spoiled prima donnas, making a million fucking dollars a year, and walking off the job because they either wanted more money, or essentially had perceived some subtle slight or vague threat in the way the owners were making money, or some similar greedy bullshit. While they were making a million dollars a year to play a child’s game.

Meanwhile the players on the college football teams I liked—I no longer watched NFL ball at all either—were sort of heroes from their play. The annals of college football, it turns out, are nearly so rich as those of baseball, and heroes of sorts are not hard to find. And they did all this while writing term papers, studying for finals, and occasionally finding a few spare moments to date the ladies. Pretty much like my life (minus the ladies, naturally) but with some awesome athletic prowess mixed in. A guy who could run for 2000 yards in a fall semester while carrying a full time class load: now that’s some heroic shit.

Now, John Cooper was eventually fired, and two years later Ohio State—joy!—won their first national championship in 34 years. The drought was over, and even if Red Sox and Cubs fans would scoff at 34 years as a drought, that interval had seemed pretty rough to most of us Buckeyes, peppered as it was with late-season inconceivable collapses. Which both the Red Sox and the Cubs can relate to. The Ohio-Michigan rivalry was back; it was back even though it had once been so one-sided that Michigan fans denied it was even still competitive enough to be a rivalry, which the Red Sox can relate to from the attitudes of unsufferably arrogant Yankees fans.

And so I somehow found myself this year taking my first tentative look back at major league baseball since the 1994 strike. The Toledo Mud Hens had been in the playoffs in 2002, had a lovely new “Junior Wrigley” park downtown, and I had taken in a few games. And then I had done a bit of reading during the off season about the Red Sox-Yankees rivalry, and found myself identifying with the Red Sox fan’s pain when I read one smug Yankee commentator who wrote something to the effect that “the Yankees have 26 world championships since 1920, Boston has zero. Red Sox fans may not like us, but this really isn’t a rivalry anymore. Please.”

The whole snarky tone sucked me back into my college days as a resident of the Den of Thieves. I hated the smugness, and immediately recognized it as what typically came out of Michigan fans, and I kind of wanted something vaguely bad to happen to the author of that sentiment. Or at least his team—I’ve always hated a sore winner. I hate losing like you wouldn’t believe, but I’ve always been a reasonably good winner, finding no need to taunt my opponent. Once your team has won a game, it’s a small small man who can’t feel good enough about the victory without rubbing salt in the disappointment of the other team. Michigan fans, and evidently Yankee fans, don’t share this sentiment of sportsmanship. And while all teams have obnoxious fans, few teams have won so much as to allow their fans the opportunity to be such sore winners, as have Michigan and the Yankees.

So I watched the whole 2003 season, sort of a mild Red Sox fan. I was pulling for them to win the AL East, and loving the Cubs’ run to win the NL Central. And both of “my” new teams ended up in their respective League Championship Series. As anyone who watched knows, we fans were rewarded with probably the best two playoff series in memory. And if ever a team deserved to win the pennant and return to the World Series, it was the Cubs. Or it was the Red Sox. Or, best still, it would be both, and I’d be able to enjoy a World Series matching two great teams, content in the knowledge that at least either the Cubs or the Red Sox would finally end their drought; not both, of course, but at least one group of suffering fans could finally rejoice in the end of their drought like I had when Ohio State topped Miami in last year’s Fiesta Bowl.

But no. Despite the tantalizing prospects for both teams, and the eighth-inning leads which could have clinched the Cubs in game 6, and the Sox in game 7, somehow both teams pulled a John Cooper and dropped games—and prospective championships—they should have won. At least some metaphorical justice could have been done, had either team won their first World Series since the Great War. (Yes, it helps to view sporting events through such a prism of Principle and Justice; considering them otherwise tends to make one less passionate of a fan. And the resultant reduced stress for everyone would kind of defeat the purpose of competition to begin with, so what fun would that be?)

So I finally watched some baseball this year, just enough to make me care about it, have it encourage me to invest some emotionally in it. Baseball repaid me by entertaining me with the two best series I’ve ever seen. But they both ended with frustrated franchises and their fans still stuck in the funk they’ve suffered through their long droughts. I wouldn’t pretend I’m enough of a fan of either the Cubs or the Red Sox to personally share this frustration, but as a long-suffering Buckeye I feel something of a bond with what fans of both teams have endured. It’s just unthinkable that neither team finally achieved their long-awaited championship, and that the Corporate Yankees and the twice-a-decade Marlins go to the Series instead. And that’s why I hate baseball.

Can't wait till April.

Below is the text of a letter I sent to Ohio's Secretary of State, Mr J. Kenneth Blackwell, in support of his petition drive to rescind the recent state sales tax increase. Feel free to copy and paste a portion, or the entirety, of the following as the basis for your letter to the Secretary. But please do write him some message of support in any case!

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14 October 2003

J. Kenneth Blackwell
Ohio Secretary of State
180 E. Broad St. 16th Floor
Columbus, OH 43215

Dear Mr Blackwell:

I read with great interest an editorial in today’s Wall Street Journal, entitled “Arnold of Ohio,” which describes your efforts to force the state legislature to either rescind the recent sales tax increase outright, or to submit it to a popular vote. I wish to add my voice to those who desire a public referendum on the recently enacted sales tax increase, and to thank you for your principled efforts to this end.

I am well aware of the state’s current budget deficit, but I believe the first response to a budget crisis should be restraint of spending, not raising of taxes. When I have a personal budget shortfall, my first remedy is to reduce some spending, not to demand a raise from my employer, which merely rewards and encourages undisciplined spending. I expect the same discipline from my elected representatives in state government.

I am a registered Republican, and often vote for Republicans for state office in recognition of their usual preference for spending restraint and fiscal discipline. But I am sufficiently disappointed in this response to the budget deficit that I will gladly vote for any candidate, of either party, who adopts fiscal discipline and restraint of spending as their primary tools for balancing the state budget. My taxes are altogether high enough, and I’ve no intention of supporting taxes which are still higher.

If you will kindly forward me a petition form, I will provide my signature and will gather the signatures of my family and friends who agree with your proposed measure. It will be my pleasure to be of service to you in this effort.

I can be reached by regular mail, or by email, at the above addresses.

Sincerely,

cc:
Governor Bob Taft
30th Floor
77 South High Street
Columbus, OH 43215-6117

Senator Randy Gardner
Senate Building
Room #220, Second Floor
Columbus, OH 43215

Representative Lynn Olman
77 South High Street
13th Floor
Columbus, OH 43215-6111

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If you don't know who your state senator is, or how to contact him, you can look that up here.
If you don't know who your state representative is, or how to contact him, you can look that up here.

And don't forget to copy Governor Taft!