FREE Insights Column

Gresham’s Law on the Internet

We’ve all heard the phrase, “Bad money drives good money out of circulation.” This is now called Gresham’s Law but it dates back to the ancient Greeks. What does this mean in practice and how might it be relevant to the internet and more generally to civility in our public discourse? First I’ll consider legal currency and then generalize to websites.

In the United States we have legal tender laws that require different forms of commodity money be accepted at face value for economic transactions. America debased its silver money in 1965. The Mint switched to cheaper metals as the value of silver in the coin exceeded its face value.

The commodity value of “bad money” is less than its face value. When circulating along with money with a higher commodity value, with both forms accepted at equal value as legal tender, debased money will displace the “good” money, that made of 80% real silver. 

FREE Insights Column

Zoning Out Civility and Friendship

Ramona and I delight in ranch life in the Gallatin Gateway community. There are immense social and environmental benefits to this rural setting, notably friends and excellent access to the urban qualities of Bozeman and surrounding outdoor treasures.

We have many long-term neighbors we like, admire, and trust. Most are farmers and ranchers with whom we share much history and culture. I see these folks socially and at meetings of the Kleinschmidt Canal Company.

The canal meetings provide a classic American demonstration of voluntary cooperation cultivated by a framework of civility and clear property rights. When rights are clear, conflict is minimal and harmony fostered. 

NPR, Public Goods, and the Longing for NQR

National Public Radio (NPR), a nonprofit 501 c-3 corporation, has 860 independent stations throughout America. I wouldn’t care to live in a place that didn’t have radio access. (Streaming it on the web is a poor substitute.) When traveling, I find the local station so not to miss “Morning Edition” and the evening program “All Things Considered.”

While I’m obviously a loyal listener, their biannual weeklong fund drives are things to endure. One suffers through them as a necessary nuisance, much like Montana’s spring mud season.

During the 30-plus years I taught university courses in political economy, NPR was one of my favorite examples of a “public good.” Like national defense, it is something that, if provided to anyone, is available to everyone. So, of course, are all radio stations. The difference is that explicit advertising for specific products supports commercial radio. NPR, in contrast, has mercifully brief underwriting. This source provides just over one-fifth of its revenue. Governments, mainly federal, provide 16 percent.

Guest Column, Free Insights

The Business of Climate Change

If Congress passes climate change legislation, someone must manufacture and sell products and services to help companies meet lowered carbon emissions targets. With this in mind a friend asked if I saw profitable opportunities. Surely there is money to be made in alternative energy sources like biofuels, wind, and solar? Perhaps arbitraging the CO2 markets is the way to go? While on the surface this seems like a target rich environment, I advise caution to investors considering this arena. Here’s why.

Global warming has created a breeding ground for political capitalists. These are businesses that are expert at manipulating the political process to gain profits they can’t make in the competitive marketplace. The opportunities for political capitalism increase with the size and scope of government. When government allocates resources and imposes constraints it is generally to serve the strong and entrenched; the weak and aspiring suffer. The recent health care reform clearly exemplifies just this sort of mischief. 

Guest Column: FRee Insights

FREE’s 25th Anniversary

This year is FREE’s 25th anniversary. The initial focus of our work was on the economics and policy analysis of contentious natural resource issues. Our goal was to show how to harmonize environmental quality with America’s founding ideals of liberty and responsible prosperity.

Twenty-five years ago environmental problems were addressed almost exclusively through command and control regulation. This blunt instrument produced many accomplishments but also posed compelling threats to America’s traditions of property rights, individual responsibility, and reliance upon markets for social coordination. Our task was to show that these traditions need not impede environmental quality, but could actually improve it. 

Guest Column, Free Insights

Explosive Lessons in Empathy and Understanding

It is surely no accident that the term “bureaucracy” carries a crust of derision in every known language. And yet, with the possible exception of the TSA, most individuals within each bureaucracy normally attempt to do well and want to be liked.

Against all odds, some succeed. For example, I’ve found the state auto license bureau in Bozeman to be remarkably helpful. In my experience, and quite remarkably, the same holds for the local tax assessment office. Other than accidents of personality, I have no explanation for these fortunate outcomes.

Public utilities have an especially difficult time maintaining public support and approval. This is despite serious efforts to do so. Ironically, when dealing with individuals within these organizations, I normally find competent and helpful individuals at every level. Yet at the organizational level, they often fail to please. Here’s an example. 

FREE Insights Column

What’s Next for Climate Change?

Domestic and international efforts to reduce CO2 emissions are dead in the water. Many will think this is bad news. I don’t. Here’s why.

Policies such as the Kyoto Protocol and U.S. cap-and-trade legislation focus solely on reducing CO2 emissions. But these are symbolic acts, mere posturing, while doing little or nothing to achieve their stated goals. Stubborn reliance on this approach is now the main barrier to an effective climate policy.

Guest Column, Free Insights

Horse Sense and Reality Checks

Each year we host a few dozen horses on our winter range. They are given hay when snow makes grazing difficult but they normally feed on rangeland and uncut hay fields. The horses have running spring water just south of our house and most mornings they troop down to drink.

This is always a beautiful sight, especially when they’re running. They come down from the bench to cross the bridge over the Kleinschmidt Canal to reach our lower meadow with its constant flow of water.

Counterfactually, it would be easy to imagine that they are a herd of wild horses. Then, it’s a small step to appreciate the charm, in some cases even abstract love, that so many Americans have for our wild horses.

Column: Free Insights

Heart of the Valley Entrepreneurship

Social entrepreneurship is becoming ever more important for achieving social goals. As the government sector hits budgetary reality checks imposed by unsustainable political promises and payoffs, its scope of activities will necessarily contract. When public choices require tradeoffs among important functions, maintaining police, public health, and pollution control are compelling examples, other worthwhile social activities will suffer neglect. Even a nation as rich as ours, and we remain immensely wealthy, hits financial constraints.

Fortunately America, far more than European nations, has a rich tradition and great experience in creating voluntary organization, alternatives to strictly political management. Publicly spirited citizens design and implement non-coercive means to achieve compassionate outcomes. This is social entrepreneurship.

Social entrepreneurship is especially hard to measure, for it doesn’t focus on traditional profit and loss, the stuff economists measure with precision. But, as Thomas Sowell reminds us, what economists measure best is not what matters most.