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Why Do We Believe These Pathological Liars? by B.K. Marcus

How do you feel when someone lies to you?

It probably depends on who is doing the lying. A stranger’s fabrications may not phase you, but dishonesty from a friend or lover can end the relationship. The more you feel the liar is supposed to be “on your side,” the more his or her deceptions feel like betrayal — unless, it turns out, the lies come from a politician you support.

When I shared a link on Facebook to Rick Shenkman’s article “Why Are Trump Voters Not Bothered by His Lies?” someone immediately replied by asking, “Why are Hillary voters not bothered by her lies?” Why, in other words, focus on only one mendacious candidate when lying to voters seems like a prerequisite for running for office?

Shenkman, who is the editor of HistoryNewsNetwork.org and the author ofPolitical Animals: How Our Stone-Age Brain Gets in the Way of Smart Politics, might respond with his claim that Trump “has told more lies than any other leading political figure probably ever has.” But his article is in fact about neither Trump’s astonishing number of fibs nor his supporters’ astonishing tolerance for them; it is about how widespread both such lying and such tolerance are across party lines and throughout the era of mass-media mass democracy.

Shenkman is writing for a left-leaning readership, thus his headline’s righteous indignation toward a right-wing candidate, but most of the examples he gives are of deliberately deceitful Democrats. He starts with candidate Kennedy’s campaign claim that the Soviets had more nuclear missiles than the United States:

He continued to insist that there was a missile gap to the Soviet’s advantage even after he was briefed by General Earl Wheeler that there wasn’t. After the election his secretary of defense, Robert McNamara, told the press on background that a study had found there was no missile gap, leading to blaring headlines the next morning.

JFK’s reaction? He ordered his press secretary, Pierre Salinger, to tell the media that there had been no study and that there was a gap. The truth was that JFK himself didn’t take his own rhetoric about the missile gap seriously. At cabinet meetings he cracked on numerous occasions, “Who ever believed in the missile gap” anyway?

Four years later, President Johnson “told the American people that the North Vietnamese were guilty of making repeated unprovoked attacks on [US] naval vessels in the Tonkin Gulf.” As with Kennedy, we know that Johnson was being dishonest, not mistaken. “Hell,” LBJ told an aide, “those dumb stupid sailors were just shooting at flying fish.”

Shenkman barely touches on Nixon’s perfidy in Watergate and never mentions Nixon aide John Ehrlichman’s 1994 interview, admitting that the war on drugs was not about crime or health but was rather a politically motivated attack on war protestors and American blacks. “Did we know we were lying about the drugs?” said the president’s former domestic affairs advisor. “Of course we did.”

And while he may have given Ms. Clinton a pass, Shenkman does mention the millions of supporters who refused to believe the allegations against her husband “until prosecutors revealed they possessed [Monica Lewinsky’s] infamous blue dress.”

No one should be shocked by the frequency of politicians’ duplicity, but it is frustrating when a candidate is caught in an undeniable falsehood and his or her supporters never waiver.  Our political culture expects politicians to perjure and prevaricate left and right, but that doesn’t make their deceptions defensible. So where is the outrage?

“Our brains are partisan,” Shenkman writes:

While we are quick to seize on the misstatements of other candidates, we give them a pass when it’s our own. When the social scientist Drew Westen put voters in an MRI machine he discovered that their brains quickly shut off the flow of information contrary to their beliefs about their favorite candidates. The neurons actively involved in the transmission of this information literally went inactive.

It’s not just the political candidates who are lying. So are the voters. “We lie,” Shenkman points out, “about our unwillingness to put up with lies.”

If politicians keep lying and voters keep shrugging it off, isn’t that an indictment of democracy? Aren’t voters supposed to act as a check on the people in power?

In theory, an election is supposed to be more than a popularity contest. Candidates are supposed to represent an approach to policy making, which is in turn supposed to reflect both facts and a theory of cause and effect. What we have instead is a formalized tribalism, us versus them, facts be damned.

Shenkman assures the reader that the liars don’t get away with it forever, but his evidence for that conclusion is questionable. Johnson and Nixon are remembered as liars by both Democrats and Republicans, but the reckoning for Gulf of Tonkin and Watergate are outliers in the steady stream of deception flowing out of DC and the state capitals. Meanwhile, Mssrs Kennedy and Clinton will be remembered more for deceiving their wives than the voters.

Westen’s research on cognitive dissonance and party politics is troubling, but well before there was any hard data on how voters process unwanted facts, the theory of rational ignorance told us why so many facts are so unwanted: to the individual voter, the cost of acquiring the relevant knowledge far outweighs the practical benefits of knowing the truth when casting a ballot.

In contrast, the benefits of supporting a candidate accrue, not from any actual effect on the electoral outcome, but largely from the signaling that it provides the voter: this is the sort of person I am, and these are the sorts of causes I support. Symbolic affiliation isn’t dependent on the truth of any particular facts, so why should we expect inconvenient falsehoods to change anyone’s political alignment?

As I wrote in “Too Dumb for Democracy?” (Freeman, spring 2015), “getting an issue like the minimum wage terribly wrong takes no work and has the immediate payoff of feeling like you’re on the side of the angels. It also solidifies your standing within your own ideological tribe. Bothering to understand supply and demand … offers no practical reward after you pull the lever in the election booth.”

The lies we care the least to uncover are precisely those for which the cost of caring outweighs the benefits of our vigilance. That describes almost anything we may ever be asked to vote on. But when knowing the truth directly matters to the decisions we make every day — the truth about our jobs, our homes, our families and loved ones — the relative benefits of knowing the truth are far greater, and we therefore penalize the liars in our lives. Cognitive dissonance may be a barrier to accepting hard truths, but even cognitive dissonance is price sensitive.

The more decisions we cede to the political process, the less we should expect anyone to protect our interests. Even we don’t bother to do it, because the rules of the game — majority rules — render our efforts ineffectual. Worse than that: we’re not even rewarded for knowing what policies really are or aren’t in our best interest.

The truth can win out, but it’s a lot less likely in an election.

B.K. MarcusB.K. Marcus

B.K. Marcus is editor of the Freeman.

“Creating Jobs” Will Hurt the Economy by T. Norman Van Cott

How many jobs would the Keystone Pipeline project create? Political reporter Tom Murse points out that the answer is a matter of dispute. “Supporters argue that the Keystone XL pipeline would create tens of thousands, if not hundreds of thousands, of new jobs.” But critics “claim those numbers are wildly inflated,” Murse writes.

Both sides assume a higher number would make the project better for the economy. Both sides have it backwards.

Home Economics

The value of work is easy to grasp at the most domestic level: your own home.

Being a homeowner isn’t easy. Among other things, you always seem to have more chores to do than time to do them. The chores are not ends in themselves. Rather, they are means to an end — in this case, making a home and yard more livable or aesthetically pleasing.

Opting to do a chore yourself — “insourcing” in current parlance — isn’t costless. You lose the opportunity to enjoy the fruits of your other labors. For example, you could tackle different chores, spend more time with your family, or work extra hours in the marketplace, increasing your income. Hiring someone else to do the chore — that is, “outsourcing” — isn’t costless, either. It means you can’t buy other things. Costs represent sacrificed alternatives.

The rule when it comes to home ownership isn’t rocket science. Tackle those chores whose ends you value more than their cost. If your water softener breaks, and you value having softened water more than what it would cost either you or the plumber to repair it, then hire the plumber if his cost is less than what it costs you to fix it yourself. (Don’t forget to count the work time you’ll be giving up to act as your own plumber.)

By outsourcing the repair work, you will have “lost a job,” but your standard of living will be higher. By how much? The difference between your cost and the plumber’s cost.

Added household chores — that is, “gaining jobs” — are anything but a blessing. Chores represent hurdles between you and that more livable, aesthetically pleasing home and yard. Each job represents something you’re going to have to give up before your house is the way you want it. “Gaining jobs” to achieve a given objective is synonymous with worsening your situation, not improving it.

The Rule Writ Large — The Case of the Keystone Pipeline

What is rocket science for many is the ability to recognize that the rule for individual households extends to the national household, as we can see in the case of the Keystone Pipeline controversy. The project, which has been a political football for several years, would transfer oil from Canada to the Texas Gulf Coast. The project’s desirability is associated with the number of jobs required for the pipeline’s construction and maintenance. The more jobs created, the more desirable the pipeline, it would seem.

All involved in the discussion fail to apply lessons for individual households to the national household. Pipeline jobs are part of the cost of getting oil from Canada to the Texas Gulf Coast. They are not part of the benefits. The fewer jobs created, the better. Indeed, in the best of all worlds, there would bezero jobs required to transfer oil from Canada to the Texas Gulf Coast. That way, we could get the oil transferred without having to give up anything!

Pipeline proponents who note a large number of required jobs are unwittingly arguing against the project, just as opponents who cite a small number of jobs are unwittingly arguing in its favor.

Beyond the Pipeline

This failure to apply the simple rules for individual households is not restricted to the Keystone Pipeline issue. It pervades economic, business, and political discussions. Government programs come packaged with estimates of the number of new jobs the programs will supposedly create. The more jobs, the merrier. That’s the political refrain. Likewise, state and local economic development bureaucrats tout the number of jobs associated with business relocations or expansions.

One has to wonder whether those who peddle this more-jobs nonsense apply it to their own households. I bet not. Fewer chores, not more, make their homes more enjoyable. National households are no different. Or as Adam Smith put it in his classic, The Wealth of Nations, that which “is prudence in the conduct of every private family, can scarce be folly in that of a great kingdom.”

T. Norman Van CottT. Norman Van Cott

T. Norman Van Cott, professor of economics, received his Ph.D. from the University of Washington in 1969. Before joining Ball State in 1977, he taught at University of New Mexico (1968-1972) and West Georgia College (1972-1977). He was the department chairperson from 1985 to 1999. His fields of interest include microeconomic theory, public finance, and international economics. Van Cott’s current research is the economics of constitutions.

“Green Banks” Will Drown in the Red by Jonathan Bydlak

Why does federal spending matter? There are many reasons, but perhaps the most fundamental is that free markets allocate resources better than governments because markets rely on price instead of politics. Many industries show this observation to be true, but the emerging field of “green banks” offers perhaps one of the clearest recent examples.

A green bank is a “public or quasi-public financing institution that provides low-cost, long-term financing support to clean, low-carbon projects by leveraging public funds…to attract private investment.” Right now, only a handful of green banks are scattered across Connecticut, California, New York, Rhode Island, and Hawaii.

Free marketers rightly doubt whether public funds should be used to finance private startups. But regardless of where one stands in that debate, the states’ struggles serve as a valuable testing ground for future investments.

The State of Connecticut operates under a fairly significant budget deficit. California has been calculating its budgets without taking unfunded pension liabilities into account, and it’s gambling with its ability to service its debt. New York continues to live beyond its means. Rhode Island’s newest budget does little to rehabilitate its deficit spending addiction, and, despite having a balanced budget clause in its state constitution, Hawaii has a pattern of operating at a deficit.

In fact, a state solvency report released by the Mercatus Center has each of these five states ranked in the bottom third of the country, with their solvency described as either “low” or “poor.”

This all raises the question of whether these governments are able to find sound investment opportunities in the first place. Rhode Island couldn’t even identify a bad investment when baseball legend Curt Schilling wanted $75 million to make video games about something other than baseball!

Recently, though, there have been calls to extend the struggling green banking system to the federal level. Mark Muro and Reed Hundt at the Brookings Institute argued in favor of federal action in support of green banks. Somewhat paradoxically, they assert that demand for green banking institutions and the types of companies they finance is so strong that the existing state-based green banks cannot muster enough capital to meet demand.

Wherever there is potential for profit and a sound business plan, lending institutions are likely to be found, willing to relinquish a little capital for a consistent and reasonable rate of return. So where are the private lenders and other investment firms who have taken notice and are competing for the opportunity to provide loans to such highly sought-after companies and products?

Even assuming that there is demand for green banking services, recent experience shows that a federally-subsidized system would likely lead to inefficiency, favor trading, and failure. For instance, the Department of Energy Loan Program is designed to facilitate and aid clean energy startup companies. Its portfolio exceeds $30 billion, but following a series of bad investments like Solyndra, Inc., new loan guarantees have been few and far between. The program has already lost over $700 million.

Even the rosiest measurements do not show particularly exciting returns from this system. The Department of Energy itself estimates that over the lifetime of the loans it’s guaranteed, there exists the potential to see $5 billion in profit. However, those estimates also depend on the peculiar accounting methods the DoE itself employs.

This problem is apparent in other government sectors. For instance, determining how much profit the federal government makes off of student loans depends on who is asked. Some say none, while others say it’s in the billions. Gauging the economic impact or solvency of government programs is notoriously difficult, and different methods can yield what look like very different results. Add to that the consistently uncertain nature of the energy market, and profits are hardly guaranteed.

Examples abound of wasteful federal spending, and the growing green technology and renewable energy industry is no exception. The DoE Loan Program has already faced issues that go well beyond Solyndra: Abound Solar, a Colorado-based solar panel manufacturer, was given a $400 million DoE loan guarantee, only to later file for bankruptcy, potentially costing taxpayers $60 million. The Ivanpah Solar Electric Generating System, a 175,000 unit heliostat array in California, received a $1.6 billion federal loan and, because it failed to produce the amount of power estimated, was forced to later request more than$500 million in federal grants from the Treasury Department. A recent Taxpayers Protection Alliance study showed that risky investments in heavily subsidized solar energy could even lead to a bubble similar to the disastrous 2008 housing bubble.

Those who want to expand the government’s role in green banking likely want to see more clean and renewable energy reach the consumer market, and a lot of people probably applaud that goal — but the real question is whether the proposed means can reliably achieve that end. A wise manager with a solid business plan can find investors who will willingly take a chance. Considering the struggles of several states, trusting the federal government to build an even bigger system would exponentially increase that risk.

In contrast, the market offers opportunity to entrepreneurs in the green technology and renewable energy industries. For instance, GreatPoint Energy, a company specializing in clean coal, successfully went the route that other companies do: Design a product or service, find investors, and compete in the marketplace.

SolarCity, a California-based and publicly traded corporation of over 2,500 employees, entered the industry before many government loan programs were established. Thanks to a sound business model and subsequent horizontal and vertical expansion, it has become a leader in the industry. SolarCity’s success, however, cannot be touted by the Department of Energy’s Loan Program, which declined to invest in the company, leading SolarCity to try — and succeed — in finding private investment.

If GreatPoint or SolarCity had failed, only those who willingly participated in the startup would suffer the consequences. The issue with green banking — and indeed government “investments” more generally — is that taxpayers are not party to the negotiations but are the ones ultimately on the hook for failures.

In absolute terms, these billions of dollars are a lot of money. But in the grand scheme of government spending, the amount of money invested in green banks and renewable energy production is relatively small. If Social Security is the Atlantic Ocean, and wasteful defense appropriations are the Mediterranean, then green energy investments fall somewhere in the range of the Y-40 pool: easily measurable but certainly not insignificant.

Your odds of drowning may be smaller in the pool than the ocean, but that doesn’t make the drowning itself any more pleasant. The federal government is already under water; adding new liabilities on the hope that politicians can guess the future of energy is merely a step towards the deep end, not the ladder out.


Jonathan Bydlak

Jonathan Bydlak is the founder and president of the Institute to Reduce Spending and the Coalition to Reduce Spending.