Restricting Private Weapons

A true Constitutionalist must believe that the federal government should not ban private ownership of military weapons.  Most people think it’s utter lunacy to contemplate an individual being allowed to buy things like grenades, or a 155mm howitzer.  To me it is perfectly legitimate.

Consider the case of motor vehicles.  We let almost anyone — even minors and felons — purchase and operate cars that carry a combustible payload of fuel and which can easily weigh three tons and travel over a hundred miles per hour.  When aimed correctly a single passenger vehicle in a single collision is capable of killing many people and destroying hundreds of thousands of dollars in property.  Cars greatly enhance the ability of criminals to steal the property and lives of other people.  So how can a society full of car drivers survive?  Two simple rules make this work:

  1. Every vehicle is registered to an owner, and it is very easy for law enforcement to trace a car used incorrectly to its owner.
  2. Every vehicle owner has to post and maintain a bond to cover the potential misuse of his vehicle.  Typically he does this through a third-party insurance contract, though (at least in some states) owners can “self-insure” by convincing the regulator that he has enough money to cover reasonable liabilities.

How can a polite society permit unrestricted weapons ownership?  Well the first key point is that only responsible citizens enjoy full liberties.  If you are a child, a felon, or certifiably insane then you already lack the right to keep and bear arms.  Do we need to worry about a wealthy individual having a bad day and lobbing his registered grenade into a crowd of innocent bystanders?  Or about his teenage son taking the grenade to school?  Probably not if there’s a six-figure bond covering the use of that grenade, and especially not if chemical tracers can irrefutably finger him as the device’s owner and put him in jail for criminal negligence.

Would criminal gangs be unstoppable if they could keep a main battle tank in their hideout?  Again, somebody with full rights would have had to register that weapon system and post a huge bond to insure against its misuse.  I.e., a responsible party is on the hook.  It’s not like somebody is going to drive a tank downtown and fire a few 120mm rounds without people noticing where it came from.

What about the most extreme case, a thermonuclear bomb?  We could perhaps exempt high-yield nuclear weapons from private ownership simply because they are strategic, not tactical — or more saliently, they are fundamentally a terrorist weapon.

Returning to more practical considerations, one may wonder why we should contemplate private ownership of powerful weapons.  What legitimate role could they play in a stable democracy like ours?  I guess this may be where Principled thinkers diverge from Pragmatic ones, but in principle I know that only tyrranies need to disarm responsible individuals.  I also know that even stable societies can break down — sometimes only temporarily — and the fact that we are enjoying a period of peace and prosperity doesn’t mean that chaos is impossible.  If citizens with property want to invest in private arsenals, either for their own amusement or as insurance against a marauding mob that the state isn’t in a condition to beat back, why should our society show preference to the mob?  Especially when a registration and bonding regime is capable of adequately dealing with weapons of every caliber.

The Punchline

It may surprise many Americans to know that the federal government actually does allow individuals to buy things like grenades or working artillery pieces.  Our laws, together with the executive Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF) draw amusingly arbitrary lines on weapons ownership:

  • “Armor Piercing” bullets are illegal to manufacture or import.  The criteria for what this ban encompasses are too complex to mock in this space.  (However there is still an existing supply of legal bullets manufactured before the ban.  Since the ban fixed the supply tungsten core rifle bullets now cost upwards of $1 apiece.  Who buys them?  Probably speculators.)
  • Individuals cannot own any machinegun manufactured after May 19, 1986.  (As a result of this fixed supply the market for legal machineguns is very expensive: The cheapest now sell for at least $4000, and popular models like the M-16 are now around $12000.  Again, many owners are now investors.)
  • Any firearms with shoulder stocks have to have a barrel of at least 16″ and overall length of 26″, or else they have to be purchased as an NFA item.  (NFA items, named in the National Firearms Act, can be legally purchased by individuals as long as they register the purchase and pay the “Transfer Tax,” which for most items is $200.)
  • Shotguns with barrels shorter than 18″ are NFA items.
  • Any gun with a bore diameter over half an inch is considered a “Destructive Device” (DD) unless it’s a “shotgun suitable for sporting purposes” or a muzzle-loaded firearm.  “DD”s are a special class of NFA items that are often more harshly restricted by state laws.
  • The feds will let you buy a grenade, as long as you register the device and pay the $200 tax (that’s per grenade).
  • A suppressor (“silencer” — actually, any component that can be readily used to construct a firearm silencer) is treated as an NFA firearm.
  • Interstate commerce in “switchblade” knives is also prohibited, except to the military or to people with only one arm.

Note that criminals can easily modify many non-NFA firearms to create short-barrelled or automatic weapons for less than $200.  Meanwhile, law-abiding citizens can buy grenades and commission 155mm howitzers if they pay a $200 registration tax, but they cannot legally buy new machineguns or “armor piercing” bullets for any price.

Supreme Court Rules Against Constitutional Restraints on Government

Richard Epstein in today’s WSJ explains just how bad the Supreme Court’s decision was in Hein v. Freedom From Religion Foundation.  By ruling that taxpayers can’t challenge their government for overstepping its bounds they struck a heavy blow against key forces that would restrain government.

At stake is whether judicial review itself remains as a check on the political branches. Blocking taxpayer standing often leaves no one to challenge congressional or presidential actions as inconsistent with our basic constitutional design — allowing both branches to act in areas where they have no constitutional authority.

The Car of the Future — Today!

I love energy efficiency just as much as the next guy, which is why I’m always fascinated by improved engine technologies.  A good idea makes so much sense that it doesn’t need massively distorting government subsidies or mandates to be marketable.

Last year I noted Hydraulic Hybrids.  Today I came across Ethanol-Boosted Turbochargers.  As Technology Review explains, this concept boosts the efficiency of gasoline engines by 30%.  How can you get more energy out of gasoline?  First, by raising the compression ratio you can extract more energy from combustion because you increase the expansion ratio of the hot byproducts.  Second, by extracting more energy from the same space you can use smaller engines, which lose less energy to friction.  (Ever wonder why the same car with a bigger engine has a lower mileage rating?  It’s almost all due to waste heat in the engine.)

Social Security — Try to Calculate Your Benefits!

I would invite anyone who believes in Social Security to try to calculate their expected benefits based on what they have paid in.  This is actually an amusing exercise which I recently undertook to answer the following question: If you haven’t paid any social security taxes in your life, what is the least you can pay in to get the maximal return from the Social Security system?

Continue reading “Social Security — Try to Calculate Your Benefits!”

Computers Offer Productive Recreation

I love the idea of distributed computing projects that harness idle computer processors for computationally intensive projects.  However the proliferation of power-saving technology has reduced the attraction of this sort of spare-cycle application:  Since computer processors idle their power consumption when they aren’t being used it is no longer completely free to put them to work.

Wouldn’t it be great if we could harness the computational power of all the human brains that idle away hours playing completely unproductive games of solitaire and minesweeper?  Humans are unparalleled for many useful computational tasks.  Luis von Ahn at Carnegie Mellon is a pioneer in capitalizing that factGoogle is putting his technology in practice.  There is also research into exploiting the enormous subconscious computing power that every person carries.

Congress Imitates Homer Simpson

As people gradually realize that burning food for fuel (i.e., corn-based ethanol for gasoline) isn’t such an economical plan, I am reminded of Homer Simpson who, on discovering that there is a market for waste grease, bought and cooked a side of bacon, fed the meat to the dog, and eagerly took the grease to a recycling plant.

Homer: Okay, boy. This is where all the hard work, sacrifice, and painful scaldings pay off.

Employee: Four pounds of grease … that comes to … sixty-three cents.

Homer: Woo-hoo!

Bart: Dad, all that bacon cost twenty-seven dollars.

Homer: Yeah, but your mom paid for that!

Bart: But doesn’t she get her money from you?

Homer: And I get my money from grease! What’s the problem?

Franking Sense

I was outraged today to receive what appeared to be a campaign mailing from my “Honorable” Congressional Representative bearing the fine print, “This mailing was prepared, published and mailed at taxpayer expense.”  How thoughtful.  My “representative” spent some of my tax money to remind me about all the hard work he’s doing for me.  The 40-pound oversized cardstock was a nice touch, as was the professional layout and the beautiful color offset printing.

There’s a picture of him on each side of the mailing, which apparently went to every single residence in his district.  His name appears eight times, not including the URL for his web site which is helpfully featured on both sides.  With free publicity like this, how can an incumbent candidate lose?

After digging into this abuse I learned that Congress itself regulates the expenditure of tax money on mailings — known as the “franking privilege.”  There are legitimate reasons for this, which Congress itself eloquently expresses in 39 USC Section 3910:

It is the policy of the Congress that the privilege of sending mail as franked mail shall be established … in order to assist and expedite the conduct of the official business, activities, and duties of the Congress of the United States.

What follows is a case study in why government has to be restrained:  From this simple policy follows 2500 words of U.S. law outlining “The Intent of Congress” in this policy, which is further elaborated into a 72-page “Franking Manual,” which is maintained by the House Commission on Congressional Mailing Standards.  Indeed, from a 44-word policy Congress proceeded to carve out so many rules and loopholes that my Representative’s propaganda could be produced and mailed at my expense and still comply with the letter of the law.

Department of Unintended Consequences — Part IV

Proof that you can’t arbitrarily raise taxes to create government revenue is noted by Jason Furman:

[T]the United States has the second highest corporate tax rate in the OECD but the fourth lowest corporate tax revenue as a share of GDP in the OECD.  Moreover, something is wrong when the effective tax rate on equity-financed corporate investment is 36 percent but the effective tax rate on debt-financed corporate investment is -6 percent. 

Ask Your Broker: Where Is Your Short Interest Rebate?

When you sell a stock short your broker borrows shares, sells them on your behalf, and collects cash in return.  That cash sits somewhere collecting interest.  You should get a cut of it.  But unless you’re a customer of Muriel Siebert or Thinkorswim you won’t see a cent.

Institutions (especially long/short funds) look forward to the “short rebate” of this interest after the broker has covered the costs of borrowing shares.  It can make a market-neutral portfolio nearly costless to finance.  I was surprised to learn how hard it is to earn this rebate as an individual investor.  Following are brokerages that do NOT pay any short rebate:

  • Ameritrade
  • Banc of America
  • ETrade
  • Fidelity
  • Firstrade
  • Interactive Brokers
  • Marsco
  • OptionsXpress
  • Schwab
  • Scottrade
  • Tradeking
  • USAA
  • Vanguard

The best broker in terms of money rates is Siebert: They will pay 1.875% (currently; floats with the Fed Funds rate which is currently 5.25%) on any short credit balance, and will even negotiate higher rates for large balances.  Meanwhile they charge a margin rate of at most only 75bp over the Broker Call rate (currently 7%) and offer a competitive money-market sweep (currently 4.45%).

Thinkorswim, which specializes in options and derivatives, offers a 1.75% rebate on short balances above $100k, with up to 2.25% on balances over $1MM.  They sweep at Fed Funds – 125bp, and margin at 225bp over Fed Funds.

Who Cares, Don’t Tell?

Bob Barr offers disingenuous arguments against the “Don’t Ask, Don’t Tell” law on military service by homosexuals. I would welcome the repeal of this law because that would deprive liberals of their favorite excuse for attacking our military institution. It would be refreshing if colleges like Yale, my alma mater, could no longer hide behind “Don’t Ask, Don’t Tell” to justify their lack of support for ROTC and military recruiters.

But Mr. Barr naively claims that this policy has resulted in the firing of over 11,000 soldiers, costing taxpayers over $360 million. Almost any serviceman can tell you that a general discharge for homosexuality is one of the most convenient ways out of an unpleasant service contract. Many believe that a good number of those discharged for homosexuality were simply exploiting that fact.

Contrary to Mr. Barr’s insinuations, soldiers are not routinely kicked out of the military for a mere slip of the tongue. He talks of “rounding up gays and lesbians” and “unconscionable intrusion” into the lives of suspected homosexual servicemen. But those days ended when Congress signed this policy into law: Our military has taken its obligations under the “Don’t Ask” clause very seriously. Towards the end of his essay Mr. Barr admits as much, suggesting a poll found, “A majority of those who knew someone gay in their unit said the person’s presence had no negative impact on unit morale.” That isn’t a poll question one could ask in an institution busy hunting and persecuting homosexuals.

As an Air Force officer I knew homosexuals who served and who continue to serve in compliance with this law. Perhaps it is unfair that homosexuals must keep their sexuality discreet while heterosexuals can flaunt their orientation. But even heterosexual soldiers have to abide numerous regulations constraining their sexual behavior that may surprise civilians.

We must remember that military service is a very serious institution, not a forum for personal expression.

Shareholder Rights

Shareholder activism and the evangelism of dueling academics like Lucian Bebchuk and Stephen Bainbridge have renewed the question of whether current laws do enough to secure shareholder rights.  In theory, Shareholders elect Trustees who oversee corporate Officers who are responsible for performance of a company.  It sounds like it should be a little democracy where the motto is “one share one vote.”

In practice many corporations are structured so that Shareholders get little say in anything other than whether they’re happy with the status quo.  Trustees often end up more beholden to the Officers they are supposed to be policing.  Activist Shareholders have been crying foul as they discover that they can’t always effect the changes they want through shareholder votes.

But the real “shareholder vote” was always supposed to be one’s right to sell shares and take one’s capital elsewhere.  And here we find the real rub: Institutional shareholders may have that luxury, but individual investors generally do not.  If they sell then they have to pay capital gains taxes.  I.e., there is a tax on the ultimate shareholder vote!

Real shareholder activists should be agitating for tax reform.

… Back to Federalism

This is a convenient point to note that the federal government has not only encroached upon the ultimate shareholder vote, but has also trampled the ultimate citizen’s vote: The right to vote with one’s feet.

If federalism were respected in this country then we would have fifty competing governments, each with the ability to offer a significant political alternative to its citizens.  Those who are unhappy with their current government could cast their electoral votes to change it, but they could also vote with their feet by moving to a state that more closely represented their interests.

Lamentably, since the federal government has usurped many powers that belong to the states, U.S. citizens have lost that right.  No matter which state you move to, the political regime is largely the same.  It’s as if there were only one company you could invest in.  Kind of communist, isn’t it?

Fine Water

Ever since I read this review of a gallon of milk on Amazon I have enjoyed the subtle sarcasm in the blurbs that accompany those specialty restaurant menus for wine, martinis, single-malt scotch, etc.  I hit the jackpot on an NCL cruise where I found a four-page “Water menu.”  It listed bottled waters by bubbliness, and included such gems as the $11/liter “Ramlosa” from Sweden, “Discovered in the late 1800s by accident while drilling for coal, this water was later analyzed and proven to be as pure and rich in minerals as the most famous waters of Europe.”

Nevertheless, I think it’s fair to devote a little bit more attention to drinking water.  Time magazine this week has a feature on “Fine Water” that is both amusing and illuminating:

[A]bout 75% of the fine-water experience is mouthfeel–basically, how many bubbles there are and how big they are. Some 20% comes from how dense the liquid is with minerals such as calcium and magnesium–which, to my shock, is listed on the side of most bottles as the TDS: total dissolved solids. The remaining 5%, Mascha claimed, comes down to pH balance: slightly alkaline waters taste sweet; acidic ones have a tinge of sourness.

Dolphin Racing

OK, I know this is the weekend of bizarre ideas, but I got to swim with bottlenose dolphins today at Discovery Cove and watch them perform at Sea World, and I’m wondering why dolphin racing isn’t an established sport.  After all, we race horses, camels, and dogs.  Dolphins are magnificent marine mammals — not only intelligent and social, but also extremely fast and easily capable of carrying people through the water.  I even watched a pair take a harness and pull a man standing on their backs.  It’s a wonder that none of the Arabian billionaires have stepped up to sponsor and train their own pod for harness racing.

Futurist: Smart Walls

I’m not very keen on “futurists,” but today I’m taking a break from my contempt for them to offer my own vision of the future: Smart walls.  Future walls will be insulated, sturdy modular panels capable of controlling every phase and frequency of electromagnetic radiation.  Plug them into a central control and they will:

  • Pump heat from one side to another, providing optimal heating and cooling of rooms with no hotspots.
  • Offer high-resolution emission of visible light, so that any spot on a wall can provide not only space or task lighting, but also can serve as a video display.
  • Selectively transmit visible light, so that a window can be opened anywhere on any wall, and can be dimmed or shaded electronically.
  • Transmit power wirelessly to other devices that can work off of resonant current.

I.e., walls will now be the feature of a living space, instead of dumb dividers pockmarked by power and data outlets, ducts, lights, and switches.  And users will no longer be constrained by the static placement of receptacles and windows.

Continue reading “Futurist: Smart Walls”

Guests and Citizens

Daniel Henninger got in trouble with opponents of immigration when he suggested, “Conservatives will pay a price for demoting economic forces in immigration.”  Today he summarized their eminently reasonable platform as follows:

They want the borders secured, the laws obeyed, English spoken, taxes paid, costs raised on employers of illegal workers, welfare payments suppressed, enclaved Spanish neighborhoods broken up and a very, very long path to citizenship.

The obvious solution to the immigration “problem” is to open our borders to let in as many “guest workers” as the market demands, but also open the flow in the other direction to readily expel as many non-citizens as try to take advantage of our country.  I.e., if you can do something better or cheaper than us then come on over, but break our laws or abuse our system and you’ll get sent back from whence you came.


Proper citizenship is a social contract between each citizen and his country.  It is a peculiar contract because it is hereditary, and since most of us are born into our citizenship we don’t have to think deeply about it.  But if people stopped to consider the rights, benefits, and obligations of this contract, then most would agree that there should be significant obstacles to extending citizenship to outsiders.  Why?  For one thing a great deal of citizenship amounts to social insurance, and a fundamental characteristic of insurance is that if you allow people to opt into an insurance system after their insured risks are known then the system will collapse.  (Another reason citizenship traditionally excludes “outsiders” is the cultural issue: Citizens are expected, on the whole, to conform to the culture of the citizenry.  I don’t know if this is essential to the preservation of a country, but there is more than enough academic historical material on cultural assimilation to weigh that question.)

The question of illegal immigration has gotten tangled up with the question of how we should grant citizenship to those who are not born to existing citizens.  (At present the United States also grants citizenship to anyone born on U.S. soil, which is unnecessary, and which complicates these questions further.)  I think citizenship should only be gained through significant service, tax-paying, or some other contribution to the country that exceeds whatever a candidate could expect in return.  But this is a separate question from the matters of illegal immigrants and the market demand for foreign labor.


One obstacle to an open worker market is the number of American workers who are used to the layers of labor protectionism created by current immigration policy.  For example, it is extremely difficult for skilled professionals to work here illegally.  The number of visas granted annually for them to work legally is so small that it is exhausted within the first 48 hours of each year.  So the supply of skilled labor is artificially depressed, which artificially elevates skilled wages.  If the markets were allowed to balance it is almost certain that skilled Americans would see their wages drop.  (They may even lose their current jobs — particularly if they are unwilling to work for the lower market-clearing wage.)  But that’s a myopic way of looking at this matter: After all, if labor is cheaper then goods and services will also be cheaper.  As with all markets, those who were profiting from protectionism will lose their rents, but overall everyone will be better off.

Granted, the transition to an open labor market would have to be gradual to allow currently protected workers to adapt.  That transition is easy to implement through quotas (like we already have) or excess taxes on guest workers.  But in the end productive workers are an asset to a country and to an economy, not a liability.  We want more of them, not fewer.  The labor market is not a fixed pie, with a fixed number of jobs to give out.  Just because a foreigner takes your job doesn’t mean there isn’t something else for you to do.  On the contrary, more workers — particularly entrepreneurs, which can come from anywhere — tend to enlarge the labor market.  In the big picture more workers means more and cheaper goods and services for everyone, and more economic power to pursue whatever agenda the citizenry elects.

We want as many productive guest workers as our economy can employ, but we do not need to tolerate or accept law-breakers or free-loaders to get them.  As citizens we govern our own social contract, and we can exclude those who would abuse it.

Europe Imitates Anthem

Brian Carney, in an article on government approaches to global warming, notes a profound difference in the philosophies between Europe and America:

[T]he characteristic American response to, say, climate change, is to believe that technologies— and even companies—that do not now exist will crop up to solve the problem, assuming there is a problem. The characteristic European response, as exemplified by the German conspiracy theorist in Venice, is to focus on how to get the businesses to behave “better.

Anyone who remembers Ayn Rand’s Anthem will find this comment particularly salient:

Most European employment law is focused on preserving the jobs that already exist. Policies designed to create new jobs are viewed as threatening to the status quo….

Tapping Waste Heat

We are surrounded by heat differentials that represent usable energy, but that currently go untapped.  All of our generators, fuel engines, and electric devices throw off waste heat.  The amount of waste can be astonishing — for example, piston engines aren’t even 30% efficient!  But waste heat doesn’t have to be wasted:  Physicists are demonstrating thermoacoustic electric generators (with no moving parts!) that can convert some of this (maybe 20% at best) back to electricity.

Jennifer Ouellette’s blog puts this in context with a fascinating review of acoustic energy technology, from sonoluminescence to sonofusion.

Unlock Adolescent Productivity

Society has essentially locked up the human capital of teenagers, putting adolescents in a sort of limbo where they are unable to participate productively in society.  Robin Moroney summarizes Robert Epstein’s thoughts on this:

Today’s schooling and child-labor laws worked well in the late 19th century, when factories brutally exploited young workers, and a lifetime of education had to be packed into the start of life. A century later, the laws serve only to divorce teens from the adult world.

“They are free to spend, to be disrespectful, to stay out all night, to have sex and take drugs,” says Dr. Epstein. “But they’re not free to join the adult world, and that’s what needs to change.”

Parents who want to give their children “responsibility tied to significant rights” have few ways to do it. States have been increasing restrictions on teens since the 1960s. Having raised the drinking age, some states are considering prohibiting teens from attending parties where alcohol is served, even if they’re not drinking. Parents have few ways to resist such infantilization, other than by assigning household chores, which tends to increase household conflict.

Dr. Epstein recommends giving teens more options, privileges and responsibilities. He believes we should see schooling as a lifetime project, rather than something only for the young. He would allow some teens to work and set up businesses while still in school. He recommends establishing tests that teens could take to prove they’re competent to assume responsibilities like owning property or running a business, the way they can now if they want a driver’s license.

Hedge Fund Replication: Nuts!

In the year since Lo and Hasanhodzic floated the idea of hedge fund replication, a.k.a. hedge fund cloning, there has been plenty of discussion debunking the concept.  But a lot of it gets bogged down in statistical minutiae.

What astonishes me is that major players keep on rolling out replication products — Goldman Sachs’ Absolute Return Tracker, Merrill Lynch’s Factor Index, Deutsche Bank’s Absolute Return Beta Index, JP Morgan….  This is either naive or sarcastic, as a simple explanation should show:

Continue reading “Hedge Fund Replication: Nuts!”