Thursday, October 28, 2004

Surprise! Corruption in Massachusetts!

US Marshall Gets Full-Time Pay For A Few Hours of Work

Runs Errands While On Duty

It's 2:58 on a gorgeous fall afternoon, and US Marshal Anthony Dichio is 35 miles from the federal courthouse in Boston where he works. As he steers his government-issued sport utility vehicle along the leafy roadways of Westford, Dichio lazily hangs his left arm out the window.

He'll be home in three minutes, having put in a total of three hours and one minute in the office.

For Dichio, it was a short, but not the shortest day he worked during 10 recent days on which the Globe observed him. On two of the days, he didn't go into the office at all.

On this day, Dichio arrived for work at 9:41 a.m., left at 12:42 p.m., and spent a leisurely two hours on the way home shopping at a Verizon Wireless store and dining alone at a Bertucci's restaurant.

The Globe investigation found that Dichio, who is paid $129,000 to protect judges, juries, and jailed suspects at Massachusetts' three federal courthouses, rarely puts in a full day on the job.

For the 10 days in late September and October during which the Globe observed him, Dichio worked an average of four hours and 17 minutes. For each of the days, according to time sheets obtained by the Globe, he was credited with a full eight hours of work.

The surveillance was conducted by two reporters, who were sometimes joined by a Globe photographer. The Globe staked out Dichio's Westford neighborhood, noted his departure time each day, and followed his route from there. On days when he went to his office, which is located in the federal courthouse in Boston, the Globe kept watch on the only exit of the building's garage, to record his time of departure from the courthouse and follow him home.

Dichio declined to comment to the Globe. But a spokesman for the director of the US Marshals Service, after being told of the Globe's findings, said the department regards the position as full time and would conduct a review of Dichio's performance.

''We are going to get to the bottom of this," said Donald Hines, a spokesman for director Ben Reyna. ''We will find out the truth and take whatever steps are appropriate. The director is concerned about these allegations."

The Marshals Service, Hines said, will examine the electronic security system at the federal courthouses in Springfield, Worcester, and Boston to check the times Dichio entered and exited. It will also review Dichio's cellphone and computer records, Hines said.

''Those will be looked at," he said.

Hines added that the marshal has discretion, as a manager, to set his own hours, so long as the operation is well managed.

Dichio's appointment as marshal of Massachusetts in August 2002 was highly controversial. A career State Police trooper who served on the security detail for former governor Paul Cellucci, Dichio's nomination was criticized because he lacked antiterrorism and management experience. The appointment was controversial in part, because the Marshals Service was being called on to play a larger Homeland Security role, including bolstering security at the nation's airports, after the attacks of Sept. 11, 2001.

Dichio, however, had the strong backing of Cellucci, then US ambassador to Canada, and President Bush appointed him over the opposition of the state's two US senators and nine of its 10 US representatives.

Dichio supervises a staff of at least 120 people who are responsible for providing security at the federal courthouses in Boston, Springfield, and Worcester. They also protect the 17 federal judges in the state, as well as federal juries and witnesses, and transport jailed suspects to and from court appearances.

The Marshals Service also handles the apprehension of federal fugitives, asset forfeiture, and witness protection programs. In addition, marshals participate in various task forces with the State Police and other law enforcement agencies.

Dichio's three predecessors would not comment on his performance, but said that when they served as marshal, it was a demanding job that consumed at least 40 hours a week.

''There are some pretty heavy decisions the marshal must make affecting law enforcement," said James B. Roche, who became deputy director of the Marshals Service after seven years as the US marshal for Massachusetts in the 1980s. ''You were expected to work a normal business week at the office, unless on official business to one of the other courthouses," Roche said.

''The job demanded that you have a physical presence at the courthouse, and that's what I did," said Nancy McGillivray, who served from 1994 to 2002.

''I would do at least 40 hours a week at the courthouse or outside on business," said Robert Guiney, who held the position for three years prior to McGillivray.

Guiney and Roche were Republican appointees, while McGillivray was appointed by President Clinton.

Dichio's frequent absences from his office at the federal courthouse in Boston have been a subject of frustration for some high-level court officials. In addition, some marshals have contended that his lack of visibility is hurting morale and diminishing the stature of the Marshals Service.

Besides his federal salary, Dichio, 44, receives an annual pension of $45,000 from the state because of his 22 years service as a trooper, according to the state treasurer's office.

Globe reporters began observing Dichio on Sept. 28 and concluded their surveillance on Oct 20, a period covering 16 workdays. (Oct. 11 was Columbus Day, a federal government holiday.) Dichio took vacation days three times during the period, and Globe reporters lost sight of him on roadways around Greater Boston on three other days, so those days were excluded from the calculation.

That left 10 days for which the reporters directly observed Dichio and can attest to his whereabouts.

On those 10 days, the Globe observed Dichio working less than 8 hours each day. But, according to documents obtained by the Globe, time sheets submitted to the marshal's office's ''certified timekeeper," the clerk in the Boston office who oversees payroll administration, give Dichio credit for working a full eight hours for each of the days.

David B. Taylor, deputy chief marshal for Dichio, declined comment on the discrepancy. It's not clear who personally submits Dichio's weekly hours to the clerk.

''I can't give you an explanation," Taylor said.

Asked how often Dichio was in the Boston courthouse, Taylor said: ''It's the District of Massachusetts. He's either here, Worcester, or Springfield."

But the Globe found that when Dichio was not at the office in Boston, he was frequently and often leisurely doing errands near his home in Westford, 36 miles from Boston.

On Wednesday, Oct. 13, for example, for which timesheets report he worked eight hours, Dichio did not leave home until shortly after noon.

Wearing shorts, a polo shirt with a US marshal's insignia, and leather clogs, he headed to the nearby Market Basket grocery store in his US Marshals-issued black Ford Explorer. He never went to the courthouse.

The policy of the Marshals Service, provides that government-issued vehicles are ''for official use," though the conduct of ''reasonable personal business is allowed," according to Hines, the spokesman.

At the Market Basket, he pushed a shopping cart down the aisles, sampling cheese at the deli counter and exchanging pleasantries with other shoppers. He left the store with five bags of groceries at 1:22 p.m., returned an hour later for bathroom cleaner, and stayed home the rest of the day.

On Friday, Oct. 1, Dichio went out to gas up his personal car at 10:36 a.m., stopped by the grocery, then the dry cleaners to pick up a woman's blouse. He was home the rest of the workday.

On most days, the former trooper drove the highways at speeds frequently exceeding 85 miles per hour to Boston, passing cars and changing lanes.

Read the whole story at

Unfortunately, this is happening by the thousand in Washington D.C. and across the U.S.A.

Tuesday, October 26, 2004

U.S. Senators' Stock Picks Beat The Market

The Wall Street Journal just picked up this story, but it actually hit the press back in February.

NPR's All Things Considered has an archived interview available here.

Study finds senators profit from privileged information

STEVE CHIO Staff Writer
March 30, 2004

A new study conducted by a Robinson College of Business professor and colleagues concluded some U.S. senators profit from the use of information exclusively available to them when making personal financial investments.

Dr. Alan Ziobrowski, Associate Professor of Real Estate at Robinson College of Business, is a co-author, along with Ping Cheng, assistant professor at Florida Atlantic University; James W. Boyd, associate professor at Kent State University; and Brigitte J. Ziobrowski, professor at Augusta State University, of the forthcoming article in the Journal of Financial and Quantitative Analysis titled, “Abnormal Returns from the Common Stock Investments of the United States Senate.”

The study suggests senators have an advantage over other investors because of information made available to them due to their position in the U.S. Senate.

Presently, there is no law restricting these government officials from participating in common stock transactions.

According to the U.S. Senate Ethics Manual, “The strong presumption would be that the member was working for legislation because of the public interest and the needs of his constituents and that his own financial interest was only incidentally related.…”

When asked if there is any difference between a senator’s actions and insider trading, Dr. Ziobrowski stated there is not.

“Technically speaking, all of them deny they did anything,” stated Dr. Ziobrowski. “None of them would want to acknowledge they are personally profiting from their positions.”

Looking at data gathered from Financial Disclosure Reports, which was passed by Congress in the 1970s to create a more ethical government, from 1993 to 1998, Dr. Ziobrowski and colleagues, determined the stocks bought by sixty-two senators who invested during this time period, yielded unusually high return rates compared to the overall market.

Implying the senators knew what stocks to buy, when to buy and sell.

Dr. Ziobrowski mimicked the senators’ activities by completing similar buy and sell transactions with the same stocks as the senators’.

With these stocks, Dr. Ziobrowski created a “senate portfolio,” and tracked the behavior of that portfolio against the market. “We concluded that on average the senate portfolio beat the market by 85 basis points (or 12% annually),” said Dr. Ziobrowski.

“From the studies we’ve done in the past, it’s virtually impossible to beat the stock market by a statistically significant margin,” said Dr. Ziobrowski, “…similar to going to Las Vegas and winning on a long term basis, the chances of them (senators) being that lucky are very small.”

Based on the data, the researchers were able to determine that the stocks the senators invested in performed very well after its purchase. When the stocks were sold, their profitability returned to normal.

How the senators got the abnormal returns is debatable.“That’s the conundrum, we don’t know how,” stated Dr. Ziobrowski, “I can envision a hundred different ways. Senator gets a phone call from a friend at the FDA, Pentagon; there’s a wide variety of vehicles that could be used here.”

Although, the research looked at both Democrat and Republican senators, the study did not find any significant data to suggest one party had greater returns. But the researchers found seniority to play an important role.

Meanwhile, the research showed senators with least seniority, those who are serving in their first term, had greater returns than senators who had served more than two terms.

“We don’t know why,” stated Dr. Ziobrowski. He suggested maybe “The new guys may have more need for funds…than the old guys who’ve been there for twenty years.”

Even though, the current public disclosure law requires the senate to report their assets and stock transactions, Dr. Ziobrowski stressed the need for the public to understand that the current system is only a cosmetic issue.

“Theory was you could look at what they own and you could make a decision as to whether they were acting ethically or not, but that’s not true,” Dr. Ziobrowski said. “It tells me what they bought…I may know they own the XYZ company, but how will I ever know if they were doing anything to help out XYZ.”

Dr. Ziobrowski stated he would like to see tighter government restrictions on the actions of U.S. Senators.“You put out these studies and hopefully get their attention and hopefully stir up something.”

Read the article at the GSU Signal.

Thursday, October 21, 2004

"The Campaign's Almost Over"

"The Campaign's Almost Over"

(to the tune of Oasis' "Champagne Supernova")

How many of your positions changed?
How many lies--isn't it strange?
Where were you when Bill was getting high?
Threw your medals on the Mall,
Said you dodged a cannonball,
Where were you when Bill was getting high?

That's why we will find you
losing in a landslide,
'Cause the campaign's almost over and you lied.
That's why we will find you
losing in a landslide,
'Cause the campaign's almost over,
The campaign's almost over and you lied.

Wake up at dawn to call the wives,
Say their husbands lost their lives,
"Wipe that tear away now from your eye."
4th I.D.'s behind a wall,
Taking flak and cannonballs,
Where were you when Bill was getting high?

That's why we will find you
losing in a landslide,
'Cause the campaign's almost over and you lied.
That's why we will find you
losing in a landslide,
'Cause the campaign's almost over,
The campaign's almost over and you lied.

People believed what you told us all to think all last summer.
One thing July, but then Dean died,
And now you say you haven't changed your mind.
Right, right, yeah right.

How many Rose Garden answers changed?
No WMD, isn't it strange?
Where were you when Bill was getting high?
"Alabama" and that's all
That you say when Rather calls.
Where were you when Bill was getting high?

That's why we will find you
losing in a landslide,
'Cause the campaign's almost over and you lied.
That's why we will find you
losing in a landslide,
'Cause the campaign's almost over,
The campaign's almost over and you lied.

- Author unknown

Wednesday, October 20, 2004

Financial Times on Austrian Economics

The bubbling up of Austrian analyses

By John Dizard

The criminal and civil suits brought in New York against the insurance underwriters and brokers for alleged anti-competitive practices started with a warning flag raised in this column last December 15.*

I had my doubts that officialdom would follow up on the industry's conflicts of interest, but here we are. All that concerns me now is whether I should look under my car before turning the ignition key.

A fair number of my libertarian friends, the more eccentric ones, that is, have for years described their economics theories as "Austrian". That means they subscribe to a set of analyses based on the works of Ludwig Von Mises and Frederick Hayek, along with their colleagues and successors. The Austrians were pretty much eclipsed from public attention by the Keynesians, the Chicago monetarists and, of course, the Marxists from the 1950s to the 1970s. It was only with the revival of market economics in the 1980s that the Austrians' work was treated as anything other than a joke.

The first real victory for the Austrians came with the collapse of communist regimes, something predicted by them and by Ronald Reagan, who had been mocked by mainstream thinkers for many of the same reasons. Reagan made the Austrians' case that market economics was the basis for political freedom, which became one of the tenets of the Clinton administration's foreign policy - uncredited, of course.

However, "serious" monetary economists still acted as if the real work was to be done by the quantitative analysts and bond desk jockeys at the Federal Reserve. The Austrians might be good enough propagandists for the unwashed in the Third World but what did they know about the real world of managing the US and global economies?

In Wall Street, though, the Austrian theory of the business cycle began to make its way into speculators' thinking. In the words of Roger Garrison, a contemporary Austrian economist: "The Austrian theory is a recognition that an extra-market force [the central bank] can initiate an artificial, or unsustainable, economic boom. The money-induced boom contains the seeds of its own undoing: the upturn, by the logic of the market forces set in motion, will be followed by a downturn . . . for Mises and Hayek, monetary expansion engenders a boom, which eventually leads to a bust."

The problem with any official recognition of this is that it implies that the Federal Reserve, and its chairman Alan Greenspan, could be capable of error. That is just what the "Austrians" say, sometimes without apology.

"It's the Fed, stupid!" howls the headline on the current edition of Grant's Interest Rate Observer. Jim Grant, whose publication is celebrating its 21st birthday, confesses under interrogation to having been an Austrian since the 1970s.

"The Austrians see a fundamental problem with a subsidised rate of interest," Mr Grant says. "They have a deep distrust of the idea of 'price stability', saying that in a time of productivity growth prices should be falling."

This was not a very interesting point of view to many people as long as they were all making a lot of money directly or indirectly off cheap credit. They also were not sympathetic to criticism of the Fed, which was considerately protecting everyone from the consequences of disasters such as Russian debt, Long Term Capital Management and the Asian crisis.

But things have changed.

"Hayek's The Road to Serfdom no longer has dust on it thanks to the 2000-01 recession and the end of the tech bubble," says Jim Bianco of Bianco Research. "You can tell by the use of the word 'bubble', as in real estate bubble, dotcom bubble, bond bubble, and so on. I became an Austrian in the early to mid-1990s."

One friend of mine in the financial markets who communicates regularly with a Fed governor, says that in the dark night of the governor's soul he has guiltily begun to think Austrian thoughts. Thoughts along the lines of: "Maybe we've created a mega-bubble with all our bailouts and monetary management. How are we going to get out of this without going through the mother of all crashes?"

Apparently, though, Mr Greenspan, before whose wisdom the two main presidential candidates both bow, has no such doubts. That might seem odd, considering his libertarian past. But I have noticed that people at the end of their careers seem to look forward to the prospect that, after their departure, all will turn to dust.

So, for the moment, the Austrian interpretation of the business cycle does not prevail on Independence Avenue. Instead, its adherents are, so to speak, conducting cattle raids and sacking provincial towns at the edge of the empire, towns such as Fannie Mae and Freddie Mac.

But by the next recession they might be among the contenders for influence over US monetary policy.

* See dizard-insurers

Read the article at

Saturday, October 16, 2004

John Stewart Takes Down Crossfire

A few excerpts from probably the finest Crossfire segment ever (my apologies to Bob Novak):

STEWART: See, the thing is, we need your help. Right now, you're helping the politicians and the corporations. And we're left out there to mow our lawns.

BEGALA: By beating up on them? You just said we're too rough on them when they make mistakes.

STEWART: No, no, no, you're not too rough on them. You're part of their strategies. You are partisan, what do you call it, hacks.


STEWART: Now, listen, I'm not suggesting that you're not a smart guy, because those are not easy to tie.

CARLSON: They're difficult.


STEWART: But the thing is that this -- you're doing theater, when you should be doing debate, which would be great.

BEGALA: We do, do...


STEWART: It's not honest. What you do is not honest. What you do is partisan hackery. And I will tell you why I know it.

CARLSON: You had John Kerry on your show and you sniff his throne and you're accusing us of partisan hackery?

STEWART: Absolutely.

CARLSON: You've got to be kidding me. He comes on and you...


STEWART: You're on CNN. The show that leads into me is puppets making crank phone calls.


STEWART: You know, the interesting thing I have is, you have a responsibility to the public discourse, and you fail miserably.

CARLSON: You need to get a job at a journalism school, I think.

STEWART: You need to go to one.

The thing that I want to say is, when you have people on for just knee-jerk, reactionary talk...

CARLSON: Wait. I thought you were going to be funny. Come on. Be funny.

STEWART: No. No. I'm not going to be your monkey.


STEWART: Where's your moral outrage on this?

CARLSON: I don't have any.

STEWART: I know.


CARLSON: I do think you're more fun on your show. Just my opinion.


CARLSON: OK, up next, Jon Stewart goes one on one with his fans...


STEWART: You know what's interesting, though? You're as big a dick on your show as you are on any show.


CARLSON: Now, you're getting into it. I like that.


CARLSON: OK. We'll be right back.


Read the whole transcript of John Stewart vs. Tucker Carlson & Paul Begala @


Here is the video from

Wednesday, October 13, 2004

Causality in the Universe, Duh

How To Build The Universe

Including cause-and-effect in equations produces four-dimensional space-time

Philip Ball

Is causality an inherent and necessary characteristic of the Universe, or just an illusion produced by the way our brains interpret the world?

It's real, say physicists, who believe they have worked out how the Universe is constructed from the tiniest building-blocks of space-time. The finding could also help the development of a theory of quantum gravity, which would marry the two currently estranged physical theories of the Universe: quantum theory and relativity.

Quantum theory describes the Universe at the tiniest possible scale - about 10-35 metres (about 1020 times smaller than the radius of a proton). It predicts that on this scale the apparently smooth fabric of space and time must degenerate into a kind of 'foam' in which connections between different points are constantly appearing and vanishing.

Physicists have long been trying to figure out how the fuzzy nature of space-time at this tiny scale can give rise to the large four-dimensional Universe we see around us, as described by Einstein's theory of relativity.

Scientists studying the problem assume that each tiny piece of the foam is a kind of four-dimensional triangle, with three dimensions of space and one corresponding to time. The smooth fabric of space-time can be built up by gluing these triangular tiles together, just as a smoothly curved surface can be made from flat, two-dimensional tiles.

Because the quantum foam fluctuates through all kinds of configurations, constructing the physical Universe means adding up all the possible tiling patterns. You might think that this would inevitably generate a four-dimensional Universe - but it doesn't. Earlier researchers found that they got a space-time with either an infinite number of dimensions or just two. Neither of these looks at all like our Universe.

Construction work

Renate Loll of Utrecht University in the Netherlands and her co-workers have now found a way to assemble the pieces so that they inevitably produce a four-dimensional Universe. Instead of assuming that all tilings are allowed, they impose two constraints.

First, the theory of relativity must apply within each individual tile (so that nothing can travel through it faster than light) and second, the assembly must preserve causality. This means that a piece of space-time cannot be constructed in such a way that an 'event' - some change in the Universe - precedes its cause.

When they enforced these criteria on their calculations, the researchers ended up with universes with three spatial dimensions and one time dimension - just like our own1. It was "like magic", says Loll.

Even more startling, they found that typical universes generated this way started off small and got bigger - they expanded, just like the real Universe has done since the big bang. This was completely unexpected - there was nothing in the tiling rules that seemed to demand it. "We're completely stunned," says Loll.

She admits that there's no a priori reason to demand that quantum space-time has to observe causality: the researchers put it into their equations by hand. But that, it seems, is the only way to end up with a realistic Universe.

Read the news at

Monday, October 11, 2004

The Feds Are Watching Your Chat Room

Government Funds Chat Room Surveillance Research

Michael Hill (AP)

TROY, N.Y. (AP) - Amid the torrent of jabber in Internet chat rooms - flirting by QTpie and BoogieBoy, arguments about politics and horror flicks - are terrorists plotting their next move?

The government certainly isn't discounting the possibility. It taking the idea seriously enough to fund a yearlong study on chat room surveillance under an anti-terrorism program.

A Rensselaer Polytechnic Institute computer science professor hopes to develop mathematical models that can uncover structure within the scattershot traffic of online public forums.

Chat rooms are the highly popular and freewheeling areas on the Internet where people with self-created nicknames discuss just about anything: teachers, Kafka, cute boys, politics, love, root canal. They are also places where malicious hackers have been known to trade software tools, stolen passwords and credit card numbers. The Pew Internet & American Life Project estimates that 28 million Americans have visited Internet chat rooms.

Trying to monitor the sea of traffic on all the chat channels would be like assigning a police officer to listen in on every conversation on the sidewalk - virtually impossible.

Instead of rummaging through megabytes of messages, RPI professor Bulent Yener will use mathematical models in search of patterns in the chatter. Downloading data from selected chat rooms, Yener will track the times that messages were sent, creating a statistical profile of the traffic.

If, for instance, RatBoi and bowler1 consistently send messages within seconds of each other in a crowded chat room, you could infer that they were speaking to one another amid the "noise" of the chat room.

"For us, the challenge is to be able to determine, without reading the messages, who is talking to whom," Yener said.

In search of "hidden communities," Yener also wants to check messages for certain keywords that could reveal something about what's being discussed in groups.

The $157,673 grant comes from the National Science Foundation's Approaches to Combat Terrorism program. It was selected in coordination with the nation's intelligence agencies.

The NSF's Leland Jameson said the foundation judged the proposal strictly on its broader scientific merit, leaving it to the intelligence community to determine its national security value. Neither the CIA nor the FBI would comment on the grant, with a CIA spokeswoman citing the confidentiality of sources and methods.

Read the entire article on chat room surveillance at Tampa Bay Online.

Saturday, October 02, 2004

Star Wars: A Reality?

All's Fair in Space War

By Noah Shachtman

The American military has begun planning for combat in space, an Air Force report reveals. And commercial spacecraft, neutral countries' launching pads -- even weather satellites -- are all on the potential target list.

"Air Force Doctrine Document 2-2.1: Counterspace Operations" is an apparent first cut at detailing how U.S. forces might take out an enemy's space capabilities -- and protect America's eyes and ears in orbit. Signed by Air Force Chief of Staff Gen. John Jumper, the unclassified report sketches out who would be in command during a space fight, what American weapons would be used and which targets might be attacked.

In that way, the report is similar to hundreds of others in the Pentagon's archives. But buried in the report's acronyms and org charts are two striking sentiments, analysts say. First, the document declares that the U.S. Air Force is duty-bound to slap down other countries' space efforts, should the need arise. Then, Counterspace Operations (.pdf) declares that a satellite or ground-control station doesn't have to belong to one of America's enemies in order to get hit.

"You could be inflicting large costs on a company or country that has no role in a war. And that introduces great possibilities for backlash and political fallout," warned Theresea Hitchens, vice president of the Center for Defense Information. "You could wind up damaging the capabilities of our allies -- or even ourselves."

But the Air Force may not have much of a choice, really. Nearly all the world's militaries -- including America's -- rely on private companies' satellites for relaying messages, taking pictures or guiding bombs. During the Iraq invasion, for example, commercial orbiters carried 80 percent of U.S. forces' satellite communications.

In the opening pages of Counterspace Operations, the Air Force announces that it has a new job: to maintain America's "space superiority" -- the "freedom to attack as well as the freedom from attack" in orbit. This emerging mission has become just as important to American forces as control of the skies, the report states. And together, the two form "crucial first steps in any military operation..."

Read the whole article on All's Fair in Space War at

Friday, October 01, 2004

Amartya Sen on Hayek's The Road To Serfdom

"An insight into the purpose of prosperity"

By Amartya Sen

Friedrich Hayek's combative monograph The Road to Serfdom had a profound impact on political, economic and social thinking in the decades that followed its publication 60 years ago, serving as an intellectual manifesto against socialist planning and state intervention. But are Hayek's ideas and arguments of any interest today, after the downfall of communism and the emergence of neo-liberalism as the dominant ideology of contemporary capitalism? I would argue that they remain extremely important.

Consider Hayek's insistence that any institution, including the market, be judged by the extent to which it promotes human liberty and freedom. This is different from the more common praise of the market as a promoter of economic prosperity. A huge part of economic theory is concerned with the prosperity argument, going back to Adam Smith and David Ricardo. That connection is indeed important, and it is not surprising that so much attention has been devoted to seeing the market mechanism from this perspective - defending its achievements as well as disputing particular claims and proposing qualified endorsements. Yet Hayek was surely right to insist on clarity regarding the purpose of seeking prosperity. Markets have to be judged, he argued, by their role in advancing freedoms, not just in generating more income (as Hayek once said: making money can be of interest only to the miser). This integrative perspective demands that we be concerned both with the outcome of market processes (including the economic prosperity it may generate and the extent to which that would advance human freedom) and with the processes through which these results are brought about (including the liberty of action that people have in an institutional system).

It is the perspective of seeing markets and other institutions in terms of their role in advancing freedoms and liberties of individuals that Hayek brought into singular prominence. It may be pointed out, in contrast, that despite the title of Milton Friedman's famous book (with Rose Friedman), Free to Choose, the criteria by which Friedman tends to defend the market mechanism are not liberty and freedom, but prosperity and utility ("being free to choose" is seen as a good means - a fine instrument - rather than being valuable in itself). Even though a few other economists, James Buchanan in particular (and, to some extent, John Hicks), have presented insightful ideas on a freedom-centred line of reasoning, it is to Hayek we have to turn for the classic articulation of this way of seeing the merits of the market mechanism and what it gives to society.

I am not persuaded that Hayek got the substantive connections entirely right. He was too captivated by the enabling effects of the market system on human freedoms and tended to downplay - though he never fully ignored - the lack of freedom for some that may result from a complete reliance on the market system, with its exclusions and imperfections, and the social effects of big disparities in the ownership of assets. But it would be hard to deny Hayek's immense contribution to our understanding of the importance of judging institutions by the criterion of freedom.

A second contribution of Hayek is of particular relevance to thinkers on the right of the political spectrum. In The Road to Serfdom, he gave powerful reason to indicate why explicit provision has to be made by the state and the society for the deprived and the dispossessed. While Hayek is often taken to be uncompromisingly hostile to any economic role of the state (other than what is needed to support the market mechanism), and certainly late in his life he gave grounds for thinking that this could indeed be his view, nevertheless in The Road to Serfdom Hayek's position is much broader and inclusive than that. Now that the welfare state is often under such attack, it is worth recollecting that the pioneering manifesto that championed the market mechanism on grounds of freedom did not reject the need for a welfare state and provided a reasoned defence of it as an institutional necessity.

A third contribution of Hayek is of particular interest to those on the left of the political spectrum. Hayek's critique of state planning is mainly based on a subtle psychological argument. He was particularly concerned with the way centralised state planning and the huge asymmetry of power that tends to accompany it may generate a psychology of indifference to individual liberty. As Hayek put it: "I have never accused the socialist parties of deliberately aiming at a totalitarian regime or even suspected that the leaders of the old socialist movements might ever show such inclination." One of Hayek's central points was that "socialism can be put into practice only by methods of which most socialists disapprove".

We can hardly ignore the massive accumulation of evidence - before and after publication of The Road to Serfdom - of tyrannical use of bureaucratic power and privilege, and the political and economic corruption that tends to go with it. Hayek's central point here was to note that even though socialism has a strongly ethical quality, that is not in itself adequate to guarantee that the results of trying to implement it will be in line with its ethics, rather than being deflected and debased by the psychology of power and the influence of administrative arbitrariness.

Hayek was insightful in drawing attention to a basic vulnerability that goes with unrestrained administrative authority, and in explaining why social psychology and institutional incentives are extraordinarily important. To take the massive evidence in socialist practice of departures from expected behaviour to be no more than easily avoided individual aberrations would be comparable to blaming the "few bad apples" to whom the leaders of the coalition forces point in Iraq when they refuse to consider the systematic corruptibility underlying the torture and brutality of an unrestrained system of imprisonment. Incidentally, Hayek's psychological insights into administration also tell us something about the genesis of those terrible contemporary events.

Our debt to Hayek is very substantial. He helped to establish a freedom-based approach of evaluation through which economic systems can be judged (no matter what substantive judgments we arrive at). He pointed to the importance of identifying those services that the state can perform well and has a social duty to undertake. Finally, he showed why administrative psychology and propensities to corruptibility have to be considered in determining how states can, or cannot, work and how the world can, or cannot, be run.

As someone whose economics (as well as politics) is very different from Hayek's, I would like to use the 60th anniversary of The Road to Serfdom to say how greatly indebted we are to his writings in general and to this book in particular. Dialectics is critically important for the pursuit of understanding, and Hayek made outstanding contributions to the dialectics of contemporary economics.

The writer, Lamont university professor at Harvard University, was awarded the Nobel prize for economics in 1998

Financial Times, Sept. 20, 2004.

Thank you to the Hayek Center's Taking Hayek Seriously for the link.

An Email Straight From Iraq

Farnaz Fassihi from the Wall St. Journal in Baghdad emails home with some sobering realities of the current situation.

"Being a foreign correspondent in Baghdad these days is like being under
virtual house arrest. Forget about the reasons that lured me to this job: a chance to see the world, explore the exotic, meet new people in far away lands, discover their ways and tell stories that could make a difference.

Little by little, day-by-day, being based in Iraq has defied all those reasons. I am house bound. I leave when I have a very good reason to and a scheduled interview. I avoid going to people's homes and never walk in the streets. I can't go grocery shopping any more, can't eat in restaurants, can't strike a conversation with strangers, can't look for stories, can't drive in any thing but a full armored car, can't go to scenes of breaking news stories, can't be stuck in traffic, can't speak English outside, can't take a road trip, can't say I'm an American, can't linger at checkpoints, can't be curious about what people are saying, doing, feeling. And can't and can't. There has been one too many close calls, including a car bomb so near our house that it blew out all the windows. So now my most pressing concern every day is not to write a kick-ass story but to stay alive and make sure our Iraqi employees stay alive. In Baghdad I am a security personnel first, a reporter second..."

Read the whole email on Iraq at Poynter Online.

My thanks to the Blog at

PATRIOT Act or Electronic Communications Privacy Act?

According to Sen. John Cornyn the Wednesday court ruling by the Southern District of New York that was reported in the press as striking down of a portion of the USA PATRIOT act actually focused on an amendment sponsored by Sen. Patrick Leahy in 1986.

For more info see John Cornyn's site.

And for more analysis see the Volokh Conspiracy.

As Orin Kerr points out (among many other things), as the end of the day nears, what will a journalist do?Read the whole 122-page legal opinion or just go by the ACLU press release?