President Vaclav Klaus of the Czech Republic has just given an important speech in Prague on Central and Eastern Europe and on the IMF. Among other lessons of the global financial crisis he points to the growing menace of the IMF:

I consider the IMF a barbaric relic from the Keynesian and fixed-exchange rate era. I know it is a harsh verdict but Keynes himself repeatedly used similar strong statements about his colleagues which justifies my using such a terminology. 

I am convinced the IMF should be dismantled or radically restructured as soon as possible. To do the opposite, to increase its role as it happened as a result of the last year’s G20 decision in the middle of the panic connected with the then looming crisis or to speculate about creating similar institutions on individual continents (especially in Europe) is a wrong way to go. It is yet another manifestation of a mistaken and dangerous global governance mindset which – to my great regret – has been getting more and more support in the intellectual and political circles these days. To whom and how at all can the IMF be held responsible for its activities? And if its proposals or measures turn out to be mistaken (and this can happen very easily), who will face the consequences? Certainly not the IMF. (emphasis in original)

NPR reports on more doctors giving up private practices and going to work for hospitals. Hospitals think they can manage care better and get more patients, and doctors like being relieved of administrative headaches. But it isn’t a perfect solution. Reporter Jenny Gold notes one of the problems:

GOLD: This isn’t the first time hospitals have gone doctor shopping. In the 1990s, hospitals bought up as many practices as possible. Dr. Bill Jessee is the president of the Medical Group Management Association. He remembers the ’90s as something of a disaster.

Dr. BILL JESSEE (President, Medical Group Management Association): The first thing a lot of physicians did was took a vacation. And when they came back, they weren’t working as hard as they were before their practice was acquired.

Indeed. This is a standard insight of economics. People work harder when they have something to gain. There are real benefits to the division of labor, including corporations where salaried employees contribute to a joint product, but there are also risks that employees won’t work as hard when their compensation isn’t directly tied to their output. Managers and economists have searched for solutions to the “shirking” problem. In this case the hospitals are experimenting with bonus systems based on how many patients the doctors see. The problem is much more significant, of course, in government, which is far more restricted in its ability to use merit pay, bonuses, or other performance-related pay systems. Thus the widespread impression that government employees don’t work as hard as private-sector employees — and one reason that it’s a good idea to leave as many services as possible in the private sector.

The NPR story also reminded me of Malcolm Gladwell’s New Yorker article on Philo T. Farnsworth, the inventor of television. Gladwell dismisses the romantic notion of the lone inventor and says that Farnsworth would have been better off working for a big corporation, where other people would have worried about raising capital, fending off lawsuits, and all the little details of management and left Farnsworth free to invent:

Farnsworth was forced to work in a state of chronic insecurity. He never had enough money.…he did not understand how to raise money or run a business or organize his life. All he really knew how to do was invent, which was something that, as a solo operator, he too seldom had time for.

This is the reason that so many of us work for big companies, of course: in a big company, there is always someone to do what we do not want to do or do not do well–someone to answer the phone, and set up our computer, and arrange our health insurance, and clean our office at night, and make sure the building is insured. In a famous 1937 essay, “The Nature of the Firm,” the economist Ronald Coase said that the reason we have corporations is to reduce the everyday transaction costs of doing business: a company puts an accountant on the staff so that if a staffer needs to check the books all he has to do is walk down the hall. It’s an obvious point, but one that is consistently overlooked, particularly by those who periodically rail, in the name of efficiency, against corporate bloat and superfluous middle managers. Yes, the middle manager does not always contribute directly to the bottom line. But he does contribute to those who contribute to the bottom line, and only an absurdly truncated account of human productivity–one that assumes real work to be somehow possible when phones are ringing, computers are crashing, and health insurance is expiring–does not see that secondary contribution as valuable.…

Philo Farnsworth should have gone to work for RCA. He would still have been the father of television, and he might have died a happy man.

Here are a handful of the posters being used in the United Kingdom to fight the perversely-destructive proposal to increase tax rates on capital gains. (for an explanation of why the tax should be abolished, see here)

Which one is your favorite? I’m partial to the last one because of my interest in tax competition.

But this isn’t just a popularity contest. With Obama pushing for higher capital gains rate in America, it’s important to find the most persuasive ways of educating people about the damage of class-warfare tax policy.

By the way, “CGT” is capital gains tax, and “Vince” and “Cable” refers to Vince Cable, one of the politicians pushing this punitive class-warfare scheme.

Late last month, the National Research Council released a book entitled Biometric Recognition: Challenges and Opportunities that exposes the many difficulties with biometric identification systems. Popular culture has portrayed biometrics as nearly infallible, but it’s just not so, the report emphasizes. Especially at scale, biometrics will encounter a lot of challenges, from engineering problems to social and legal considerations.

“[N]o biometric characteristic, including DNA, is known to be capable of reliably correct individualization over the size of the world’s population,” the report says (page 30). As with analog, in-person identification, biometrics produces a probabilistic identification (or exclusion), but not a certain one. Many biometrics change with time. Due to injury, illness, and other causes, a significant number of people do not have biometric characteristics like fingerprints and irises, requiring special accommodation.

At the scale often imagined for biometric systems, even a small number of false positives or false negatives (referred to in the report as false matches and false nonmatches) will produce considerable difficulties. “[F]alse alarms may consume large amounts of resources in situations where very few impostors exist in the system’s target population.” (page 45)

Consider a system that produces a false negative, excluding someone from access to a building, one time in a thousand. If there aren’t impostors attempting to defeat the biometric system on a regular basis, the managers of the system will quickly come to assume that the system is always mistaken when it produces a “nonmatch” and they will habituate to overruling the biometric system, rendering it impotent.

Context is everything. Biometric systems have to be engineered for particular usages, keeping the interests of the users and operators in mind, then tested and reviewed thoroughly to see if they are serving the purpose for which they’re intended. The report debunks the “magic wand” capability that has been imputed to biometrics: “[S]tating that a system is a biometric system or uses ‘biometrics’ does not provide much information about what the system is for or how difficult it is to successfully implement.” (page 60)

“Biometric Recognition: Challenges and Opportunities” is a follow-on to the 2003 National Research Council report, “Who Goes There?: Authentication Through the Lens of Privacy.” That was one of few resources on identification processes and policy when I was researching my book, Identity Crisis: How Identification is Overused and Misunderstood. (Mine is quite a bit more accessible than this new book, so if you’re interested in the field, you might want to start there.)

There is nothing inherently wrong with biometrics. They will have their place, and they will make their way into use. But the dream of a security silver bullet in biometrics is not to be. Identity-based security—using the knowledge of who people are for protection—is valuable and useful in day-to-day life, but it does not scale. National or world ID systems would not secure, but they would carry large costs denominated in both dollars and privacy.

A number of Cato friends — including senior fellow Randy Barnett, former tech policy director Tom W. Bell, David Friedman, Nadine Strossen, and Erik Luna (Lindsay Lohan’s favorite law prof) — have endorsed California’s Proposition 19, which would decriminalize and regulate marijuana. Also among the 65 signers of the petition are some professors with whom we have disagreed, such as Erwin Chemerinsky.

It remains to be seen whether a group of the country’s smartest legal scholars will be any match for the combined weight of the Obama administration, the leading Democratic and Republican candidates for office in California, and almost all the major newspapers in the state. Reason editor Matt Welch, who has been monitoring newspaper editorials, tells me that all of the 21 largest papers that have editorialized on Proposition 19 have opposed it.

That’s about as overwhelming as the editorial opposition to Proposition 13 back in 1978. All major papers except the now-defunct Los Angeles Herald Examiner opposed the granddaddy of tax-cutting initiatives, but it passed with 65 percent of the vote. Perhaps Proposition 19 will be equally successful as a way for voters to thumb their noses as the political establishment.

As Welch says:

I’ll reiterate and update my previous pitch: If Dianne Feinstein, Meg Whitman, Jerry Brown, Barbara Boxer, Dan Lungren, Steve Cooley, Lee Baca, 49 California congresspeople, the California Chamber of Commerce, the Sacramento Bee, the San Francisco Chronicle, and Dean Singleton’s MediaNews empire are against it, the vote-yes commercials write themselves.

Roger Pilon mentions two interesting articles on the tea party movement in today’s Wall Street Journal. I have a feeling lots of people don’t read the Saturday Wall Street Journal, even though the Journal has made great efforts to promote it, including promising to deliver it to your home or country estate or private island if you normally get the Journal at your office. As my weekend Washington Posts get thinner and thinner, I can’t help noticing that the weekend Journal is getting bigger. If you didn’t read today’s Journal, you missed — in addition to Haidt and Berkowitz on the tea parties — Judy Shelton’s interview with Robert Mundell, Theodore Dalrymple’s atheist take on the value of religion in the Chilean mine, a brave article by a Chinese activist already under “residential surveillance” about growing agitation for democracy, Matt Ridley on Fibonacci, Larry Miller on the Marx Brothers, Amity Shlaes on American capitalism, and more college football analysis than the Washington Post.

In a long essay in this morning’s Wall Street Journal, “What the Tea Partiers Really Want,” University of Virginia psychology professor Jonathan Haidt argues, as the subtitle puts it, that “the passion behind the populist insurgency is less about liberty than a particularly American idea of karma.” Taking his cue from Dick Armey and Matt Kibbe’s claim in their new book, Give Us Liberty: A Tea Party Manifesto, that tea partiers “just want to be free, … so long as we don’t infringe on the same freedom of others,” Haidt notes that his research shows that while self-described libertarians agree most strongly with that view, liberals are not far behind, in contrast with the social conservatives “who make up the bulk of the tea party,” who are more tepid in their endorsement of that idea.

So why are libertarians and conservatives largely teamed up in the tea party? Haidt doesn’t really answer that question. Rather, his main aim, as noted, is to show that the tea party’s moral passion is not so much about liberty as about “an old and very conservative idea” of karma, which “combines the universal human desire that moral accounts should be balanced with a belief that, somehow or other, they will be balanced.” In other words, “kindness, honesty and hard work will (eventually) bring good fortune; cruelty, deceit and laziness will (eventually) bring suffering. No divine intervention is required; it’s just a law of the universe, like gravity.”

Yet in “the last 80 years of American history” the welfare state has undermined that moral balance, Haidt continues, nowhere more clearly, recently, than with the Bush bank bailout, using taxpayer dollars, which Armey and Kibbe claim was the real start of the tea-party movement.

Listen, for example, to Rick Santelli’s “rant heard ’round the world” on CNBC last year and its most famous lines: “The government is promoting bad behavior,” and “How many of you people want to pay for your neighbors’ mortgage that has an extra bathroom and can’t pay their bills?” It’s a rant about karma, not liberty.

Haidt is certainly on to something here. And he develops and illustrates his thesis in some detail, including how the modern liberals’ focus on equality, and their attraction to government programs securing it, makes them uneasy with this karma, separating them from libertarians and conservatives. But he also argues that research that he and a colleague have done on “the five main psychological ‘foundations’ of morality” shows that “libertarians are morally a bit more similar to liberals than to conservatives,” leading him to conclude that it’s not clear how long the tea party blend of libertarians and conservatives can stay blended.

I won’t go into the details of Haidt’s five main psychological foundations of morality, except to say that, at least as presented in this essay, they raise as many questions as they answer. I will add, however, that lumping people into even self-identified ideological groupings is always problematic, since any such “group” will be constituted by individuals with a range of views and tendencies. Moreover, and more important, the contrast Haidt draws between liberty and what he calls karma is doubtless overdrawn. After all, the “libertarian” focus on liberty and the “conservative” focus on “karma” most often come to the same thing, at bottom. The “conservative” notion of individual responsibility, coupled with positive and negative sanctions, is fully realized only in a regime of liberty of a kind that “libertarians” have long promoted. In fact, to flesh that out more fully, the Journal has another useful essay this morning on the editorial page, Peter Berkowitz’s “Why Liberals Don’t Get the Tea Party Movement.” Much to think about as we cruise to the elections little more than two weeks away.