Senator Norm Coleman, quoted in the NYTimes:

“Government is about first-class service. It is certainly not about first-class lifestyles.”

If I see another citation of this story as proof that we need national health care, I’m going to vomit. Supposedly, this man killed his wife because he couldn’t afford her medical bills. People on discussion boards like this one are sure that it’s because we don’t have one of those magical government systems that gives everyone all the health care they need. See, it’s because we’re too selfish and backward to have socialized medicine that a man in America deserves sympathy for throwing his sick wife off of a balcony to her death (of course it’s not possible that he was tired of caring for her or anything. After all, people always tell the truth about why they kill other people). This is the level we’ve fallen to- we actually believe that people deserve sympathy for committing cold-blooded murder because the government didn’t do enough to take care of them.

I frequently come across writings on economic issues that make me think, “If I wrote that, the people who taught me economics would slap me upside the head.” That crossed my mind as I read about the Supreme Court wrestling with the question: Are price floors good or bad? The NYTimes article on the SC decision presents it as a binary choice:either the court must decide that price floors are unequivocally “bad”, or courts must examine every case of every business from now until the end of time, deciding which price agreements are “good” and which are “bad”. When economic questions come before a court, they are treated as simplistic, good or bad, fair or unfair, with one magic answer a court can hand down from on high. On the other hand, this analysis of the Supreme Court’s price floor decision is spot on: What newspaper reporters, Supreme Court justices, and countless others don’t understand is that those decisions can’t be made in some esoteric environment, divorced from the real world in which consumers make choice and entrepreneurs respond to them. Just an example: I am acquainted with a small business that deals a product that can also be widely found through internet retailers. Their niche is providing in-depth knowledge of the different brands and personalized customer service, including repairs and upgrades of their products. Their competitors include so-called “drop ship” businesses. These are basically individuals, usually doing business over the internet, who take orders for a product from customers, then order the product from the company and have it shipped to the customer. In this way, they become dealers with very small overhead costs, allowing them to sell for lower prices than a brick-and-mortar business providing individualized advice and customer service both before and after the sale. If companies that make the product wish to support dealers who offer product knowledge and personalized service, one way to do that is through minimum pricing. The manufacturers are making a choice to have dealers of their products who compete on service, and entrepreneurs take advantage of that by selling both the product and the personalized service together. Other manufacturers can and do choose to let their dealers compete solely on price, doing volume sales to large retailers who can sell close to cost. These are not mutually exclusive; they can exist simultaneously in the market.
It’s a choice of a business model, and only the decisions that consumers make can tell us if it’s the right or wrong choice. Can price floors raise the cost of goods? Perhaps. But if they do, consumers are perfectly capable of punishing the businesses that do that. If consumers don’t care about customer service, the businesses that use price floors as I described will find out, without the intervention of any court, that they made the wrong choice. Whether price floors benefit consumers or not depends on the time, the place, the product, the customer, and a host of other factors that no judge or antitrust bureaucrat can know. Lawyers, judges, and “consumer advocates” are not behind the counter day after day, trying to figure out what customers want so that they can keep their business afloat. Entrepreneurs are, and they are part of an amazing system that does not need the wisdom of judges and central planners to tell them whether consumers benefit from their business models or not.

….by the Onion

This blog has hosted some, shall we say, interesting debates on the question of global warming. For those who are convinced that it is an urgent issue that requires action, I have a question. Suppose, for the sake of argument, that claims about global warming are all true. It is happening, we are causing it, and it will change the environment. In this way, global warming reminds me of terrorism. It exists. It’s bad. It causes real harm to people. It also gives rise to apocalyptic predictions about how terrible the consequences will be if we do nothing, it becomes “a threat to our very way of life”, and it is of course a problem so huge and intractable that only collective action coordinated by the government can stop it. So it was with terrorism. But what were the results that we got? The government’s solutions were at best inefficient and counterproductive and at worst gross violations of people’s rights. We now have prisons where we hold people without trial and torture them, we’re being spied on by our own government, we’re sending the young men and women of my generation to be maimed and bleed out their lives in a faraway country and an unwinnable war. It has become yet another reason for the state to devour more power, more money, and more lives. And six years later, we are no safer. Terrorism is not gone. The problem is not solved; indeed, our leaders speak of a war against it that will last beyond our lifetimes. It will consume our money, our freedom, and our people with no end in sight. So even if every single terrible prediction about global warming is true, why should I have any confidence whatsoever in state-sponsored solutions to the problem?

The story of the debacle at Walter Reed that the Washington Post broke has generated commentary all over the place. Some libertarians have suggested that the Walter Reed scandal is somehow connected to the problems of having the government run a health care system. But after reading more commentary on the issue, I’ve come to see that this is just not so. Walter Reed, and every other story like it, provides absolutely no proof that government-provided health care doesn’t work, and this can be proven by ironclad logical argument. It goes like this:
1. Walter Reed is run by the Army.
2. The Army is run by the government.
3. The government is currently run by George Bush and his administration.
4. George Bush and his administration do not believe that government can accomplish anything, help people, or do anything right.
5. When you do not believe that government works, you underfund it and starve it of resources.
6. When you do not believe that government works, you appoint your political cronies to important jobs as patronage instead of appointing competent people who will do the job right.
7. People who believe in government give it all the resources and funding it needs.
8. People who believe in government appoint competent people who will do the job right.
9. Therefore, the cause of government failure is the failure to believe that government can succeed.
10. Besides, medical care is much better in countries where it’s run by the government, with everyone receiving great care and living much longer than Americans do.

So there you have it- proof that government works if you just elect people who believe that government works. It’s not an incentive problem, it’s not a calculation problem, it’s not a scarcity problem, it’s not problem with the lack of competition or the inherently corrupting nature of power. You just have to have…faith. There is nothing to fear about the future of government run health care as long as we all make sure it’s always run by the right people (which isn’t hard to do, right? right?) Don’t quite know what you’re supposed to do if the wrong people get elected to run it, but who’s worried about that when their health care is free? Having embraced this epiphany, I am now an intellectually honest person instead of a libertarian ideologue. I look forward to voting for competent, enthusiastic believers to run my health care system. Anyone who experiences similar enlightenment upon reading this may thank me in the comments section. Have a nice day.

Jeff Tucker’s post on the supposed failures of the daycare market got me thinking about some of the messages implicit in the National Association of Child Care Resource and Referral Agencies report that criticises government oversight of daycare programs and calls for more regulation. Let’s think about this for a minute. What is daycare, anyway? It’s essentially the outsourcing, for some period of time, of the job of taking care of your children. When not done by daycare providers, this job is done by parents. It makes sense, then, that you would want your daycare provider to take care of your child as well as you would do it yourself. But what I take away from this article is that many of us are woefully underqualified to be parents. If we apply the National Association of Child Care Resource and Referral Agencies standards to everyone, parents should:

Have a bachelor’s degree, preferably in child development (Bye bye, parents who never went to college! Did you think this was a job for amateurs?)

Be trained in CPR (Always a good idea, but I doubt most parents are.)

Have criminal background checks (I guess you and your prospective partner could run checks on each other. But what if you both have a record?)

Have child care training (You did take a class before you had kids, didn’t you? This isn’t something you learn as you go, people!)

Have an appropriate provider-to-child ratio (There go those people I saw on the Discovery Channel who had sextuplets).

And don’t forget having your home inspected for cleanliness and safety by the state!

Certainly these may be qualities that parents want in a daycare provider, but I doubt they are all present in every home in America where kids are being raised. A politician who was seeking to regulate the industry did the standard trotting out of a terrible tragedy supposedly preventable by regulation when he “…evoked the 2004 drowning of a toddler at a licensed day-care facility in Riverside, Calif” (a terrible tragedy that certainly never happens when children are at home). Some people settle for people who seem to know what they’re doing with children; I know someone whose childcare arrangement consists of someone who already has kids, and whose parenting style is presumably compatible with her own. The article makes it appear that the failure in the daycare market is that parents can’t find people who are better qualified to raise their kids than the parents themselves. Forget daycare licensing; why not parent licensing?

And every other woman in America. So much, in fact, that they want to be sure we don’t have a chance to make what they consider to be bad choices about contraception. The organization is petitioning the FDA to ban newer-generation birth control pills on the basis that they “offer no unique benefit over the older and safer pills.” This illustrates a key problem with the winner-take-all governmental approach to drug safety that the FDA represents. First, it treats “safety” as though it were an objective standard and an objective concept. It’s not. All drugs have risks and benefits. The individuals who make up the group Public Citizen believe that the risks of the newer generation of birth control pills outweigh the benefits. There is nothing wrong with that belief in and of itself, nor with their conducting an educational campaign to tell other people so. The problem is their failure to recognize that risk-benefit assessments are subjective and unique to the individual. By forming a lobbying group, they can make their subjective preferences into regulation that is binding on huge numbers of other individuals. Having their beliefs enacted in regulation does not make them an objective for juding the safety of drugs. It simply means they gamed the system to get what they wanted. Whether the risks of certain pills outweigh the benefits depends on the woman assuming the risks and enjoying the benefits. But through the petition process, Public Citizen can claim the right to make that decision for every single woman in America who uses or is considering using oral contraceptives, based solely on the subjective preferences of the individuals who make up Public Citizen.
The FDA, by law, has to consider their petition, and therefore must seriously consider allowing a small group of people whose sole interest is lobbying the FDA to make an important decision for a huge, diffuse group of people who spend little time paying attention to what the agency does. The result could be a sweeping, one-size-fits-all solution that does not take into account the diverse preferences of individual women, or the subjective risk- benefit analyses we all do when deciding whether to use pharmaceuticals. A petition like this is emblematic of what is wrong with governmental control of drug safety. It makes no room for the diverse, subejctive preferences of individuals, decreases our choices, and deprives us all of the benefits of medical progress for the sake of an illusion of “safety”.

Zimbabwe is the latest nation to experiment with price controls as a method to make food affordable. It is an unspeakable tragedy that Zimbabwe’s people should end up being a object lesson in what happens when someone tries to wish away the laws of human action. And yet, when it comes to price controls, everything old is new again. I learned about the magic of price controls in a class where we were discussing Allende’s Chile. The teacher spoke of the government prosecuting merchants who did not “cooperate” with the regime’s price control laws, as though it was a simple matter of whacking the uncooperative over the head until they got with the program, and then prices would go down. Unfortunately for people in Allende’s Chile, Mugabe’s Zimbabwe, and countless people for the 30 years in between, leaders have ever failed to learn that the laws of human action do not change just because the state decrees that it should be so. Perhaps they never learn this lesson because although no one can escape the laws of human action, leaders can easily escape the laws they impose on others.

The NYTimes has a fascinating article about the obstacles confronting those who seek to establish a new government in Somalia. There have been several debates on this blog about the nature of anarchy as it currently exists in Somalia, and whether the country would be much better off than it is now if some sort of state governed it. The establishment of said state, though, is much easier said than done.
The current efforts to create a government have run up against the much older system of clan relations that govern Somalian civil society. If Somalia truly is better off with a state, that state will somehow have to be imposed over an already existing societal structure that is already deeply suspicious of the current efforts to form a government. Whether anarchy is good or absolutely terrible, Somalian civil society already has a definite structure provided by the clan system. There seem to be some very difficult questions here about how to impose a state that people supposedly need desperately onto individuals who don’t trust it and fear it will disrupt an already existing way of life. Whatever one thinks of the current anarchy, it seems that the formation of a government is not going to instantly bring peace and stability to Somalia, and that the state may end up in constant conflict with the very society it seeks to stabilize.

Jeff Tucker’s cold medicine post got me thinking. As the government’s creeping power to regulate all sorts of things continues to expand, for each new regulation you always hear the same argument: “But it’s really not a big deal!” There are always people ready to argue that it is not really a big inconvenience or a great restriction on your freedom for the government to restrict the amount of cold medicine you can buy, prevent a restaurant from serving you trans fats, require you to wear a seatbelt, etc. These things are simple. You hardly miss them. Why do they matter at all? Don’t you have bigger problems?And, of course, this is always followed by the observation that getting pissed off about these “little” restrictions is just more proof that libertarians are all nutjobs. But the people who defend this chipping away at their freedom miss the larger, vital point. When you say “it’s not a big deal”, you’re saying that giving someone else control over what you can and cannot do with your own body is something so small it’s not worth bothering with. Essentially, you are giving away the most fundamental freedom of all as though it is meaningless. I hope that the individuals in the it’s-not-a-big-deal-quit-your-whining crowd never come to the point where they realize exactly why it matters so much. If you’ve ever watched seriously ill people pack a hotel ballroom to beg the government for a drug that can help them, and watched government appointed “experts” deliberate over whether these people, whom they don’t know at all, deserve access to a drug they are completely willing to take, you realize just how unjust the system is and how much people are suffering because of it. I’ve seen it myself. But that system exists and is given legitimacy because we’ve already conceded the fundamental principle- that the government, not you, is entitled to decide what you can and cannot put in your own body. Maybe you think it’s just about cold medicine or trans fats, but someday it could be about your life. Because when it comes to the right to control your own body, you don’t know what you’ve got ‘til it’s gone.

A fascinating, and very depressing, story from the NYTimes. Convinced that markets, supply and demand, and voluntary production would be insufficient to protect us from a bioterror attack, the government took on the job, and project BioShield was born.
Assuming that markets could never fill the need, the project was originally intended to ensure the production of vaccines and drugs by granting exclusive government contracts to produce these goods. It has since degenerated into political infighting and rent-seeking by companies that might otherwise occupy themselves in filling an actual market demand for treatment and prevention should there be a bioterror attack. Five years after the anthrax attacks, the government has made us no safer and no better prepared. Neither have the drug and vaccine companies. As is obvious from the article, they’ve found better, and more profitable, things to do with their time. Time, talent, money, knowledge, and resources that could be used to protect people and cure deadly diseases are instead being wasted, siphoned off by rent-seeking because the government needs to…protect us.

Via Scotland: sometimes the simplest arguments for taking away freedom are the scariest:

“So pervasive is poor diet that reliance on individual choice as the prime ideology in shaping food supply is no longer an adequate policy or ideology.” It’s the ultimate parent-child relationship between us and the state- “We let you have the car keys, and you showed you can’t be trusted!” This is the simplest, and at the same time the most sweeping, rationale for taking away any freedom you can imagine; you were allowed to choose, and all you did was make bad choices. As a student in public health (though I study infectious diseases, not obesity), I have followed with interest the public discussion of obesity as an “epidemic” and a “public health crisis”. Once it gets framed in these terms, I think there’s a progression that’s inevitable. There are a lot of difficult questions in public health that have to do with coercion and individual rights, and it’s easy for individual rights to come out the loser.
I don’t personally believe that every public health practitioner just wants to create the ultimate nanny state and control everyone’s behavior, but there’s a slope that it’s easy to start sliding down. If you think you know what behaviors are best for people, you can try to educate and inform them. But if you try and try that and it doesn’t work, maybe coercive alternatives start looking more and more attractive. After all, it’s good for people. You just want them to be healthier and happier, right? It’s almost as though you gave them a chance and they showed that they’re incapable of making the right choices. Why do they deserve to keep choosing for themselves? Add in the idea that since medical care is so socialized, “we’re all paying the bills” for other people’s bad choices, and coercion may not seem like such a bad thing. Before you know it, we’re regulating all aspects of human behavior. I’m not sure how we go backwards, and start removing what are really individual choices from the realm of “public health.” Health care reform might be a start. It will be incredibly difficult, but I think it needs to be done if we want to halt the gradual erosion of our freedom in the name of our health.

The idea that we need to be “self sufficient” when it comes to producing food just keeps getting more respect than it deserves. As Sallie James of Cato pithily observed, “I know of only two other countries that pursue a policy of total self-sufficiency in food: North Korea and Zimbabwe.”

But people love it, from politicians, to the Crunchy Con guy, Rod Dreher (given the smackdown by Jeff Tucker here). Dreher suggests bringing back a concept from the good ol’ days of World War Two- the Victory Garden. Since, he explains, “…a broader Mideast war that caused another oil shock could make it a lot more expensive to feed ourselves. Getting into habits of self-sufficiency now is smart.” My take on it isn’t nearly so cheerful. Rather than giving me the warm fuzzies about being self-sufficient and doing my little part for the war, I think my Victory Garden would remind me that nothing can screw up the power of the market economy to feed everybody like government can.

I don’t worry about Wal-Mart, Kroger, or the local Whole Foods suddenly deciding to cut off my food supply, or jacking up their prices because they’ve decided to go to war with one another. It’s only when governments meddle with individuals wishing to engage in peaceful trade that we all have to worry about where our next meal is coming from. As things are, my backyard garden has yet to produce a single tomato. In the event of a Mideast war and huge oil price spikes, I will apparently be living on my only successful crop: weeds. But at least they’ll be weeds I grew myself.

I remember when I was at Walter Block’s excellent Radical Austrianism, Radical Libertarianism seminar last summer, someone asked him if being an Austrian led people to become libertarians. Specifically, they were wondering how someone could not adopt libertarian views on something like the minimum wage once they understood the actual economic effects of it. Dr. Block’s reply was to the effect that he supposed you could be a rather unpleasant person, and support the minimum wage because you thought it was good for certain groups of people to be unemployed. Well, it turns out that Walter Block is prescient.
An op-ed in the New York Times has the answer to ending illegal immigration. How? Raise the minimum wage nationwide to $8 an hour! As the logic runs, the economic distortion that would result is a good thing. Americans formerly unwilling to work for the $5.15/hr minimum wage will rush to fill these jobs, squeezing the illegal immigrants out of the labor market and making them turn around and go home. This will be accompanied by efficient government enforcement of wage laws, which of course will make it impossible for a black market in sub-minimum wage illegal labor to flourish (really). Every time I read a new proposal from a politician for what the government should do to handle immigration, I think we’ve hit bottom. But then I’m afraid we haven’t.

Some organizations are demanding a change in the process to permit terminally ill people to gain speedier access to possible cures. Their demands have so far been rebuffed by regulators. Here I argue the case for liberalizing the approval process. Terminally ill patients are still capable of rational assessment of their alternative choices. FULL ARTICLE

Dr. DiLorenzo’s article “Should Wal-Mart be Broken Up?” is a good example of how government interventions in the economy are like bacteria: you only need to start with one, and before long, you have another, and another, and another, until there are more than you can count (though there are limits on how much bacteria can reproduce themselves. I see no such limits with government). In effect, antitrust is the intervention to fix the problem that intervention created. In a free market, large companies can reap the advantages of economies of scale. But the potential growth of a firm in the market is not infinite. At some point companies can grow so large that they encounter diseconomies of scale (a point made by Roderick Long in his recent seminar). These can include internal calculation problems, similar to those that take place in a socialist economy where there is a lack of monetary prices that make calculation possible. In a free market, these problems can limit the size to which companies can grow. However, the current market is distorted by government intervention in the form of subsidies and tax breaks (which lower the cost of business for some companies but not others), regulations (the costs of which are more easily absorbed by large firms than small ones) and other restrictions on entry and competition. Government intervention on behalf of corporations can stifle competition and insulate certain companies from competitive forces. In such an environment, it may be possible for such a company, facing fewer penalties for inefficiency, to grow in size beyond what it might achieve in a truly free, competitive market.
I do not know if this is the case specifically with Wal-Mart, but it is a possibility. If so, this is another example of how one intervention begets another and another and another: by intervening in the economy for the benefit of large corporations, the government allows them to grow beyond what they would in the free market. Once they reach a size people find somehow threatening, it spurs calls (probably from competing businesses) for the state to intervene again, this time to “encourage competition” and “benefit the consumer” by breaking them up. Once they’re broken up, it can make room for their growing competitors to get in on the lucrative business of lobbying the government for special favors. Once they’re on the receiving end of government favoritism, they start growing and growing. And the cycle begins again…

Sez Senator Charles Schumer. The pharmaceutical company Merck is facing generic competition for its cholesterol-lowering drug Zocor. In response, Merck is cutting deals with insurance companies to offer lower copays on name-brand Zocor than the generic equivalent (it’s true that a copay is not the actual price of the drug, but it is the price signal that people with insurance are concerned with. I’m not sure how this affects the price of the drug without insurance). According to Schumer, price competition between brand-name and generic drugs is bad for consumers. Why? Because undercutting your competitor on price is…anticompetitive. Schumer has asked the FTC (the subject of S.M. Oliva’s recent post) to investigate. It is ultimately this government body that decides what is defined as “anticompetitive”. Apparently, allowing consumers to pay less for a product has now become part of that definition.

…That Congress is finally going to do something about gasoline price gouging. There’s really no commentary I could come up with that could improve on this article from the NYT. Consider it your entertainment for the day.

Reading the thread on global warming below, I see a common mistake that pops up in a lot of arguments at the intersection of science and policy. With all due respect to the participants in the thread, they are largely talking past one another. This often happens in arguments over global warming, and I think there’s a specific reason for it: there are really two separate questions in the global warming debate, and both sides tend to conflate the two, treating them as though they are the same issue with the same answer.

The thread below can really be thought of as two arguments:

Is human-caused global warming taking place?

If human-caused global warming is taking place, what, if anything, should be done about it?

Consider the two questions separately for a moment.

Is human-caused global warming taking place?

There are two obvious answers to this question: yes or no. It’s largely an empirical question, needing scientific inquiry.

If human-caused global warming is taking place, what, if anything, should be done about it?

This question, which accepts that we are causing global warming, is more complex. There are theoretically many answers, but policymakers and people who believe global warming is a serious problem tend to reduce it as though the answer were a simple dichotomy of 1) the government takes action, or 2) we do nothing.

The problem is, it’s easy to combine these two questions and their answers so that it seems as though a particular solution Y follows logically from a particular answer X, when this is really not the case at all. It distorts the global warming debate so that it seems as though there is only one question: Is human-caused global warming taking place? And the only answers are: No, and therefore we should do nothing, or Yes, and therefore the government needs to take action.

When the two essential questions in the global warming debate become tangled up in this way, those of us who oppose government action feel as though we are placed in an untenable position; either we deny global warming is happening or we acknowledge that it is and therefore accept the necessity of government action. I believe that when we allow the debate to be framed this way, we’re missing what’s really important, and we’re missing the opportunity to make a point that desperately needs making in the public arena.

For this purposes of this post, I’m not going to take a position on whether or not humans are causing global warming. But there is a position I can take: if global warming is real, government action is not the answer. State action is too inefficient, too slow, too vulnerable to power-seeking and rent-seeking behavior, too apt to ignore the serious economic consequences of an action that has popular appeal. I am indebted to Dan D’Amico for also making the vital point, in the context of criminal justice, that government is unable to accommodate citizens’ diverse preferences for the handling of large-scale societal problems. That is why libertarians must disentangle the two questions above and stay focused on the one that is most important to us, the question of state action. The presence and cause of global warming is a scientific question that will continue to be argued. That is as it should be; in science, complacency, the sense that we have all the answers, is always our enemy. But the idea that government is the logical, best, and only answer to the largest-scale problems in society is so appealing that it is often treated as though it needs no debate. It’s this idea, not the idea that we’re causing global warming, that is our enemy. Sitting here at my laptop, I freely admit I don’t know the solution to global warming. But that does not mean that millions upon millions of freely acting humans in a dynamic market cannot or will not produce one. That is the central message, the one we need to keep in front of people. If we can keep our eye on that, whichever way the debate goes, we will be ready.