Producers, Consumers and the General Welfare

Every now and then, I come across a quote in my reading which seems particularly relevant to current events. This is one of those.

Each of us is producer and also a consumer. However, we are much more specialized and devote a much larger fraction of our attentions to our activity as a producer than as a consumer. We consume literally thousands if not millions of items. The result is that people in the same trade, like barbers or physicians, all have an intense interest in the specific problems of this trade and are willing to devote considerable energy to doing something about them...The groups that have a special interest...are concentrated groups to whom the issue makes a great deal of difference. The public interest is widely dispersed. In consequence...producer groups will invariably have a much stronger influence on legislative action and the powers that be than the widely spread consumer interest.

--Milton Friedman, from Capitalism and Freedom, quoted in The Regulation of Medical Care: Is the Price Too High by John Goodman, pg 95.

This quote nicely explains the source of the incentive to organize and lobby as a special interest group. The problem of special interests arises because we have allowed them to gain customized favors through the political process. The solution is to eliminate all possibility of special treatment for any group or individual by consistently applying equality before the law.

This is the proper understanding of "promote the general welfare." If a law does not treat all parts of society equally, then is it not promoting the general welfare but instead is promoting a special welfare of some at the expense of others.

The consistent application principle of individual rights includes the corollary principles of equality before the law and the promotion of the general welfare. Properly understood and implemented, these principles will protect us from the natural tendency of organized special interests groups to obtain special favors or privileges at the expense of the rest. These principles guide us in forming laws so that there are no legal conflicts of interests between rational men.

Debate on Dead Aid

I just finished reading Dead Aid by Dambisa Moyo.

Her primary thesis is that not only has aid not helped to end poverty (a view also held by William Easterly: The White Man's Burden and The Elusive Quest for Growth, Peter Bauer, and others) but on balance, aid does more harm than good.

Moyo has a PhD in economics, interestingly obtained under the tutelage of foreign aid advocate, Dr. Paul Collier (The Bottom Billion).

The book is short and quickly glosses over multiple topics. For someone unfamiliar with the history and controversies surrounding foreign aid, this book could be one good place to start --but as a defense of her thesis, it falls short. Her arguments are plausible, especially for someone already skeptical of government intervention into economic affairs. A convincing presentation, however, would require much more empirical data and analysis in order to substantiate the claims.

Wanting to obtain an opposing point of view, I asked my favorite Keynesian for his recommendation--and he sent me the link to Stephen Lewis' segment in the following debate. I highly recommend watching at least the opening statements of this star panel which in addition to Lewis includes Moyo, Collier and Hernando de Soto (The Mystery of Capital).

The 2009 Munk Debates: "Be it resolved, foreign aid does more harm than good"

Part 1 of 15 - Intro

Part 2 of 15

Part 3 of 15

Part 4 of 15

Part 5 of 15

Part 6 of 15, Part 7 of 15, Part 8 of 15, Part 9 of 15 , Part 10 of 15

Part 11 of 15, Part 12 of 15 , Part 13 of 15 , Part 14 of 15, Part 15 0f 15

Nurturing the Wealth Creators

At my son's graduation for the local government high school, all of the speakers were politicians--the mayor and our national congressional representative. It struck me even then, why no businessmen? I know of several members in our community who work in businesses doing world-changing work. My first reaction was pretty cynical--well of course a government school promotes politicians. But after seeing the clip below, I thought about how the bias goes further than public school. I know of no private school that teaches entrepreneurship either.

Entrepreneurs and businessmen are wealth creators. Without the middlemen to bring the bacon to market--we'd have to all live on a farm. They deserve our admiration, and our nurturing when young.




Caveat: Just because I post something doesn't mean that I endorse every single thing within it--whether an article or a video clip.

Putting the oil spill in perspective

The Deepwater Horizon oil spill has directly caused the loss of 11 lives and will result in extensive ecological and economic damage. Just as physicians obtain malpractice insurance in order to compensate patients for the inevitable occurrence of injury due to unintentional error, we rightfully expect oil companies to make similar provisions to mitigate the damage caused by their business activities. However, a reasonable degree of responsibility must be based on a full context of the character of human activity. Amidst the hue and cry, name-calling, finger pointing, and calls for retribution against BP and a halt to off-shore drilling, three authors stand out for their articles reminding us of the wider context which we must hold while evaluating the benefits and costs of drilling for oil.

Boston.com columnist Jeff Jacoby reminds us that "Oil fuels better lives," pointing out the importance and value of oil to the quality and even the quantity of modern life--both in numbers of human beings the earth can support, as well as individual longevity.

Awful as the catastrophe has been, however, life without oil would be far, far worse.

Americans consume oil not because they are “addicted’’ to it, but because it enriches their lives, making possible prosperity, comfort, and mobility that would have been all but unimaginable just a few generations ago. Almost by definition, an addiction is something one is healthier without. But oil-based energy improves human health and reduces poverty — it makes life longer, safer, and better. Addictions debase life. Oil improves and expands it.

Alex Epstein, a regular contributor to Voices for Reason and Pajamas Media, demonstrates the importance of oil to the simple daily occurrence of a bacon and eggs breakfast, as well as the life saving materials and technology of modern surgery.

Blogger Stephen Bourque of One Reality uniquely identifies the relative scale of the BP oil spill compared to the much larger man-made disasters central planning and government usurpation of fundamental liberties.

Mr. Obama was brazen enough to say, after describing the damage done by the oil spill, “We cannot consign our children to this future.”[Note 2, emphasis mine.] There is simply no comparison between the damage of the oil spill, large as it is, and the utter long-term devastation that the Obama administration, the Federal Reserve, and the Democrats on Capitol Hill have wreaked. (By the way, I’m focusing on President Obama here, but the same criticism applies to Bush, Paulson, etc.)

Free minds and free men are the key to solving whatever challenges we encounter. The most crucial environment to preserve is the social system which ruthlessly and consistently protects individual rights and systematically eliminates the initiation of force as a legitimate means of achieving any end.

Worse than the explosion of one oil rig, is the explosion of government mandates, taxes and debt which act as a ball-and-chain on ingenuity and industriousness. Worse than the slimy oil slick creeping into estuaries and suffocating the wildlife are the myriad of regulations and bureaucrats suffocating innovation and production in the name of safety. But worst of all is the toxic contamination of the civic mindset that freedom has failed and the solution is to relinquish ever greater amounts of control and responsibility to the central authority of the state.

We must not consign our children to a future in which they are born thousands of dollars in debt, legally obligated to live and work as servants indentured to the community, or with a legacy of dependency and statism replacing one of self-reliance and liberty.

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Living for yourself is not living only for yourself

This is the second of three installments aimed at addressing points made in comments to a previous post. In the first, I explained why I do not think advocating for voluntary funding of government is utopian (i.e. naive or unrealistic). Here, I would like to address another misconception: that in defending an individual’s right to be either persuaded or left alone, I am advocating we all “live only for ourselves.”

I do not “live only for myself”—nor is that what I advocate or promote. I am, however, insisting that each person has the right to exist for his or her own sake and that no one has any unchosen obligations. If a person chooses to be an antisocial recluse—that is their business, and I think, their loss as well. I am simply arguing that it is never right to do by ballot what you would never consider doing as an individual. One example would be demanding at the point of a gun that someone hand over his honestly earned money.

I do not advocate for any right which cannot be applied equally to all. It is this principle of non-contradictory individual rights which creates the barriers to stop each of us from infringing on others.

The basic political question is not “should I value and give my time to others?” (That is an important moral question--but not all that has to do with morals belongs in politics. Morals have to do with right and wrong in general; politics has to do with right and wrong in a social context, especially as related to the institutional use of force.) A fundamental political question is "If I don’t see the value in something, should my neighbors be able to gang up on me and force me into certain actions, regardless of my own judgment?"

Frequently it is postulated that either we put others before ourselves or we put ourselves before others. These two opposing alternatives do not exhaust the possibilities. The alternative I support is as follows: The respect for and valuing of other people is an extension of the respect for and valuing of my own life. My right to live for my own sake does not exist separate from the right of others to live for their own sake. My life is much richer for the interactions and exchanges I have with other people. Provided we keep our interactions voluntary, we have much to gain from sharing our lives, time, riches and values with other human beings.

When steeped in this mutual respect, people are of bountiful value to each other, not as supplicants or duty-bound servants, but as equals. When these rules of proper social interaction are codified in law, we can live amongst each other secure in our person and property, peacefully in freedom, with government acting solely as objective arbitrator and the protector of each and everyone's individual rights.

Up next: Voluntary taxes: How could it possibly work?

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Education and Coercive Funding

The following is a series of letters to the editor published in the Half Moon Bay Review in opposition to a local parcel tax to help fund the local government schools, the latest of which was published today. Also, just today, I found a discussion site that I was previously unaware of hosted by the paper. After carefully reading all of the entries, I will do my best to respond. I am grateful to an editor who is willing to publish my views even though he is in disagreement with them.

LTE 3-17-2010

Budgets are cut. Jobs are lost. Schools are expected to do more with less. The suffering quality of education is a true tragedy—but not the one that most people seem to think.

The spiral of increasing costs accompanied by decreasing quality is an inescapable function of all goods and services provided via state central planning. The best intensions and admirable efforts of the hard working, honest individuals participating in this system can not overcome this economic fact.

The real tragedy is the existence of government schools. Compulsory attendance laws result in the government providing schools for students to attend. This requires funding, which--as in all government programs--is accomplished through the expropriation of private property, subsequently allocated on political terms, not according to quality or economic efficiency.

The strong-arm of government has created a near monopoly in education. Although private schools do exist, the variety of educational options is severely stunted. Because government schools appear to be “free,” and people who chose a private alternative end up paying twice, 80% of primary and secondary students attend government schools. Only the relatively wealthy are able to “opt out.” This crowding out of private alternatives leaves people dependant on government schools—and thus dependant on the political processes to affect both curriculum and funding.

With a captive “customer” base, the normal incentives for providing the best value for the lowest cost no longer exist. Powerful unions increase costs further while bolstering barriers to competition-induced improvements. Schools can not compete for funds by offering a better product, so they are reduced to begging for votes to expropriate even more of their neighbor’s money.

And that is the real tragedy of our educational budget crisis—a tragedy that only the free market and its consistent respect of property rights will alleviate.

LTE 6-2-2010

Measure E is on the ballot to raise money for our local government schools. Cutbacks in state funding mean the education of our local youth will suffer. This is tragic. Education is important and worthy of receiving adequate funding.

In spite of this, I cannot bring myself to support a law that uses the force of government to deprive others of their property. If people cannot be convinced to voluntarily provide financial support to the schools, I know of no moral principle that allows me to force others to act against their best judgment. Our Constitution was written to protect us from precisely this abuse of power by the majority.

It is simply immoral to even attempt to achieve a goal through the use of force, no matter how deeply ensconced in compassion, generosity, or good will. You may try to persuade your friends and neighbors, and tirelessly work to obtain their voluntary assistance (financial or otherwise), but, if you can’t convince them, there is no moral basis for employing the coercive power of the state to aid you in achieving through force what you can not achieve through persuasion.

What is at stake is greater than the plight of our schools. The peaceful coexistence of human beings is grounded upon the recognition of each individual’s right to his own life, liberty and property — and only his own.

The civilized world has come to recognize the immorality of enslaving another human being in order to employ his labor against his will. The next step in our moral progress is to recognize that a man’s property is an extension of his life, and that to seize a man’s property against his will is merely another form of slavery.

For this reason, Measure E is immoral and should be soundly defeated.

LTE 6-16-2010

Proposition E has passed. In spite of being against the principle of government-run education, I have mixed feelings about the results of last week’s election.

In part, I am relieved that the vital services our local schools provide will not suffer the devastating cuts they would have without this financial boost. At this time, for many students and families in our community (including mine) there is no realistic alternative to government schools. I am very appreciative of the relationships and experiences that my son enjoyed in his four years at Half Moon Bay High School. Many of the individuals in the system are excellent human beings devoted to providing a quality education to our children. That said, I continue in my concern that this is a temporary patch on a fatally flawed system, which in the long run is neither moral nor practical. The very existence of government education is premised upon the violation of property rights. Even though 70 percent voted in favor of Measure E, 30 percent of our neighbors will have their property taken against their will. Additionally, history has repeatedly demonstrated the failure of central planning — in business, in education, in health care. (Please see my letters from March 17 and June 2.)

I can only hope that, with more time and experience, more people will come to understand the superiority of a government limited to the protection of individual rights and a society which demands that all interactions are based on persuasion, and in which the initiation of force is always viewed as an illegitimate means for obtaining one’s ends.

Thank you for the opportunity to express my minority view in your publication.

Is the idea of voluntary government utopian

If everyone acted rationally, would we need a government? I think yes. Even rational people can disagree. Rationality does not mean omniscience or infallibility, nor does it exclude the existence of grey areas which must be adjudicated.

But, I do not premise my defense of voluntary funding of government on an expectation that everyone will act rationally. My argument is premised on a particular understanding of human nature which then determines the requirements for living a fully human life, and thus leads further to the conclusion that proper human interactions must exclude the initiation of force.

1. As living organisms, we must act to live.

2. As conscious beings possessing free will, we must choose which actions to take in order to live. Our unique means of deciding entails reason as the means by which we evaluate the world and make our decisions. In other words, reason is the means of our survival, of promoting and preserving our lives.

3. In order for us to put our decisions into action, we must be free to act. To accomplish this in a world shared by other human beings, we must construct rules of social interaction which recognize and protect that freedom of action. Such freedom is not license to do whatever one pleases or freedom for the requirements of nature. Rather, my understanding of freedom is simply freedom from the initiation of force. The principle which guides the limits of these freedoms in a social context is the fact of self ownership which gives rise to a right to one’s own life, and only one’s own life.

Since one’s means of survival, of preserving and promoting one’s life, is reason, a man must be free to use his mind in service of his life. Human beings can interact only in one of two ways: voluntarily through persuasion, or coercively through the use or threat of force. Persuasion leaves each man free to act on his own assessment of reality. the Initiation of force allows one man to impose his views and values upon another thus severing a man’s actions from his judgment ---directly in violation of a man’s right to his own life.

The rights to liberty (freedom to act) and private property (the right to the results of one’s actions) are corollaries to the right to one’s own life. Applied consistently, one man’s rights begin where another man’s rights end.

Reason could not function without free will---they are two sides of the same coin. Along with free will comes fallibility—which means errors in thinking and judgment, irrationality and evasions. Not all people will be rational or respect the rights of others—and that is why we need an institution which acts to protect individual rights. That is the proper function of government.

This is why I disagree that my concept of government is utopian. I am doing my best to advocate for a form of government based on my understanding of human nature and the requirements of human life. From this perspective, it is “utopian” to think you can open the Pandora’s box of accepting the initiation of force as legitimate in some realms and have any basis for eliminating the initiation of force in other realms.

My respect for each individual life demands that I employ only persuasion in my interactions with others (except in the case of self-defense) --even to the extent of how to fund the institution to which I have delegated the job of protecting my life.

From my perspective, it is more naive to believe that we can consistently respect other human beings under a system which justifies the use of non-defense force than to have confidence in a system which strives to deny the initiation of force as a legitimate means of achieving any end.

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Controlling Health Care Costs

via John Goodman:

Under the heading “Enlisting Patients in the Fight to Cut Costs,” a New York Times article mentions patients controlling health dollars exactly zero times.

Because Wealth is Not the Problem

HT Carpe Diem.

Capitalism is Perfect

In an excellent response to Thomas Frank's attack on Capitalism, Wendy Milling states:

Since politics concerns the nature of government, and the essence of government is force, the full politico-economic application of property rights is a system in which government protects an individual's property rights from violation by others, but does not itself violate them. Capitalism is the politico-economic system of private property rights. It connotes a system whereby property rights (and hence, the other rights) are respected objectively and completely.

Capitalism is perfect...

Assaults on capitalism are rooted in a crybaby metaphysics, and they rely on obfuscations, equivocations, and an attitude of militant evasion. One trick is to make inappropriate demands of capitalism, then stomp and pout and denounce capitalism when those demands are not met.

One of the irrational demands made on capitalism is to provide infinite abundance, usually in some particular object of the demander's whim. The world has finite resources, and man has limited time and is not omniscient. There cannot be an infinite abundance of anything. This is not a flaw in any proposed politico-economic system (especially capitalism, which provides the greatest abundance of all of them), and in fact has nothing to do with systems qua system at all. It is a feature of reality.

A corollary demand is the erasure of all poverty, suffering, and, by logical extension, inequality among man. Appealing to an irrational sense of guilt, this trick ascribes to political systems an implicit, incompatible mission: Make it so that absolutely everyone is healthy, educated, happy, and has all the resources he wants (or some do-gooder wants for him). It then pronounces capitalism as flawed when such conditions do not materialize. Some degree of economic malady exists and will continue to exist under any system, including capitalism. It is not the responsibility of capitalism to eliminate, and it is not a feature of capitalism, but of a special facet of reality: Man's free will

Read the rest here.

DOJ AntiTrust Undermines Trust

Justice Department has unambiguously stated that refusal to accept government price controls is a form of illegal “price fixing.”

–Christian Science Monitor 5/31/2010

In an landmark decision, the Justice Department has ruled that under the Sherman Antitrust Act, a group of Idaho orthopedists are guilty of conspiracy and price fixing–because they jointly refused to accept the inadequate reimbursement offered by the government’s workman’s compensation program.

Read more here and here.