Riding the brakes?

Do you remember when those hurricanes hit Texas and Florida last month and since some people couldn’t access their money to buy food and other supplies the government just waived the law against theft so people could get what they needed more quickly? Yeah, me neither. But in fact the government did waive one law last month: the Jones Act. This waiver applied to affected ports in Texas, Florida, and Puerto Rico.  But I thought laws were the very immovable bedrock upon which society was based. How can such pillars of civilization be summarily set aside? The answer is that such “laws” are not really law at all. They are but mere whims and cronyist preferences of those with the power to rule over we mere peasants. These “laws” rather than preventing victimization they instead create victims by benefiting one party at the expense of another.

The Jones Act of 1920 artificially restricts the transport of goods between US ports to only those vessels owned, operated and principally manned by US citizens. In other words no “ferners” can move goods from US port to US port. It was established for putative national security interests post World War I, predicated (as all such protectionist measures are) on a fear of the big “what if” nightmarish scenario of US goods being transported mainly by foreigners….shudder. Of course such a policy is amenable to the autarkist interests of any nation eager to engage in war.

So while the Act has benefited the US merchant marine industry, it has been at the expense of consumers, principally those on US protectorate islands (like Puerto Rico) who by necessity must have nearly all goods brought in by ocean. A 2012 study showed that it cost nearly twice as much to ship to Puerto Rico from the US as it would were a non-US vessel permitted to make such shipments. Another study showed it costs Puerto Rico $537 million per year. In other words $537 million more goes to US vessels (seen benefit) and $537 million fewer dollars goes to those businesses and industries (unseen harm) where that money would have been spent had it stayed in the pockets of the Puerto Rican people.

If a law becomes an obstacle in times of distress then think of what it does in normal times. Although one can get from point A to B while riding the brakes on a full tank, does it really require running on fumes to realize perhaps this constant braking is not a good idea? It is time to remove all such artificial drags on the economy. The role of government is to protect our rights, not to benefit one group at the expense of another.

 

October 03 / 2017

Fallacies

Just as the warm, moist air of late summer engenders the destructive fury of hurricanes, so too do these storms bear the perennial fruit of economic ignorance. Like clockwork the talking heads either eagerly forecast economic prosperity or decry the mendacity of the evil price “gouger.” Or both. The former is the classic example of the broken window fallacy, which like a case of herpes, will never be fully expunged from humanity’s collective consciousness. The error lies in focusing on seen benefits while ignoring unseen harm. We are implored to consider the benefits of jobs that will be created as we set about rebuilding lost homes, towns, and infrastructure. But this economic activity is not enhanced; rather merely diverted. All the money spent on rebuilding would have, absent the hurricanes, been spent on other goods and services. It is those markets and industries that will in turn see economic decline as fewer people spend in those areas. Even if argued that the rebuilding funds come exclusively from the savings coffers of insurance carriers therefore it wasn’t going to be used anytime soon, that still does not change the economic dynamics. A huge influx of “new” cash competing for a fixed amount of supplies does nothing but cause prices to rise for everyone else (e.g. building supplies will be in higher demand therefore all users of such supplies nationwide will experience higher prices). These higher prices mean, again, fewer dollars to spend on other goods. The only sense in which one could argue that net economic activity increases is if we assign no value to leisure. Certainly if one works 12 hours a day rather than 8 to both rebuild what was lost and maintain what one still has, then output is indeed greater. But is that the world we want to live in, where we sacrifice leisure in the name of economic output? Why we don’t need a destructive storm to achieve that, just pass a law enforcing a 16 hour work day and we could double GDP overnight! Destruction is not the path to an economic free lunch. Everything has a trade-off. The only path to prosperity is through savings, capital accumulation, and investment of that capital toward avenues that make production more efficient (i.e. cheaper).

The price gouger fulfills a valuable economic role, namely the rationing of constrained supplies in direct correlation to need. The feedback is immediate and perfect. There is no need for the imprecision of someone overseeing how much has Person A bought in such and such time period if rationing is imposed by pubic or private diktat. This issue is not so much of a fallacy since people do generally understand principle that if supply goes down prices will go up. Rather, it is more of an issue of emotion; each person’s barometer of what a “fair” increase amounts to varies. The fallacy is in believing that someone charging an “unfair” amount deserves to be thrown in a cage. As much as people would like to redefine words, “victim” does not describe someone who paid more than they would have preferred. So, no victim, no crime and thus any laws against price “gouging” are themselves victimizing when those with a true need find nothing but empty shelves. Trading willfully unobserved harms for spurious benefits leaves us all vulnerable.

Quora post: What are libertarian solutions to market failure in emergency healthcare?

My reply here:

There is no such thing as “market failure”. That’s just a term for “outcome I don’t like”

maybe if government got out of the way we’d see these solutions. People are quite innovative and I’m sure solutions I can’t fathom would crop up.

But lets take one example I presume is meant here. Someone needs emergency care and has no insurance or means to pay. Well we already had a solution for that but government killed it. We used to have numerous charitable church run hospitals that would supply such care at no or little cost. But then government got involved with Medicaid and Medicare and started paying everyone so why do stuff for free? Now everyone expects a hand out expecting to be paid by government and the church run hospitals lost their reason to exist and went away (there are only a handful left now).

Government distorts the market and creates the very failures that are so often pointed to.

The fallacy here is believing that 51% of the populations deems policy x so important that they elect people to carry out policy x but absent government somehow those same 51% would just shrug their shoulders and do nothing? No. They would support anyone trying to achieve end they desire

 

 

And then a good exchange below fleshing out the details a bit:

 

 

Qurora user

 

Well you’ve got several scenarios mixed in here which are all quite dissimilar. If as you claim there is no market for some scenario how can that be a market failure? That’s like saying Christianity failed as a religion because it didn’t aid in maintaining societal cohesion in 12th century Mayan society. If something isn’t present how can its absence be blamed on it. Anyway.

To be clear, constrained or limited choices do not constitute “failure”. Just because options are limited doesn’t mean one is being “forced” into a choice. Force only applies if violence or the threat thereof is being employed to constrain ones choice (eg I choose to freely give my wallet to the mugger…my choice was constrained by the threat of violence so it’s not a real choice nor truly voluntary). But your example is no different than saying we are forced to work because Mother Nature threatens us with starvation if we don’t earn money to buy or grow our food. This fact of existence limits our choices in what we can do everyday of our lives. So if I break my leg and I end up in the hospital and my only option given there is amputation or death even though there actually does exist a better option at a different hospital two states over still doesn’t constitute failure. That’s just life. It’s no different then being in the wrong place at the wrong time…we don’t call that life failure. Sure it would be great if you could pull up an app on your phone that told you exactly where to go for the best care and you could teleport there in a second, but people who died before organ transplants existed weren’t sitting around discussing how the market had failed them because it had not invented a cure. Options in life are always constrained by the simple facts of our existence; who are parents are, where we live, where we go to school, who are neighbors are, what language(s) we speak etc. all of those factors can contribute to outcomes we deem positive or negative. Markets are no different because markets as a thing don’t exist…it’s just people doing stuff for other people. So going back to the hospital example and the broken leg, if you happen to end up in the best hospital in the country for that does that then “prove” markets work?

I think what you’re getting at is the classic “”information problem”. This is what the socialist believe, that a perfect market would be a socialist market because with perfect information the state could direct precisely the right amount of each good to produce just in time to satisfy all needs, and so all would be employed, with zero waste and maximum efficiency. And so anything that falls short of this utopian perfection is considered imperfect or a “failed” market. It’s an impossible standard as we are not omniscient beings, so perhaps it makes interfering intellectual fodder, but in the real world is of no real consequence.

its funny how markets are deemed to fail because one can come up with either real or hypothetical scenarios where some outcome was negative…yet such failures exist today under our state controlled markets and somehow that is never seen as a failure of state control. Indeed it just produces calls for more control. Indeed, if whipping the patient isn’t helping then surely the solution is to whip him even more.

 

I think that this scenario would be such an extreme outlier (i.e. a person with no insurance, no identifying information, completely family-less and friendless, suffers a life threatening injury and is also unconcious) that indirect (outside groups) or direct (the hospital itself) would cover these 0.01% occurrences without a second thought.

It think the question to treat without explicit consent is a common libertarian debating point and there are differing opinions on it… but in my opinion you can call it implied consent or “when in doubt” principle or whatever, but I think it is entirely reasonable for people to assume that every person will always prefer any alternative to death and to then act on that assumption. Or to proceed on the course that reasonably seems it should produce the least amount of harm.

I just can’t see how anyone can argue with that position. To argue against it is to argue that you prefer to die over the notion of your right of consent being violated. Right. I don’t think you’ll find many takers on that one. 😉

Now maybe someone’s religion says they should not get medical treatment and they would prefer death, but doing so is not a rights violation per se as they are perfectly free to kill themselves later if they don’t like the outcome of being treated and the person doing the treating is acting in a reasonable and reciprocial way (that is they acted in a way they would wish to be acted upon were they in the same state).

And at the end of the day the whole notion of rights is about reciprocity… we cannot demand rights for ourselves that we are not ourselves willing to honor for others. If we say we have the right to kill other people and take their stuff then we have little cause to complain when someone does that to us. If we say we only have a right to our body and our property etc then we are obligated to respect those same rights in others. So acting on this unconcious injured victim comes down not to what version of rights that victim lives by (unless you happen to know what they are and thus are able to act according to them, but we’re assuming in this extreme example we have no idea what they are) but rather what version you live by (the one treating him/her). You must act in a way that is consistent with your views or how you would want to be acted upon (“do unto others…”)

So the libertarian position in my mind then is “do unto others” and I think 99.999% of people or institutions would treat them, but for the small minority that wouldn’t and let them die, that should be “legal” in the sense there is no legal obligation to act… of course the real world ramifications of not acting would probably be quite similar to it being illegal. pretty much everyone who thought that was a dick move would boycott the hospital or doctor or whatever and they would flush all value in their reputation down the toilet. So you don’t need a “state” to force these things on people… the morality of that society will most directly reflect what actions are approved and what are shunned and thus tend to eliminate those that are shunned… you’re free to do whatever you want, but you’re not free to avoid what others think about you for doing whatever you want.

 

 

Qurora user

Well I was assuming a “libertarian” society in which case nearly everyone would have insurance 😉 because it would be so cheap, like car insurance… because medical costs would be reasonably and low. Otherwise it’s an unfair question, like assume everything is exactly as it is today but you just removed all government force… how would you solve this the day after that? Well of course you wouldn’t have some perfect solution as the entire structure of society has been distorted by state force such that we end up with these scenarios where medical costs are sky high and insunrace is likewise expensive due to mandates. It’s kinda like saying well the government forced me to sit in a wheelchair my whole life and the liberatrian solution is to get out of the wheelchair, but look when you get out you can’t walk, so clearly the libertarian solution is the wrong one.

But I would concede your point it might be a bit more common than 0.01% 😉 as one can still have family etc and not be able to get in touch in time. But far more people would have insurance so the question then just becomes one of how do we insure we can be identified and our insurance status determined if we are unconscious.

But not sure why you say that doesn’t happen right now? It does. I don’t recall the law’s name off hand but there is a federal mandate that hospitals must treat patients to the point they stablize them so they don’t die. They don’t have to “fix” everything, but they do have a legal obligation to keep them from dying. That does create some moral hazard as those that choose to remain uninsured know this and may rely on this in some small part. Now not everyone will but on the margins it must be happening.

In a libertarian world there would be a mix of hospitals that will treat you in these situations and those that won’t and might let you die… and you’ll never know which you might get, so this creates a big incentive to get insurance and carry that fact with you at all times!

But if the original question is asking how can we implement libertarian solutions within the framework of a state run society, i.e. just have some “reforms” while keeping everything else in place (mandates, regulations, certificates of need, moral hazards,e tc) then I don’t think there is such a solution… everything is connected, you can’t just change one small part without needing to change other parts in order for it all to work properly.

Qurora user
August 11 / 2017
Author Greg Morin
Category Health care, Quora
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Quora post: Libertarians, why should I lean libertarian?

Here’s my reply:

It comes down to one simple question: do you believe that sometimes it is ok to initiate (that is, you are not responding to violence initiated against you) or threaten to initiate violence against others in order to achieve some end? Or stated differently, do you believe that sometimes the ends justify the means?

if you answer “yes” then you are not a libertarian but in order to not also be a hypocrite you should also happily accept whatever is done to you by the state in order that the state may achieve its putatively meritorious ends. Any objection to any state action in this situation would be hypocritical.

On the other hand if you answer “no” to this question then you are a libertarian and following this one simple rule in life will yield the correct answer whenever it is asked “”should the state do X?”

August 11 / 2017
Author Greg Morin
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A Quora response

A recent Quora post of mine answering a question:

Why don’t we call people who don’t believe in climate change ‘deniers’ instead of ‘skeptics’?

 

For one reason and one reason only: it is a passive-aggressive ad hominem attack on any one holding that position meant to denigrate the holder of that viewpoint by cleverly associating them in the mind of the listener with holocaust deniers. We all know holocaust deniers are truly nuts (no I’m not being sarcastic, they are) so all we have to do is pluck that “denier” word from that usage and stick it over here to the same effect. You see the term “denier” is not used _anywhere_ else until today except for holocaust denial. We don’t call creationists “evolution deniers”. We don’t call the anti-vaccine crowd “vaccine deniers”… they all get their own separate neutral term. But no, for climate skeptics its “denialism” for you.

Yes there are a handful of nutjobs that say there is no change in the climate or no evidence, but they are the tiny minority. But I suppose its like anything, the small vocal group (islamic terrorist) give a bad name to the whole rest of the group that are perfectly reasonable. The climate question is not monolithic. It’s not simply “climate change” and that’s it. It includes

  1. Is CO2 increasing? Yes
  2. Is the temperature rising? Yes
  3. What is man’s contribution to the increase in CO2?
  4. What is the contribution of CO2 to temperature change?
  5. Will the rise in temperature have overall negative, neutral or positive outcomes for humanity? for other species?
  6. Should humans try to combat the percieved causes of the temperature rise?
  7. If they do should they do so in an economicaly mindful way (ie spend more to mitigate than the estimated cost of the damage)?

The problem is, you can agree with the establishment viewpoint on 1–6 but disagree on 7, and that makes you a pariah, a denier (just ask Bjørn Lomborg if you don’t believe me)

That is just not helpful. There are a lot of people like me who have legitimate, genuine questions, but they don’t get answered by the climate folk. We’re just told to “shut up and trust us” No. I’m a scientist as well (chemist) and I’m no idiot, I can understand your answers if only you’d bother to engage us actual skeptics who have actual legitimate questions. All I see on TV are climate scientists refusing to even sit in the same room with a climate skeptic. Sad. Thats’ not science, that’s religion, that’s belief. That’s denialism.

March 24 / 2017
Author Greg Morin
Category Climate Change, Quora
Comments No Comments

Vain Pursuits

It is a curious artifact of American politics that the showcasing of a soldier’s widow (as Trump did during his recent address of a joint session of Congress) has the opposite effect one might imagine. If little Johnny were brought before the class by his teacher to show them how he lost a finger playing with firecrackers, one might expect that frightful outcome would instill in the other children a sense that perhaps holding a lit firecracker in your hand is perhaps not a good idea. We would not expect the children to feel emboldened to engage in the same activity.

Likewise, shouldn’t parading the grieving loved ones of fallen soldiers instill in our “leaders” an instinct to be more parsimonious when using this scarce human capital? We would hope they would become progressively less inclined to engage in bellicose rhetoric that necessitates sending soldiers into harms way. But no, it has the opposite effect. In order ensure the recently departed have not “died in vain” and to defend the “honor” of the country, the leaders become even more inclined to retaliate or engage in new overseas adventures with the supposed goal of “furthering US interests” or “consolidating US power.” Why is that? Because for all the high-minded sounding rhetoric (equality, peace, freedom) and apparently “civilized” structure of the modern democratic state these political decisions still turn on raw emotions. The same emotions that drove primitive bands of hunter-gatherers to raid each other’s villages today drive men in suits sitting under gold domes to murder people half a world away. There is no logic, there is no thought, just raw, visceral emotions of revenge, anger, and pride, all wrapped up in some twisted nationalistic package we label patriotism and uniformly applaud like trained seals when shoved in our faces.

Patriotism, literally “love of one’s country” drives not just American leaders but every other country’s ruling elite to engage in the stupidest, most ill advised behavior – from hot wars to trade wars – all to advance the goal of autarky in an “us vs. them” board game. I suppose it is true what they say, “love is blind,” but in combination with political power this aphorism becomes lethal if love of country blinds one to reason and logic. In the war on terror reason and logic would dictate that blowback and the desire to control others is the proximate cause of virtually the entire problem of terrorism. Stop throwing rocks at the hornet’s net if you want to stop getting stung; beating it harder only makes the problem worse.

You’d think we all want no more widows and orphans resulting from pursuing inane policies. That should have been the point of shoving into the face of Congress the results of their polices. If we keep wasting these fine men and women in vain political pursuits, we will one day find no one left to defend us from an actual external attack.

March 09 / 2017

Defending the Undefendable: The Scalper

Country music star Eric Church recently took the unprecedented step of cancelling 25,000 tickets to his spring tour that he claims were purchased by scalpers. The cancelled tickets will be up for re-sale so his “true” fans can purchase them. In fact, this effort to curtail scalping harms his fans – who does he think bought or will buy the tickets from scalpers? I recently tried to buy tickets to an event but was barred from buying more than 2 at a time. Ever. Had I bought two and went back and bought two more I would have been branded a scalper and all 4 tickets cancelled. Net effect: I just won’t go; it’s my whole family or none of us. Oh well. So I have no doubt many of those 25,000 were people like me who tried to skirt the stupid rules just so a family or group of friends could all go to a concert and actually sit together.

The idea that scalpers cause high prices is as persistent a ‘cart pushes the horse’ myth as is the notion college education causes success. Scalpers provide an invaluable public service. They identify and solve glaring supply problems. They make it possible for poor planners, the blissfully unaware, and the peripatetic to enjoy a show at a moment’s notice. In my college days I was in Paris for a summer study abroad. Through last minute word of mouth I happened to find out Pink Floyd was in concert one evening. Of course it had been sold out months before I arrived, but that was no problem. I walked up to the venue and in a few seconds had bought a ticket from a scalper. Couldn’t have been easier. Now someone might argue (incorrectly) that had there been no scalpers I could have bought one at the box office for a normal price. Ten minutes before show start? I don’t think so – not with a band as popular as Pink Floyd at the time.

But, that scenario actually could take place (box office purchase) if only the artists would stop ignoring basic economics. If something is in high demand (seating at a show) but the supply is low (seats x shows) the solution is to not to set an artificially low price and cover your eyes and ears and stamp your feet demanding scalpers not buy the tickets. The solution is to (a) raise prices or (b) increase supply (more shows or more seats). If they truly want all their fans to have an opportunity to see them perform they need to stop selfishly withholding their talents and perform more frequently!

The two most vilified economic activities, piracy and scalping, are both the result of producers over or under estimating their own worth. If someone is pirating your goods then you are charging too much. If someone is scalping your goods then you are charging too little. Think about it: if music and movies were priced at a nickel each, all piracy would cease. The irony is the studios would make more money following this model. Riches are obtained more readily not from charging high prices to a few but rather low prices to the many (which is why price based competition, in contrast to quality or service based competition, is the most popular tool at gaining sales).

Looking back to our example of scalping we can see that if performers charged what the scalpers charged, the scalpers would realize no more arbitrage advantage to scalping and would cease. Airlines do this rather well, offering a range of ticket prices all of which are still high enough there is nothing to gain by scalping them (ignoring security issues today, but this was true in the past when tickets had no names on them).

These performers are a “victim” of their own success. There is only one of them, so increasing popularity means more and more will vie for contact. They have no choice but to charge more or devote more time to their fans. Supply and demand is as inexorable as gravity: sooner or later it will win.

February 28 / 2017
Author Greg Morin
Category Uncategorized
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Tyranny of the Do-Gooders

In 2012 Jeffrey Dallas Gay, Jr. (age 22) died of an overdose of prescription drugs. There is little more tragic than death resulting from something so easily preventable. As a parent the instinct is strong to stamp from the face of this earth that which our child became entangled in. But just as setting a national 5 mph speed limit would be a counterproductive response to death by automobile accident, so too are the knee-jerk reaction of legislators when faced with these sorts of drug related tragedies. Senate Bill 81 was recently introduced into the Georgia General Assembly with the stated goal of trying to eliminate opioid overdoses. As with all such intrusions by the state into the lives of individuals, it leaves in its wake the collateral damage of individual lives sacrificed on the altar of the greater good.

The bill preamble first cites a scary-sounding decontextualized statistics (that roughly 30,000 die annually from opioid overdose – context: 0.008% of the US population) it then moves headlong into the “solution.” Now, if 30,000 people a year were dying because some enemy was lobbing bombs at US cities, then yes, the government should do something about that. But we aren’t dealing with an external foe, rather an internal one, ourselves. Laws on gambling, prostitution, drugs, alcohol, compulsory health insurance, etc. all share in common the well-intentioned desire to protect us from ourselves. But such laws undermine the very idea of a free nation built on individual rights. Do you sell your soul to save your life?

SB 81 purports to solve, or at least mitigate, the opioid “epidemic” by limiting first time opioid prescriptions in the state of Georgia to no more than a 5 day supply. Additionally every pharmacist is required to log all such prescriptions into a statewide database (cough, Big Brother, cough) so usage can be tracked to prevent someone buying “too much” (whatever that may be). Just as someone today can hit a wall if they try to buy “too much” Sudafed so too will the unintended consequence be that some must suffer in agonizing pain because their prescription is “too much” under the eyes of “the law.” But hey, who cares about individual suffering if we think our policy might help someone. What’s next, tracking our grocery purchases to be sure we aren’t “abusing” our bodies by buying the food that makes us less healthy and leading to higher health care costs? The greater good of “public health” would surely allow for such reasoning. Yes, laugh now, but it’s coming one day.

Of course these legislators want their cake and eat it too. The paragraph stipulating no more than a 5-day supply is quickly followed by a paragraph supporting the right of a physician to prescribe whatever they deem medically necessary. So once again politicians get to bask in the limelight of “doing something” while not actually doing anything other than adding yet another layer of bureaucracy for doctors who are already over-burdened with a mountain of regulatory paperwork they have to comply with from the local, state, and federal level.

The sad fact that no one wants to face is there no way to solve the opioid overdose problem other than getting people to follow the prescription on the bottle. And that’s not going to happen because people are people and some people just can’t follow directions. People “abuse” antibiotics as well by doing the reverse, not taking enough. This promotes antibiotic resistance. Indeed, nearly as many people (23,000) die each year due to antibiotic resistance. Why no bills designed to solve that “crisis”? Perhaps because no one is getting high off antibiotics? The desire to stamp out any possibility of artificially induced pleasure seems to be the driving force behind drug policy in this country. Anyone who needs a medication should not be made to suffer the hardship of additional hurdles just to get what they need because a handful of people can’t act responsibly. If you want to make a meaningful inroad toward ameliorating this problem, lobby the FDA to remove rules on side effect disclosures that require events with a 0.00001% chance of happening being listed. This leads to information overload and people just tune out everything. If the warning listed only actual hazards – like death from overdose – people would pay attention. Thus unintended consequence of government meddling leads to “solutions” like SB 81 which will invariably lead to more unintended consequences which can only be solved by yet more rules and legislation. The state cannot remake man through the pen. It must stop trying to do so.

DeVoss vote a proxy for freedom, choice

The Democrats waged a bitter campaign against the confirmation of Betsy DeVos as Secretary of Education. Ultimately they lost that battle when Vice-President Pence cast the deciding vote in a split Senate. But this battle had less to do with DeVos the women (indeed, perhaps one can only be a misogynist if they oppose Democrat women) and more to do with the concept of “school choice.” Ah yes, the Democrats, the party of “choice” when it comes to women and their bodies are decidedly anti-choice when the debate shifts to where you send your children to school. Because DeVos has expressed support for school vouchers, that means she is a blood-sucking monster who wants to see children die. This is no hyperbole in characterizing the oppositions rhetoric – noted Democrat film critic Richard Lawson tweeted “voucher programs will lead to more suicides, Betsy DeVos’s policies will kill children. That is not an exaggeration in any sense.”

The tweet has since been deleted. But you get the idea. These people literally believe that if we don’t all meekly line up single file like cattle to go to our assigned schooling center, then the very fabric of society will be rent.

Apparently allowing parents the freedom to decide where their children go to school means the public schools will be unable to function by virtue of decreased revenue. But this makes little sense on its face. If a school has 1,000 children and 500 leave for another school then both revenue and expenses have fallen in concert. This is why if you choose to eat at McDonalds and not Burger King no one says your actions are “defunding” Burger King – as though Burger King has some superior claim to your money that for the good of society necessitates you eat there. Why if you don’t eat at Burger King then they may have to fire people, and unemployment is bad for society, therefore we will tell you when and where to eat, shop, live, and go to school. Even though schooling is the only active part of that hypothetical edict, logically there is no reason this greater good argument can’t be used for any other economic activity.

School choice means that if money is directed away from public schools that are not satisfying the parent’s desire for a good education, then those public schools will have to fire teachers and (gasp!) administrators. Fewer public school teachers mean fewer public school union members. Unions oppose school voucher programs not because they genuinely think it will harm children. No. They oppose it because they genuinely think it will harm their current position of political clout.

Fortunately the American public sees through the self-interest of the unions and past their spurious claims of wanting what is best for the children. A recent poll found that 68 percent of Americans are firmly in the school choice camp. Indeed it is often claimed that school choice is a clandestine method of re-establishing segregation in schooling again, but don’t tell that to the 72 percent of blacks and 75 percent of Latinos who are pro-school choice. For many of them it is the only life-line they have to escape the failing schools they have no choice but to attend by accident of their zip code. The Democrats claim to stand for the interests of the poor and underprivileged, but they are all too willing to sacrifice those ideals upon the altar of political expediency in praise of their god the unions (indeed, the Department of Education was established by President Carter to reward the strong support he received from the teacher’s unions). But there’s still hope for the anti-DeVos camp; throw your support behind Rep. Thomas Massie’s bill H.R. 899 which will abolish the Department of Education.

February 14 / 2017
Author Greg Morin
Comments No Comments

“Mr. Gorbachev, give us this wall”

Throughout Trump’s campaign he repeatedly promised that “we” would build a wall and that Mexico would pay for it. The details of that boast were conveniently omitted. But class is now in session and the homework is due, so at long last we have been made privy to his “secret” method of getting Mexico to pay for this wall: tariffs. Trump plans on imposing a 20% tariff on imported Mexican goods coming into the US. The proceeds are earmarked for paying for said wall. There’s just one problem with this little scheme of course: it won’t work, or at least not the way Trump imagines. In other words, as with all government actions, there will be unintended consequences. One of the central tenants of economics is that incentives matter. Closing a door just means now the window doesn’t look so bad. Like rats from a sinking ship, there are numerous routes to avoid the tariff. To offset the tariff Mexican exporters may raise prices, which of course means US buyers will shoulder the cost (although magically increases in minimum wage never incline one to increase prices). But higher prices mean US buyers may then opt to forego the purchase or to seek alternative goods; the net effect being no tariff earned and decreased sales for the Mexican company employing, you know, Mexicans (homework assignment: what effect might increased Mexican unemployment have on the demand to enter the US looking for work?). Or if the Mexican company decides to absorb the cost then that means they’ll either have to cut costs by potentially scaling back their work force or slowing the rate of hiring – all of which puts more Mexicans out of work (again see homework assignment above). The more you turn up your stereo to drown out your neighbor’s music, the more he does likewise in a perpetual game of one-upmanship until you both go deaf.

The immigration “problem” is one of positive feedback. Actions designed to decrease an effect actually make it grow. The irony here is that Trump of all people doesn’t see the problem. He is quite fond of blaming China for harming the US economy and putting people out of work by flooding the US market with cheap goods. However, he fails to see the US has been doing the exact same thing to Latin America for decades. That area of the world is less developed and so depends much more on agriculture production to support its economy. Any factors (such as cheap imports) in that agricultural market will have an outsize effect in that region. The US has a long history (since the depression) of agriculture subsidies to US farmers. Subsidies lower the cost of US agricultural products, allowing US farmer to export heavily into the Latin American market where local farmers can’t compete. That darn NAFTA! Yes, NAFTA enabled cheap imports in both directions. These imports had the obvious effect of putting them out of work whereupon they are left with little choice but to move to where there is a demand for low skilled labor – the US.

The inconvenient truth is that the solution to most of the immigration “problem” is to simply end all agricultural subsidies. But no, we’d rather scratch our heads as to why so many keep coming here, shrug our shoulders, and then set about building a wall to keep “them” out. Farm subsidies have become such a political lighting rod in this country that it is actually easier to subsidize foreign farmers (the US sends subsidies to Brazilian cotton farmers!) than to scale back subsidies to our own farmers.

If Trump really wants to stem the tide of Mexicans entering the US he needs to make Mexico great again – great enough that their economy becomes a magnet to all expatriates, drawing them home to where the jobs are. Perhaps Carrier should build that Mexican plant after all.

February 08 / 2017
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