Wednesday, April 30, 2008

Politics and the Nature of Man

Katherine Kersten at The Minneapolis Star-Tribune has some thoughts on the welfare state and its consequences, based on her trip to Scotland:

Some of the Scottish people I met were eager to detail the burdens of life in a "nanny state." Among them were the husband and wife who ran the guesthouse where I stayed, and the guide who helped me find my way through the Highlands.
These folks work seven days a week to keep their little businesses afloat. What irked them more than the gas tax and the strike, they said, was what they called "spongers" -- the substantial and growing percentage of the Scottish population supported by the nation's expansive welfare system.

Footing the bill

"Spongers" include able-bodied young men who live off government benefits, and turn down jobs with impunity because "that sort of work is unsuitable for me." They also include legions of young, unmarried mothers who expect taxpayers to support them and their children indefinitely.

The hard-working, middle-class taxpayers I met are proud of Scotland's beauty and rich heritage. But many seem fed up with footing the bill for a bloated welfare state.

"The government talks about redistributing wealth, but it rarely talks about the importance of creating wealth," complained my guesthouse host. "That's what we're trying to do."

One of the primary things that differentiates the individualist from the collectivist is that the latter believes both in grand historical forces as the primary drivers of history, and that bad things happen to good people because of bad acts by bad people. When one believes in both of these things simultaneously, the justification for the sizable welfare state becomes clear and obvious: the poor and weak are poor and weak because society has made them so, and so society can, through public policy, cure what ails them. That the collectivist should have the necessary authority over the policy goes without saying.

But there is no room in the collectivist’s model for the “sponger.” People are good, and will work if given the chance, and will be happy to provide for the defenseless through high taxes and other submission to state control. If the sponger inconveniently shows up anyway (not so much as the welfare cheat as the businessman who evades government price controls, or the farmer who refuses to produce at repressed state prices), he must be dealt with, by whatever means necessary. So too are people prisoners of their demography, with all social interaction being carried out on the terms of and decisively defined by the unholy trinity of “race, class and gender.”

The individualist, in contrast, believes that it is within the capability of every man to do great things, provided only that he be given the freedom to do so, and to bear the consequences if he fails to do so. Great things happen because great individuals achieve them. The collectivist has a fundamentally dispiriting notion of man and what he is, possessed of no authority over his own destiny and thus tailor-made to be led by the (state) slavedriver. The most compelling argument against the growth of the welfare state is not its bad incentives for work, its destruction of traditional social networks that,before they were crowded out, used to deal with social problems, and its violations of individual liberty (although those are all damning objections in their own right), but its reduction of man to an animal, fit only to be made the captive of the technocratic elite even as he is a captive of history's inevitable forces too.


Saturday, April 26, 2008


The New York Times comes to grips with expensive textbooks:

College students and their families are rightly outraged about the bankrupting costs of textbooks that have nearly tripled since the 1980s, mainly because of marginally useful CD-ROMs and other supplements. A bill pending in Congress would require publishers to sell “unbundled” versions of the books — minus the pricey add-ons. Even more important, it would require publishers to reveal book prices in marketing material so that professors could choose less-expensive titles.

The bill is a good first step. But colleges and universities will need to embrace new methods of textbook development and distribution if they want to rein in runaway costs. That means using digital textbooks, which can often be presented online free of charge or in hard copies for as little as one-fifth the cost of traditional books. The digital books can also be easily customized and updated.

Right now, textbook publishers are calling the tune. They add as many bells and whistles as they can and pump out new editions as quickly as possible — as a way of making perfectly good textbooks obsolete. Not every book can be cheap. A specialized text that only a few people know how to write and that reaches a small audience will be costly by definition. But there is no reason for an introductory textbook to carry a price tag of, say, $140 in an area like economics where the information changes little from year to year.

Leave aside that Congress telling book publishers how to run their businesses would seem to run afoul of the First Amendment. This analysis of the textbook market is misplaced.

One of the most common mistakes people make in trying to think economically is to suppose that all prices are driven primarily on the supply side. For example, things added to textbooks make them more expensive. But demand is often as important in driving up prices as supply. The primary reason textbooks are expensive is not (at least in a direct sense) "marginally useful CD-ROMs and other supplements," but simply that students willingly (if reluctantly) pay these prices. Why will students pay them? Because they are critical to succeeding in so many classes. Why are they critical to succeeding in so many classes? Because professors build their classes around textbooks. Why do professors build their classes around textbooks? Because publishers make life easy for them by writing canned exams, study guides, web supplements to (even replacements of) traditional lectures, etc. Professors, in turn, have little incentive to care what their students pay, and so publishers can get away with all of this. Publishers also use the new-edition tactic to gut the used-textbook market, which would otherwise eat a lot into sales. The professor is more or less indifferent to whether the new edition adds enough value over the old one to justify its higher cost, and so is comfortable with this tactic.

I teach five classes on a regular basis. In one I use no text at all, and in two others I use standard textbooks but make them optional. In the other two I have mandatory books, but books that are not traditional textbooks but mass-market books that are a lot cheaper but do not have "problem sets," web supplements, etc. But that requires that I create and grade my own tests, not lean on the publishers' add-ons, and otherwise actually aggressively teach my classes. It is old-fashioned, but it surely does keep student costs down. There is some justification for the traditional textbook model in some science and language classes, and other places where repetitive problem-solving and/or drills are important, but the fault otherwise lies at least as much with the professors who select their books as it does with the publishers who offer them.


Thursday, April 24, 2008


The Union of Concerned Scientists is concerned that politicians are interfering with scientists’ ability to govern us:

An investigation of the Environmental Protection Agency released today found that 889 of nearly 1,600 staff scientists reported that they experienced political interference in their work over the last five years. The study, by the Union of Concerned Scientists (UCS), follows previous UCS investigations of the Food and Drug Administration, Fish and Wildlife Service, National Oceanic and Atmospheric Administration, and climate scientists at seven federal agencies, which also found significant administration manipulation of federal science.

The rise of the scientocracy has had destructive effects on liberty in the U.S. Since the rise of the regulatory state with the creation of agencies such as the FDA (and many more since the late 1960s), it has become standard to assume that the role of scientists in government is to provide unbiased scientific research, and then recommendations about how particular government regulations should be crafted. Politicians, in turn, should generally do what the scientists say. Starting from this premise, any intervention by mere political officials cannot help but be seen as “interference.”

But in fact this misunderstands what the role of civil servants, scientifically credentialed or otherwise, ought to be. In a free society the governing institutions must be accountable to the citizenry. Politicians and pressure groups will often seek to maneuver authority for policies that are politically unpopular over to the rule-makers in the bureaucracy, with the EPA grab of authority to regulate CO2 emissions under the Clean Air Act, even though such emissions were not even on the radar when that act was drafted, being a classic example. Regulatory control of individual choices must be expanded because the scientists say so. Politicians find it in their interest to merely call for vague goals that no one can be against such as clean air or safe food, and to leave it to the professional scientists to tell us what that means on the ground.

This model has appeal because scientists are very respected, and politicians (for good reason) are not. Why not simply leave it to the scientists to find out in good conscience what should be done, and leave the politicians out of it? Because ultimately a free people require that government not be, so to speak, privatized – to be handed over to “experts” who make decisions because they are (allegedly) apolitical. But scientists are like everyone else. They have interests, which all too often coincide with giving themselves more power. (I do not recall the Union of Concerned Scientists ever calling for less government action on some matter.) I want politicians interfering with the bureaucracy, especially the scientific bureaucracy, as much as possible. The tyranny of scientists – on stem-cell research, on pollution regulations, or anything else – does not turn out any better than any other kind.

Saturday, April 19, 2008

Do College Degrees Cause Prosperity?

The Mackinac Center in Michigan has a new report that calls into question the effort by governments there, in Ohio and elsewhere to increase standards of living by increasing the number of fannies in college classrooms. The naïve faith that increasing the number of people who are college graduates can, in the words of the Ohio newspaper editorial linked above, “rescue the state's economy” misunderstands what college can and can’t do for a society.

The naïve belief holds that a college degree is a magic prosperity pill that increases the lifetime income of anyone who swallows it. It is certainly true that college graduates on average earn more than those who don’t get one, and that internationally the average education level of the population is associated both high higher average standards of living and with economic growth rates. Thus, more education should yield more prosperity.

Up to a point this is surely true. A society where no one can read and write is clearly not going to be as wealthy as one in which everyone can. Certain skills provided by education make people more productive. But potential skill is simply not equally distributed among the population. To model it in an instructively harsh way, imagine that there are two kinds of people, Lows and Highs. The two types are distinguished by their potential productivity. Highs, if given a college degree, are very productive, while the degree does nothing for Lows.

There are two types of mistakes the education system can make. The first is to fail to identify the Highs, and thus not provide them education that would clearly benefit them and, through their efforts in the marketplace, the rest of us too. The other mistake is to send Lows into college. If they don’t graduate, then incentives are powerful for standards to be lowered to allow them to graduate. Less-difficult majors are created, the distribution of grades shifts to the right, etc.

In addition, there is downward displacement. In other words, the large number of new graduates, only some of whom are Highs, means that jobs that didn’t use to require a college degree now do. Some students who are Highs then feel pressure to incur additional expenses to separate themselves from the Lows, and so go on to earn graduate or professional degrees that weren’t necessary before the expansion in access to undergraduate ones. In addition, the lower informational value of a college degree or transcript from all of this (it is no longer as clear whether a college graduate is a Low or High) lowers the overall average expected productivity, and hence wage, of college degrees.

How can we minimize the two kinds of mistakes? Clearly, we need to target potential Highs who are missed by the system. The GI Bill might be an example of a policy that achieves this. Access to college was much more difficult right after World War II, and that plus the life-changing nature of the war experience (how tough can it be to pass the philosophy final after seeing combat at Bastogne or Okinawa?) means that there are lots of people who can benefit from access to college. But sweeping policies designed to give lots of people college degrees simply will not necessarily magically increase everyone’s income; it is not the piece of paper itself, but what people can conclude about a person from the fact that he possesses the piece of paper, that matters.

While the taxpayers’ tolerance for such language will be understandably limited, it is worth reminding people that a primary benefit of a college education is simply the ability to live a more reflective life, to struggle with the great issues of human existence, and to be more capable of participating in consensual government. The “better jobs” argument, alas, can only be taken so far.


Thursday, April 17, 2008

Mixing Sports and Politics

Here I do not mean mixing sport and politics but looking for the echoes of political philosophy into sport. Fred Schwartz in The National Review has an interesting little essay on which professional sport is the most consistent with conservative principles. For a variety of reasons, he argues for baseball. Is he right?

While his arguments dwell on attire, immigration policy and the like, I think the strongest argument for baseball as the quintessentially conservative game has to do with the evolution – of which there has been surprisingly little since integration – of the game. The fundamental fact about baseball, which differentiates it in my view from other sports, is that the choices managers and players face are essentially the same now as they have ever been. The rules are the same (other team sports are constantly tinkering with theirs) as they were decades ago, as are the strategic choices – hit-and-run or not, take a pitch or two with a fleet runner on first, etc. – as they were at the dawn of the live-ball era. The only real on-field innovation that I am aware of in the thirty-plus years of my fandom is the development of specialized relief pitching. A baseball fan teleported from the 1920s would find the players bigger and more global, but would recognize the game itself. This is not true for most sports, which have a constant flow of coaching innovations (the 46 defense, the dribble-drive offense, and so on). If conservatism means respect for traditions of the game themselves, baseball clearly contrasts with football, basketball and hockey, all the more so given the veneration for its past that is such a part of baseball. Only in baseball do we get the overwrought, teary-eyed nostalgia of a Roger Kahn, Bob Costas or George Will.

In contrast, I have become persuaded by some recent reading that American football has a whiff of the fascist motif about it. The charismatic leader, in the form of the fiery coach or trusted quarterback (a position with no analogue in the other team sports), plays a much bigger role in football than elsewhere. There is no football equivalent of the post-ideological, leader-led drive toward the common purpose that Jonah Goldberg argues is the essence of fascism, but the martial elements and mass-rally motif of a typical football crowd are still, a reasonable person would I hope agree, suggestive.

But if conservatism means American conservatism, with its critical component of decentralized cultural evolution, then as much as I hate to say it, the ultimate conservative (or perhaps, more accurately, libertarian) sport is soccer. In soccer it is players, not coaches, who do much of the innovating, through the creation of the soccer kick, bicycle kick, etc. This is a way of extending the range of human possibilities, just as techno-libertarians such as the types over at Reason admire. The Brazilian Leonidas, inventor of the bicycle kick, is to sports what Steven Jobs is to technology. And as in most strains of libertarianism there is one paramount rule – no force or fraud – and little else to restrain anything else humans might try. So too with soccer, where “do not use your hands” is the only overarching commandment; within this constraint, most everything else is legal.

None of this has anything to do with which sport is better. I like American football just fine (make of that what you will), and like a lot of Americans, I don’t much care for soccer. Indeed, one of the reasons Americans may dislike it is that we prefer to invent our own sports. I don’t pick my friends according to their politics, nor do I pick movies or sports by their abstractly argumentative political characteristics. But soccer (and American football and basketball) will be significantly different twenty years from now from what they are now, and I find that an attractive characteristic.

Wednesday, April 16, 2008

How Much Worse Could it Be?

According to CNN, Youngstown, Ohio is disappearing:

YOUNGSTOWN, Ohio ( -- Youngstown, Ohio, has seen its population shrink by more than half over the past 40 years, leaving behind huge swaths of empty homes, streets and neighborhoods.

Now, in a radical move, the city - which has suffered since the steel industry left town and jobs dried up - is bulldozing abandoned buildings, tearing up blighted streets and converting entire blocks into open green spaces. More than 1,000 structures have been demolished so far.

Under the initiative, dubbed Plan 2010, city officials are also monitoring thinly-populated blocks. When only one or two occupied homes remain, the city offers incentives - up to $50,000 in grants - for those home owners to move, so that the entire area can be razed. The city will save by cutting back on services like garbage pick-ups and street lighting in deserted areas.

Here are my recommendations, for whatever city fathers think they are worth:

1. The Youngstown Zoning Ordinance runs 173 single-spaced pages. It specifies in minute detail what kinds of buildings property owners may build, how to supplicate before the authorities when a building or its alteration is being contemplated, etc. Repeal it. Entirely.

2. Youngstown levies a 2 ¼ percent income tax on residents and nonresidents, and on profits earned by corporations from business done in the city. Repeal it. Entirely. Cities all over the country get along just fine without an income tax.

3. Adjust government spending as necessary.

4. The government of Ohio demands that Youngstown businesses acquire the following kinds of licenses if necessary:

Accounting License
Alcohol License
Asbestos Contractor's License
Auction Firm License
Barber Shop License
Bedding License
Certificate of Authority
Cosmetology Shop License
Dairy License
Design Firm License
Elevator Permit
Engineers/Surveyors Corp License
Fictitious Name Registration
Finance License
Insurance Business License
Landscaping License
Lottery License
Nursery License
Pesticide Business License
Pharmacy License
Real Estate License
Sales Tax Registration
Salon License
Security License
Tanning Facility License
Tobacco License
Vehicle Dealer License
Weights and Measures
Withholding Tax Registration
Worker's Compensation

Recognize that Western civilization survived and even flourished for centuries without, for example, the need for cosmetologists and real estate middlemen to be licensed by the government. Proclaim that in the name of reviving your city these requirements will be waived, and dare the government of Ohio to stop you.

5. Announce that the city of Youngstown no longer gives a rat’s patoot about how many workers you have, how much you’re paying them, and how many hours a week they are working. Declare Youngstown a sanctuary city for workers and employers who wish to simply bargain freely.

6. Remind yourself before taking these steps how bad things are now, and remember this ten years from now when they are much better and you are contemplating going back to the old ways.

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Tuesday, April 15, 2008

Rethinking Europe's Ethnic Future

There is much talk lately of the demographic transformation of Europe. (Go here for a review of this small but growing and useful literature; one more has come out, which I have read and may review, since I wrote that post.) The pessimistic argument says that Europe is being swamped by immigration and by higher fertility among non-native immigrants, many Muslim, who feel no allegiance to the culture they are swamping. But the data appear to be telling a different story now, at least in one European country. The level of immigration and especially political asylum claims appear to be in decline; it is instead emigration of natives that is the biggest concern.

The statistics below are all from the population section of Statistics Netherlands. The table below shows total native-Dutch population from 1996-2008:


So population is stabilizing and on the verge perhaps of beginning to decline, which is an oft-told tale. Total “persons with a foreign background,” i.e. with at least one non-Dutch parent, have risen, although are still just a bit over ten percent of the population:


So the population of such individuals is growing, but far more slowly than a few years ago. It grew 11.1% between 1996 and 2000, but only 4.1% from 2004 to 2008. Given that it includes mixed marriages and people from other Western countries, and that some presumably nontrivial portion of this group is on the way to assimilation in all the ways that matter, the marginal impact of Third World population movement to Holland may be falling.

Immigration and asylum tell similar stories. Here are the data for “nonwestern” immigrants during a similar period:


And asylum claims, which generate the most anger because unproductive immigrants unwilling to assimilate soak the welfare system as their progeny prepare to take over, show the same pattern:


So immigration and asylum fell substantially as this decade unfolded. The conclusion I draw from this is that, at least for one country, the threat to social stability from immigration (while far from over) has probably peaked. To be sure, it is only one country; some, like Denmark, have become even more vigilant about immigration, while others, like Sweden, have yet to do much to limit immigration or promote assimilation. But evidence from several countries across western Europe indicates that the flood of refugees is on the wane, and while the population balance among ethnic groups continues to tilt, it is not occurring as rapidly as before. Talk of Amsterdam becoming majority Muslim by 2015, as Daniel Pipes asserts today, or European countries ceasing to be recognizably European, seem excessive.

The two confounding factors are lower birth rates of and emigration by the natives. Here are data for population of Dutch nationals (including those of foreign background, since Statistics Netherlands doesn’t break this group out) between 20 and 30 years old:


This is quite a substantial decline, 18.4% in only 11 years, although it appears to have halted by 2003. Emigration of 20-30 year olds does show a rise, although the numbers are fairly small:


Matching up 2006 emigration with 2005 total population for this age group means that about six Dutch in 1000 of that age group are leaving each year. Given that these are the parents of future Dutch, and given that they probably self-select for ambition, risk-taking and creativity (and perhaps away from comfort with nonwhite immigrants), this is a problem, although not a civilization-threatening one. That emigration is still on the rise despite alleged economic recovery in Europe is also disconcerting.

In short, I suspect that the threat of Europe being remade in undesirable ways by immigration, which I have written about here and here, may have crested. Not through the sort of apocalyptic violence Ralph Peters has predicted in a famously overwrought way here, but through the simple act of cracking down harshly on immigration. As long as illegal immigration is also controlled and the immigrants and their children either assimilate or come most of the way down to native-level fertility (neither a sure thing), disaster will probably be avoided. But the economic impact of Europe’s emigration of the young, if Holland is in any way typical, is a potential area of concern.

Lord Keynes, whose skill with the language was always better than his economics, is supposed to have said (although it is not to be found in my Bartlett’s) that “when the facts change, I change my views. What do you do?” Immigration waves in some countries have crested, fertility rates in France, Sweden and elsewhere are rising too much to be entirely accounted for (given the proportion of those groups in the population) by differential fertility rates for nonindigenous groups, and few countries are currently in catastrophically low fertility of 1.5 or less (and most of those in eastern Europe). And so I have changed my views, at least in part, since I last wrote on this. Note though that this says nothing about Europe's economic woes, or its looming welfare-state catastrophe, which I think are still major, perhaps fatal challenges.

For a dissenting view on these demographic questions, listen to Mark Steyn promote the paperback release of his still extraordinary America Alone on Milt Rosenberg’s Extension 720, a show I had the honor of appearing on myself, with nerves that will be obvious to the listener, once.


Monday, April 14, 2008

Both Ends Against the Middle

In his classic book Crisis and Leviathan: Critical Episodes in the Growth of American Government, Robert Higgs (whom I have had occasion to mention in the past here and, in what is apparently, according to the download statistics, one of my more popular postings here) makes the case that social crises generate both demand for and opportunistic supply of bigger government, which becomes the launching pad for even bigger government once we reach the next crisis.

H.L. Mencken once said that “[t]he whole aim of practical politics is to keep the populace alarmed (and hence clamorous to be led to safety) by menacing it with an endless series of hobgoblins, all of them imaginary.” And so it has been one crisis after another, for much longer than I have been alive. The Port Huron Statement, the founding document of the 1960s New Left, uses the word “crisis” ten times. Politicians on the make must speak the language of crisis in order to persuade voters to reach out desperately and reject the other guy. And so we are currently in the grips of the environmental crisis (global cooling then, global warming now), the race-relations crisis, the health-care crisis, the education crisis, etc.

The press makes much of the ways in which the new behavioral economics can be used to justify government control over our lives – by requiring that employers offer certain kinds of retirement options, by banning certain kinds of financial speculation, etc. The behavioral economics of the state, however, has not benefited from that kind of scrutiny as far as I am aware. If, say, people are neurologically wired to extrapolate current trends in the most pessimistic way, the opportunity will never go away for politicians to grab permanent power for problems that are, when seen (as they should be) from a long-term perspective, temporary and small.

At the moment the political stars are aligned, I think, in an unusually unfortunate way. September 11 has driven many in America to fear Islamism. Given how little thought most of us gave this radical theology and the number of its adherents before that awful Tuesday, this is perhaps a useful corrective. But gradually we see such bulwarks of individual freedom as keeping the national-security state accountable to the judiciary come under attack, all in the name of the government’s looking out for us. The worst-case scenarios for the jihad have them getting and using WMDs in the U.S., but this would be the culmination of a lot of unlikely steps, more difficult since they caught us napping the first time. In its most worrisome forms the jihad is closer to an organized-crime problem than a World War II problem. It does not merit any kind of fundamental rethinking of Anglo-American notions of due process.

And the challenges of global competition, in conjunction with the popping of the housing bubble and the ever-more catastrophic government encroachment on the health-care system portend more squeezing out of individual autonomy in the economic sphere as well. Limited government seldom has much of a constituency, as the founders knew all too well.


Thursday, April 10, 2008

The Wages of Ignorance

Dith Pran, a professional photojournalist, died recently. He had worked for The New York Times during the Cambodian Civil War, and was left behind as Westerners escaped soon after the Khmer Rouge took power there in April, 1975. His best friend there was the Times reporter Sydney Schanberg, whose story of Dith Pran's harrowing ordeal under and escape from the Khmer Rouge was the basis of the compelling film "The Killing Fields." The excerpt below is from one of Mr. Schanberg’s last dispatches, headlined “Communist Rule is at Least Uncertain; Napalm is Not; Indochina without Americans: For Most a Better Life:”

Many people have asked, over the long years of the Indochina war what the consequences of American withdrawal from this peninsula will be.

Secretary of Defense Schlesinger has said flatly—and Secretary of State obliquely—that Indochina is of no significant strategic ‘or political importance to American interests. Its only importance, they have said, is in whether the rest of the world will interpret an American withdrawal from the region as a failure of Washington’s credibility in failing to honor commitments.

But these concepts mean nothing to the ordinary people of Indochina and it is difficult to imagine how their lives could be anything but better with the Americans gone. For the American presence. meant war to them, not paternal colonialism. The Americans brought them planes and Napalm and B-52 raids, not schools and roads and medical programs.

This is not to say that the Communist-backed governments which will replace the American clients can be expected to be benevolent. Already in Cambodia, there is evidence in the areas held by the Communist-led Cambodian insurgents that life is hard and inflexible, everything that Cambodians are not.

The insurgents have committed several village massacres In their present offensive, and the Americans have predicted a “bloodbath” when the rebels take over. On the other hand, Government troops who recently emerged from a besieged provincial town southwest of Phnom Penh reported matter of factly that they had cooked and eaten the bodies of dead insurgents when they ran short of food and that they had grown to enjoy it.

Wars nourish brutality and sadism, and sometimes certain people are executed by the victors but it would be tendentious to forecast such abnormal behavior as a national policy under a Communist government once the war is over.

Cambodia, being a country blessed with rich agricultural land and a relatively small population, can be revived without any major reconstruction program as would be necessary in an industrialized nation. In South Vietnam the Mekong Delta can feed the population if the fighting stops and the land can be tilled.

At my university the faculty having been having a discussion about whether there are two few conservative professors on campus, and if so whether education is “biased,” and even mere left-wing indoctrination. I argued these were not really the key issues; the ignorance of graduates was. A politically tilted faculty produces a politically tilted curriculum, often perhaps (though certainly not always) without malevolent intent. It produces people who think that Stalin killed a couple of thousand people tops, that the natural mission of government is to solve problems rather than be paralyzed by ideological fights, or that Martin Luther King, Jr. (for all his undeniable achievements and bravery) is the primary figure in American history.

Depriving people, intentionally or not, of some sorts of knowledge is a way to produce a polity unlikely to choose wisely. For Mr. Schanberg to write that “it would be tendentious to forecast such abnormal behavior as a national policy under a Communist government once the war is over” required a special sort of ignorance, to wit ignorance of the near-universal laws of how totalitarian governments, including and perhaps especially communist ones, behaved after they took power. They killed their enemies, real or asserted, with gusto. They killed, and killed, and killed again, and even then were constantly on the paranoid watch for yet more enemies. They killed from Russia to Ukraine to China to Cuba.

An educated person knows his history. He knows the philosophical assumptions and historical opening act to the drama he is currently not just witnessing but, in a democratic society, being asked to evaluate and make sense of. I am in college classrooms all the time, and I appreciate that it is unrealistic, given the demands faced by many of our young, to demand that they know fully why Locke and Rousseau matter, where totalitarianism comes from, why liberty is so fragile. But that is no excuse not to try.


Tuesday, April 08, 2008

The Olympic Spirit

I like the Olympics, and always have. I like watching the greatest athletes in the world, and I especially like watching the more obscure sports for Americans (one of which, badminton, I play myself) that otherwise never make it to my television set.

But the Olympic movement I don’t much care for. The International Olympic Committee is a vast commercial empire, with the same sort of tangential relation to ideals that the NCAA has. It was formed in a burst of silly utopianism in the early part of the 20th century that believed that what we would now call “soft power” and treaties were the key to peace, and its role in promoting that peace is about as substantial as that of the Kellogg-Briand Pact. Its facilitation of corruption (predictable when a small group of people controls an extraordinarily valuable and very scarce asset, much like diamonds in Sierra Leone) was legendary until the scandal over the Salt Lake City bid, and the obsessive nationalism of the Games itself is only disappointing to the terminally naïve.

And so the fiasco over the Olympic torch wending its way through Paris and London is no surprise. The decision to give the Games to a totalitarian, up-and-coming power was understandable as a sort of athletic realpolitik, but we shouldn’t be surprised that the victims of that totalitarianism and cynicism, in Darfur, Tibet and elsewhere, are surprised. You lie down with pigs, you get muddy. Nor should we have any patience for puffery about the need to keep politics and sports separate, since the Beijing government desperately wanted the Games first and foremost as a political act.

And so now we have been treated to the revolting spectacle of Chinese security agents being forced to protect the torch from protesters while thugging their way through the streets of London, the capital of the land that gave the world the rule of law. (The protesters themselves, at least one of whom apparently tried to seize the torch from a wheelchair-bound athlete, were often no better.) The Olympics are compelling sport, but that is all they can ever hope to be, and (as Munich 1936 reminds us) they can be much less too.

Saturday, April 05, 2008

Control Freaks

Industrial policy could be coming back to a government near you. A faddish idea in the late 1980s and early 1990s, it holds that free market participants frequently collectively make wrong decisions, causing resources to flow to bad industries and away from good ones. Some excerpts from a recent interview Sen. Clinton gave with USA Today:

In an interview with USA TODAY, she proposed stripping tax benefits from sectors such as the oil industry and using government policies to boost industries such as automakers, wind turbine producers and steel companies. And she rejected criticism that her plans amounted to a form of industrial policy that would represent a dramatic departure from traditional U.S. practice.

She offered few details of how business incentives would be reshaped other than to vow to preserve auto manufacturing and steelmaking capacity and promote alternative energy industries. But she insisted that government subsidies are needed to counteract the market's tendency to "punish" investments that don't deliver swift returns. The interview came amid a global credit crunch that has the U.S. economy stumbling like a sailor on shore leave. Signs of financial weakness are evident at home — where house prices, consumer confidence and jobs are all sliding — and abroad, where the value of the U.S. dollar is down more than 17% against the euro since early 2006.
"We subsidize the oil companies. We think it's important that we give them our tax dollars so they can go out and explore and extract and produce oil. That's a clear decision right along the lines of an industrial policy," she said. "We subsidize all kinds of industries. We don't call it that. But we've made a decision we're going to subsidize them. I think that what we subsidized in the past is not what we should be subsidizing right now."

In her comments, Clinton made it clear that she regards the free-market doctrine that has held sway in Washington for a generation to be both inequitable and ill-suited to the sharp-elbowed global competition the U.S. now faces. Leaving economic outcomes to the market has resulted in stagnant incomes for the typical family and special treatment for the well-connected, she says.
"People say all the time, 'We can't pick winners and losers.' Well, then fine. Take every single dollar of subsidy out of the federal tax code. Get rid of all of it. … Let's have a real level playing field where nobody gets a penny in subsidy," she said. "Then see what happens. You'd hear the squeals of protest from Wall Street to Houston to Silicon Valley."

"We have to adjust our view of this. … What is it we really believe the United States should continue to make? I would put certain defense items in that category. I would put certain basic goods in that category, like steel," she said. "If you look at every other country, they make such judgments like that. We are competing against countries that directly and indirectly subsidize what they have concluded to be in their national interest."

Would that we were all so smart as Sen. Clinton is so well-known to be. Tens of millions of people betting their own money every day on where resources will command the highest return, and not one of them as smart as Sen. Clinton (who as president would be spending other people’s money with, presumably, much more care than others spend their own) is in solving this problem.

Industrial policy was a fad when it was credited with the seeming rise to economic dominance of Japan in the 1980s. (It was seldom blamed by those so infatuated with it when Japan had a lost decade of economic depression in the 1990s.) It is certainly true that there are any number of countries that “directly and indirectly subsidize what they have concluded to be in their national interest,” but it is also true that those countries are poorer than the U.S. Industrial policy is based on the premise that a bunch of really clever people in the federal Department of Omniscience can survey a land of 300,000,000 people and know the opportunity costs and social value of every resource-use decision. But as Friedrich Hayek taught us long ago, we are in most of our economic decision-making astonishingly ignorant. We simply do not know whether our speculations will be as profitable as we hope they will. We do not know the consequences of our choices for other people. It is the job of competition, working through the price system, to make us aware of these things by rewarding successful experiments and punishing failed ones. In the absence of these things, mistakes flower instead of wilt, which then leads to calls for ever more control and regulation. (Go here for a poignant example of other people paying the costs because politicians fail to predict the unintended consequences of their choices.)

When governments override the price system because, for example, it is too shortsighted, that supposes that public officials know things that collectively all the people do not know. And this means, in turn, that what one person, Sen. Clinton, “thinks” about the likely economic future becomes a binding shift in incentives for all of those 300,000,000 people. Industrial policy of this type is an act of astonishing arrogance.

But maybe it sounded better in Russian.


Thursday, April 03, 2008

Is There Anything Special About Health Care?

Here is David Freddoso in The National Review on Wal-Mart’s success in providing cheap prescription drugs:

In January 2006, the federal government began implementing the controversial Medicare Part D program, which pays most or all of the cost of most senior citizens’ prescription drugs, regardless of income level. The program has basically been successful at what it set out to do, providing drugs through competing insurers at low premiums. Between 2005 and 2006, the taxpayers’ burden for drug payments shot up by 35 percent, from $55 billion to $74 billion. American consumers’ out-of-pocket prescription-drug spending dropped only $1.2 billion, to $47.6 billion.

In September of 2006, Wal-Mart rolled out its $4 generic prescription deal, which promised to provide a month’s supply of some 300 drugs (now 361) for less than the cost of a pint of beer. Several other chains — Target, Costco (which is now offering 100 drugs for $10), and Kroger’s, among others — lowered prices in order to compete. Wal-Mart announced last month that its program alone, enacted without any government compulsion, has saved consumers $1.03 billion in less than 18 months. If the other firms’ price reductions are included as well, the total savings could easily be twice as great.”

The market for Wal-Mart prescription medicines is functioning as most do. A producer is producing a thing as long as the cost of doing so is less than what consumers are willing to pay for it, and consumers are buying it as long as the price is less than their willingness to pay. Wal-Mart fully takes account of the cost to society of making the medicine available, and consumers fully take account of the cost to society of their decision to consume a drug. (The argument would be identical if Wal-Mart ran cash-based clinics, as it is contemplating.)

Contrast this to the way most health care is delivered in advanced countries. People consume health care and not only pass off much of the cost to others – to other policy-holders and insurance-company employees for those with private insurance, taxpayers for those in a government health-care program, here or elsewhere - but struggle to make others bear most of these costs. Patients want insurance companies, employers and their fellow taxpayers to do it, drug companies want patients and taxpayers to do it, employees want their “employers” (i.e., owners and other workers) to do it, etc. This is completely unlike how most markets, even for such vital goods as food and housing, function. No one expects third parties (the poor occasionally excepted) to pick up the tab for these items; rather, we are fully expected to feed and house ourselves. Yet for medical care this cost-shifting is taken for granted. Veterinary medicine and some human medicine (Lasix and cosmetic surgery, e.g.) function too in the cost-bearing rather than cost-shifting way.

Leave. aside the gains to be had from jettisoning the extraordinary amount of government control over the health industry, more innovation in particular. If employer-based and taxpayer-funded comprehensive health insurance (i.e., insurance not just for catastrophes but for routine medical expenses) were ended at midnight tonight, would this market, after a few months’ adjustment, function any less well than these others?

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Wednesday, April 02, 2008

A Little is Enough

Well, now if I were the president of this land
You know, I'd declare total war on The Pusher man
I'd cut him if he stands, and I'd shoot him if he'd run
Yes I'd kill him with my Bible and my razor and my gun

- Steppenwolf, “The Pusher”

Ah, but what if the president is the pusher man? We are forced to confront this question with the growing momentum for legislation to give the FDA the power to regulate tobacco products in the same way it oversees food and medicine. The natural reaction of the average citizen is to view this as an attempt by the government to enforce the common good by restricting and controlling, perhaps to extinction, a pernicious vice. And I do not doubt that there are many earnest people in the bureaucracy and the anti-tobacco movement who honestly see it this way. But I predict that this is not what will happen. If anything, bringing tobacco further under the government umbrella will end any further improvement in the long struggle against this particular addiction, which has substantially (though not entirely - think bans on restaurant smoking) been accomplished through private stigma as much as public sanctions.

The reasons are twofold. First, the government has itself become addicted to tobacco revenues. Tobacco taxes are a significant portion of state and a smaller portion of federal revenues. While demand for tobacco in the short run is relatively inelastic – i.e., big price increases (from higher taxes or otherwise) lead to small decreases in consumption - this is not necessarily true in the long run, as Gary Becker famously noted years ago. A big increase in tobacco taxes may not have much impact on current smokers (save perhaps to cause them to resort to the black market), but it may have a huge impact on the decision to smoke in the first place. Government, needing this revenue, cannot afford to let smoking fall too much. (There is an offsetting effect, in that smoking leads to Medicare and Medicaid expenses, but it is not clear that government opposes expanding the scope of government spending. And offsetting this is the lower spending on Social Security as smokers die young.)

Second, some tobacco companies themselves take advantage of this government addiction to protect themselves from competition, a standard case of regulatory capture. Philip Morris, the dominant producer at roughly 50%, in the American market, supports the proposal, while R.J. Reynolds, a distant second, does not. I predict, however, that the bill will be modified so as to draw Reynolds’ support, by reinforcing their position against smaller and overseas cigarette makers. If you have any doubt that regulatory capture has happened in tobacco, note that at the request of Philip Morris the International Trade Commission is ”investigating”, with an eye to doing something about, cheap cigarette imports.

The CDC publishes data on the extent to which Americans have smoked since 1965. Here is how that figure has changed over time, for all adults and for those aged 18-24:

While overall smoking has declined substantially and more or less linearly over this period, as has smoking among young people, the progress with respect to the latter appears to have ground to a halt after, a period that dramatically upped the ante for government need for tobacco cash. In 1998 a landmark settlement was signed between the major U.S. tobacco producers and first the federal and then state governments, which resulted in the payment of tens of billions of dollars into government treasuries, much of which was spent not on public health but workaday vote-buying government programs. Today's young smokers, who are tomorrow's cash cows, are now smoking at about the same rate over time. The overall decline in smoking appears to be linked to the aging of the population, and perhaps to other demographic changes, particularly the increase in the Hispanic population; Hispanics historically have smoked less than other ethnoracial groups. But if my theory that the government can’t afford to have too little smoking is correct, I would expect it to wink at more aggressive marketing efforts in the coming years in the Hispanic community, and for Hispanic smoking rates to then approach those of other groups.


Tuesday, April 01, 2008


In addition to being one of the most popular with journalists, research by economists into what makes us happy is one of the most rapidly growing areas of research. Ever since Richard Easterlin published research in the 1970s indicating that despite decades of economic growth Americans weren't any happier than they were in the 1950s, economists have had to labor under the suspicion that one of their most basic theoretical models, which indicates that more income relaxes consumers' budget constraints, enables more choices and thus make them better off, is built on sand. In recent years economists, journalists, and popular commentators have taken this now vast body of empirical research and used it to draw the conclusion that we emphasize economic growth too much, and that public policiesshould instead emphasize other things that the research indicates matters more in making people happy -- in particular income equality and general "social solidarity."

One of the reasons income equality is said to matter is that people are said to judge their happiness by their standard of living relative to that of others, rather than by their own absolute level. The poor become happy not just by becoming richer themselves, but through the knowledge that the rich ain't all that rich. Resentment in poverty-stricken countries similarly builds up as globalization makes some countries ever-richer even as others continue to languish. Because global communications systems make people ever more aware of these disparities, globalization is creating a world of a few smug haves and a mass of angry have-nots.

This body of research naturally lends itself to the grand government plan. If people are not living lives as fulfilling as they could, then the free market that has generated these results must be controlled. People need to be given marriage license, the government needs to ensure that unemployment is low, and confiscatory taxes need to be imposed to prevent envy. (Never mind that and he is at best an ethically dubious basis for government policy, and that in the US at least our founding document argues only for "the pursuit of happiness," not its achievement.) Indeed, one British school has even somewhat creepily taken it upon itself to offer happiness lessons, with a goal (naturally) of helping its hapless students overcome their obsession with “celebrity, money and possessions,” a necessary result of the well-known fact that “as societies become richer, they don't become happier -- a fact regularly shown by social science research."

Well, the research doesn't actually quite show that. As Will Wilkinson of Cato notes, it is actually much more complicated than that. It consistently shows that within a society wealthier people tend to be happier than those with less wealth, and that people in richer societies are substantially happier than people in poor ones. he argues that it also suggests that opportunity and freedom, not equality per se, promote individual satisfaction.

And I think this is what is really going on in a lot of this research. I suspect it is true that people make mental comparisons in deciding how satisfied they are with how their lives are turned out. But the comparisons are not to the outcomes of others' lives per se, but instead of their own outcomes relative to what they feel they could have achieved. Other people are merely used as a reference point. If people feel they've had a fair chance, that is all they ask for. Of course, some people some of the time invariably to react life’s disappointments with anger at the unfairness of society, but freer, more open societies will, I suspect, generate people who arehappier with their lives, other things equal. An implication of this view is that, independently of the level of wealth in a society, less corruption by the government ought to be associated with more happiness. As far as I know, this is a proposition that has not been tested. In this view, happiness is about equality of opportunity rather than equality of outcome.

Of course it is true that money isn't everything, but it is not true that the welfare-state society is the happy society, particularly in the context of the United States. Arthur C. Brooks, who has recently been doing some of the most interesting research on charity and its causes and effects, finds in his forthcoming book Gross National Happiness (according to the reviews) that differences in happiness among Americans are “largely due to differences in social and cultural values. The values that bring happiness are faith, charity, hard work, optimism, and individual liberty. Secularism, excessive reliance on the state to solve problems, and an addiction to security all promote unhappiness.” People who give to charity to help the poor are happy, people who want the government to solve poverty are not. Indeed, I suspect that the people who place the greatest stock in politics to solve our problems are the most unhappy. Politics is a dirty business, its practitioners require (and hence manufacture) a constant supply of crises to solve, and is thus ultimately unsatisfying. But that is a book all its own.

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