Monday, October 30, 2006

Talk About Your Dubious Distinction...

We have a new winner in the Most Dangerous City in the U.S. competition! Yes, St. Louis, Missouri tops the charts this year, boasting an increase in violent crimes that outpaced other cities in the Midwest. Sorry, Steve...

Here's what I found most interesting about the article:
St. Louis has been spending millions of dollars on urban renewal even as the crime rate climbs.

Funny how so many buy into the notion that if we just give people in urban areas more free stuff (nicer homes, trendier businesses, etc.) they will be compelled to turn from their wicked ways and stop killing each other. Interesting how it never occurs to lawmakers that it might work the other way around...that violent crime is what causes urban areas to deteriorate into slums.

The fact is, successful businesses are one of the factors that bring prosperity to any area. But it's tough to run a business when you have to be constantly worried about being robbed or shot. Consequently, businesses don't stick around long in crime-ridden areas. Reduce crime first, and voluntary urban renewal will follow. do we reduce crime in urban areas? The first step would be to call off the War on Drugs...but that's another post.

Monday, August 28, 2006

Who Dispenses Justice [in a Libertarian Society]?

Recently my wife and I went on vacation with some friends, and one day a discussion about Libertarianism such discussions are wont to do. During this discussion a question was put to me, which was: "If I stand just off your property and yell obscenities day and night, who dispenses justice?"

Now as it happened on this particular day I had decided that I should do my best to consume what alcohol was left in the rental unit, since we only had a day or two before we had to check out. I have no idea how much I had imbibed by the time the discussion began, but it was definitely enough to impair my ability to effectively answer the question as least to my satisfaction. So, lest my friends think they "got me" on that point, here is the response I would have given, had I had full use of my faculties at the time. ;)

First, the question as worded seems to assume that Libertarianism = Anarchism. Admittedly, this is a comparison which many Libertarians would find agreeable, depending on the individual's view of the legitimate role of the State. Since I happened to be reading Rothbard at the time, I found the question very poignant, as he arguably felt that the State is an entity that can and should be dispensed with whenever possible...which pretty much means "always".

The bottom line, however, is that there must be some system to arbitrate disputes between individuals or groups and in some way punish violations of rights by one against another. This system can take many forms beside the currently accepted form of State-administered justice, with all its waste, corruption, and perverse incentives. In For a New Liberty, for instance, Rothbard outlines a system of private arbitration that is completely separate and independent of the State, and it is indeed compelling.

A more important question, though, is what exactly constitutes "justice" in this case...or rather, what is the injustice that must be put aright? Am I being harmed by the obscenity-yeller, and if so in what way? From a Libertarian standpoint, I am only being harmed if the aggressor is somehow violating one or more of my rights. More specifically, since all individual rights in one way or another are a product of property rights, is the yeller somehow violating my right to private property? I think, yes.

If we go back even further into the origins of property rights, to Locke, all right to property stems from an individual's ability to be productive. This ability grants the individual exclusive rights to dispose of the fruits of his or her productivity in the manner he or she sees fit. Someone standing at the edge of my property yelling obscenities could very well have a negative impact on my ability to be productive. If the yelling is incessant, persisting day and night, I probably won't be able to sleep. This would certainly affect my ability to be effective at my job, possibly causing me to lose some income and resulting in financial harm.

There are other ways I could be harmed as well. I could become ill from lack of sleep, or I could fall asleep at the wheel of my car, thereby harming me physically. In the end, though, both of these impact my ability to produce, and we're back at Locke's viewpoint. By the same token, the yelling would probably affect my ability to use my property as I see fit, as I may not be able to spend time outside my home in my yard without being yelled at.

So, even if we don't consider the possibility of various types of "psychological harm" that might be done to me, there are still several ways that I could be harmed by this aggressor. Any of these would be cause for dispensation of justice by whatever system happens to be in place at the time. Next time, I'll make sure I'm sober before starting an argument.

Wednesday, July 05, 2006

It's Official...Government Sucks!

If you're in doubt as to how pervasive government is in our everyday lives, just ask any resident of New Jersey. Their state government is gridlocked about how to close a $4.5 billion "budget gap", so the whole state has ground to a screeching halt, including state parks, beaches, and even the casinos in Atlantic City.

Now I ask you, would a private casino ever close its doors if it wasn't forced to? (Yes, Atlantic City casinos are private, but they're not allowed to operate unless the government hawks are there to ensure the state gets its cut.) Would a private park close its gates over the State's indecision? Would a private police force have to work for free just because the State can't get its shit together? No...absolutely not.

On the other hand, increasing taxes is not the right answer either. The "lawmakers" are correct that such a sales tax increase would impose additional costs on families, but has any one of them suggested that they cut anything out of the budget? I doubt it.

The answer is to take a hard look at the "services" the State provides at taxpayers' expense and eliminate those that could be provided better and cheaper by private firms, without a bunch of stupid interruptions...which would include pretty much all of them.

Friday, May 19, 2006

Are Consumers to Blame?

During a recent discussion with a friend about immigration, I made the argument that prices on some goods and services would be higher if it weren't for the availability of cheap labor provided by illegal immigrants. My friend responded with skepticism because she doesn't believe the cost savings on labor are necessarily being passed on to consumers. This belief is pretty common, and those of us who are believers in the invisible hand of the free market would argue that competition among businesses provides an incentive for passing those savings on to their customers, as he who offers the best service at the lowest price should be the most successful. Still, this doesn't mean that some businesses don't continue to save money on labor (or other factors of production), charge the same prices, and pocket the difference. But how can a business that does so stay in business if the potential exists that his rivals will underprice him, thereby taking away his customers?

I think I have an idea of at least one factor that contributes to that ability significantly...irresponsible consumerism.

My friend cited landscaping and painting as her example, as there are services for which she's contracted with local businesses in the past. She said that it's been her experience that bids for the same job from different businesses seem to come in "all over the place." Business A may bid $1000 for a painting job, while business B may bid $3000 for the same work. Why the difference?

There could be many reasons. Business A may not do as good a job as B, or B may be in higher demand than A. Maybe B uses only certified, bonded laborers, whereas A hires day labor. Regardless of the reasons for the disparity, it is the consumer's responsibility to ensure that he or she is getting the best value. This is why my friend gets at least 3 bids for any job, putting her among the responsible ones. There are plenty of people, though, who simply take the first bid they get. Since prices are ultimately determined by what people are willing to pay for a particular good or service, this could certainly contribute to rising prices.

In addition to shopping around, further responsible action may be required, such as asking Business B why his bid is so much higher than his rival's. This gives notice to B that he must compete with A for your money, providing him with incentive to either lower his price or convince you that his work is worth the additional cost. By the same token, calling A to find out how he's able to charge so much less than B would provide information that could help make an informed decision. Of course, A, B, or both could simply respond by talking smack about the other, which would be telling in itself.

Too often, people are unwilling to put in the legwork necessary to make an informed purchase decision, and in the event that it leads to a bad experience the typical response is to shift the cost of the poor choice onto someone else. Whether the cost is shifted to the manufacturer or service provider in the form of a lawsuit, or widely distributed to taxpayers and consumers in the form of increased regulation resulting in higher prices, we all pay extra for the bad choices made by some. Government intervention in the form of regulation, the Consumer Product Safety Commission (CPSC), and the Food and Drug Administration (FDA) only serve to exacerbate the problem by making it unnecessary for consumers to act responsibly. Such paternalistic tendencies affect all areas of our lives, undermining personal responsibility every step of the way.

Thursday, May 18, 2006

Absolutely Unbelievable...

Forget about defining marriage, the city council of one Missouri town has taken it upon itself to define what a "family" is and is not. Further, it presumes to dictate who may live with whom, and under what circumstances.
The current ordinance prohibits more than three people from living together unless they are related by "blood, marriage or adoption."
This is unmitigated gall in the extreme. I don't even know what else to say. I know I should explain exactly why I feel that way about it, but right now I'm too disgusted.

Friday, May 12, 2006

Yet Another Post on U.S. Auto Makers

In the Soviet Union, there were frequent problems with production for its own sake, and the problem was often made worse because it was hard to monitor the managers in every industry -- the old joke is that an order for 1000 pounds of nails was just as likely to result in one 1000-pound nail as it was to result in 1000 pounds of "normal-sized" nails.

But getting back on topic:

Saying that the Detroit auto builders employ more workers per car built is just another way of saying they're less efficient. It's hard to believe that anyone thinks this should be a badge of honor.

There's an old story about an economist visiting the Soviet Union in the 60s. He is taken on a tour of a new dam project East of Moscow, and he observes that the workers are using shovels to prepare a foundation while various bulldozers and earth-movers sit idly by. "Why are the workers using shovels instead of heavy equipment?" he asked.

"Well, we can employ many more workers if they dig by hand," responded his tourguide.

To which the economist said: "Well, if the goal is to employ as many workers as possible, why not dig with teaspoons instead of shovels?"

A healthy business, industry, or even economy, does not function to provide employment. Employment is a side effect of a healthy, growing economy. The purpose of an economy is to produce goods and services that consumers will want to buy. One service provided is labor. But labor is only valuable when it is willingly bought by those who demand it. Employment for its own sake makes no more sense than production for its own sake (think of the 1000 pound nail).

Thursday, May 11, 2006

More U.S. Auto Maker Frenzy

Okay first off, the name of the group referenced in this article (the Level Field Institute) kills me. There’s no such thing as a “level playing field” in a free market. Businesses that are good at serving their customers will be successful, while those that aren’t will fail. “Leveling the field” usually means hindering a successful business for the benefit of one (or a group) that is less competent. Hobbling the fastest runners so the slower ones have a chance to win hardly results in a moral contest.

The group’s central argument is the fact that U.S. auto manufacturers employ more workers that foreign auto makers.
"The truth is, U.S. automakers still employ eight out of every 10 autoworkers — four times more than all the automakers from Japan, Korea and Europe combined."

…to which I say, “so what?” Lots of businesses employ more workers than lots of other businesses. The comparison is silly, especially since domestic auto makers are talking about more plant closings in the near future. Are they suggesting that the foreign auto makers’ plants in the U.S. should be shut down and their workers divvied up between Ford, GM, and Chrysler plants?
"I'm surprised that with the Big Three meeting with President Bush next week to talk about their survival, few people seem to care," [Jim] Doyle said. "I don't think people appreciate the difference in the scale and quality of the jobs at stake..."

No, of course they don’t...nor should they. Consumers care about the quality and price of the vehicles being produced. They will support the jobs they value most highly by spending their money…and condemn those of lesser value by not spending it. The fact that U.S. auto manufacturers are unable to compete in any market, domestic or global, means that consumers have chosen them for extinction unless they get their shit together. I’ve said it before...the giant, uncompetitive American auto makers must be allowed to fail, so that the workers they employ can find jobs in areas more highly valued by consumers.

There is a bright spot in the article, though…
"Detroit's ability to shape important government policies, such as fuel-economy and air-pollution rules, will be much diminished, and the likelihood of federal aid for research and development will be reduced," Patel wrote in a recent research note.

We can only hope. they're taking our jobs AND our houses!

The methodology used in this study is a bit silly, but the numbers are still interesting. I am a little confused, though. If illegal immigrants (most of which are hispanic) are supposedly depressing wages and lowering the standard of living everywhere they go, how is it that they're able to buy houses? Surely they're taking homes away from hard-working Americans!

Wednesday, May 10, 2006

Protecting our Borders

Boy, am I glad we have people like Sheriff Arpaio, to protect our borders from those no-account, blood-sucking, wage-depressing, culture-diluting, non-English-speaking illegals! What ever would we do without these fine individuals to protect us from paying less for thousands of products and services? The ability to sleep better at night, knowing our borders are safe is well worth the extra money we’re forced to spend! What a load of crap.

Beyond the nonsense about “protecting our borders”, there’s something in this article that most people will probably miss:

The immigrants had been on their way to build a dairy farm
in this town about an hour southwest of Phoenix.
So, now there’s a dairy farm that probably won’t be built. If it is built, it will have to be done by American workers, so it will cost more to build. The extra expense could cause the dairy farmer to rethink his plans entirely, possibly deciding not to build the farm at all, or he could decide to build it in a more cheap-labor-friendly location. Even if the farmer does choose to go ahead and build the farm using American workers, there will be less money left in his pocket to spend on other things, such as equipment for the farm or food for his family. He will probably be forced to hire fewer workers, or pay lower wages to those he does hire, in order to recover the building costs. Should he decide to build the farm elsewhere, fewer jobs will be created in the original location, and local businesses will lose the benefit of those additional customers. Because of Sheriff Arpaio’s zeal to keep out the undesirable element, many people (besides just the illegals) will be worse off.

Monday, May 08, 2006

Mankiw on Trade and Outsourcing

Two years ago Greg Mankiw got a lot of heat for publicly suggesting that (gasp!) outsourcing jobs to India could be an example of creative destruction, noting that it's better if we don't try to hang onto jobs that the U.S. no longer holds a comparative advantage in.

He finally sets the record straight in this post. If you neither believe that free trade makes everyone better off in the long run, nor that free movement of labor does, than that's a failure of we, the economists, to educate the public. But if you believe in free trade for goods but not of labor (or like some real geniuses, the other way around), then you're just a stubborn person in denial.

Saturday, May 06, 2006

Why do things cost so much?

This question was asked of me by my sister some time ago. In a similar vein, a friend recently lamented the fact that the final price of most products on the market don't faithfully reflect the costs of their production. The point of this post is to show how the workings of the price system answer the first question, while examining the relevance of the price vs. cost argument.

First, let's talk about labor. Labor is everything. Nearly 100% of the cost to produce any given service or product is traceable back to the labor employed to create every item used in its creation. In order to understand the full impact of this fact, one must look beyond the manufactured goods used to create a product and realize that those items began as crude resources buried in, laying on, or growing out of the ground. The resources themselves have no inherent cost, nor by the same token any inherent value. They are given value through the labor used to harvest them and make them into useful things. Therefore, it is impossible to determine the cost of any item without considering the labor used to produce each of its parts from crude resources, and the cost of such labor is determined by relative scarcity, along with the level of effort required to harvest those resources. No one person, committee, or government bureaucracy is able to determine what the cost of labor "should be", as it's relative to the difficulty of the labor being performed, the demand for the final product on the market, and the number of laborers with the necessary skills to perform the work. (This is one reason those who lament the transition in America to a mostly "service-based economy" need to calm down, but I'll save that discussion for another post.) And so the cost of labor, as with the cost of the final product or service, is determined by supply and demand.

The law of supply and demand is really a simplified way of explaining the very complex process that is the "price system". Prices do more than just generate revenue and profit for entrepreneurs and corporations. They are also a "yardstick" that helps show market actors (entrepreneurs and investors) where to invest their time and dollars for the greatest return. If the price of an item is high in relation to its cost of production, the market actors will invest in the production of said item in order to receive a profit. As more actors invest in the production of the same or similar items, competition forces them to adjust their prices in order to maintain their share of the market. If the cost of production remains constant, lower prices will mean less profit, so cheaper ways of producing the item(s) will have to be devised. In this way prices and profits constantly adjust to meet the changing conditions of the market.

Now, suppose the government stepped in and mandated a price control, saying that businesses were only allowed to make a certain amount of profit so that prices more accurately reflected the costs of production. Since profits would be the same across the board, the lure of investors to potential profit would be reduced, if not outright eliminated, meaning fewer dollars invested in new products or services. Additionally, competition between firms producing similar goods would be pointless. Since no one has the opportunity to make more profit than any other, why bother competing for consumer dollars? Probably the most intense effect would be the elimination of any incentive to find cheaper, better ways to produce anything, meaning that prices would remain high, while quality would stagnate or decline.

A friend told me the other day that his father paid $700 for a VCR when they first came out in the early '80's. Nowadays, a 4-head, hi-fidelity VCR with wireless remote can be had for under $50. Had government decided at the time that $700 was a ridiculous price to pay for a VCR and passed a profit cap on the product that limited its price to say, $300, 20 years later we'd still be paying $300 for a grainy picture and mono sound...complete with a wired remote. Unless, of course, the workers producing VCRs were unionized, at which point we'd probably be paying $1000...but I digress.

I'm a giant slacker.

Okay, so it's been over a month since I posted anything to the wombat blog. I know...I suck. I have no real excuses, other than to say that for a while I've been wondering what the point in posting really is. There are so many blogs out there that it's not terribly likely anyone will run across mine, and even if they do will my ramblings really give anyone food for thought?

Maybe...maybe not. But I guess that's not really the point after all. The point is that ideas are where change begins. Most likely anyone that runs across my blog, whether they agree with me or not, will agree that there is something wrong with the world we live in, and most of them will probably not be sure what exactly it is that's wrong. For a long time, I was one of those people.

Now though, I have a much better understanding of the role that freedom (or lack thereof) and economics play in shaping society. So hopefully I have some things to say that will give others something to think about and reach their own conclusions. In the process my own conclusions and understanding will be tested, shaped, and solidified. So, even if nobody reads my spouting off about this or that, someone still benefits in the process...and that's the whole point.

Wednesday, April 05, 2006

"...[C]ars are a lot less expensive than people."

I's been a while since I posted to the wombat 'blog. I've kinda started to feel lately that the things happening all around us to erode our liberty and steal our wealth have gotten so ridiculous that I just don't know how to respond. I guess, though, that these are the times when it becomes that much more important that I DO respond, even if it doesn't seem to do much good in the short term.

So...on with the show!

Let's start in Massachusetts...

BOSTON, April 4 -- The Massachusetts legislature approved a bill Tuesday that would require all residents to purchase health insurance or face legal penalties, which would make this the first state to tackle the problem of incomplete medical coverage by treating patients the same way it does cars. (the rest of the story)

Now...let me go on record as being of the firm opinion that this is a phenomenally bad idea. Why? Lots of reasons:

First, it totally ignores (or is perhaps oblivious to or in denial of) the price-increasing effect "health insurance" has had on health care to begin with. By hiding costs from patients, health insurance eliminates any incentive to shop for health care services based on price. When was the last time you saw a price list in a doctor's office? If a visit to the doctor only costs you a $20 co-pay, you might not think twice about making an appointment for a child with a sniffle. If, on the other hand, you had to fork over $120 of your hard-earned cash to see a doctor for something minor, you might give it a day or two to see if the sniffle gets better before running to the doctor for some professional reassurance of your parenting skills.

And what about those who can't afford health insurance? Don't worry, the Taxachusetts legislature thought of that too, and they'll happily subsidize coverage for anyone whose income falls below the national poverty level. Can't afford to spend your own money on health insurance? Fine, we'll spend everyone else's money on it for you. In all fairness, this really isn't much different from what happens now across the country. Federal law prohibits hospitals from refusing to treat emergencies based on an individual's inability to pay, but someone has to pay. Often taxpayers foot the bill for such treatment.

Those without health insurance will be subject to fines until they sign up for a policy. Likewise, businesses who do not provide health insurance for their employees may be fined for each employee who is uninsured. So what about those who don't want to carry health insurance? (I assure you, such people do exist) Well, they no longer have any say in the matter...either get health insurance, or pay up.

Say, that gives me a great idea! I'm going to start my own health insurance company for people in Massachusetts who don't want health insurance. The premiums will be less than the fine for not having insurance, but you'll only be able to visit doctors that are "in network". Little will the Massachusetts muckety-mucks know that the only doctor in the network is a Hoodoo witch woman who lives on a raft in the Louisiana bayou. I could make a couple hundred bucks, easy!

In all relative seriousness, the unmitigated gall with which these idiots proclaim their victory is even more astounding than the bill itself. The comparison between health insurance and automobile insurance has been made by Libertarian economists for years, but Governor Mitch Romney drove the point home with this gem:
"We insist that everybody who drives a car has insurance," Romney said in an interview. "And cars are a lot less expensive than people."


Even better was the proclamation by Uwe Reinhardt, professor of economics at Princeton, that
"Massachusetts is the first state in America to reach full adulthood," said Reinhardt, noting that the new measure is a move toward personal responsibility. "The rest of America is still in adolescence."

Personal responsibility? How is forcing someone to do something they should be doing for themselves anyway a "move toward personal responsibility"? Personal responsibility would mean giving individuals the choice of whether they wish to carry health coverage or not. Personal responsibility would mean that the individual decides how much to pay for health care and where. Quite simply, it would mean a return to free market health care. Some of these yahoos, though, think that's exactly what they're doing. The piece goes on to say:
The same message might provide a political boost to Romney, who is considering a presidential run in 2008. By proving he can work with Democrats, and find a health-care solution that relies on the private sector, Romney can portray himself as an executive who can work across the aisle in harshly partisan times.

I fail to see any way that this solution "relies on the private sector". Rather, it hogties the private sector into doing its bidding...into providing health insurance for those who may otherwise present too much risk; into accepting arbitrary government-specified rates for their services; into paying fines for refusing to provide services they may not be able to afford to provide.

This is typical reactionary government. I really shouldn't be surprised. Health insurance has thus far played a significant role in the rising costs of health care, and this bill simply adds fuel to that fire. Health care costs will continue to rise at an accelerated rate, and the march toward socialized medicine will proceed. House Speaker Salvatore F. DiMasi said, "We did something to solve the problem." Indeed they did, but it's the wrong something.

Friday, March 10, 2006

The Stupid Leading the Blind

More ham-fisted bureacratization of education...
CHICAGO - Most high school students eagerly await the day they pass driver's education class. But 16-year-old Mayra Ramirez is indifferent about it.

Ramirez is blind, yet she and dozens of other visually impaired sophomores in Chicago schools are required to pass a written rules-of-the-road exam in order to graduate _ a rule they say takes time away from subjects they might actually use. (Full Story)

I honestly don't know what to say. This is right up there with the requirement for braille instructions on drive-up ATMs.

Thursday, March 02, 2006

Cherries...The New Gateway Drug?


The Food and Drug Administration (FDA) is threatening cherry growers with fines and legal action for daring to publicize peer-reviewed scientific studies demonstrating the health benefits of cherries. According to the FDA's warped view of the world this makes cherries drugs that must undergo FDA testing before public statements can be made about their benefits.

This is stupidity on steroids. Though we must hasten to add that the safety of using steroids to make bureaucratic stupidity even more stupid has not yet been evaluated by the FDA. So will all that talk on various commercials for oatmeal and breakfast cereals, claiming that they'll lower your cholesterol, help you lose weight, or make your bowel movements more regular suddenly come under scrutiny of the FDA as well? I guess the Quaker folks oughta start doing some lab testing and drawing up the thousands of pages of test results required by the FDA to get oatmeal approved for sale OTC. Don't want that stuff falling into the wrong hands.


Tuesday, February 21, 2006

Only the Best Possible Care?

During a recent discussion about health insurance, a friend told me that "whatever the most effective treatment is, that's the only option that should be available."

I disagree with this sentiment for two reasons:

1) It's impossible to implement and maintain, and

2) It's not something we as health care consumers actually want.

The reasoning for the first argument is pretty obvious. How could you possibly control the number of treatment options for any given condition? You could try making any form of treatment other than the approved option illegal, but that's not likely to stop doctors from performing them. Besides, we've all seen the horrendous outcome of outlawing things people want (prohibition, the War on Drugs, and gun control laws all come to mind).

There are a couple of reasons, though, why we wouldn't want there to be only one matter how good it is. The first of these is price. It's likely to be high. A monopoly granted on only one form of treatment, or one product, or one service won't necessarily cause the price of that thing to increase immediately, but it will prevent it from decreasing as it normally would with the introduction of new technologies and more efficient processes. Sure, many companies may try to find ways to provide the same thing at a lower cost, but their efforts would be subject to scrutiny by whatever government agency oversees their particular market. This would add cost to the final product and delay its time to market, thereby reducing the incentive to innovate.

Also, by limiting consumer choice to only one option, many consumers would be priced out of the treatment they need. For instance, if a law were passed that said only the largest television with the best possible picture could be sold to consumers, many people would go without TVs, as not everyone would be able to afford the biggest and best. Since, however, there are myriad television choices available to consumers at varying prices, nearly every household in the United States has more than one television. An increase in consumer health care choices will, through competition, cause prices to decrease and quality to increase.

Radiology: Marketing Out of Control?

You've seen the commercials, particularly during the Olympics this year, hawking state of the art medical imaging equipment. They feature doctors crowded around computer monitors, looking at spinning 3D models of bones or internal organs. It's all very high tech, cool-looking, expensive stuff...but is it useful?

I learned today that, for the most part, it isn't.

According to the radiology doctors at National Imaging Associates (a radiology services company), the 3D models provide little or no additional useful diagnostic information than the typical segmented images already produced by medical imaging equipment. In reality, all the 3D software is doing is taking those segments and stacking them atop one another to form a 3D image. It looks cool on the screen, but it can hide details that would be easily seen on the flat segmented images.'s really freakin' expensive.

From a marketing standpoint, though, the software is worth its weight in gold. Not only does it help sell imaging equipment (the usefulness of which is undeniable), it also gives care providers some additional whiz-bang functionality that they can use to attract patients. It may even boost patient confidence in the quality of treatment they receive.

In the end, however, the utility of the equipment becomes largely irrelevant when considered within the framework of our current health care and insurance system. If care providers spend millions on fancy software and equipment, the resultant increase in the cost of care will be hidden from consumers by health insurance, since the costs will be paid out of the pool of funds taken in by the insurance company through premiums, rather than by the individuals receiving treatment.

And herein lies one of the greatest reasons for increasing health care costs. When was the last time your doctor gave you an option between two or more forms of treatment, citing differences in cost as a possible determining factor in your decision? It's probably never happened to anyone who has health insurance. Even when there are several treatment options of similar effectiveness that vary in cost, doctors and patients typically choose the "best" and usually the most expensive treatment...often without hesitation. If patients were paying the bill directly, they would take more time to weigh their options, and fancy but mostly useless software and equipment would be weeded out of the market.

Wednesday, February 01, 2006

Bad Law, New Twist

When did it become okay for politicians to tell a store what it must sell? It's bad enough that they can tell retailers what they can't sell, but this is a new one on me.

Sunday, January 29, 2006

Why Steve doesn't get worked up

I think Steve's a little bit mistaken. Steve would get worked up if he were me
right now.

What Steve didn't mention in his post is that he has the benefit of having gone through this phase already. He was once like me...excited, passionate, and sometimes obnoxious about Libertarian principles and economics (even before he knew he was a Libertarian), but over the years I've seen his political and economic views mature at a more rapid pace than my own. So even though I know the things Steve pointed out about people's beliefs, I still haven't accepted them as given, so they still frustrate me to no end.

This is not to say that Steve isn't still passionate, because he most certainly is. But it's not that incensed, immature, honeymoon fervor that I'm still learning to bring into constructive focus. And though he's resisted my efforts to get him to coach me on various principles and issues for fear of unduly influencing my opinion, his counsel, when he has chosen to give it, has been valuable.

So...all butt kissing aside, I've had a chance to reflect on the claim Steve mentioned about discrimination at the motorcycle campground and come up with what I think is a more constructive response. Say we assume the campground opens its gates to anyone, regardless of what they drive or ride, but it continues to be frequented by motorcyclists. Would non-motorcyclists who would rather not associate with a "bunch of rowdy bikers" and therefore choose to stay at another campground be engaging in discriminatory behavior? Absolutely...and they would be well within their right of freedom of association to do so. So why the double standard?

Saturday, January 28, 2006

Why Ron gets so worked up

So Ron asked me if I understand why he gets so worked up around his coworkers...

My answer is a qualified "no."

I sympathize, but if I were Ron I wouldn't get so worked up when I hear what Bastiat called "economic sophisms" from my coworkers. There are a couple of reasons:

1) People believe all kinds of things that don't jive with any kind of empirical analysis; this is often the result of availability bias or representative bias.

2) Most people's beliefs don't fit into any larger, coherent (or consistent) moral philosophy. Their beliefs about politics, philosophy, and economics are purely context-dependent. They will invoke the first amendment to fight censorship when they agree with the speaker and conveniently forget about the amendment's full implication when it comes to speech they despise.

Okay, I guess that can be frustrating. But it's to be expected. Most people have higher priorities than forming an internally consistent political or moral philosophy. As my colleague Bryan Caplan has repeatedly pointed out: they're being rational, in the economic sense of the word. There's little cost to holding inconsistent beliefs about politics or economics. Maybe if you thought about it, you'd experience some cognitive dissonance. Maybe if someone like Ron comes along, you might, maybe, be made uncomfortable when he points out contradictions in your views. But maybe not. Human beings have a great capacity for dissembling and compartmentalizing.

So this means that when someone objects to, of all things, a campground for motorcyclists only, on the grounds that it's discriminatory, she thinks this is a valid point. The libertarian contrarian responds that *of course* it's discriminatory, and so is a health club that only admits women, or a golf league that requires a handicap of less than six to join. The notion that discrimination is universally bad is a heuristic, i.e. a mental shortcut. In some cases, it's correct: sometimes discrimination is a bad thing. Jim Crowe is a good example of that. But the heuristic fails where free association is concerned. Rather than merely assert: "it's private property, they can do whatever they want," it may be better to present a puzzle, to bring the contradiction into the light: Is discrimination ever acceptable? Doesn't forbidding all discrimination essentially abolish free association? Many free associations rely on the ability to include (and therefore exclude) people based on all kinds of criteria. People, though, only seem to get very upset when a business discriminates, when they have criteria for who they will do business with. That's kind of strange, because no one seems to hold customers to the same standard, and the distinction between buyer and seller is very fuzzy in economics. More later on buyers, sellers, and the nature of money.

Thursday, January 26, 2006

Libertarians are all about big business?...It just ain't so!

Libertarians are an oft-misunderstood group. Many of the principles upon which Libertarianism is based are counter-intuitive, and they typically require a much more rational approach to various problems than many people are willing or able to take. Consequently, a lot of the things Libertarians believe are usually misunderstood by the masses, and these things are made worse by media misrepresentation of Libertarian ideals. I hope to shed some light on some of these misconceptions in upcoming posts, and to start the ball rolling I've decided to address the Libertarian perspective on business, particularly with regard to government involvement therein.

Many non-Libertarians believe that Libertarians are champions of big business. They believe that our vision of Utopia is an America ruled by giant corporations and international conglomerates. This is a grave misconception.

Libertarians are not corporate shills, ready to jump to the defense of the likes of Microsoft, Wal-Mart, or Starbucks at every turn. True, we do often end up defending such corporations on various principles, but it's not due to some notion that businesses (large or small) are altruistic institutions that have only the best interests of the public at heart. We neither believe nor expect them to be such.

Libertarians do believe, however, in the Free Market, which absent government involvement treats all businesses equally regardless of size. In a free market, businesses answer to consumers, who maintain absolute sovereignty over business by virtue of their buying or refraining from buying any given product. The size of a business is only relevant in its ability to serve consumers. In some industries, larger businesses are better able to serve consumers due to economies of scale, while other industries serve consumers best through smaller institutions.

Libertarians oppose legislation that would hamper business, whether through regulation, taxation, antitrust, etc. This is typically what fosters the "corporate shill" image often portrayed of Libertarianism. However, the other side of the coin is often omitted by non-Libertarian commentary, and that is the fact that we also oppose legislation that seeks to "help" business. This means we oppose government largesse toward companies who would otherwise fail. We oppose tax cuts that favor large businesses over smaller ones. We oppose payroll taxes, minimum wage laws, and other mandatory costs that make it more difficult for smaller businesses to compete. In short, we oppose any government intervention, whether negative or positive, in the market.

When government becomes involved in the market, the natural result is that some businesses or industries are favored over others. As long as government has power in the market, businesses will be able to buy that power. Large, favored businesses will benefit, while smaller, less well-connected businesses will suffer. This is the root of all the flap over campaign finance. If government didn't have market power to sell, would campaign financing really be an issue? But that's another discussion.

This is not to say that the federal government has no role whatsoever in the market. It simply means that the government's role is judicial, rather than legislative. Contract agreements must still be enforced. Theft and fraud must still be punished.

The Libertarian philosophy is deeply rooted in the belief that unhampered free markets are the best way to improve the quality of life of everyone involved. Many people find it difficult to reconcile this viewpoint with the perception of business as it is today. They see most businesses as being willing to do whatever it takes to make a profit, including cheating consumers or even endangering consumers' or employees' lives. It is important to understand, however, that the free market does not reward such behavior. As long as consumers have the right to choose the products they buy or do not buy, they alone will determine the success or failure of any business. Government intervention only serves to hamstring this process, allowing unscrupulous or inefficient businesses to survive despite consumer preference to the contrary.