By Simon Grey, on July 2nd, 2012
According to a handful of my favorite bloggers,* the USSC ruled that the health care mandate is constitutional because it’s a tax and congress is authorized to levy taxes. I would say that I’m surprised with the ruling, but that would mean I cared about the ruling before it was handed down. ObamaCare is obviously unconstitutional and, more importantly, antithetical to liberty, which makes it in noncompliance with the spirit of the law.
Some have argued that the constitution is itself antithetical to human liberty, which is a not altogether unreasonable claim in light of the fact that the constitution a) authorizes a central government in the first place, b) authorizes said government to levy taxes, c) authorizes said government to regulate coinage, d) authorizes the government to have an army and wage war, and e) gives the government authority to regulate commerce. Basically, if the government is authorized to have coercive power (i.e. an army) and to have power over currency and business, then it would appear that the increases in federal power over time were all but inevitable.
Of course, it should now be obvious, if it was not already, that the United States is basically a socialist nation. It may not engage in the massive slaughter of its citizens (unborn babies excepted from this assertion, natch), and it may not engage in ethnic cleansing (yet), but it is undeniably socialist. It is a soft socialism born of the fear of uncertainty, wherein people are afraid to live without the guarantees of basic “necessities.” Nothing is guaranteed in life, save death and taxes, so the idea that people can be guaranteed that their health care will be provided by the government at no direct cost to them should all else fail is nothing more than a mirage.
It is also indicative of a broader pathology, namely that of cowardice. It appears that too few people are willing and able to live a life of risk. The American people are not only soft and doughy of body, but of spirit as well. Having amassed the greatest collection of wealth and prosperity that the world has ever seen, they are now afraid to lose it. Thus, the recent health care crusade—successfully defended by five tyrants in robes—is nothing more than the triumph of fear. Fear that someone somewhere may have to go without antibiotics because they would rather buy shoes than Amoxicillin. It is as if people neglect to remember that most people in most of the world throughout most of history did not have health care. And yet, they managed to procreate before the expiration of their various nasty, brutish, and short lives.
Life, of course, always goes on, regardless of whether one has immediate access to a doctor. Lack of immediate access to comprehensive health care—once a fact of life for all but the most rich and powerful—is now considered a violation of rights. Funnily, it was not considered as such until providing immediate, comprehensive health care on a wide scope was technically (though not necessarily economically) feasible.
Anyhow, getting back to the point at hand, the SCOTUS decision simply demonstrates that security is to take precedence over freedom, however illusory that economic freedom may actually be. It is better to feel that one will be taken care of than to have the freedom and responsibility to take care of oneself.
Incidentally, this decision has completely destroyed what little support I might ever have had for Romney. I had once argued with a neoconservative friend about the merits of Ron Paul vs. the rest of the GOP field (this argument occurred in the halcyon days of Herman Cain’s not-yet-a-joke campaign), and in the course of this argument had ceded the point that any GOP candidate would be better than Obama because that GOP candidate would at least pick a strict constitutionalist as a Supreme Court nominee. The ObamaCare decision, though, has shown that conservative Supreme Court nominees are pretty much worthless. Sure, Alito, Scalia, and Thomas all ruled against ObamaCare, but it was Bush’s own appointment—Roberts—that sided with the leftists. If this is the sort of thing that right-wing appointees will do, I think I’d rather have liberals because at least you know where you stand with them, which means you don’t get stabbed in the back. At any rate, it now seems ludicrous to vote GOP simply to ensure that SCOTUS picks are conservative, because it turns out that not even this is guaranteed anymore.
At any rate, the great experiment of liberty is over. It appears that it cannot be sustained indefinitely, as tyrants constantly seek power, and will contort the law to enslave the people. It’s sad that it had to end this way, but I suspect that it would have ended regardless. And now on to the next experiment.
* Vox, Karl Denninger, Foseti, Ulysses, and Sonic Charmer, among others.
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By Ajay Shah, on June 12th, 2012
What should government do?
In the question “What should government do?”, economists have one big answer “do the public goods”. A public good is something that is non-rival (the consumption by one does not come at the cost of consumption by another) and non-excludable (it is not possible to exclude someone from benefiting from the public good).
The regulation of air pollution is the favourite example which illustrates a public good. Clean air is non-rival (if you breathe clean air, it does not diminish my supply of clean air) and non-excludable (if the air is cleaned up, nobody can prevent me from breathing it in). Indeed, nothing that one person can do can make a difference to air pollution. Only the government can regulate pollution and this deliver clean air.
Similar issues arise with defence, police, judiciary, monetary policy, financial regulation, public health (though not the health of the public), biodiversity, etc., all of which add up to the economists’ vision of what government should be doing.
What should government do in the field of education?
Education is substantially a private good. I study, I benefit. There are spillovers (”externalities”) to others, and so there is a case for a government subsidy. But barring that, this is a field where the incentives are well aligned for each person to be the main one in charge of his own education.
Public funding solves the problem of externalities. At the level of elementary education, vouchers are a nice way to deliver public funding that is large enough to pay for the externalities. At the level of higher education, public policy can focus on economies of agglomeration alongside some public funding, nudging the outcome in India so that there are 100 high quality broad-based universities.
As I read The delicate technology of creating excellence by Pradip Ghosh in the Telegraph, I was reminded of the public goods character of testing and curriculum development. As he says:
in this very large country with a multitude of school boards and their non-uniform curricula and examination standards, it would be inappropriate to go by board grades because that would yield unreliable, undesirable results — we would not get the best students. And, such a course, therefore, would be unfair both to the aspiring students and to the institutions they would be entering. A single post-high school examination with a well-defined syllabus and a centrally administered paper-setting and grading system was thought to be the best alternative
The production of education services is a private good problem, to be sorted out between one student and one education provider. However, the problems of curriculum and testing have a public goods character. Let’s run the tests of a public good, for a nationwide system for standardisation of curriculum and testing.
Is it non-rival? Does the consumption of the services of this system by one person diminish the amount of this system available for another? With computerised testing, there should be full scalability (though Pradip Ghosh argues, in the article above, that there are problems with this).
Is it non-excludable? High quality curriculum is non-excludable in that once curriculum documents are on a website, everyone can download them. Testing is excludable if you want to be cussed about it, but for the rest it should not be possible to exclude anyone from taking a nationwide test.
This argument guides us in thinking about what government should be doing in the field of education:
1. Funding (calibrated to overcome the externalities)
2. Curriculum development
3. Testing
4. Information infrastructure about education service providers (i.e. schools but also all sorts of new ways of organising education service delivery) so as to assist choice by parents and students.
The entire focus of management time, and the entire resources available for the task, should be devoted to these 4 problems.
Central government or local government?
Once we know that testing and curriculum are public goods, we have to ask who should do it.
If an important outcome (getting into the IITs) was linked to regional board examinations, that is a recipe for grade inflation. This is a reason for doing this at the central government.
There are economies of scale. A curriculum only needs to be developed once. This is a reason for doing this at the central government.
In conclusion, the IIT JEE has many problems, but the building and running of high quality examinations is an important task of the central government and should not be diluted or abandoned. The fraction of management time, and resources, that are devoted to curriculum and testing need to go up.
By Simon Grey, on May 8th, 2012
It doesn’t get much clearer than this: The first case—Obama triumphant—obviously makes it easiest to imagine America doing what it takes to restore full employment. In effect, the Obama administration would get an opportunity at a do-over, taking the strong steps it failed to take in 2009. Since Obama is unlikely to have a filibuster-proof majority in the Senate, taking these strong steps would require making use of reconciliation, the procedure that the Democrats used to pass health care reform and that Bush used to pass both of his tax cuts. So be it. If nervous advisers warn about the political fallout, Obama should remember the hard-learned lesson of his first term: the best economic strategy from a political point of view is the one that delivers tangible progress.
A Romney victory would naturally create a very different situation; if Romney adhered to Republican orthodoxy, he would of course reject any government action along the lines I’ve advocated. It’s not clear, however, whether Romney believes any of the things he is currently saying. His two chief economic advisers, Harvard’s N. Gregory Mankiw and Columbia’s Glenn Hubbard, are committed Republicans but also quite Keynesian in their views about macroeconomics. Indeed, early in the crisis Mankiw argued for a sharp rise in the Fed’s target for inflation, a proposal that was and is anathema to most of his party. His proposal caused the predictable uproar, and he went silent on the issue. But we can at least hope that Romney’s inner circle holds views that are much more realistic than anything the candidate says in his speeches, and that once in office he would rip off his mask, revealing his true pragmatic, Keynesian nature.
We have, to roughly quote Vox Day, a bi-factional ruling party, wherein the only difference between the factions is that one wants huge government and the other one wants giant government. That is, the difference is a matter of degree, not kind. Both sides are Keynesians, both sides will continue to extend and pretend until the system collapses, both sides are anti-liberty, both sides will ignore the constitution, both sides are corrupt, both sides will be ineffectual. There is no difference between the two “sides.” They are simply sideshows meant to distract the easily-fooled masses, and thus cause them to ignore the fact that democracy is dead. This false sense of choice causes the masses to spend their time and energy picking sides, which is a perniciously clever way of reinforcing support for a statist system. Basically, everyone who gets caught up in politics gets so caught up in supporting certain parties that they don’t even realize that by the mere act of voting they are simply casting a vote for bigger government and a more intrusive state. The silly fools think their votes matter.
Furthermore, I see no point in voting in this election if Romney wins the GOP nomination, because it’s not like there is actually going to be a difference Romney and Obama. They are one and the same, albeit with different skin colors. They are both statists with strong desires for power. They lack the humility to see that they (and, by extension, government) cannot fix the problems currently facing the nations. They both have a pretense of knowledge, and voting for one is no different than voting for the other. The only way to have real choice in this election is for Ron Paul to get the nomination. But if there were a real choice, how could the bi-factional ruling party stay in power?
By Simon Grey, on May 1st, 2012
Levels of copper, cadmium, lead and other metals in Southern California’s coastal waters have plummeted over the past four decades, according to new research from USC.
Samples taken off the coast reveal that the waters have seen a 100-fold decrease in lead and a 400-fold decrease in copper and cadmium. Concentrations of metals in the surface waters off Los Angeles are now comparable to levels found in surface waters along a remote stretch of Mexico’s Baja Peninsula.
Sergio Sañudo-Wilhelmy, who led the research team, attributed the cleaner water to sewage treatment regulations that were part of the Clean Water Act of 1972 and to the phase-out of leaded gasoline in the 1970s and 1980s.
Three questions that spring readily to mind are: 1) is this correlation or causation? 2) Are there free market alternatives that could have attained similar results? 3) Does this prove, carte blanche, that all government regulation of the environment is similarly beneficial?
Regarding the first question, it’s difficult to answer clearly from the synopsis of the paper. The lead regulations seem like they would generally contribute to decreases in lead content in the ocean, for lead particles would be in the water vapor that is a by-product of burning automotive fuel. This lead would then enter the oceans from the atmosphere. It’s not so clear with the other metals, so it might be possible that these levels had begun to decline prior to the introduction of regulation (much like how automobile fatalities had begun to decline prior to seatbelt laws). At any rate, it seems likely, though it is not conclusive from the summary, that the environmental regulation worked.
Regarding the second question, it’s difficult to say that government interference is necessary when it would be possible to establish property rights on the coastal waters that were polluted. Under a system of private property rights, owners of said property—in this case the ocean—would be able sue those who polluted (i.e. altered and damaged) their property. As such, it would fallacious to use this study as proof that the government regulation is necessary for environmental protection. Governmental regulation may be efficacious, but that is not the same as saying that it is necessary.
Regarding the third question, it seems obvious that many environmental regulations are misguided, to say the least, and often counterproductive. As such, it does not necessarily follow that one effective, or even necessary, set of environmental regulation proves that all sets of environmental regulations will be similarly effective and necessary. Stated another way, it dangerous to extrapolate a trend from a single data point.
The conclusion to be drawn from this study is that there appears to be one instance where governmental regulation yielded positive results. Of course, this regulation was necessary because of a prior failure (i.e. the non-allowance and/or enforcement of property rights), but nonetheless the government did something useful. However, trying to prove that governmental regulation is universally necessary and effective from this single data point seems rather ludicrous, particularly in light of government’s other failures.
By Simon Grey, on March 29th, 2012
Contrary to what we hear from Republicans, America did not lose its way in the past few years. It lost its way a generation ago when it abandoned its faith in government.
By Simon Grey, on March 16th, 2012
So why was the Nepalese government opposed to the mill? The answer is that the monarchy and the elite surrounding it, who controlled the government, were afraid of becoming political losers. Economic progress brings social and political change, eroding the political power of elites and rulers, who in response often prefer to sacrifice economic development for political stability.
Ultimately, any time you see any proposal that will obviously pose significant costs on the economy, you can be sure that it’s the result of some government official somewhere being scared that ordinary citizens might be getting too powerful. And we can’t have that because citizens aren’t smart enough to handle power.
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By Simon Grey, on December 6th, 2011
Street vending has been a path out of poverty for Americans. And like other such paths (say, driving a taxi), this one is increasingly difficult to navigate. Why? Because entrenched interests don’t like competition. So they lobby their powerful friends to erect high hurdles to upstarts. It’s an old story.
Now, growing local governments are crushing street vendors.
The city of Atlanta, for example, has turned all street vending over to a monopoly contractor. In feudalist fashion, all existing vendors were told they must work for the monopoly or not vend at all.
…
Institute lawyer Elizabeth Foley says the regulations make “it virtually impossible to be an effective street vendor. You can’t be within 300 feet of any place that sells the same or similar merchandise. That’s absolutely ridiculous for the government to use its power to enact a law like that. … These people are just trying to make an honest living, and the city is making it impossible to do so.”
…
Raul Martinez, the mayor when the law passed, defended the rule.
“You don’t want to have everybody in the middle of the streets competing for space on the sidewalk without some sort of regulations. In the city of Hialeah, we’re not overregulating anybody.”
He says one purpose of the law is simple fairness: Street vendors don’t pay property taxes. Brick-and-mortar stores must.
No one likes paying taxes, and so everyone tries to either avoid the misery or spread it around. One common justification for paying taxes, then, is fairness: Why should I pay taxes when my competitor doesn’t?
That is, perhaps, a legitimate question, but it is irrelevant nonetheless because fairness does not exist. For starters, no two people can even agree on what constitutes fairness. And even if they could, ensuring fairness requires more data than anyone possesses or could hope of possessing.
Taking the case at hand, it seems obvious that it is unfair for street vendors to not pay taxes. But should their tax bill be comparable to brick-and-mortar stores? The answer isn’t straightforward because one must consider how much less of a burden street vendors are to the local government relative to brick-and-mortar stores. One must also compare the relative advantages of each venue—a street vendor does not offer the same product as a restaurant, even if the menu offerings are identical. Trying to determine a fair tax rate in light of the considerations is simply impossible.
As such, it is simply best for the government to surrender the battle on fairness and simply say that the government needs X amount of dollars in revenue and that policy Y is the easiest way to attain this. The continual bickering over fairness simply increases systemic costs, damages the economy, kills people’s job prospects, increases political rancor, and does absolutely nothing to improve the system in the long run. Therefore, the government would be better off implementing one simple tax and living within its means, and stop concerning itself with fairness.
By Simon Grey, on October 14th, 2011
Things are never so simple, of course. The tax has already been received by many Danish firms as a ‘bureaucratic nightmare’, piling on additional costs to firms in an already tough period. Once more, any tax such as this is going to be inherently regressive; those least able to afford any price increases will be hit the hardest. But what does it matter? The French ‘fat tax’ is expected to raise an estimated €120,000,000 p.a.. A nice little earner.
Fat taxes are politically convenient in countries where obesity is a sizeable problem. There is presumably plenty of revenue to be had because fat people aren’t going to change their eating habits overnight, nor are they the type to be particularly cost-conscious, in terms of both direct and indirect costs.
Furthermore, defending fatties is political suicide for most, since fat people are generally reviled. Thus, a fat tax is politically brilliant because it will raise revenue easily and enjoy widespread support (or, at the least, it won’t face much political opposition).
Most are in agreement that obesity is a society-wide problem. The more rotund we become, the more our healthcare costs increase. So what’s the solution? Surely not pricing poor people out of the market for fatty foods. We must seek a solution other than ‘more taxes’ – the default position of any government. Perhaps our BMIs could be helped by making it easier for people to help out at sport clubs without undergoing a raft of CRB checks, or by reforming our health system which currently permits the cost of atrocious health habits to be picked up by someone else.
Sadly the precedent has already been set. When we already allow the government to dictate what we may and may not consume in the form of innumerable drugs, letting them control what we eat is a logical advancement. And it will all be done for our ‘own good’.
Actually, once you expect the government to provide free universal health care for every citizen (and all non-citizen residents), the natural consequence is for the government to enact some sort of cost-cutting measure, like rationing or queuing. Alternatively, the government can enact a tax on unhealthy things in order to make providing health more reasonable. If fat people ignore the increased prices, the government will at least have enough money to defray future health care costs that inevitably arise as a result of unhealthy diet. Alternatively, if fat people decide to respond to the tax rationally, then the government will have to pay less for health care later on, thus negating the effect of less-than-projected revenue.
In many ways, a fat tax mimics the natural workings of the free market. If there were no governmental guarantees of health care, people would more inclined to take care of themselves and eat properly. Thus, the fat tax serves as a replacement market mechanism.
Now, this is not to say that I support a fat tax. I simply view it as the rational response to the current conditions in Europe, with regards to how health care is provided over there. Personally, I think the best solution would be to have the government completely deregulate and desubsidize the entire health industry, and get out of providing and paying for health care in its entirety. But if the government is going to be involved in health care, it is going to have to find a way to manage costs. That much is certain.
By Simon Grey, on September 1st, 2011
The justification for pushing people around like this is the NHS. Shouldn’t people have to pay for their own illnesses? Well, yes – that’s how personal responsibility works. But having an NHS removes the personal responsibility, and artificial attempts to inject it into the system are doubly illiberal and wrong.
The government (and the electorate, for that matter) forces people to be in the NHS. You have no choice in the matter, and you can’t opt out of it. Jamie Whyte put it well: “first the do-gooders conjure up the external costs by insisting that no one should have to pay for his own medical care, then they tell us that they must interfere with behavior that damages our health because it imposes costs on others.” This is perverse and illiberal. The tax would only affect the poor – rich people’s spending habits wouldn’t be dented. How easy it must be for doctors to pontificate about the need for a fat tax, knowing that such a tax would hardly affect them at all.
This creepy, controlling paternalism has plenty of fans in politics on both sides of the partisan divide. Doctors are the politicians’ enablers, lending the weight of their “expertise” to the nanny instinct of the political class in exchange for the feeling of being important. No amount of expertise – medical or otherwise – should give somebody the right to interfere with another adult’s choices. Nor should democracy be used as an excuse to violate the sovereignty of the individual. If fat people are costing the NHS money, that’s a mark against having an NHS, not against having fat people.
Sam Bowman is perfectly correct in noting that the problem with obesity is a mark against the NHS. The NHS has essentially reduced people’s incentive to avoid unhealthy behavior and, unsurprisingly, people have engaged in unhealthy behavior. If the NHS were abolished, people would revert to more healthy behaviors. This is the basic economics.
However, regulating people’s diets and behaviors is the natural consequence of having the NHS. If a government is going to dispense “free” health care, the only way to control costs is to limit health care and control individuals’ behavior. If the government is going to provide something for you, it is eventually going to have to control you. Government benefits and government control go hand in hand.
Therefore, if people do not wish to be controlled by their government, they must give up their benefits (and in this case pity can be offered to those in Britain because NHS is not opt-out, so there are likely some in Britain who are part of system they simply want no part of). And if people desire certain benefits from the government, they must be prepared to cede control of themselves to the state. Those are simply the natural consequences.
By Thomas Knapp, on August 8th, 2011
… that if you don’t check in with the government before wiping your bum, some idiot may blow $9,000 on extra toilet paper and blame you for it.
I’ve looked and looked and looked, and I can’t find anything in the Constitution about the airspace around POTUS being “restricted.” Nor are bullshit security theater antics covered in Article I, Section 8.
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