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Public Education Is Superior and Must Be Protected from Competition – Article by Kevin Currie-Knight

Public Education Is Superior and Must Be Protected from Competition – Article by Kevin Currie-Knight

The New Renaissance HatKevin Currie-Knight
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Opponents of School Choice Can’t Make Up Their Minds

Defenders of public education often point to data showing public schools to be as good as or better than private alternatives. A recent book celebrating such data is The Public School Advantage: Why Public Schools Outperform Private Schools.

Public schools, according to the authors, tend to outperform private rivals on a variety of metrics. Such groups as the National Education Association teachers’ union have used this research to make a case against “privatization.” (The book’s research has been criticized in some quarters for using flawed research methods, and other data show that private schools tend to outperform public ones.)

But when school choice proposals make legislative headway and threaten public school systems, this confidence seems to evaporate. People start fulminating about how school choice programs would effectively crush the public education system.

If competition from private education would doom public schools, then how confident can the public system’s proponents really be about the schools they’re defending? And if public education really is superior to private alternatives, why worry that people would prefer private schools if given a choice?

Spotting the Monopoly
Imagine that I am a spokesperson for the dominant car dealership in your area, and you’ve been hearing good things about a rival dealership. Not to worry, I convince you: our cars outperform theirs on a variety of metrics.

Now, imagine that that rival car company is about ready to open up a dealership down the street, and you hear me petition to the legislature not to allow it: “Permitting this other dealership to move in will surely spell the death of our company. Once people are allowed another option, it is only a matter of time before our profits dwindle to the point where we can’t sustain our business.”

“Wait,” you say, “I thought you just told me how confident you were in the superiority of your cars. Surely, if you are that confident, you wouldn’t be so worried about competition!”

You’d be right. And this situation is basically the one we are in regarding American public schools. Proponents point to data showing that, on several metrics, public schools fare no worse and sometimes better than private schools. Yet, when local governments entertain school choice programs, the public system’s defenders suggest that competition will spell the death of public schooling.

Either you’re confident that your product is the best choice or you’re not.

The Sky Is Falling!
Indiana, for instance, is entertaining two bills (House Bill 1311 and Senate Bill 397) that would allow students in the state to use money that would have been spent on their public education to receive private educational services. The Indiana State Teacher’s Association website declares that this change would “be a major blow to public schools.”

We see a similar lack of confidence in reactions to Arizona’s recent attempt to open up a very targeted voucher program to all students by 2018. “This is the end of public education in Arizona,” laments state senator Steve Farley.

Perhaps the fear mongering is just about rallying the troops. Maybe public school defenders know their product is superior but want to motivate their base with “the sky is falling” rhetoric.

But notice that such declarations about the “end of public school” share school choice advocates’ basic assumption: given the option, consumers will leave the public schools to the point where public schools need to be concerned for their financial viability.

Superior or Not — Which Is It?
Let’s go back to the example of the fictional car dealership. When shopping for a car, you certainly care what the research says on the cars you’re looking at. But would you be content if the car dealer told you, “You don’t need to look into that other car manufacturer. I assure you, lots of studies show that our cars are better than theirs on a variety of metrics”?

My guess is that you’d keep the claim in mind but look at the other dealer’s cars anyway. Yes, you want the best car, but you also want the flexibility to decide which car is best for you.

When you then hear the car manufacturer’s lobbyists worrying to the legislature that allowing competitors into your area would surely spell the death of their employer’s company, it seems like cause for concern. The most plausible explanation — which the car manufacturer would never admit — is that they really are worried that consumers would prefer the competitors if given a choice.

When a car dealership, a school system or anyone else believes that competition will destroy their business, you can assume they aren’t confident about what they’re selling and wonder if their product or service is inferior.

Public school proponents can’t have it both ways. Under school choice programs like the ones Indiana and Arizona are considering, public schools will compete for funding with private educational services. Students who choose public schools will send their “tuition” money to their chosen public school. Therefore, the only way these choice programs could kill public schooling is if families en masse choose, and continue to choose, to direct public dollars away from the government’s school system and into private schools.

And if that’s what parents prefer for their children, then why shouldn’t they have that choice?

Kevin Currie-Knight teaches in East Carolina University’s Department of Special Education, Foundations, and Research. His website is KevinCK.net. He is a member of the FEE Faculty Network.

This article was originally published by The Foundation for Economic Education and may be freely distributed, subject to a Creative Commons Attribution 4.0 International License, which requires that credit be given to the author.

Star Wars: Intellectual Property Strikes Back – Article by Matthew McCaffrey

Star Wars: Intellectual Property Strikes Back – Article by Matthew McCaffrey

The New Renaissance HatMatthew McCaffrey
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IP Deflates the Expanded Universe

Star Wars: The Force Awakens is already one of the most successful films of all time, and the Star Wars franchise is poised to grow at .5 past light speed for the foreseeable future. Yet, while Disney rapidly develops new chapters for the saga, it’s also quietly deleting some old ones: in 2014, Lucasfilm announced that to make way for the new films, the Star Wars Expanded Universe (or EU) would no longer be considered canon, a decision that disappointed many longtime fans.

The EU refers to the vast number of novels, short stories, comics, and games that explore the Star Wars universe outside the major films. These works enjoy an enormous following but are now consigned to a kind of alternate universe called Star Wars Legends. In other words, they will be disregarded by Lucasfilm’s officially licensed material, and any new Star Wars stories will have to fit the new canon. The original EU is discontinued, which understandably has fans feeling abandoned.

Why should the EU pose a problem, though? Why can’t artists and fans simply continue developing the canon they love, while Lucasfilm does the same? The answer is simple: intellectual property law.

Disney’s ownership of Lucasfilm allows it to license the Star Wars brand and all related intellectual property rights, especially its copyrights and trademarks. Anyone adding to the universe can only do so with permission, giving Lucasfilm power over any content within the universe or even similar to it.

In fact, Lucasfilm has a long history of aggressively litigating its IP, suing everyone from small businesses to major corporations. One of the most infamous cases was brought against the original Battlestar Galactica TV series, which was accused of copying at least 34 distinct ideas from Star Wars. These included such astonishingly original concepts as a friendly robot, an imprisoned heroine, and a movie ending with an awards ceremony.

Returning to the EU, it does make some artistic and financial sense for Disney to steer the franchise in a new direction by discontinuing older content. At the same time, artists and fans want to enjoy the EU they already know and love, something Lucasfilm legally prohibits by enforcing its IP.

My point is not that one stream of content is objectively better, but that it’s vital for all involved to freely choose the kind of content they want to create and sell. By increasing costs to both consumers and innovators, IP has already played a role in the decline of art forms like classical music, and copyrights and trademarks have similar effects in the world of pop art.

For Star Wars, original content mainly revolves around trademark rights, of which Lucasfilm owns many. Its usual defense of these properties is that unlicensed content causes confusion: without legally enforceable restrictions, consumers might think they’re buying “genuine” products when they’re actually getting cheap imitations. Furthermore, products similar to those created by Lucasfilm might be used to earn profits for noncreators who capitalize on confusion. A licensing deal from the original source ensures people won’t be taken in by unskilled or unscrupulous artists.

Assuming this is the real motivation for trademark protection, the argument is still weak. Like many consumer-oriented regulations, trademark law is patronizing: its basic assumption is that people are too dim to distinguish between official products and knockoffs or other free riders on the brand. But consumers, especially the kind of devoted fans Star Wars inspires, are perfectly capable of figuring out for themselves which content they prefer. The real issue boils down to revenue: Lucasfilm doesn’t want other businesses profiting from ideas it “owns,” and it’s perfectly happy to use monopoly privileges to protect its bottom line.

But Lucasfilm doesn’t need to litigate its trademarks to preserve profits or brand identity, which would likely be stronger in the long run without IP. For example, without trademarks, Lucasfilm would continue to officially sanction content it approves of and let consumers know which works are not “official.” If fans respect its judgment, the official Star Wars brand would thrive as people adopted Lucasfilm’s endorsement as a benchmark for quality and narrative continuity.

Competition for fan loyalty would drive official and unofficial creators alike to produce high-quality content. Different groups of creators would specialize in their own alternate universes that would succeed or fail based on their ability to satisfy fans. This would also eliminate the uncertainty surrounding fan fiction, which exists in the complex gray area of “fair use” laws. Most importantly, we’d all be able to decide for ourselves which works we treat as canon and which we abandon to the garbage masher of history.

The only truly expanded universe — one that’s creative, innovative, and prosperous — is one without IP protectionism. When we embrace genuine competition in ideas instead of competition through legal privilege, then, as Obi-Wan Kenobi would say, we’ve “taken a first step into a larger world.”

Matthew McCaffrey is assistant professor of enterprise at the University of Manchester and editor of Libertarian Papers.

This article was published by The Foundation for Economic Education and may be freely distributed, subject to a Creative Commons Attribution 4.0 International License, which requires that credit be given to the author.

Bernie Sanders’ Anti-Foreign Crankery – Article by Daniel Bier

Bernie Sanders’ Anti-Foreign Crankery – Article by Daniel Bier

The New Renaissance HatDaniel Bier
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A Vesuvius of Tribalism and Economic Illiteracy

At Sunday’s Democratic presidential debate, Bernie Sanders attacked American trade with Mexicans, Chinese, Vietnamese, and presumably all other foreigners who might try to steal our jobs. Sanders harangued Hillary Clinton,

NAFTA, supported by the Secretary, cost us 800,000 jobs nationwide, tens of thousands of jobs in the Midwest. Permanent normal trade relations with China cost us millions of jobs.

Look, I was on a picket line in early 1990’s against NAFTA because you didn’t need a PhD in economics to understand that American workers should not be forced to compete against people in Mexico making 25 cents an hour.

… And the reason that I was one of the first, not one of the last to be in opposition to the TPP is that American workers … should not be forced to compete against people in Vietnam today making a minimum wage of $0.65 an hour.

Look, what we have got to do is tell corporate America that they cannot continue to shut down. We’ve lost 60,000 factories since 2001. They’re going to start having to, if I’m president, invest in this country — not in China, not in Mexico.

First, let’s note his dodgy job numbers. As Dan Griswold noted in 2011, in response to a similar claim about jobs “lost” from the “trade deficit” with Mexico,

In the first five years after NAFTA’s passage, 1994-98, when we could have expected it to have the most impact, the U.S. economy ADDED a net 15 million new jobs, including 700,000 manufacturing jobs.

Behold, the horror unleashed on US manufacturing jobs by trade with Mexico:nafta-manufacturing

In fact, since NAFTA went into effect in 1994, total US employment has increased by 28 million jobs. Even if we buy the dubious claim that NAFTA “cost us 800,000 jobs” over the last 22 years, this amounts just 36,000 jobs a year.

As Griswold noted, even in good times, 300,000 Americans file for unemployment each week. The US economy creates and destroys more than 15 million jobs every year. This alleged displacement amounts to less than one day’s worth of job losses.

It’s true that, in the long-run, manufacturing jobs have been in decline in the United States. But this is not because manufacturing is in decline. The myth (promoted by the other nationalist blowhard in the race) that United States “doesn’t make stuff anymore” is not just wrong — it couldn’t be further from the truth.

Real US manufacturing output is the highest it has ever been. Simply put, the US makes more stuff than ever.

manufacturing-indexHow can this be? Because manufacturing productivity — the amount of value added per hour worked — has gone up dramatically in recent decades. Manufacturing employment is declining because of automation; a US factory worker today can add a lot more value per hour than one in 1970.

manufacturing-employees-output-per-hour

It’s simply not true that trade devastated the US economy and wiped out millions of jobs. Employment has shifted within the US economy, out of industry into service jobs, and manufacturing has shifted around the globe, aligning production with the comparative advantages of each country’s labor and capital markets.

The resentment stoked by nationalists like Trump and Sanders is based on a nonsensical proposition, a mirage of high-paying blue collar jobs stolen by conniving foreigners, which we could reclaim if only we had the will to wage a trade war.

But the machines and global production chains are here to stay, and the jobs being done in Vietnam and China for fifty cents an hour are on the extreme low end of the value-added chain — which should be obvious, when you think about it, since they pay so little. (On the back of every iPhone is a short economics lesson on this point: “Designed by Apple in California. Assembled in China.”)

Do we really want to “bring those jobs back”? Do we envision a future where the American middle class is sewing textiles in sweatshops for a dollar an hour? Of course not. Americans today likely wouldn’t do those jobs at any wage, but especially not at the wages paid to low-skilled workers in developing Asian and Latin American countries. Those jobs only exist at those wages; at higher wages, they are scarcer, higher-skilled, and more capital intensive.

True, we could make t-shirts and Happy Meal toys in the United States, but we’d be doing it with far, far fewer workers and a lot more capital. Instead of 30 workers at fifty cents an hour, it’d be one person with a machine for $20 an hour.

The real difference would be that everyone would be poorer as a result: consumers paying higher prices, foreigners working in worse conditions and for less money, and American resources being diverted away from where they are most productive.

This is where economic ignorance stops being morally neutral and becomes a real threat to the life and well-being of the poor, especially in the developing world.

Not content to merely keep Mexicans from working in the United States (where, thanks to US capital and infrastructure, they could earn three or four times more than they make in Mexico), Bernie Sanders now objects to the right of Mexicans to work in Mexico, if they dare to sell goods and services to Americans — or, God forbid, try to compete with American firms.

For a champion of the poor like Sanders, there’s a double irony here, in that poor Americans are already much wealthier than poor Mexicans, and that tariffs also make goods more expensive for native consumers, disproportionately hurting the poorest Americans. Not only are poor Mexicans made worse off, by losing access to the US market and thus losing jobs, but poor Americans are also made worse off by having less disposable income, which is thus not spent elsewhere in the economy to sustain other American jobs.

And this is just the first order effects of closing off trade with Mexico. When the Mexican government inevitably retaliates, US exports to Mexico (which totaled $236 billion in 2015) will also be devastated and more jobs will be lost. And of course, simply multiply this orders of magnitude for China, Vietnam, and every other country on the nationalistic hit list.

Who gains from this? In the long run, nobody, which is why (after decades of gradual reform) we finally got relatively free trade with our closest neighbors, signed into law by a liberal Democrat. But in the short run, a few US corporations and labor unions would benefit from trade tariffs — at the expense of both poor foreigners and poor Americans as a whole.

(For those keeping score, this makes it an ironic hat trick for Sanders, whose tirades against free trade and open borders are laced with fear-mongering about “corporations.”)

Finally, let us ponder Sanders’ Alice-in-Wonderland solution to the imagined ills of free trade:

Look, what we have got to do is tell corporate America that they cannot continue to shut down. We’ve lost 60,000 factories since 2001. They’re going to start having to, if I’m president, invest in this country — not in China, not in Mexico.

Did I say Alice in Wonderland? I meant Atlas Shrugged. Ayn Rand was justly accused of having unbelievable, one-dimensional stereotypes, but sadly, American politics seems to have the same problem.

It’s anyone’s guess how Sanders imagines he could force factories not to close and order companies to stay in the United States, but the “you can’t shut down” solution is almost directly lifted from “Directive 10-289,” the order that Rand’s antagonists use to try to “stabilize” the economy:

All workers, wage earners and employees of any kind whatsoever shall henceforth be attached to their jobs and shall not leave nor be dismissed nor change employment… All industrial, commercial, manufacturing and business establishments of any nature whatsoever shall henceforth remain in operation…

Faced with economic decline, the government believed that the only option was to stop the decline, rather allowing people to go where they choose, buy what they choose, and make what they choose. “What it comes down to is that we can manage to exist as and where we are, but we can’t afford to move!” archvillain Wesley Mouch exclaims. “So we’ve got to stand still… We’ve got to make those bastards stand still!”

When Rand first published this in 1957, this was hyperbole about the fear of change, the reductio ad absurdum of the argument for keeping things as they are. Now, it’s an applause line for mainstream presidential candidates.

Daniel Bier is the site editor of FEE.org He writes on issues relating to science, civil liberties, and economic freedom.

This article was published by The Foundation for Economic Education and may be freely distributed, subject to a Creative Commons Attribution 4.0 International License, which requires that credit be given to the author.

One Bad Reason to Hate Trump – Article by Sarah Skwire

One Bad Reason to Hate Trump – Article by Sarah Skwire

The New Renaissance HatSarah Skwire
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99 Reasons, But the Name Ain’t One

I have 99 (thousand) reasons to hate Donald Trump and to find his campaign stomach turning. I won’t list them here. The Google graph showing the rising use of the word “bloviate” in American political discourse should stand in place of any detailed accounting.

bloviategraph

But what’s grabbed most of the attention since John Oliver mentioned it recently on his show, Last Week Tonight, is Trump’s name. As Oliver notes, “Trump sounds like money.” But, he continues in tones of shock and dismay, “It turns out the name Trump was not always his family name.… An ancestor had changed it to Trump from Drumpf.”

My family name wasn’t originally Skwire. It was Skwirsky. My grandfather and his brothers changed it — right around when Trump’s ancestor changed the family name — because back in those days, it was hard to get jobs in the United States with an obviously foreign name. Trump’s ancestors, I’m sure, did the same thing.

There’s no shame in being from places that aren’t America. There’s no shame in having a last name that’s unusual. And I am bothered by the pleasure we are taking in mocking a name that sounds a little bit funny and a whole lot foreign. It sounds like the kind of rhetoric Trump uses. So I’m not going to indulge.

However.

(And this is a very big “however.”)

I do think there’s something to talk about here, and I don’t think it’s funny at all.

The focus on Trump’s original family name is not analogous to the focus on former Republican presidential candidate Chris Christie’s ample girth. Governor Christie’s poundage was immaterial to his campaign. He has not publically bloviated about the need for the obese to stop being lazy, to start exercising, and to start eating right. He has not signed on to regulatory agendas like former New York mayor Michael Bloomberg’s attempts to control what and how much people eat and drink. He hasn’t, in other words, turned his weight into a centerpiece of his campaign.

Trump, however, has made immigration one of his central issues. Even those of us who have tried desperately to avoid the whole political season have heard that he wants a bigger wall along the border with Mexico, that he wants Mexico to pay for it, and that he would deport 11 million illegal immigrants in short order. A little research turns up Trump’s repeated references to immigrants as criminals, drug dealers, and rapists. Birthright citizenship is dumb, he opines. And the barriers to immigration should be towering, because, Trump says over and over, the people born here should be our first concern.

It’s not funny that Trump’s family name used to be Drumpf. That’s just a standard American story that most of us probably share. To be an American, for most of us, means we’re not really from around here.

But the idea that we might have an American president who thinks it’s fine for the Drumpf family to come to America and achieve unimagined success in a few generations, but who will do everything possible to keep the Rodriguez family or the Habib family from doing the same?

That’s a tragedy.

Sarah Skwire is the poetry editor of the Freeman and a senior fellow at Liberty Fund, Inc. She is a poet and author of the writing textbook Writing with a Thesis. She is a member of the FEE Faculty Network.

This article was published by The Foundation for Economic Education and may be freely distributed, subject to a Creative Commons Attribution 4.0 International License, which requires that credit be given to the author.

Trump and Sanders Are Both Conservatives – Article by Steven Horwitz

Trump and Sanders Are Both Conservatives – Article by Steven Horwitz

The New Renaissance HatSteven Horwitz
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Shared Visions of Fear, Force, and Collectivism

Those of us who reject the conventional left-right political spectrum often see things that those working within it cannot. For example, in “Why the Candidates Keep Giving Us Reasons to Use the ‘F’ Word” (Freeman, Winter 2015), I argue that Donald Trump and Bernie Sanders, seen by many as occupying opposite ends of the ideological spectrum, both embrace the thinking of economic nationalism, if not fascism.

They also share a different political tradition. It may seem to contradict their shared fascist pedigree, but Trump and Sanders are both, in a meaningful sense, conservatives.

Trump, of course, has been lambasted by many self-described conservatives precisely because they believe he is not a conservative. And Sanders, the self-described “democratic socialist,” hardly fits our usual conception of a conservative. What exactly am I arguing, then?

They are both conservatives from the perspective of classical liberalism. More specifically, they are conservatives in the sense that F.A. Hayek used the term in 1960 when he wrote the postscript to The Constitution of Liberty titled “Why I Am Not a Conservative.” There he said of conservatives,

They typically lack the courage to welcome the same undesigned change from which new tools of human endeavors will emerge.… This fear of trusting uncontrolled social forces is closely related to two other characteristics of conservatism: its fondness for authority and its lack of understanding of economic forces.… The conservative does not object to coercion or arbitrary power so long as it is used for what he regards as the right purposes. He believes that if government is in the hands of decent men, it ought not to be too much restricted by rigid rules.

That description would seem to apply to both Trump and Sanders. They share a fear of uncontrolled and undesigned change, especially in the economy. This is most obvious in Trump’s bluster about how America never “wins” and his desire to raise tariffs on Chinese imports and close the flow of immigrants, especially from Mexico. Economic globalization is a terrific example of uncontrolled change, and using foreign workers and producers as scapegoats for that change — especially when those changes have largely benefited most Americans — is a good example of this fear of the uncontrolled.

Those policies also show the much-discussed economic ignorance of Trump and his supporters, as shutting off trade and migration would impoverish the very people Trump claims to care about — those who are, in fact, supporting him. International trade and the free migration of labor drive down costs and leave US consumers with more money in their pockets with which to buy new and different goods. They also improve living standards for our trade partners, but Trump and his followers wrongly perceive their gains as necessitating American losses.

The same concerns are echoed in Sanders’s criticisms of free trade and in his claim that immigration is undermining good jobs for the native-born. Trump’s rhetoric might be more about how the US needs to “beat” the Chinese, and Sanders might focus more on the effects on working class Americans, especially union workers, but both fear the uncontrolled change of globalized markets, seeing commerce as a zero-sum game. (See “Why Trump and Sanders See Losers Everywhere,” FEE.org, January 20, 2016.)

For Sanders, fear of change also bubbles up in his criticisms of Uber — even though he uses the service all the time. Part of Hayek’s description was the fear of change producing “new tools of human endeavor.” The new economy emerging from the reduction of transaction costs will continue to threaten labor unions and the old economic understanding of employment and the firm. Sanders’s view of the economy is very much a conservative one as he tries to save the institutions of an economy that no longer exists because it no longer best serves human wants.

In addition, both Trump and Sanders are more than willing to use coercion and arbitrary power to attempt to resist that change. These similarities manifest in different ways, as Trump sees himself as the CEO of America, bossing people and moving resources around as if it were one of his own (frequently bankrupt) companies. CEOs are not bound by constitutional constraints and are used to issuing orders to all who they oversee. This is clearly Trump’s perspective, and many of his followers apparently see him as Hayek’s “decent man” who should not be too constrained by rules.

The same is true of Sanders, though he and his supporters would deny it. One need only consider his more extreme taxation proposals as well as the trillions in new spending he would authorize to see that he will also not be bound by constraints and will happily use coercion to achieve his ends. This is also clear in his policies on trade and immigration, which, like Trump’s, would require a large and intrusive bureaucracy to enforce. As we already know from current immigration restrictions, such bureaucracies are nothing if not arbitrary and coercive. Both Trump and Sanders believe that with the right people in charge, there’s no need for rule-based constraints on political power.

Hayek also said of conservatives that they are characterized by a

hostility to internationalism and [a] proneness to a strident nationalism.… [It is] this nationalistic bias which frequently provides the bridge from conservatism to collectivism: to think in terms of “our” industry or resource is only a short step away from demanding that these national assets be directed in the national interest.

As noted, Sanders and Trump share exactly this hostility and proneness. And despite being seen as political opposites, their distinct views converge in the idea that resources are “ours” as a nation and that it is the president’s job (and the state’s more generally) to direct them in the national interest. For Trump, that interest is “making America great again” and making sure we “beat” the Chinese. For Sanders, that interest is the attempt to protect “the working class” against the predation of two different enemies: the 1 percent and foreign firms and workers, all of whom are destroying our industries and human resources.

All of this fear of uncontrolled change and economic nationalism is in sharp contrast with the position of what Hayek calls “liberalism” or what we might call “classical liberalism” or “libertarianism.” In that same essay, Hayek said of classical liberalism, “The liberal position is based on courage and confidence, on a preparedness to let change run its course even if we cannot predict where it will lead.”

This is why classical liberalism rejects the idea that the path toward progress entails electing the right people (the “decent men”) and the cult of personality that frequently accompanies that idea, as we’ve seen with Trump and Sanders. Classical liberalism understands how, under the right rules and institutions, progress for all is the unintended outcome of allowing each to pursue their own values and ends with an equal respect for others to do the same, regardless of which side of an artificial political boundary they reside on.

If we want to live in peace, prosperity, and cooperation, we need to recognize that progress is a product of unpredictable, uncontrolled, and uncontrollable change.

Trump and Sanders can stand on their porches telling us to get off their lawn, but we’re going to do it in an Uber imported from Asia and driven by a nonunionized immigrant, because we classical liberals welcome the change they fear.

Steven Horwitz is the Charles A. Dana Professor of Economics at St. Lawrence University and the author of Hayek’s Modern Family: Classical Liberalism and the Evolution of Social Institutions. He is a member of the FEE Faculty Network.

This article was published by The Foundation for Economic Education and may be freely distributed, subject to a Creative Commons Attribution 4.0 International License, which requires that credit be given to the author.

Homeschooled Weirdoes and the Culture of Conformity – Article by B.K. Marcus

Homeschooled Weirdoes and the Culture of Conformity – Article by B.K. Marcus

The New Renaissance HatB.K. Marcus
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“Not seeming weird” carries its own cost

Remember that weird kid in school? I don’t mean the really scary one. I mean the borderline oddball. The one you had to talk to a bit to spot the weirdness. The boy who never knew what TV show everyone was talking about. The girl who, when you asked her what her favorite music group was, answered some long name that ended in “quartet.” The kid who thought you meant soccer when you said football.

How did you treat that kid? (Or were you that kid?)

In “Homeschooling, Socialization, and the New Groupthink,” I suggested that the most useful definition of socialization is “ensuring that a child becomes sociable, that he or she develops the intelligence and social reflexes that promote peaceful and pleasurable interactions.” I also suggested that some of homeschooling’s critics might mean something more sinister: indoctrination into a particular vision of society.

But after reading my article, third-grade schoolteacher Heather Lakemacher, commenting on Facebook, pointed out yet a different meaning of socialization: not seeming weird.

This is the real reason, she said, “why this stereotype of the poorly socialized homeschooler exists.” Whereas I had only addressed adult perceptions of homeschooled children, the true culprit, she said, is other kids:

Many of us who were educated in a traditional school have vivid memories of meeting other kids our age who were homeschooled and thinking, “Oh my god! This kid is so WEIRD!” It’s entirely possible that the child in question grew up to be a happy, well-adjusted, productive member of society. …

However, I think the stereotype exists because of the power of those childhood interactions with a peer who just didn’t behave in the way we were expecting them to behave. That’s not an argument against homeschooling, but data will always have a hard time dispelling emotionally charged memories.

She’s right. Odd kids can make a lasting impression.

Grownups regularly note how polite my homeschooled son is, or how he’ll talk to them at all when so many other kids clam up and fail to make eye contact. Adults find his lack of awkwardness with them charming. But what do schooled kids see?

Diane Flynn Keith, a veteran homeschooling mom and author of the book Carschooling, writes that homeschooled kids are, in fact, “not well-socialized in the traditional school sense.”

I hate to be the one to break it to you, but there’s nothing “normal” about our kids. Your homeschooled child is odd compared to the schooled population because they have not experienced ongoing school-based socialization and standardization. …

They haven’t been indoctrinated in the same way. They have not been steeped in the popular consumer culture to the degree that most schooled kids have been. They are not adult-phobic and peer-dependent. (“Yes, My Grown Homeschooled Children Are Odd — And Yours Will Be Too!“)

And most of the time, homeschooling parents love that about our kids — and about homeschooling in general. We don’t want them to be standard. Whether we admit it or not, we tend to think they’re better than the standard. But it’s true that our socially flexible and resilient children can be puzzling to their traditionally schooled peers, and vice versa.

So why does the assessment of weirdness flow only in one direction? Why don’t homeschooled kids think the mainstream schoolchildren are weird?

One answer is that our kids know the mainstream experience through television, movies, and books. They may not always track the finer distinctions between Degrassi High and Hogwarts, but they certainly know a lot more about schools and schooling than mainstream kids know about education outside a classroom.

But I think that even without the pop-cultural lens on the schooling experience, homeschooled kids are just less likely to see anyone as weird. It’s just not a part of their semantic reflexes. Instead they think, “I don’t get him,” or “I’m not into the same stuff she is.”

As a result, homeschooled kids aren’t just more tolerant of diversity; they’re probably also more diverse. And that’s a lot of what gets labeled weird by those who are better assimilated into the mainstream culture.

What’s probably obvious to anyone familiar with homeschooling is that it’s good for the emotional health of kids who don’t easily fit in. What is less obvious is the damage that a culture of conformity does not just to the oddballs in that culture but also to the kids who conform with ease — and to the liberty of the larger society.

For over half a century, studies have shown that the need for social acceptance not only changes our behavior but can even make us perceive the world differently — and incorrectly.

In the early 1950s, psychologist Solomon Asch conducted a series of experiments on the dangers of group influence. When presented with simple problems that 95 percent of individuals could answer correctly when free of group influence, 75 percent of Asch’s test subjects would get the answer wrong when it meant concurring with the group.

In 2005, neuroscientist Gregory Berns conducted an updated version of Asch’s experiments, complete with brain scans to determine if the wrong answers were a conscious acquiescence to social pressure or if, instead, test subjects believed that their group-influenced wrong answers were in fact correct. Not only did the subjects report that they thought their wrong answers were right; the brain scans seemed to confirm it: they showed greater activity in the problem-solving regions of the brain than in those areas associated with conscious decision-making. And the nonconformists who went against the group and gave correct answers showed heightened activity in the part of the brain associated with fear and anxiety.

Commenting on the implications of these experiments, author Susan Cain writes,

Many of our most important civic institutions, from elections to jury trials to the very idea of majority rule, depend on dissenting voices. But when the group is literally capable of changing our perceptions, and when to stand alone is to activate primitive, powerful, and unconscious feelings of rejection, then the health of these institutions seems far more vulnerable than we think. (Quiet: The Power of Introverts in a World That Can’t Stop Talking)

Groupthink, in other words, is dangerous to a free society. And we don’t always realize when we’re not thinking for ourselves.

This kind of cognitive conformity, however, isn’t fixed or universal. Not only does it vary, for example, between East and West; it has also declined in the West since the 1950s, according to a 1996 review of 133 Asch-type studies from 17 countries. That review assessed the cultures in which the studies took place to see if their results “related cross-culturally to individualism [versus] collectivism.” Unsurprisingly, test subjects were least susceptible to the reality-distorting effects of the group in the more individualistic national cultures.

We should expect the same to be true of more and less individualistic subcultures. I bet homeschoolers, for example, are less likely to show the Asch effect. I suspect the same thing of the oddballs at school.

That doesn’t mean everyone should homeschool, or that only weirdoes can be independent thinkers, but it does suggest that the more a culture values independence and diversity, the less vulnerable it will be to the distortions of conformity. And if socialization means helping kids fit in more easily with the culture of their peers, then parents of homeschoolers and schooled kids alike may want to reconsider the value of socializing our children.

B.K. Marcus is editor of The Freeman.

This article was published by The Foundation for Economic Education and may be freely distributed, subject to a Creative Commons Attribution 4.0 International License, which requires that credit be given to the author.

UN “Green Climate” Program Is a Slush Fund for Dictators – Article by Marian L. Tupy

UN “Green Climate” Program Is a Slush Fund for Dictators – Article by Marian L. Tupy

The New Renaissance HatMarian L. Tupy
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The fund is planned to be $450 billion by 2020

Wherever you stand on the subject of global warming, pay close attention to one under-reported aspect of the 2015 United Nations Climate Change Conference or Paris Agreement. I am referring to the Green Climate Fund (GCF), which is a financial mechanism intended “to assist developing countries in adaptation and mitigation practices to counter climate change.”

According to the current estimates, developed countries will be obliged to contribute up to $450 billion a year by 2020 to the GCF, which will then “redistribute” the money to developing countries allegedly suffering from the effects of global warming.

Lo and behold, Zimbabwe’s government-run daily “newspaper” The Herald reported that “Southern Africa is already counting the costs of climate change-linked catastrophes… In Zimbabwe, which has seen a succession of droughts since 2012, a fifth of the population is facing hunger… Feeding them will cost $1.5 billion or 11 percent of … the Gross Domestic Product.”

No doubt Robert Mugabe, the 91-year-old dictator who has ruled Zimbabwe since 1980, is salivating at the prospect of some global warming cash. Beginning in 2000, Mugabe started to expropriate privately-held agricultural land. The result of what is euphemistically called “land reform” was a monumental fall in productivity and the second highest bout of hyperinflation in recorded history.

slush1Some three million of Zimbabwe’s smartest people, including tens of thousands of doctors and lawyers, have left the country. Most of those who have remained behind are subsistence farmers with very little wealth. There is, in other words, very little loot left for the government to steal.

slush2

Thankfully for the Zimbabwean dictator, there are plenty of gullible Westerners willing to believe that the frighteningly vile, comically incompetent government isn’t at the root of Zimbabwe’s food shortages, but that global warming is to blame.

Of course, this is pure nonsense. Botswana and Zimbabwe share a border and their climate and natural resources are exceptionally similar. Yet, since 2004, food production has increased by 29 percent in Botswana, while declining by 9 percent in Zimbabwe. It is not drought but government policies that make nations starve!

slush3

As befits a dictatorship, Zimbabwe is one of the most corrupt places on earth. The notion that GCF funds will be will used for environmental “adaptation and mitigation” is a dangerous fantasy.

Like much foreign aid before it, most of the “green aid” money will likely end up in the pockets of some of the cruelest and most corrupt people on earth. Congress must stand firm and refuse to appropriate any money for the fund.

slush4

This post first appeared at Human Progress.

Marian L. Tupy is the editor of HumanProgress.org and a senior policy analyst at the Center for Global Liberty and Prosperity. 

This article was published by The Foundation for Economic Education and may be freely distributed, subject to a Creative Commons Attribution 4.0 International License, which requires that credit be given to the author.

This Crazy 100-Year-Old Law Makes Almost Everything More Expensive – Article by George C. Leef

This Crazy 100-Year-Old Law Makes Almost Everything More Expensive – Article by George C. Leef

The New Renaissance HatGeorge C. Leef
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It’s time to repeal the absurd, costly “Jones Act”

The 2016 presidential campaign so far has featured almost no discussion of downsizing the federal government. Americans would benefit enormously if we could get rid of costly old laws that interfere with freedom and prosperity, and future generations would benefit even more.

I keep hoping that someone will manage to put this question squarely to the candidates in either party: “What laws would you seek to repeal if you were the president?”

There are so many laws that ought to be repealed, including countless special interest statutes that benefit a tiny group while imposing costs on a vastly greater number of Americans. But if candidates need an idea of where to start, one such law is the Merchant Marine Act of 1920, also called the “Jones Act.”

The Act requires that all shipments between American ports to be done exclusively on American ships. As Daniel Pearson explains,

Its stated purpose was to maintain a strong U.S. merchant marine industry. Drafters of the legislation hoped that the merchant fleet would remain healthy and robust if all shipments from one U.S. port to another were required to be carried on U.S.-built and U.S.-flagged vessels.

The theory behind the law is musty, antiquated mercantilism — the notion that the nation will be stronger if we protect “our” industries against foreign competition.

Imagine how strong we would be if there had been a Jones Act for automobile transportation. Would Americans be better off today if the Detroit automakers had remained an oligopoly by keeping out all of those Hondas, BMWs, and Hyundais? Obviously not — yet this logic has handicapped US shipping for 96 years.

A recent op-ed in the Honolulu Star-Advertiser nicely explain the absurd consequences of this law. The writer just wants to buy a cabinet, but “although the cabinet was made in Taiwan, it could not be off-loaded in Hawaii, but rather had to be shipped to the West Coast, then loaded onto an American ship for the costly backward journey to Hawaii.” Tons of time, fuel, and expense wasted, all thanks to the Jones Act.

We get a more comprehensive view of its costs from a report by the Government Accountability Office (GAO) last September. The report, titled “International Food Assistance: Cargo Preference Increases Food Aid Shipping Costs,” shows the heavy cost of the law. The GAO, known for its non-partisan, straight-shooting approach, found that the Jones Act increased the cost of shipping food aid by 23 percent.

What does that mean? Between 2011 and 2014, the taxpayers had to fork over an extra $45 million to ship food for USAID. With Washington’s prodigious spending, we’ve gotten used to the idea that amounts under a billion are too small to bother with, but that is the wrong way to look at things. Even if we didn’t have a constantly increasing national debt, we ought to root out every needless federal expenditure.

Treading very delicately, the GAO states that, because the Jones Act “serves statutory policy goals,” Congress should merely tweak it so that aid agencies can find less costly shipping. But the federal government has no constitutional authority to be in the business of international aid, and carving out a special exemption for this would simply help the government avoid the consequences that it is inflicting on everyone else. Congress should simply repeal the protectionist law entirely.

The Jones Act also distorts our energy market and leads to higher prices than otherwise. Writing at The Federalist, trade attorney Scott Lincicome points out that, due to the law’s restrictions, only thirteen ships can legally move crude oil between US ports, and those ships are “booked solid.” As a result, shipping American crude from Texas to Philadelphia costs more than three times as much as it would cost to send it all the way to Canada on a foreign vessel.

One of the Act’s few congressional opponents is Arizona Senator John McCain, who pointed out in this testimony that Hawaiian cattlemen who want to sell livestock on the mainland “have actually resorted to flying the cattle on 747 jumbo jets to work around the restrictions of the Jones Act. Their only alternative is to ship the cattle to Canada because all livestock carriers in the world are foreign-owned.”

Hawaii is especially hard hit by the Jones Act, but other states and territories that depend heavily on water-borne shipping also suffer. Consider Puerto Rico: a 2012 study by the New York Fed found that it cost about $3,063 to ship a 20-foot container from an east coast US port to Puerto Rico, but shipping the same container to a foreign destination, such as Jamaica, would cost only about $1,687. Because it is an American territory, the poor island pays almost twice as much to import American products.

For nearly a century, we’ve paid more at the pump, more for goods, more in taxes, and even more to do charitable aid, all because of this ancient special interest law.

All that the Jones Act accomplishes is to guarantee a market for costly, unionized American shipping. It is similar in purpose to the Davis-Bacon Act, which guarantees a market for high-cost unionized construction (as I explain here).

Such special interest laws are never good for the country as a whole, but they are passed and maintained because their lobbyists are crafty, knowledgeable, and highly motivated, while the voting public is mostly ignorant.

It takes a spotlight and presidential leadership to get rid of them. Will any of this year’s crop take up the challenge?

George Leef is the former book review editor of The Freeman. He is director of research at the John W. Pope Center for Higher Education Policy.

This article was published by The Foundation for Economic Education and may be freely distributed, subject to a Creative Commons Attribution 4.0 International License, which requires that credit be given to the author.

Venezuela Is Facing Runaway Financial Catastrophe – Article by Emily Skarbek

Venezuela Is Facing Runaway Financial Catastrophe – Article by Emily Skarbek

The New Renaissance HatEmily Skarbek
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Debt, capital flight, food shortages, and hyperinflation take hold

Often, economists want to isolate questions of public debt and analyse these issues as if public choice considerations weren’t at play. Perhaps less studied are the ways in which debt practices can systematically exert pressure on formal political institutions.

But if you want to understand what is going on in Venezuela today, you can’t do so without looking at this political-economy nexus.

For regular people living in Venezuela, the situation is bleak. As the Economist reports, food queues start at 3 am, with the real possibility there won’t be anything for those at the end of the line. And the queues are growing longer and violent.

Real wages fell by 35% last year, 76% of Venezuelans are now poor, supplies of medicines have fallen to 1/5 of their normal level.

The government has admitted that in the 12 months to September 2015 the economy contracted by 7.1% and inflation was 141.5%. Even Nicolás Maduro, Chávez’s hapless heir and successor, called these numbers “catastrophic”.

The IMF thinks worse is in store: it reckons inflation will surge to 720% this year and that the economy will shrink by 8%, after contracting by 10% in 2015. The Central Bank is printing money to cover much of a fiscal deficit of around 20% of GDP.

In a case study of Venezuela from 1984 to 2013, Reinhart and Santos examine the relationship among domestic debt, financial repression, and external vulnerability. The paper begins with a narrative of the evolution of domestic and external debt in Venezuela over the period.

Despite soaring oil prices from 2006 to 2013, net consolidated external debt of Venezuela rose from US $26.9 to US $104.3 billion. The central government, however, only accounted for roughly a fifth of that increment.

The difference, US $60.9 billion (78%), owed to standard practices of the Bolivarian revolution, and was issued by state owned enterprises and the relatively new Fondo Comun China-Venezuela (FCCV). The FCCV is a special-purpose vehicle that allows Venezuela to withdraw from a rolling line of credit at the Chinese Development Bank in exchange for future shipments of oil.

Domestic debt in local currency also climbed, rising from 36.298 million bolivares (VEF) in 2006 to 420.502 million in 2013. The nominal increase of 1,060% (an average annual rate of 42%) was partially offset by an accumulated price increase of 528% (or an average annual rate of 30%), reducing the cumulative increase in real domestic debt to about 85% (or 9% per annum).

During much of this period, the combination of exchange controls and interest ceilings created a captive domestic audience for domestic government debt despite markedly negative real ex post interest rates. The significant losses imposed on domestic bondholders escalated over time, owing to accelerating inflation.

Unlike foreign currency-denominated debt, debt in domestic currency may be reduced through financial repression (i.e., taxes on bondholders and savers producing negative real interest rates). Reinhart and Santos find the financial repression “tax rate” is significantly higher in years of exchange controls and legislated interest rate ceilings. In Venezuela, the “haircut” on depositors and bondholders via negative ex post real interest has exceeded 30% per annum on several occasions.

Confiscating the wealth of those responsible for capital savings can partially ameliorate the existing stock of domestic debt in the short run, but at the expense of encouraging capital flight and undermining any semblance of trust in crucial economic institutions.

The paper documents that capital flight has been a chronic feature in the Venezuelan economy, “representing on average of 4.7% of GDP at the official exchange rate and 7.1% of GDP at the parallel market exchange rate, while siphoning away 17.2% of total exports.”

By all measures, exchange controls proved ineffective at reducing capital flight. In fact, “when measured as percent of GDP at the average parallel market, rate capital flight turned out to be significantly higher in years of controls (8.0% vs 5.2%).

Hayek would not be surprised. Over his professional career he argued disastrous monetary policy commits the state to taking measures that weaken the proper functioning of the market. In order to combat inflation, states will attempt to impose further controls that “would not only make the price mechanism wholly ineffective, but also make inevitable an ever-increasing central direction of all economic activity.”

In Venezuela, Chávez turned the would-be checks and balances of the state — the Supreme Court and the electoral authority — into extensions of executive power. He packed the court and they then threw out those legislators necessary for the opposition to get the two-thirds majority needed to change the constitution.

President Nicolás Maduro seems prepared to continue the repression and price controls, calling the owner of Venezuela’s largest privately-held company a thief and publicly blaming him for the country’s dire economic condition.

It is perhaps fitting that it was at a Mont Pèlerin Conference in Caracas where Hayek famously quipped:

We now have a tiger by the tail: how long can this inflation continue? If the tiger (of inflation) is freed he will eat us up; yet if he runs faster and faster while we desperately hold on, we are still finished!

I’m glad I won’t be here to see the final outcome…

Emily Skarbek is Lecturer in Political Economy at King’s College London and guest blogs on EconLog. Her website is EmilySkarbek.com. Follow her on Twitter @EmilySkarbek.​

This article was published by The Foundation for Economic Education and may be freely distributed, subject to a Creative Commons Attribution 4.0 International License, which requires that credit be given to the author.

IJ and Small Business Owner Beat IRS on Civil Asset Forfeiture – Article by Adam Bates

IJ and Small Business Owner Beat IRS on Civil Asset Forfeiture – Article by Adam Bates

The New Renaissance HatAdam Bates
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The court struck a blow for property rights

Last year I referred readers to the abuse of civil asset forfeiture laws by the IRS in its attempt to take more than $107,000 from North Carolina small business owner Lyndon McLellan without charging him with any crime.

The IRS cleaned out Mr. McLellan’s business account because it suspected him of “structuring,” an offense whereby a person avoids legally-mandated financial reporting requirements by keeping their deposits and withdrawals under $10,000.

Because there are many perfectly legitimate reasons a business owner may deposit less than $10,000 at a time (for instance, if their insurance policy only covers $10,000 cash on hand), and because civil asset forfeiture allows the government to seize cash and property without proving any wrongdoing, IRS structuring seizures are prone to abuse.

Tacitly recognizing the abuse allowed by the law, former Attorney General Eric Holder announced changes to the use of civil forfeiture in structuring offenses last year. The policy changes should have spared innocent business owners like Lyndon McLellan, but it seems some federal prosecutors never got the memo.

In fact, the Assistant U.S. Attorney in charge of the case responded to criticism by sending veiled threats to Lyndon McLellan and his lawyers at the Institute for Justice, warning them against publicizing the case lest it “ratchet up feelings” in the IRS offices.

The publicity worked. After significant public and political pressure, the IRS relented and returned the amount they had taken from Mr. McLellan’s bank account. As I noted last year, however, the IRS refused to reimburse Mr. McLellan for the costs of fighting the seizure or to pay interest on the money it had wrongfully seized.

But this week a federal judge ruled that the IRS must do more to make Mr. McLellan whole, and awarded him legal costs totalling more than $20,000.

The court held:

Certainly, the damage inflicted upon an innocent person or business is immense when, although it has done nothing wrong, its money and property are seized. Congress, acknowledging the harsh realities of civil forfeiture practice, sought to lessen the blow to innocent citizens who have had their property stripped from them by the Government. …

This court will not discard lightly the right of a citizen to seek the relief Congress has afforded.

Fortunately, thanks to the efforts of Mr. McLellan and the Institute for Justice, the good guys won this time. Ultimately, however, the only way to ensure that civil forfeiture abuses stop happening is to abolish civil forfeiture. If the government cannot prove beyond a reasonable doubt that a person engaged in criminal activity, it should not be able to punish them as if they’re guilty.

As long as Congress and state legislatures allow this practice to continue, more innocent Americans will end up fighting for their livelihoods like Lyndon McLellan had to.

Cross-posted from Cato.org.

Adam Bates is a policy analyst with Cato’s Project on Criminal Justice. His research interests include Constitutional law, the War on Drugs, the War on Terror, police militarization, and overcriminalization.

This article was published by The Foundation for Economic Education and may be freely distributed, subject to a Creative Commons Attribution 4.0 International License, which requires that credit be given to the author.