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Ending the War on Kidneys – Article by Sanford Ikeda

Ending the War on Kidneys – Article by Sanford Ikeda

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Sanford Ikeda
October 13, 2012
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The war on drugs can be dated to 1914, although the phrase “war on drugs” was coined in 1972 during the presidency of Richard Nixon.  The war on kidneys began in 1984.

It’s an oft told tale how drug prohibition has led to the promotion of organized crime, skyrocketing violence here and abroad, and a simultaneous increase in potency and decrease in safety.  (See here and here for examples.)  The solution to these perhaps unintended but predictable negative consequences is legalization.  So it is, too, with the sale of organs–kidneys in particular.

Meanwhile in Iran…

Since 1984, under the leadership of Senator Al Gore, the United States government has made it illegal to buy or sell kidneys and in so doing has effectively launched a “war on kidneys.”  Again, the consequences, unintended but predictable, are mostly if not wholly bad.

According to the Human Resources and Services Administration there are currently over 93,000 persons in the United States on the waiting list for a donated kidney.  Another source estimates that the list grows by 3,000 to 4,000 candidates a year.  Between 1988 and 2008 yet another source reports that the number of kidney transplants performed in the United States has ranged from 8,873 (in 1988) to a high of 17,091 (in 2006) for an average of about 13,847 per year.  While that may indicate a dwindling list of candidates, the reality is that the number who die each year still runs into the thousands.

The United States Department of Health and Human Services, for instance, claims that 18 people die each day waiting for a kidney donor.  That’s 6,570 deaths a year, and though their figure for the waiting list is considerably higher than the HRSA’s, they are in the same ballpark.

Kidney sales are legal in Iran, which offers a mix of private and government financing for kidney transplants.  Not surprisingly, waiting lists there are practically nonexistent (because of a larger supply), and so is the number of people dying while waiting for one.

Moreover, the incidence of black markets and of “medical tourism”—in which relatively wealthy foreigners travel to relatively poor countries to buy local kidneys or have other procedures performed at lower cost than in the United States—would probably fall, much as legalization of alcohol after Prohibition saw the downfall of speakeasies and bathtub booze.

What’s the Downside?

And although some estimate that the cost of a kidney may be as high as $100,000—which would make the total cost of the transplant procedure around $350,000—keep in mind that in addition to the value of the lives saved, the savings from unnecessary kidney dialysis is about $70,000 per person per year.  (See also this article from The Economist.)

Some argue that only the rich would get organs and only the poor would die giving them up.  Existing black markets and medical tourism already reinforce any such tendency by keeping prices high.  Would a free market in organs mean that the relatively poor would supply the relatively rich?  Perhaps.  More generally, would abuses occur?  Yes, they would, just as they do in other aspects of organ transplantation—such as in shabby hospitals or lousy medical care. Nobody suggests banning hospitals or doctors because some hospitals and some doctors occasionally screw up.  The cure lies largely in greater competition, the prerequisite of which is making organ sales legal.

Some are put off by the very idea of a market in kidneys, and many who aren’t might have some reservations about extending the list to other parts of our bodies.  Some of this can be attributed to a socio-ethical resistance to “commoditizing the human body.”  Perhaps this is a valid concern.  Interestingly, there is a legal market for cadavers, so it seems to be OK to pay for bodies but not for organs.

What about other organs or body parts?  The thing about kidneys—or eyes, ears, hands, and feet—is that removing them from our bodies does not entail death or, in the case of kidneys, any significant decline in the quality of life to the donor.  But what about selling something vital such as a heart, which would spell certain death?  That’s a difficult question that we may not have to settle just yet.  Let’s start with kidneys.

The Moral Alternative

I confess to being uncomfortable with the thought of selling off body parts. In the same way, I would never recommend to anyone, including myself, taking cocaine for fun.  But I would stop short of banning cocaine, and my qualms about selling body parts doesn’t keep me from staunchly supporting legalization, especially when a strong case can be made (as in this video by Professor James Stacey Taylor) that banning it would itself be immoral.  Selling body parts for money should be no more illegal than letting people make a living fishing for crabs on the high seas or give up their lives for a cause they believe in.  I may disapprove of a practice that harms the practitioner, but that by itself doesn’t give me the right to stop it, especially if it harms no one else.

Finally, today it’s considered perfectly legal and moral to allow husband A to give up his kidney to his wife B without compensation.  Or, if A’s kidney is not a match for B, it’s okay for A to donate to C, whose husband D could then donate to B.  That is like trading a goat to Jack to get a pile of bricks to trade to Jill for a sack of grain, which is what you wanted for your goat in the first place.  While the Internet and creative websites have made organ bartering of this kind easier than in the past, humans long ago developed another institution that gets the job done much more easily:  buying and selling for money.

Crimalizing activities—whether  drugs, prostitution, or organ sales—typically generates consequences that are usually unintended but, with the aid of some basic economic knowledge, mostly predictable.  After decades and over a trillion dollars spent and countless lives ruined, a summit of Latin-American politicians earlier this year declared that “the war on drugs has failed,” a sentiment echoed around the world.

It’s time that our government ended the war on kidneys, too.

Sanford Ikeda is an associate professor of economics at Purchase College, SUNY, and the author of The Dynamics of the Mixed Economy: Toward a Theory of Interventionism.

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

Illiberal Belief #5: Charity Must Be Enforced – Article by Bradley Doucet

Illiberal Belief #5: Charity Must Be Enforced – Article by Bradley Doucet

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Bradley Doucet
October 13, 2012
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Some people feel that charity must be enforced and administered through government welfare programs because private charity would not suffice to meet the needs of the destitute and desperate. If people are not forced to give up half of their salaries to ensure a caring society, then they won’t do it and we will be left with a dog-eat-dog world in which the needy are left to suffer and die in the streets.It is undoubtedly true that very few people would give up anywhere in the neighbourhood of half of their earnings if they were not forced to do so. What is not true is that society as we know it would crumble as a result. Instead, it would flourish. Allowing people to keep more (dare we dream: all?) of their earnings would be a great incentive for people to work harder, because the extra effort would be fully rewarded. On the flipside, knowing that they will not be automatically taken care of is a great incentive for the unemployed who are able but unwilling to work to get off their butts already. As for those recipients of welfare programs who are truly unable to care for themselves, they would be able to rely on the voluntary charity of a society that will be even wealthier than the one we have right now and whose productive members will not feel that they “already gave at the office” to the tune of half of their earnings. There is simply no grounds for believing that the bulk of humanity is so uncaring as to let the truly needy suffer and die when helping them is readily within their reach.

Bradley Doucet is Le Quebecois Libré‘s English Editor. A writer living in Montreal, he has studied philosophy and economics, and is currently completing a novel on the pursuit of happiness. He also writes for The New Individualist, an Objectivist magazine published by The Atlas Society, and sings.
The Golden Age of Freedom Is Still Ahead – Article by Anthony Gregory

The Golden Age of Freedom Is Still Ahead – Article by Anthony Gregory

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Anthony Gregory
October 6, 2012
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Free enterprise is often associated with the past. This perception puts the market’s champions, seen as hopeless reactionaries, on the defensive.

A typical narrative follows: America had an insufficiently active government under the Articles of Confederation. The Constitution expanded the central government to meet society’s needs. In this climate, where property rights continued to trump the common good, the central government could not maintain national cohesion and ensure racial equality. During the Civil War, the federal government grew to preserve the Union, enable commerce through expansion of infrastructure, and abolish the ancient evil of slavery. During the late nineteenth century, laissez faire reigned supreme. Unchecked, robber barons exploited their customers and workers.

American society, so continues the narrative, overcame its laissez-faire history and embraced active government in the Progressive Era. Commerce, banking, monopolies, food and drugs, and labor conditions finally became regulated. The market was still too free, however, causing the stock market crash and the Great Depression, which the New Deal’s reforms finally addressed. Anachronistic free marketers resisted this progress.

A generation later the free market proved inadequate on race relations, education, poverty, social insurance, workers’ conditions, and the environment. New regulations, taxes, and programs arose in the 1960s and 1970s to address these deficiencies. Ronald Reagan’s election marked a conservative counterrevolution toward the free market, causing the savings-and-loan crisis, rising income disparities, and, ultimately, the 2008 financial collapse. After four consecutive reactionary presidents—Bill Clinton being a practitioner of neoliberal austerity—deregulation and market fundamentalism have again revealed themselves as outdated approaches to America’s modern problems.

This repeated recognition that the free market no longer suits society’s needs is a common theme of modern liberalism. Through experience the inadequacy of the unhampered market has forced enlightened observers to accept the need for more government.

One obvious problem with this narrative is the steadily changing definition of “free market.” The free market is said to have caused problems addressed in the Progressive Era, yet once again the market economy was blamed for the Depression.The New Deal is said finally to have abolished laissez faire, yet laissez faire has been the culprit in every crisis since. Thoughtful proponents of this narrative explain that the 1980s, for example, were somehow substantially more laissez-faire than the 1970s, yet they rarely present more than a handful of superficial examples of deregulation amid an overall trend of regulatory expansion.

A major problem market proponents have in confronting this narrative, whatever its shortcomings, arises because they themselves sometimes accept it implicitly, often complaining about the liberties lost over the years. The significant kernel of truth is that the national government has unmistakably grown well beyond anything imagined in 1789 or even the nineteenth century. And surely, for every argument statists have defending this growth, compelling historical and economic counterarguments are available.

Yet we must be careful before conceding this premise that the past was laissez-faire. By celebrating the political economy of yesteryear, we risk associating our ideals with the past’s many injustices. We can and should avoid this baggage entirely.

Slavery: The Opposite of Free Enterprise

No libertarian defends the horrid institution of slavery. The problem comes in how free marketers sometimes describe slavery as a mere exception to the rule of early American freedom. In fact this exception virtually swallowed the principle whole.

Progressives love contrasting the pro-liberty, anti-tax rhetoric of the founding generation with the slavery that they tolerated or championed. Robin Einhorn’s American Taxation, American Slavery is a sophisticated contribution to the argument that those loudly protesting taxes were often the very people who clung to human bondage. This argument indicts the rhetoric of property rights, which is foundational to free enterprise and, in a warped form, the “right” of one person to own another. Infamously, the Supreme Court found in Dred Scott v. Sanford (1857) that the Fifth Amendment protected a white man’s right not to be deprived of his slave without due process. Given this association between America’s slave-owning generations and the rhetoric of liberty, it is crucial that free marketers explain, emphatically and intelligently, how slavery was the very negation of the free-market system.

The subjugation of slaves would undermine early America’s status as a free country even if slaves were a tiny minority. They were not. Slaves amounted to 18 percent of the population at the time of the Constitution’s ratification and 12.6 percent on the eve of the Civil War, at which point there were nearly four million.

Libertarians should study the brutality of this system. Historians estimate that hundreds of thousands of slaves were forced to migrate in antebellum America’s internal slave trade. Children were frequently ripped from their families. Beatings and rape were ubiquitous, and torture as punishment was hardly unusual.

Even slaves with relatively humane masters lacked the freedoms that most of today’s Americans, living under the modern leviathan, take for granted.

Peter Kolchin, in his seminal American Slavery: 1619–1877, sums up the reality:

Slaves could hardly turn around without being told what to do.They lived by rules, sometimes carefully constructed and formally spelled out and sometimes haphazardly conceived and erratically imposed. Rules told them when to rise in the morning, when to go to the fields, when to break for meals, how long and how much to work, and when to go to bed; rules also dictated a broad range of activities that were forbidden without special permission, from leaving home to getting married; and rules allowed or did not allow a host of privileges, including the right to raise vegetables on garden plots, trade for small luxuries, hunt, and visit neighbors. Of course, all societies impose rules on their inhabitants in the form of laws, but the rules that bound slaves were unusually detailed, covered matters normally untouched by law, and were arbitrarily imposed and enforced, not by an abstract entity that (at least in theory) represented their interests, but by their owners. Slaves lived with their government.

I thank God I don’t live with my government! For many years the pro-market tradition saw slavery as a grave violation of its principles. Kolchin writes:

Early political economists—including Adam Smith, whose book The Wealth of Nations (1776) remained for decades the most influential justification for the principles underlying capitalism—believed that slavery, by preventing the free buying and selling of labor power and by eliminating the possibility of self-improvement that was the main incentive to productive labor, violated central economic laws.

Although critics blame market exchange for the rise of slavery, this criticism is grossly unfair. The slave trade was indeed a market of sorts—unfree, unjust, and regulated—but the most fundamental relationship in slavery was not a market at all. Kolchin explains:

Slave owners engaged in extensive commercial relations, selling cotton (and other agricultural products), buying items both for personal consumption and for use in their farming operations, borrowing money, and speculating in land and slaves, but the market was conspicuously absent in regulating relations between the masters and their slaves. In other words, relations of exchange were market-dominated, but relations of production were not.

The slave power dominated political life in the South and enjoyed federal support through the Fugitive Slave Clause. Slavery was a major government program, its enforcement costs socialized through law. “The chief way that the South’s slaveholding elite externalized the costs of the peculiar institution was slave patrols,” writes Jeffrey Rogers Hummel in Emancipating Slaves, Enslaving Free Men. These slave patrols were “established in every slave state” to enforce black codes, inflict punishment, and suppress insurrections and were “compulsory for most able bodied white males.” Slave patrols, necessary to slavery’s maintenance, were a flagrant violation of the free economy.

The destruction of the Indians, the restrictions on women owning property, and many other antebellum policies also illustrate that the United States hardly had a free market before the Civil War. Slavery best makes the point. The conflation of a slave society with free enterprise is an obscenity.

Protectionism, Nationalism, and Corporatism

Outside of slavery nineteenth-century America often fell far short of the free-market ideal. Protectionism was a perennial problem, from the nationalist Tariff of 1816 to the sectionally biased Tariff of 1824 and the infamous Tariff of Abominations in 1828, from President Andrew Jackson’s threat to invade South Carolina to enforce the Tariff of 1832 to the Morrill Tariff of 1861. In 1870 the average tariff rate hit 44.6 percent. High tariffs financed the corporatist arrangement of federal subsidies for waterways, canals, and railroads during the Civil War, a war that defied market principles dramatically through its taxation, conscription, militarization of society, massive inflation, and inauguration of new government bureaus.

After slavery’s abolition and before the twentieth century, American economic liberty in some senses achieved a peak, but not without many qualifications. Immediately after the Civil War, state-level black codes kept nominally free blacks in a form of extended slavery, indenturing them to employers and criminalizing “vagrancy.” The U.S.  government began enforcing Reconstruction in the conquered South through military rule. Reconstruction counteracted State-imposed rights violations but also fostered a rise in government education and infrastructure projects financed through federal subsidies and considerable hikes on state-level property taxes. Government schooling became much more prevalent in the South, and by the end of the century 75 percent of the states had compulsory attendance laws.

The banking system—fundamental to any modern economy—was regulated by the federal government for most of the nineteenth century. There was a National Bank from 1791 to 1811 and again from 1816 to 1832.The Civil War birthed a new federal banking system that quickly grew, eventually culminating in the creation of the Federal Reserve in 1913.

In the late nineteenth century Benjamin Tucker identified four federally created monopoly powers that robbed Americans of their liberty—the land monopoly, money monopoly, patent monopoly, and tariff monopoly. These mostly involved federal privileges, but the heavy hand of government was also felt locally. Nineteenth-century state governments, at times working with federal authorities, displaced and killed American Indians; regulated various professions, labor relations, consumption goods, and businesses; and implemented social programs.

All in all, the U.S. regulatory state, explains Roderick Long, was not a twentieth-century innovation, but rather was “deeply involved from the start, particularly in the banking and currency industries and in the assignment of property titles to land. (Even such land as was not stolen from the natives was seldom appropriated in accordance with any sort of Lockean homesteading principle; instead, vast tracts of unimproved land were simply declared property by barbed wire or legislative fiat.)”

In substantial ways the economy of the late nineteenth century was freer than today, although some groups were heavily controlled, not least of all the southern blacks persecuted by Jim Crow laws, to say nothing of whites restricted by segregation from freely associating with these blacks.

Even nationally the twilight of the nineteenth century was a mixed bag. Veto-happy Grover Cleveland was probably the most laissez-faire president in half a century and ever since. Yet Cleveland’s terms had nontrivial blemishes: He used U.S. Marshals to quell the Pullman strike and enforce the Sherman Antitrust Act, supported the Dawes Act’s aggrandizement of presidential authority over Indian affairs, strengthened the Chinese Exclusion Act, begrudgingly acquiesced to an income tax to offset reduced tariff revenue, created the Interstate Commerce Commission, and despite a largely anti-imperialist record, threatened and used military force to assert dominance in Latin America against European influence and in favor of U.S. banking interests.

Shifting Definition

The market’s defenders often mimic its opponents in moving the benchmarks to describe historical periods as “laissez-faire.” This dangerous game does not stop with the nineteenth century.

American life before the New Deal was certainly freer in important respects, but we must be cautious in defending the 1920s. Putting aside the bloated bureaucracies lingering from World War I, the Fordney McCumber Tariff of 1922, the Immigration Control Act of 1924, and the calamity of alcohol prohibition, it was 1920s credit expansion that Austrian economists credibly blame for the boom and 1929 crash. We lose credibility in carelessly praising the pre–New Deal Era while blaming the Depression on policies enacted in that time.

Less ambitious free marketers idealize the 1950s—the decade of top marginal tax rates exceeding 90 percent (and, for the poorest Americans, 20 percent); the FCC’s puritanical regulation of the airwaves and maintenance of the telephone monopoly; the booming military-industrial complex; and the growing regimentation of industry, farming, and higher education. The transformative Great Society was in many ways an expansion on Eisenhower-era precedents more than a qualitative break from the past.

Even more desperate acts of nostalgia glorify the Reagan years. Although some government impositions were curtailed on the margins, Ronald Reagan oversaw growth of the New Deal–Great Society regime, as deficit spending exploded, Social Security and protectionism expanded, and foreign aid and bureaucracies ballooned.

None of this sober reflection backward should prompt us to see our history as an inexorable march toward liberty. There have been major advances in modern times—abolition of the draft, strengthened free-speech rights, and greater legal tolerance for minorities—but even in areas like racial oppression and personal freedom, many matters have worsened. Over two million Americans are behind bars. The drug war has devastated African-American communities. Last year the national government deported more immigrants than ever before. The war on terror has shredded basic rights. Washington’s run-of-the-mill economic interventions—in the name of health, equality, environmentalism, and fighting poverty—have escalated.The national debt and entitlement state have seen an unprecedented boom.

Neither today’s dismal state of affairs nor past oppression should make us nihilistic. History can teach us a lot about liberty. Certain areas of American life were freer in the nineteenth century than today and others were not, and the social blessings arising from relative conditions of liberty are worth identifying and understanding. Economics shows that free markets serve the masses by elevating workers’ productivity and smashing the old order of privilege and oppression. Both experience and economic science demonstrate the superiority of liberty to statism.

The golden era of freedom and free markets is not now and it’s not behind us. It is still ahead of us. This is reason to rejoice. We can happily envision a much better future.

Anthony Gregory is a Research Fellow at the Independent Institute.

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

The Importance of Subjectivism in Economics – Article by Sheldon Richman

The Importance of Subjectivism in Economics – Article by Sheldon Richman

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Sheldon Richman
October 3, 2012
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After many years, Frédéric Bastiat remains a hero to libertarians. No mystery there. He made the case for freedom and punctured the arguments for socialism with clarity and imagination. He spoke to lay readers with great effect.

Bastiat loved the market economy, and badly wanted it to blossom in full—in France and everywhere else. When he described the blessings of freedom, his benevolence shined forth. Free markets can raise living standards and enable everyone to have better lives; therefore stifling freedom is unjust and tragic. The reverse of Bastiat’s benevolence is his indignation at the deprivation that results from interference with the market process.

He begins his book Economic Harmonies (available at the FEE store) by pointing out the economic benefits of living in society:

It is impossible not to be struck by the disproportion, truly incommensurable, that exists between the satisfactions [a] man derives from society and the satisfactions that he could provide for himself if he were reduced to his own resources. I make bold to say that in one day he consumes more things than he could produce himself in ten centuries. What makes the phenomenon stranger still is that the same thing holds true for all other men. Every one of the members of society has consumed a million times more than he could have produced; yet no one has robbed anyone else.

The Existence of Privilege

Bastiat was not naïve. He knew he was not in a fully free market. He was well aware of the existence of privilege: “Privilege implies someone to profit from it and someone to pay for it,” he wrote. Those who pay are worse off than they would be in the free market. “I trust that the reader will not conclude from the preceding remarks that we are insensible to the social suffering of our fellow men. Although the suffering is less in the present imperfect state of our society than in the state of isolation, it does not follow that we do not seek wholeheartedly for further progress to make it less and less.”

He wished to emphasize the importance of free exchange for human flourishing. In chapter four he wrote,

Exchange is political economy. It is society itself, for it is impossible to conceive of society without exchange, or exchange without society. …For man, isolation means death….

By means of exchange, men attain the same satisfaction with less effort, because the mutual services they render one another yield them a larger proportion of gratuitous utility.

Therefore, the fewer obstacles an exchange encounters, the less effort it requires, the more readily men exchange.

How does trade deliver its benefits?

Exchange produces two phenomena: the joining of men’s forces and the diversification of their occupations, or the division of labor.

It is very clear that in many cases the combined force of several men is superior to the sum of their individual separate forces.…

Now, the joining of men’s forces implies exchange. To gain their co-operation, they must have good reason to anticipate sharing in the satisfaction to be obtained. Each one by his efforts benefits the others and in turn benefits by their efforts according to the terms of the bargain, which is exchange.

But isn’t something missing from this account?

Austrian Insight

Indeed, there is: the subjectivist Austrian insight that individuals gain from trade per se. For an exchange to take place, the two parties must assess the items traded differently, with each party preferring what he is to receive to what he is to give up. If that condition did not hold, no exchange would occur. There must be what Murray Rothbard called a double inequality of value. It’s in the logic of human action–which Ludwig von Mises christened praxeology. Bastiat, like his classical forebears Smith and Ricardo, erroneously believed (at least explicitly) that people trade equal values and that something is wrong when unequal values are exchanged.

Perhaps I am too hard on Bastiat. After all, he was writing before 1850. Carl Menger did not publish Principles of Economics until 1871. Yet the Austrians were not the first to look at exchange strictly through subjectivist spectacles, that is, from the economic actors’ points of view. The French philosopher Étienne Bonnot de Condillac (1715-1780) did so a hundred years before Bastiat wrote:

The very fact that an exchange takes place is proof that there must necessarily be profit in it for both the contracting parties; otherwise it would not be made. Hence, every exchange represents two gains for humanity.

Bastiat Unaware?

Well, perhaps Bastiat was unaware of Condillac’s argument. That is not the case. He reprints the quote above in his book and responds:

The explanation we owe to Condillac seems to me entirely insufficient and empirical, or rather it fails to explain anything at all. . . .

The exchange represents two gains, you say. The question is: Why and how? It results from the very fact that it takes place. But why does it take place? What motives have induced the two men to make it take place? Does the exchange have in it a mysterious virtue, inherently beneficial and incapable of explanation?

We see how exchange . . . adds to our satisfactions. . . . [T]here is no trace of . . . the double and empirical profit alleged by Condillac.

This is perplexing. Clearly, the necessary double inequality of value is not empirical or contingent. Contra Bastiat, the double inequality explains quite a lot, and his questions all have easy answers.

Yet more perplexing still is Bastiat’s statement in the same chapter: “The profit of the one is the profit of the other.” This seems to imply what he just denied.

Consequential Failure

Bastiat’s failure to grasp this point had consequences for his debates with other economists. For example, he and his fellow “left-free-market” advocate Pierre-Joseph Proudhon engaged in a lengthy debate over whether interest on loans would exist in the free market or whether it was a privilege bestowed when government suppresses competition. Unfortunately, the debate suffers because neither Bastiat nor Proudhon fully and explicitly grasped the Condillac/Austrian point about the double inequality of value. As Roderick Long explains in his priceless commentary on the exchange,

[E]ach one trips up his defense of his own position through an inconsistent grasp of the Austrian principle of the “double inequality of value”; Proudhon embraces it, but fails to apply it consistently, while Bastiat implicitly relies on it, but explicitly rejects it. . . .

Proudhon’s case against interest seems to depend crucially on his claim that all exchange must be of equivalent values; so pointing out the incoherence of this notion would be a telling reply. But Bastiat cannot officially give this reply (though he comes tantalisingly close over and over throughout the debate) because elsewhere–in his Economic Harmonies–Bastiat explicitly rejects the doctrine of double inequality of value.

How frustrating! Bastiat has so much to teach. But here is one blind spot that kept him from being even better.

Sheldon Richman is the editor of The Freeman and TheFreemanOnline.org, and a contributor to The Concise Encyclopedia of Economics. He is the author of Separating School and State: How to Liberate America’s Families.

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

Are We Destroying the Earth? – Article by Sanford Ikeda

Are We Destroying the Earth? – Article by Sanford Ikeda

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Sanford Ikeda
October 3, 2012
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People often complain that mankind is destroying the earth: that insatiable consumption and relentless production have laid waste to irreplaceable swaths of our planet, and that these activities have to stop or someday it will all be gone.

Which raises the question: What does it means to “destroy” something?

When you burn a log, the log is destroyed but heat, light, smoke, and ashes remain.  It’s in that sense that physics tells us that matter is neither created nor destroyed.  Similarly, cutting down a forest destroys the forest but in its place are houses and furniture and suburbs.

The real question is: Is it worth it?

Value Can Be Both Created and Destroyed

What people usually mean when they say mankind is destroying the earth is that human action causes a change they don’t like.  It sounds odd to say that my wife, by eating a piece of toast for breakfast, is “destroying” the toast.  But if I wanted that toast for myself, I might well regard her action as destructive.  Same action, but the interpretation depends on purpose and context.

When a missile obliterates a building and kills the people in it, it may serve a political purpose even though the friends and family of those killed and the owners of the building are harmed.  The perpetrator’s gain is the victim’s loss.  In the political realm, one person’s gain is necessarily another person’s loss.  You rob Peter to pay Paul; you kill Jack to appease Jill.  It’s a “zero-sum game.”

In the economic realm, however, a thing is destroyed to the extent that it loses its usefulness to somebody for doing something.  Someone may want to bulldoze my lovely home just for fun.  If she pays me enough I may let her do it and be glad she did.  When not physically coerced, a trade won’t happen unless each side expects to gain.  If it does happen, and if the people who traded are right, then all do in fact gain.  Each is better off than before. The trade has created something–value.  If they are wrong they destroy value and suffer a loss, which gives them an incentive to avoid making mistakes.

Profits and Losses Help to Minimize the Destruction of Value

In free markets gains manifest themselves in profit, either monetary or psychic.  (In the short run, of course, you can sustain a monetary loss if you think there’s a worthwhile nonmonetary aspect to the trade that will preserve the profit.)  Now, the free market is not perfect, despite what some economics professors say about the benefits of so-called “perfect competition.”  People don’t have complete or perfect knowledge and so they make mistakes.  They trade when they shouldn’t, or they don’t trade when they should.  Fortunately, profits and losses serve as feedback to guide their decisions.

There’s another source of market imperfection.  People may be capable of making good decisions but they don’t trade, or trade too much, because the property rights to the things they would like to trade aren’t well-defined or aren’t effectively enforced.  In such cases their actions or inactions create costs they don’t bear or benefits they don’t receive.  The result is that their decisions end up destroying value.

If I free-ride off the oceans, if for example I don’t pay for dumping garbage into it, then the oceans will become more polluted than they should be.  If there is a cleaner, more efficient source of energy than fossil fuels, but no one can profitably use it because the national government prevents anyone from doing so (for example by prohibitions or excessive taxation), then again the value that would have been created will never appear.

Aesthetics or Economics?

Our esthetic sense of beauty is part of what makes us human.  If we wish to protect a lake or a valley from development because we think it beautiful, how do we do that?

To some extent it’s possible to do what the Nature Conservancy does, and purchase the land that we want to protect.  But that’s not always possible, especially when the land is controlled not by private persons but by the national government, which makes special deals with crony capitalists in so-called public-private developments.  In any case, even the free market is not perfect.  Economic development and material well-being mean that some beautiful landscapes and irreplaceable resources will be changed in ways not everyone will approve.

Remember, though, that economics teaches us that an action is always taken by someone for something.  There are no disembodied costs, benefits, and values.  In a world of scarcity, John believes saving rain forests is more important than saving the whales.  Mary believes the opposite.  If we are to get past disagreements on esthetics–essentially differences of opinion–that can turn into violent conflict, we need to find some way to settle our differences peacefully, some way to transform them into value-creating interactions.

Imperfect though it may be, the free market has so far been the most effective method we know of for doing that.

Sanford Ikeda is an associate professor of economics at Purchase College, SUNY, and the author of The Dynamics of the Mixed Economy: Toward a Theory of Interventionism.

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

Is it Evil to Vote for a Lesser Evil? Steele’s Response to Stolyarov – Part 1 – Article by Charles N. Steele

Is it Evil to Vote for a Lesser Evil? Steele’s Response to Stolyarov – Part 1 – Article by Charles N. Steele

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The New Renaissance Hat
Charles N. Steele
October 2, 2012
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Mr. Stolyarov gives a thoughtful reply to my contention that given a choice between Barack Obama and Mitt Romney, Romney is the lesser of two evils.  I respond, but find I must do so in two parts.  Mr. Stolyarov makes two kinds of arguments in his reply to me; one is a philosophical one on the ethical nature of voting and the second an empirical one about Romney and Ryan.  In this note I address Mr. Stolyarov’s philosophical argument.   I ask many questions here – please note carefully that most of them are not rhetorical.

Mr. Stolyarov’s philosophical argument concerns the moral responsibility one bears in voting: “[E]ven a true incrementally lesser evil is still evil and does not warrant one’s support. One key consideration in casting one’s vote is one’s share of moral responsibility in what would transpire if one’s candidate of choice (even half-hearted choice) gets elected.”

At first glance this seems a reasonable argument – after all, wouldn’t we think that, for example, German citizens who supported Hitler’s regime bore a good share of responsibility for its crimes?  And in general, if people vote for candidate A over candidate B, it’s reasonable to think they bear some responsibility for empowering A’s platform over B’s.  But the more I contemplate it, the less I understand the nature of  this “moral responsibility” voting, for three reasons.

1. When we vote, we vote under conditions of uncertainty about what the candidates will do should they win.  Two reasonable people might differ in their expectations over what opposing candidates might do if elected, even if the candidates are truthful.  And candidates are often less-than-truthful about what they will do if elected; sorting out what is and isn’t true is not necessarily straightforward.  Consider a presidential election between A and B.  If candidate A wins the election and what subsequently transpires is counter to what the voter in good faith expected, what is the voter’s moral responsibility?  Further, we also don’t know and will never know what B would have done.  Does that matter?  Might not a vote for what proved to be A’s bad policies have prevented B’s worse ones?

In many cases these issues are small, but not always.  And certainly in times of major institutional transitions, or economic crises, or other important changes, they are likely to loom large.

2. If one votes for a candidate who wins, does one then share responsibility for everything the candidate does?  When we vote for candidate A, we get the “entire package.”  We can’t limit ourselves to voting for her/his positions on some issues but not others.  Suppose one agrees with candidate A on fiscal policy, but disagrees on foreign policy, and conversely supports B on foreign policy and opposes his fiscal policy.  In order to decide between candidates, our voter must judge which issue is more likely to be of central importance in the next term, as well as which one is more important for the voter’s overall vision of what should be done.  For that matter, the voter might think that B’s fiscal policy is a more serious flaw than A’s foreign policy, but also believes institutional barriers (e.g. Congress) will largely block B’s fiscal policy while nothing would block A from pursuing the bad foreign policy, and hence reasonably vote B.

3. How much difference does one’s vote make, anyway?  The quote from Mr. Stolyarov suggests that if candidate A wins, a person who voted for him shares some responsibility for what transpires.  But suppose A wins with a very large margin of the vote.  In that case, there’s nothing the voter could have done to stop what transpires.  What is her/his responsibility then?  Conversely, suppose instead A loses, so nothing transpires from the vote and presumably no moral responsibility attaches to the voter.  How does anything differ in these two cases, with respect to the voter’s culpability?  I can’t see that the voter has behaved differently in the two cases; shouldn’t moral responsibility be the same?  Perhaps not, but the why not?  And how would the responsibility differ in either case had the voter instead stayed home and not cast a ballot?

Similarly, in every presidential election in which I’ve voted, I voted in Montana.  In none of these was the vote close enough for mine to have mattered, but that’s irrelevant.  Montana’s three electoral votes simply do not matter for the national outcome, so no matter what happened, my vote had no connection at all to what subsequently transpired.  Does this mean that I’m exempt of all moral responsibility when I vote in a presidential election?  Why or why not?

These three points involve “disconnects” betweens one’s vote, the outcome of an election, and what subsequently transpires.  It strikes me that these disconnects weaken the moral responsibility a voter holds.

Mr. Stolyarov does address some of my concerns (particularly those of point 2) when he observes “It may therefore be justified to vote for an imperfect candidate who could do some incremental good, but not for a candidate who would commit incremental evil – in the sense of reducing liberty compared to the situation that existed prior to his election.”

It’s clear, then, that Mr. Stolyarov is not committing the Nirvana fallacy.  But I still find his point quite problematic.  It is not always obvious what constitutes “incremental good/evil” on net, or how we identify an overall reduction in liberty.  Let’s simplify this case by assuming there’s only one voter and no uncertainty about what candidates will do if elected, so that there are no disconnects between the vote cast and the political consequences.  Again, the voter faces a choice among presidential candidates, but now her/his vote determines the election and s/he knows exactly what political consequences will transpire.

If A’s positions on issues X and Y reduce liberty, and his position on issue Z increases it, how is the voter to weight A’s net effect on liberty?  (Assume for sake of argument there are no other issues.)  Is A automatically disqualified because of his position on X and Y?  Or could his position on Z conceivably be sufficiently beneficial for liberty to outweigh the harm done on the first two?  I would think so, and I suspect Mr. Stolyarov agrees.  (Again, I should note that in some cases any reasonable person should be able to weigh these relative harms and benefits and get the same answer.  But in some real world cases reasonable persons might strongly differ.)

But also, doesn’t it matter against whom A is running?  If candidate B is worse, much worse, on all three issues, should not the voter choose A over B, regardless of whether the net outcome from A is positive?  (I would think so.) Alternatively suppose instead candidate B drops out of the race to be replaced by C, and C is superior on all three issues.  Shouldn’t that lead our voter to reverse himself and support C?

This seems quite sensible to me, but Mr. Stolyarov seemed to rule it out:  “There is no doubt in my mind that Mitt Romney would commit numerous incremental evils – and there is no justification for supporting him in any way, even if his transgressions could be predicted with certainty to be less severe than Obama’s.”  It should by now be clear why I find this position problematic.

On this point, Mr. Stolyarov agrees with my earlier assertion “real progress in expanding liberty will come from economic, technological and social processes, NOT from electoral processes. If elections and political processes do anything in this regard, it will be simply to respond to and formalize advances made by civil society.”  But he then concludes: “But if this is the case, then there is no point supporting anything other than the very best available option in any election.”

I can’t see how that follows.  In our one voter example, suppose candidate A will take the nation slowly towards a totalitarian state, and B will take it very rapidly.  Would it not be preferable to choose A over B, to buy time for countervailing processes to act?

All of these examples suggest – at least to me – that a voter might reasonably and morally vote for a candidate who will minimize damage to liberty, even if the voter has only reasonable expectation of this.

Mr. Stolyarov does have another point worth noting in this matter.  He suggests we vote for the best candidate, even a third party candidate who has no chance of winning: “[A] single person can send a message by refusing to play along with the two-party system. If enough of us begin to think this way, then the libertarian voters will become a force to reckon with, a credible threat to the two main parties that unsatisfactory candidates will be disfavored no matter what. As an added bonus, if enough people in general begin to vote based purely on their conscience, then the whole ‘lesser of two evils’ trap would disappear, the two major parties would need to rapidly evolve or would disintegrate, and government could become truly representative.”

Maybe so.  I certainly hope so.  But note that this is a strategic argument and quite different from the argument about a voter’s moral responsibility.  I find the moral argument to be unhelpful in this discussion.

In part 2 of my response I will try to make the case that Mitt Romney is indeed the lesser of two evils when compared to Barack Obama.

Dr. Charles N. Steele is the Herman and Suzanne Dettwiler Chair in Economics and Associate Professor at Hillsdale College in Hillsdale, Michigan. His research interests include economics of transition and institutional change, economics of uncertainty, and health economics.  He received his Ph.D. from New York University in 1997, and has subsequently taught economics at the graduate and undergraduate levels in China, the Russian Federation, Ukraine, and the United States.  He has also worked as a private consultant in insurance design and review.

Dr. Steele also maintains a blog, Unforeseen Contingencies.

Gold is Good Money – Article by Ron Paul

Gold is Good Money – Article by Ron Paul

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The New Renaissance Hat
Ron Paul
October 1, 2012
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Last year the Chairman of the Federal Reserve told me that gold is not money, a position which central banks, national governments, and mainstream economists have claimed is the consensus for decades.  But lately there have been some high-profile defections from that consensus.  As Forbes recently reported, the president of the Bundesbank (Germany’s central bank) and two highly respected analysts at Deutsche Bank have praised gold as good money.

Why is gold good money?  Because it possesses all the monetary properties that the market demands: it is divisible, portable, recognizable and, most importantly, scarce – making it a stable store of value. It is all things the market needs good money to be and has been recognized as such throughout history.  Gold rose to nearly $1800 an ounce after the Fed’s most recent round of quantitative easing because the people know that gold is money when fiat money fails.

Central bankers recognize this too, even if they officially deny it.  Some analysts have speculated that the International Monetary Fund’s real clout is due to its large holdings of gold.  And central banks around the world have increased their gold holdings over the last year, especially in emerging market economies trying to protect themselves from the collapse of Western fiat currencies.

Fiat money is not good money because it can be issued without limit and therefore cannot act as a stable store of value. A fiat monetary system gives complete discretion to those who run the printing press, allowing national governments to spend money without having to suffer the political consequences of raising taxes.  Fiat money benefits those who create it and receive it first, enriching national governments and their cronies.  And the negative effects of fiat money are disguised so that people do not realize that money the Fed creates today is the reason for the busts, rising prices and unemployment, and diminished standard of living tomorrow.

This is why it is so important to allow people the freedom to choose stable money.  Earlier this Congress I introduced the Free Competition in Currency Act (H.R. 1098) to permit people to use gold as money again. By eliminating taxes on gold and other precious metals and repealing legal tender laws, people are given the option between using good money or fiat money. If the federal government persists in debasing the dollar – as money monopolists have always done – then the people would be able to protect themselves by using alternatives such as gold that are both sound and stable.

As the fiat money pyramid crumbles, gold retains its luster.  Rather than being the barbarous relic Keynesians have tried to lead us to believe it is, gold is, as the Bundesbank president put it, “a timeless classic.”  The defamation of gold wrought by central banks and national governments is because gold exposes the devaluation of fiat currencies and the flawed policies of the national government.  National governments hate gold because the people cannot be fooled by it.

Representative Ron Paul (R – TX), MD, was a three-time Republican candidate for U. S. President. See his Congressional webpage and his official campaign website. 

This article has been released by Dr. Paul into the public domain and may be republished by anyone in any manner.

The Law of the Jungle is Taking Over: Professor Eric Posner Calls for Censorship – Article by Charles N. Steele

The Law of the Jungle is Taking Over: Professor Eric Posner Calls for Censorship – Article by Charles N. Steele

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The New Renaissance Hat
Charles N. Steele
September 30, 2012
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Another highly placed America legal scholar is endorsing gutting the First Amendment in favor of anti-blasphemy laws and censorship.  It’s the most anti-First Amendment op-ed I’ve seen yet.

It turns out “we overvalue free speech” (foreigners’ values are the right ones, so we must abandon ours) and “often free speech must yield to other values and the need for order.”

So says University of Chicago law professor Eric Posner, who also argues “We have to remember that our First Amendment values are not universal; they emerged contingently from our own political history, a set of cobbled-together compromises among political and ideological factions responding to localized events…”

This is not true.  The case for free speech is a profoundly philosophical one, with a very long history — and it is not only a Western idea, either.  Posner is highly educated legal scholar — I suspect he knows this already (umm, is it to be prohibited to suggest that some public figure is, umm, lying?)

“As often happens, what starts out as a grudging political settlement has become, when challenged from abroad, a dogmatic principle to be imposed universally. Suddenly, the disparagement of other people and their beliefs is not an unfortunate fact but a positive good. It contributes to the ‘marketplace of ideas…'”

Yes, in fact the freedom to examine and criticize people and beliefs is a positive good, and how else will we ever be able to separate good ideas from bad ones?  There is no other way other than freedom of discussion.  And one can’t specify in advance which ideas or criticisms are and aren’t permitted — that would assume we already knew and agreed on Truth.

“…as though we would seriously admit that Nazis or terrorist fanatics might turn out to be right after all. Salman Rushdie recently claimed that bad ideas, ‘like vampires … die in the sunlight’ rather than persist in a glamorized underground existence. But bad ideas never die: They are zombies, not vampires. Bad ideas like fascism, Communism, and white supremacy have roamed the countryside of many an open society.”

They also don’t die if we suppress them, and in fact do fester and grow.  Rushdie is right.

“So symbolic attachment to uneasy, historically contingent compromises, and a half-century of judicial decisions addressing domestic political dissent and countercultural pressures, prevent the U.S. government from restricting the distribution of a video that causes violence abroad and damages America’s reputation.”

No, it doesn’t cause violence.  Religious fanatics and psychopaths choose to engage in violence.  If they did not, we would not be having this debate.  The video would simply be a case study in bad filmmaking for a few reviewers.

“And this is a video that, by the admission of all sides, has no value whatsoever.”

No!  The filmmakers disagree.  For that matter, I disagree!  I think the first parts, which illustrate the attacks of Salafi muslims on Coptic Christians, and Egyptian state complicity, have merit. Our values have zero weight?  Why?

Let’s take this farther.  If I find Posner’s op-ed blasphemous and utterly without merit, is that sufficient for me to call for its suppression and his prosecution?  If not, how many of us does it take?  How big a mob must I organize and how violent must we become?

Professor Posner, you’re a professor of law, so explain for us the legal criteria your argument implies.  I want to know now, in advance, what the boundaries are.  What speech will be prohibited?  Is it really only that which ex post “causes” others to engage in violence?

I’m quite certain that Michael Totten has it right, that these kinds of arguments are equivalent to giving terrorists veto power over our thought, speech, and actions.  Conversely, Posner tries to claim that this is just about having a reasonable debate over “whether a government should be able to curtail speech in order to safeguard its relations with foreign countries.”  Never mind Posner’s confusion of religious rioters with foreign states, this point is simply disingenuous.  The purpose of our government is to protect our rights from attack by foreigners, not restrict them when foreigners are 1) offended and 2) engage in criminal behavior.  What the hell can Posner be thinking?

Posner thinks we need to understand “that often free speech must yield to other values and the need for order.”  In Pakistan, “yielding” to “other values” has lead to what one Muslim cleric calls “the law of the jungle…”  If a mob is sufficiently violent, the police arrest the “offender” and courts convict, all in the name of defending the mobs’ values and maintaining a pretense of civil order.  Note that it is Pakistani Muslims who are recognizing that Islamic anti-blasphemy laws are empowering the worst people in their country.

“Law of the jungle” is an apt description.

Not all academics have gone mad, of course. Professor of Sociology Mahfooz Kanwar — a Muslim — warns that “[t]he blasphemy law is clearly a very blunt and effective tool used to destroy the lives of one’s enemies…” and that “[t]he entire Muslim world, not just Pakistan, is agitating for the United Nations to pass an anti blasphemy law. The rest of the civilized world must oppose this at every turn.”

Why isn’t this obvious to Posner, and everyone else tripping over themselves to abandon the First Amendment?  There can be no law but the law of the jungle under Posner’s standards.  Go ahead and “yield to other values” and you’ll see what kind of order that gets us.

This article originally appeared on the Unforeseen Contingencies blog.

Dr. Charles N. Steele is the Herman and Suzanne Dettwiler Chair in Economics and Associate Professor at Hillsdale College in Hillsdale, Michigan. His research interests include economics of transition and institutional change, economics of uncertainty, and health economics.  He received his Ph.D. from New York University in 1997, and has subsequently taught economics at the graduate and undergraduate levels in China, the Russian Federation, Ukraine, and the United States.  He has also worked as a private consultant in insurance design and review.

Anthropogenic Global Warming, Liberty, and Technology – Video by G. Stolyarov II

Anthropogenic Global Warming, Liberty, and Technology – Video by G. Stolyarov II

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Mr. Stolyarov argues that, whether or not anthropogenic global warming is real, political interference is not the proper way to address it. The solution is maximum individual liberty and freedom for entrepreneurs to innovate and develop improved technologies.

Remember to LIKE, FAVORITE, and SHARE this video in order to spread rational discourse on this issue.

A Republic, Not a Democracy – Article by Ron Paul

A Republic, Not a Democracy – Article by Ron Paul

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The New Renaissance Hat
Ron Paul
September 23, 2012
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Early September 2012 marked the conclusion of the grand taxpayer-funded spectacles known as the national party conventions.  It is perhaps very telling that while $18 million in tax dollars was granted to each party for these lavish ordeals, an additional $50 million each was needed for security in anticipation of the inevitable protests at each event.  This amounts to a total of $136 million in taxpayer funds for strictly partisan activities – a drop in the bucket relative to our disastrous fiscal situation, but disgraceful nonetheless.  Parties should fund their own parties, not the taxpayer.

At these conventions, leaders determined, or pretended to determine, who they wished to govern the nation for the next four years amidst inevitable, endless exaltations of democracy.  Yet we are not a democracy.  In fact, the founding fathers found the concept of democracy very dangerous.

Democracy is majority rule at the expense of the minority.  Our system has certain democratic elements, but the founders never mentioned democracy in the Constitution, the Bill of Rights, or the Declaration of Independence.  In fact, our most important protections are decidedly undemocratic.  For example, the First Amendment protects free speech.  It doesn’t – or shouldn’t – matter if that speech is abhorrent to 51% or even 99% of the people.  Speech is not subject to majority approval.  Under our republican form of government, the individual, the smallest of minorities, is protected from the mob.

Sadly, the constitution and its protections are respected less and less as we have quietly allowed our constitutional republic to devolve into a militarist, corporatist social democracy.  Laws are broken, quietly changed and ignored when inconvenient to those in power, while others in positions to check and balance do nothing.  The protections the founders put in place are more and more just an illusion.

This is why increasing importance is placed on the beliefs and views of the president.  The very narrow limitations on government power are clearly laid out in Article, 1 Section 8, of the Constitution.  Nowhere is there any reference to being able to force Americans to buy health insurance or face a tax/penalty, for example.  Yet this power has been claimed by the executive and astonishingly affirmed by Congress and the Supreme Court.  Because we are a constitutional republic, the mere popularity of a policy should not matter.  If it is in clear violation of the limits of government and the people still want it, a Constitutional amendment is the only appropriate way to proceed.  However, rather than going through this arduous process, the Constitution was in effect, ignored and the insurance mandate was allowed anyway.

This demonstrates how there is now a great deal of unhindered flexibility in the Oval Office to impose personal views and preferences on the country, so long as 51% of the people can be convinced to vote a certain way.  The other 49% on the other hand have much to be angry about and protest under this system.

We should not tolerate the fact that we have become a nation ruled by men, their whims and the mood of the day, and not laws.  It cannot be emphasized enough that we are a republic, not a democracy and, as such, we should insist that the framework of the Constitution be respected and boundaries set by law are not crossed by our leaders.  These legal limitations on government assure that other men do not impose their will over the individual, rather, the individual is able to govern himself.   When government is restrained, liberty thrives.

Representative Ron Paul (R – TX), MD, was a three-time Republican candidate for U. S. President. See his Congressional webpage and his official campaign website. 

This article has been released by Dr. Paul into the public domain and may be republished by anyone in any manner.