Monday I insisted that all reasonable people should be at least mildly disturbed by the diminution of property rights implicit in a ban on whites-only lunch counters.
Tuesday I cited an excellent comment from Jonathan Pryor suggesting that a whites-only lunch counter is itself an indirect assault on property rights insofar as the owners expect taxpayers to foot the bill for enforcement of the whites-only policy (say, by calling the police when unwanted visitors show up).
There are circumstances in which I think Pryor’s argument clearly applies. I cited the case of the man who keeps a barrel of Hershey bars on his front lawn and expects the police to stop children from filching them. Surely this man is imposing a burden on the community over and above the assertion of his own property rights. But I also gave several other examples that gave me pause about the applicability to lunch counters.
This in turn brought forth an insightful comment from Ken B, who points out that the Civil Rights Act itself called for a lot of taxpayer-financed enforcement. The act was passed, blacks sat down at lunch counters, owners attempt to evict them, the police were called.
I had planned to get back to our friend the absent-minded driver today, but yesterday’s post on Rand Paul garnered (at least) one comment so good that it deserves to be highlighted.
I said yesterday that the 1964 Civil Rights Law (forbidding racial discrimination in places of public accommodation) infringes on property rights and that all reasonable people ought to be disturbed by that, even if their ultimate judgment is that the benefits of the law outweigh its costs.
Our commenter Jonathan Pryor responded, in effect, as follows (I am paraphrasing):
When you open a restaurant and announce that you won’t serve blacks, you’re not just announcing that you won’t serve blacks. Instead, you’re implicitly announcing that whenever a black person comes in and asks for service, you’re going to call the police and ask the taxpayers to subsidize the cost of your taste for discrimination. You have no property right to those taxpayer dollars.
My first reaction was: This is an excellent point, which I haven’t seen raised before. For the most part, that’s still my reaction. Still, this argument cannot be definitive as a matter of principle, because the same argument applies in many cases where we clearly reject its conclusion. After all, when you open a restaurant, you’re implicitly announcing that whenever a naked person asks for service you’re going to call the police and ask the taxpayers to cover the cost of removal. For that matter, you’re going to call the police every time you get robbed. But we don’t conclude that it should always be illegal to open a restaurant.
Having linked recently to a Fox News segment hosted by a close evolutionary cousin of a sea cucumber, I am delighted to balance the scales with this clip of a thoughtful and literate three-way conversation about Arizona’s anti-immigration statute, featuring Judge Andrew Napolitano, the journalist Jack Hunter, and my hero, George Mason University’s inestimable Don Boudreaux.
Writing in the New York Times, law professor Kris Kobach promises to rebut all the major objections to Arizona’s new anti-immigration law and proceeds to ignore all the major objections. Professor Kobach’s idea of a major objection is “It’s unfair to demand that aliens carry their documents with them”, whereas my idea of a major objection is “It’s idiotic, hateful and destructive to put obstacles in the way of productive activity.”
The number of “unauthorized aliens” in Arizona at any given moment is estimated as just under a half million—about the same as the number of Jews in New Jersey. Over half the text of the Arizona law is devoted to penalizing employers who hire these people. Now suppose for a moment that the New Jersey legislature were to pass a bill penalizing anyone who hires a Jew. Would Professor Kobach defend this law, as he does Arizona’s, by pointing out that it doesn’t require anyone to carry a driver’s license?
The anti-immigration hysterics keep warning us that foreigners want to come over here and exploit our welfare system. The insincerity of that stance is exposed whenever, as in Arizona, its proponents set out to prevent those very same foreigners from coming here and working.
After six months of blogging nearly every weekday, I’m taking a four day weekend. This will give you a chance to browse through the archives for all the good stuff you might have missed. Or, if you’re looking for a good read to tide you over, I can recommend Chapter Two of my book Fair Play. Some of the examples are dated (Wal-Mart, as far as I know, no longer advertises that “we buy American so you can too”), but it makes a good companion piece to yesterday’s post.
I’ll be back on Tuesday with, I expect, something new to say.
You guys—with your thoughtful, witty and relevant comments—have made me thankful I took up blogging. My (considerable) experience with the mainstream media suggests that you meet a much lower class of people there. Let me give you an example.
Once upon a time I wrote a Forbes column drawing an analogy between protectionism (which discriminates on the basis of national origin) and racism (which discriminates, of course, on the basis of race). (Of course the analogy isn’t perfect. For example, racism can be a solitary hobby, whereas protectionism by its nature forces other people to discriminate as well.) There were many responses, of which my favorite was Pat Buchanan’s screed containing both some hilariously misguided economics and a paragraph I’ve had posted on my office door ever since:
Now I do not know what parents pay to send their kids to the University of Rochester. But if the philosophical imbecility of Landsburg is representative of the faculty, it is too much.
Shortly afterward, I was scheduled to appear on John Gibson’s program on Fox News, where the following exchange took place:
This, in turn, led to a flurry of email. To give you the full flavor, and so as not to bias the sample, I am appending every single email I received on this subject, excepting only one relatively positive note from my mother.
A friend living in England (the philosopher Jamie Whyte, actually, whose writing has graced this very blog) sends along a little vignette for the benefit of my American readers who see European health care systems through rose colored glasses.
A 64 year old breast cancer survivor suffering severe back pain is told she’ll have to wait five months for an appointment with an orthopedic surgeon through the National Health Service (NHS). She therefore (and perfectly legally) chooses to pay 250 pounds (about 385 dollars) for a private appointment. He puts her on a waiting list for surgery to remove a cyst from her spine, surgery which is routinely covered by the NHS. But the NHS decides that since she can afford 250 pounds for a private appointment, she can also afford 10,000 pounds (over 15,000 dollars) for private surgery. They therefore deny to provide her the surgery for which she’s been paying taxes her whole life.
This was not an isolated incident; until recently, cancer patients were routinely denied further NHS treatement after privately purchasing lifesaving drugs that are not available through the NHS.
More details here. It’s worth reading the comments, where readers excoriate the patient for “queue jumping” because she used the price system to signal her high demand for medical services. Note that nobody complains about “queue jumping” in the market for, say, oranges, because oranges are not rationed by government bureaucrats and therefore do not generate queues.
The lesson, I think, is that once an inefficient bureaucracy becomes entrenched, a certain fraction of the electorate becomes incapable of imagining anything better. In this case, that fraction seems to have forgotten first that some people need medical care more desperately than others, so that “queue jumping” can be desirable, second that private payments to doctors actually call forth more medical care and therefore shorten queues, and third that maybe it would be better to have a system that didn’t require queuing in the first place.
What a relief. Now that April 15 is out of the way, my tax rate is back to zero for another year.
At least that’s the way the President of the United States seems to have it figured—your tax burden, according to him, is measured by what you’re paying right this moment as opposed to what you’re obligated to pay in the future.
That’s the only possible interpretation of his statement last night that Tea Partiers (and others) should be thanking him for cutting taxes. The reality is that President Obama, like President Bush before him, has rather dramatically raised government spending and therefore has raised your taxes. To say otherwise is like saying you got your new swimming pool for free because you put it on your credit card.
Once the money is spent, the bill must eventually come due—and there’s nobody around to foot that bill except the taxpayers. We are locked into higher current spending and therefore locked into higher future taxes. The president hasn’t lowered taxes; he’s raised and then deferred them. To say otherwise is—let’s be blunt—a flat-out lie.
Having blogged twice this week (here and here) on Paul Krugman’s green economics essay, I want to add a couple of quick comments on what it takes to contribute usefully to this discussion.
Yesterday I blogged about Paul Krugman’s recent piece on climate control policy. The bottom line: After recovering from a shaky start, Krugman does a good job of laying out the issues and posing many (though not quite all) of the right questions. But I’m not sure he gets the answers right.
A few years ago, writing in Slate, I listed the key questions that the Al Gores of the world mostly fail to address or even acknowledge. (See also the discussion on pages 186-190 of The Big Questions.) Krugman (thankfully) is no Al Gore, and he does address most of these questions. Let’s see how he does with them.
Halfway through reading Paul Krugman’s New York Times piece on green economics, I had my snarky retort all ready to go. Then in the second half he went and got all reasonable on me. I still don’t buy his conclusions, but (sadly for readers who like fireworks), he’s not (at least in this instance) nuts.
Today is the ninety-ninth anniversary of the legendary fire at the Triangle Shirtwaist Factory, which reigned for ninety years as the worst workplace disaster in New York history. A hundred and forty six workers died that day, most of them young women. Escape routes were cut off by doors that were kept locked to prevent employee pilfering. The main exit from the factory floor was designed so that only one person at a time could pass through; departing workers had their handbags inspected by a night watchman. “It comes down to dollars and cents against human life, no matter how you look at it”, in the words of then-Fire Chief Edward Croker.
Well, yes, of course it comes down, at least in part, to dollars and cents against human life (where “dollars and cents” are, of course, stand-ins for “a whole lot of other things we care about”). The interesting question is whether the terms of trade were favorable. In other words: If the workers, in advance of the fire, had been fully informed of all the risks and all the potential consequences, would they have wanted those doors locked or open? Or more generally: When the New York state legislature responded to the fire with over two dozen new occupational health and safety laws, were they compounding the disaster?
Suppose that year after year, you spend more than you earn. You are worried that you’ve become fiscally irresponsible. Which of the following is not a path back to fiscal sanity for your household?
Spend less.
Earn more.
Stop at the ATM more often so you’ll have more cash in your pocket.
Do we all understand why the answer is C? Good. Now let’s try another one.
The Obama administration has its knickers all in a twist over rising health insurance premiums. As you wade through the rhetoric, here are a few things to keep in mind:
Greed does not cause rate hikes. I’m not sure why some premiums have shot up lately, but I’m quite sure that “greed” is not the answer. That’s because I’m quite sure that the insurance companies are no greedier today than they were a year ago. To explain a change in prices, you’ve got to point to something that’s changed. Greed is pretty much a constant.
Yesterday my lunch companion announced his new weight loss strategy—he’s eating more cake. He’s got it figured that if he eats enough cake now, it will motivate him to take up running someday (even though he’s never run before). So he ordered a slice of chocolate cake and announced that he’d just lost two pounds.
Of course, my friend wasn’t entirely serious; he was just gearing up for a possible future at the Congressional Budget Office, which says we can reduce government spending by enacting the president’s health reform proposal. They’ve got it figured that if we pass this proposal now, it will motivate future cuts in Medicare (even though nobody’s ever had the stomach for those cuts before). If I understand the numbers right, they’re counting that as a “saving” of several hundred billion dollars. Well, pass me that cake.
Harvard’s Robert Barro, who is good at this stuff, estimates (in round numbers) the effects of last year’s stimulus package (numbers represent billions of dollars):
The executive summary is that income (that is, the total income of all Americans) rises in 2009 and 2010 (while the stimulus money is being spent), and continues a bit higher for another year after that, but falls in later years (when the taxes, with their accompanying disincentive effects, come due). (Of course, the day of reckoning can be delayed, but not forever—so the arithmetic still rules). Adding up over five years, income falls by $300 billion, or about $1000 per American.
These numbers confirm my prejudice that the stimulus package is a bad idea, but they still make me uncomfortable. Let me first add a few remarks about what the numbers mean and then I’ll tell you what I don’t quite get about them.
Yesterday’s post on child labor generated some great comments, and I’d like to respond briefly to a few of them here.
Jambaramba asked whether low wages for children are a result of their poor bargaining position. I responded that you can’t raise wages nationwide through bargaining. (You might raise them in one sector, but only at the cost of lowering them in other sectors, and overall you’ll make people poorer, not richer.) The only way to raise wages is to make people more productive. This means providing them with more and better capital and giving them opportunities to trade. Manfred followed up with a supercomment elaborating on this point. I promise to blog about the supporting theory and evidence sometime soon.
Caitlin Flanagan is such a smashingly good writer that I normally devour anything she’s written. But when I saw her latest piece in the Atlantic—roughly 5000 words in opposition to public school gardens, where students learn horticulture instead of long division—it seemed well, too petty a subject for Flanagan’s vast talents—so I put it aside without reading it.
Today I read it. Wow, was I wrong. This is Caitlin Flanagan at her blistering best. I’ll offer you a few choice quotes, but my real recommendation is to leave now and go read the entire piece.
With the Edible Schoolyard..the idea of a school as a venue in which to advance a social agenda has reached rock bottom. This kind of misuse of instructional time…has been employed to cheat kids out of thousands of crucial learning hours over the years, so that they might be indoctrinated in whatever the fashionable idea of the moment or the school district might be. One year it’s hygiene and the another it’s anti-Communism; in one city it’s safe-sex “outercourse” and in another it’s abstinence-only education.
Does the immigrant farm worker dream that his child will learn to enjoy manual labor, or that his child will be freed from it?…If this patronizing agenda were promulgated in the Jim Crow South by a white man who was espousing a sharecropping curriculum for African American students, we would see it for what it is: A way of bestowing field work and low expectations on a giant population of students who might become troublesome if they actually got an education.
Until our kids have a decent chance at mastering the essential skills and knowledge that they will need to graduate from high school, we should devote every resource and every moment of their academic day to helping them realize that life-changing goal. Otherwise we become complicit—through our best intentions—in an act of theft that will not only contribute to the creation of a permanent, undereducated underclass, but will rob that group of the very force necessary to change its state.
Congressman Donald Schwerbitz, who represented South Dakota back in the 1960s and 70s, was a visionary environmentalist who sponsored the first legislation designed to reduce our national carbon footprint. It was Congressman Schwerbitz who recognized that carbon emissions are caused primarily by breathing, and he proposed to cut those emissions in half by requiring every American to wear a device that plugs up one nostril.
Back in March, 2001, I wrote a little fable about taxation for the op-ed piece of the Wall Street Journal. Several readers have asked me to post that fable here on the blog. Your wish is my command. At the bottom of this post, I’ll say a few words relating the fable to another recent blog post.
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Once upon a time, a man went to work and earned a dollar. He used the dollar to buy a share of stock. The stock paid a dividend of 10 cents a year, 10% being the going rate of return in the land.
When I teach economics, I try to drive home the lesson that words are supposed to mean something coherent. If you want to be rewarded for stringing together a bunch of empty phrases, you should go take an English class.
I was therefore maximally sympathetic to the poor XM radio host (I think it was Pete Dominick but I’m not sure) who was stuck interviewing a man named John Sakowicz last Friday. Sakowicz, who hosts his own radio show in northern California, was there to warn about the dangers inherent in our growing national debt. He was very clear about this much: the debt and its associated dangers are massive, explosive, perhaps even apocalyptic. He was entire unclear, however, about exactly what those dangers are.
Interviews with Democratic Representative Barney Frank and Republican Senator Richard Shelby are the final installments in BigThink’s series of video interviews on “What Went Wrong?” during the financial crisis. (You’ll also find links to all the previous installments.) If you have a taste for politics, you can comment here on what you thought of them.
I am opposed to all taxes on interest, dividends and other forms of capital income. Supporters of these taxes keep making the same fallacious argument. The purpose of this post is to shame those people out of ever making that argument again. (They are, of course, free to make other arguments.)
The fallacy I have in mind goes like this: First, economics teaches us that everything should be taxed at the same rate to avoid unnecessary distortions. Second, QED.
With appropriate caveats, the first part is true. The problem is with getting from there to the second part.
Whenever I ask about the reasoning underlying some legal principle or another, my friend the law professor is always quick to remind me that “there is no such thing as legal reasoning”. So it is with William Blackstone’s famous doctrine that it’s better for ten guilty men to escape than for one innocent to suffer. Why ten? Because that’s the first number that happened to enter Blackstone’s head; that’s why.
Writing 200 years after Blackstone, Emory Law School professor Alexander Volokh surveyed the history of alternatives to “ten” in a charming essay called n Guilty Men. The bottom line is that a great many alternatives have been offered, almost never with anything approaching a justification.
At Big Think, a consortium of bloggers (including me) have been invited to submit questions for use in video interviews with major players in the financial crisis. I posed a question to Mark Zandi, the chief economist at Moody’s, who had recently said this:
“It’s no coincidence that the great recession ended just as the stimulus package began providing its maximum economic benefit.”
Over at National Review Online, John Derbyshire starts off with some kind words about The Big Questions, and then goes off on an ill-considered screed about immigration. First, by all means let’s quote the kind words:
Steven’s new book, The Big Questions, has a lot of good things in it, as one would expect from an author who proudly declares himself a math geek. His explanation of Heisenberg’s uncertainty principle (pages 135–141) is a model of clarity in the popularization of science. His geometrical illustration of a Talmudic rule on the division of an estate (pages 205–213) shows the mathematical imagination at its best.
Landsburg is an economist by profession — a professor of economics, in fact — and has the economist’s insight that many matters commonly discussed in terms of morality can be reduced to cold arithmetic: “When things are priced correctly, there’s no need to moralize about them.” He gives some illuminating examples.
Over at Econlog, Arnold Kling chides me for the way I concluded yesterday’s post on health care and Harvard Professor David Cutler:
My gut instincts point me in a different direction that Professor Cutler’s do, but I think we agree on what the big problems are and on what would count as solutions. I think almost all economists would agree on that much, and that’s a lot.
Here is Arnold:
My disagreement with Cutler is more than mere gut instinct. Cutler and I might agree that there is overuse of medical procedures with high costs and low benefits. We might agree that incentives affect this. However, Cutler is confident that central planning represents the solution, not the problem. He believes that remote bureaucrats can measure health care quality well enough and implement compensation schemes that are fine-grained enough to achieve significant improvement.
For the record, Arnold and I are saying the same thing, though I tried to say it a little more politely. David Cutler, Arnold Kling and I all agree that incentives matter and that it’s important to get them right. Arnold Kling and I agree that David Cutler probably doesn’t know how to do that.
Yesterday I had the privilege of meeting David Cutler—Harvard health economist, advisor to President Obama, and co-author of much of the health reform legislation currently moving through Congress. While I am very skeptical of some of Professor Cutler’s policy goals, I was reminded once again that, for all our bickering around the edges, nearly all economists of all political stripes have a shared and useful way of thinking about the world.
I took the opportunity to ask Professor Cutler about a question that arose on this blog last week. I had posted about my fear that a public health insurance option would be manipulated by politicians intervening to get better coverage for their contributors and constituents, while passing the costs off to less well-connected groups. Some of the commenters—notably Cos and Sierra Black—asked whether this has been a problem in other countries. I had to admit that I had no idea, so I put the question to Professor Cutler. Here is what he said:
The people at Big Think have posted their latest videos in the “What Went Wrong” series about the financial crisis; I am one of a consortium of bloggers who have been invited to submit questions the interviewees and to blog about their answers.
The most interesting of the current interviews is with hedge fund manager Peter Thiel. A few choice quotes:
If you want to understand why a public health insurance option is such a bad idea, just imagine a world where we’ve passed the Coburn Amendment, requiring all members of Congress to subscribe to that public option. In that world, a powerful Senator who develops a hankering for a nose job can make a few phone calls and nudge the public insurance commissioner toward a new appreciation for the moral imperative of covering cosmetic surgery.
And if the Senator is successful, where do the funds come from? Either higher premiums, paid for mostly by subscribers who never wanted this kind of coverage, or by dipping into general revenues. After all, the funds have to come from somewhere.
With or without the Coburn Amendment, and however unlikely you might find this particular scenario, the public option is nakedly vulnerable to exactly this type of corruption. A Senator who would never dream of intervening quite so blatantly on his own behalf might think nothing of intervening on behalf of a big campaign contributor, and will certainly think nothing of intervening on behalf of politically potent interest groups—that, after all, is what politicians do for a living.
