Gary Johnson on drug policy

Link blag

Cato has the grim facts on public schooling since 1970.

League: Jason Kuznicki, Austin Bramwell, and Jaybird on gay marriage and Christianity.

MR: What political action are markets demanding?

NYT: Your Brain on Computers: Hooked on Gadgets, and Paying a Mental Price

Rand Paul editorializes on the CRA and individual rights in a local Kentucky paper.

The costs of paternalism

Glen Whitman in Cato Unbound:

[Cass] Sunstein and [Richard] Thaler define their “libertarian paternalist” spectrum in terms of the cost of choice: “The libertarian paternalist insists on preserving choice, whereas the non-libertarian paternalist is willing to foreclose choice. But in all cases, a real question is the cost of exercising choice, and here there is a continuum rather than a sharp dichotomy.” Even outright bans, such as motorcycle helmet laws, lie on the spectrum because “[t]hose who are required to wear motorcycle helmets can decide to risk the relevant penalty, and to pay it if need be.” This framing ignores the question of who imposes the cost and how. To see why this is bizarre, notice that a 10-cent tax on Twinkies is relatively low-cost, while having to drive 20 miles to the nearest 7-11 is relatively high-cost. In Sunstein and Thaler’s rubric, the state-imposed tax is more “libertarian” than the self-imposed cost of living far from civilization.

Jason Kuzniki at the League:

I’ve spent a lot of time trying to figure out how libertarians see the world differently from other people. The above is a good example. We worry about who or what imposes a cost, rather than tending to treat them all alike.

Is the cost we’re considering based on a dumb fact of nature? The result of a market process? (A functional or a dysfunctional one?) Or — and here’s where we raise our eyebrows — does the cost spring from the decision of another human being, or of a group thereof?

Among non-libertarians, there’s a strong tendency to collapse all the different types of costs together. You’re unfree if you have a family you feel obliged to support. You’re unfree if you live far from civilization. You’re unfree if you get cancer. You’re unfree if your personal tastes are expensive. You’re unfree — I infer — if you’re thrown in a prison camp. Just another type of cost to pay. Something seems way off here to me.

That’s because political unfreedom is different. Political unfreedom isn’t the result of bad luck, or your moral code, or your freely made but unwise choices. Other humans did it to you, and those other humans could stop doing it if they wanted. Whitman’s argument above is that we should think carefully about which people get to impose costs, and how, and to what end — even though other costs exist, even though the world remains full of dysfunctional markets, bad personal choices, and brute facts of nature.

Now, these cost-imposers may act with a smile on their face, or they may be brutal about it. They may have a representative government to validate their acts, or not. But political and non-political costs should never be confused. Political freedom is the freedom from arbitrary interference on the part of other people. We find it striking, and worrisome, when we see political theorists who aren’t so careful about the distinction. (For more on this idea, see Tom Palmer, writing in last month’s Cato Unbound.)

Now, the obvious rejoinder is that our decisions are continually subject to the arbitrary interference from other people. And this is quite true, even apart from the trivial example that we are all constrained equally from killing each other, in a clever little constraint-on-constraint. Other constraints abound.

And yet if we could find a means to eliminate first one and then another kind of arbitrary interference, again and again, the libertarian would view this as a steady improvement in the state of our politics. Living in society with others shouldn’t mean submission to them. And it certainly shouldn’t mean that — given the existence of some inescapable costs — whatever other costs some favored people want to throw on are just fine too.

Provocation of the day

"Celebrate Human Achievement", says Cato:

Environmentalist groups and celebrities are celebrating “Earth Hour” tonight. They ask that you turn your lights out for an hour, to call attention to global warming.  Folks at the Competitive Enterprise Institute suggest that “this sends the wrong message — to plunge us all into darkness as a rejection of technology and human achievement.” In fact, they point out that it’s Earth Hour every night in North Korea, where people lack basic freedoms, as well as affordable, reliable access to many human achievements, such as electricity. Check out this famous photo of environmentally conscious North Koreans observing Earth Hour all night, every night:

CEI rejects the rejection of technology. They have declared the hour between 8:30 and 9:30 tonight to be “Human Achievement Hour.” To join the celebration, just turn your lights on tonight and enjoy the human achievement of light when we want it. And watch CEI’s short video history of human achievement here.

Wilco.

Quote of the day

"Swiss voters underestimated the impact on religious liberty when they voted to ban minaret construction. But Muslims whose nations persecute Christians, Jews, and other religious minorities have no standing to complain. The Islamic world needs to respect religious liberty at home before lecturing the West about intolerance, racism, hatred and Islamophobia."

—Doug Bandow on the minaret ban in Switzerland

"Take away their shovels and give them spoons"

Cato explains job creation.

Big Daddy Byrd

Cato:

As of today, U.S. Senator Robert C. Byrd (D-WV) becomes the longest-serving member in the history of the U.S. Senate.

To celebrate this milestone, we offer the following video, which pretty well summarizes Byrd’s extremely long tenure in the Senate. If you ever wanted to know what corruption looks like, here’s your chance.

Yeah, man.

Ezra is also unhappy with the record.

Link blag

DIA: The fierce urgency of whatever

NYT: It's a fork, it's a spoon, it's a...weapon?

ABC: Tennessee woman arrested for poking someone over Facebook

WSJ: Reagan's secretary of state says the drug war is not working

Cato: Paul Krugman continues to be wrong

And the award of "best headline for something I skipped reading" goes to:
"Will Stimulating Nominal Aggregate Demand Solve our Problems?"

Downsizing the federal government

Cato has a helpful department-by-department guide.

Another victory in the war on drugs

A grandmother in Indiana has been arrested for purchasing cold medicine. We can all sleep more safely now that this hardened criminal has been taught a lesson.

The Terre Haute News reports:

When Sally Harpold bought cold medicine for her family back in March, she never dreamed that four months later she would end up in handcuffs.

Now, Harpold is trying to clear her name of criminal charges, and she is speaking out in hopes that a law will change so others won’t endure the same embarrassment she still is facing.

[..] Harpold is a grandmother of triplets who bought one box of Zyrtec-D cold medicine for her husband at a Rockville pharmacy. Less than seven days later, she bought a box of Mucinex-D cold medicine for her adult daughter at a Clinton pharmacy, thereby purchasing 3.6 grams total of pseudoephedrine in a week’s time.

Those two purchases put her in violation of Indiana law 35-48-4-14.7, which restricts the sale of ephedrine and pseudoephedrine, or PSE, products to no more than 3.0 grams within any seven-day period.

When the police came knocking at the door of Harpold’s Parke County residence on July 30, she was arrested on a Vermillion County warrant for a class-C misdemeanor, which carries a sentence of up to 60 days in jail and up to a $500 fine.

(ht Cato)

Why I oppose government programs

As a contemporary example, Cato argues Cash for Clunkers is among the dumbest ever:

• A few billion dollars worth of wealth was destroyed. About 750,000 cars, many of which could have provided consumer value for many years, were thrown in the trash. Suppose each clunker was worth $3,000 at a guess, that would mean that the government destroyed $2.25 billion of value.
• Low-income families, who tend to buy used cars, were harmed because the clunkers program will push up used car prices.
• Taxpayers were ripped off $3 billion. The government took my money to give to people who will buy new cars that are much nicer than mine! 
• The federal bureaucracy has added 1,100 people to handle all the clunker administration. Again, taxpayers are the losers.
• The environment was not helped. See here and here.
• The auto industry received a short-term “sugar high” at the expense of lower future sales when the program is over. The program apparently boosted sales by about 750,000 cars this year, but that probably means that sales over the next few years will be about 750,000 lower. The program probably further damaged the longer-term prospects of auto dealers and automakers by diverting their attention from market fundamentals in the scramble for federal cash.   

Sane folks should agree these outcomes are outrageously dumb.  B-b-but, Obama bragged the program was popular!  And truly, it was.

Offering everyone $100 towards burning an old set of ugly clothes and buying a sleek new replacement might also prove popular, both to consumers and the clothing industry.  Huzzah, let's do it!  Regrettably, such popularity does not make it a good idea nor mean that implementing it would make any kind of economic or environmental sense—which it clearly wouldn't.

This basic problem of economic inefficiency, generalized, is why the majority of other government programs and economic interventions are also really bad ideas. What is politically popular seldom implies economic efficiency.  Often, quite the contrary. Political popularity foments fiscal insanity.  First you get your Democrats, who want to give every person on Earth a free cake, dog, and pony—plus the choice of a prepaid subscription to either People or The Washington Monthly.  This proves popular.  Then as a reaction you get your Republicans, who don't want to pay half a cent toward anything.  This also proves popular.  Unsurprisingly, voters want to have their cake and not have to pay for it, too.  Politicians are happy to pander to both sides.  The emerging compromise?  Massive deficits—a.k.a. having our children and grandchildren deal with it somewhere down the line.

Yes, Virginia—I don't mean to scare you with technical phrasing, but politics and government really do suck.

A sufficiently free market, by contrast, implements a method that almost always results in superior efficiency to either political popularity or technocratic fiat.  It's called price signals.

Unfortunately, due to a history of misguided (but politically popular!) government interventions and regulation, the U.S. health-care system does not have price signals.  This works out very poorly.

Allow me to paint you an analogy.  It would be as if credit cards were issued by "insurance card" companies who agree to provide their customers with "consumption coverage".  You would pay them a pre-arranged monthly "consumption premium", and in exchange they would "cover"—with just a small co-pay!—any shopping you do with their card, provided it was clear that you "needed" it.  Ramen noodles would probably be covered—eat more than you can puke.  So would most canned goods.  Even many of the cheaper fruits and veggies.  But the fine entrée you wanted to serve at your next dinner party?  Sorry, your insurance card company doesn't think you "need" it.  Oh, and there would also be limits on things like how much gas you can buy per week or how many drinks you're allowed at the bar per night.  Sound good?  Meanwhile, more and better ways would be developed to game and profit off the convoluted system.  Retailers would overcharge whatever they could get away with making the "insurance card" companies pay, and consumer demand for more and better purchase coverage would rapidly increase. Thus the monthly cost of these "consumption premiums" would also soar.

The above scenario is basically the status quo of U.S. health-care.  Obviously, it sucks.   In lieu of price signals, people always want more and better health-care to be provided, just like in the above they always want more "consumption coverage".    When the consumer doesn't pay for services, markets become dysfunctional. (Also true of some marriages >_>)

So how to reform the system?  Apart from those unfortunate Brits—who tragically got the idea during WWII that it would be good for their state to stay in the business of directly providing care—the left's favored solution tends to be single-payer: a government takeover of health insurance companies, analogous to taking over the odd "insurance card" ones above.

Insurance companies make great villains, but as we saw with Cash for Clunkers and can observe by looking at many other programs—particularly socialized health plans in other countries—they all have their own kinds of problems.   These problems are different from the US status quo: better in some ways, worse in others.

For example, one thing other countries' socialized systems are better at is cost control (.pdf).  They use their monopsony power to negotiate lower prices, and they can often be better at saying no to consumers.  They say no in more equitable ways, such as long waiting times, and some Canadian towns run regular lotteries to decide which families get a doctor.

Controlling costs would be nice, especially compared to an expensive system like the US status quo.  But one thing centralized bureaucratic cost controls also do is reduce the incentive for future private innovation.  Why spend your time experimenting with and further developing a new health product if you can't know whether the health bureau will decide it's a cheap and effective enough treatment to get it off the ground?

In short, the choice between the U.S. status quo and a single-payer system offers trade-offs.  I won't spill more ink trying to formally pin them all down: it's a big topic, kind of like going on about the difference between Republicans and Democrats.

At this point someone usually pipes up and wails about the plight of the uninsured poor.  But that is not a health-care system problem, it is an income problem.  And one of the few ways to directly mitigate an income problem is to provide subsidies to low-income families (some ways are more economically sound than others).  Point is, you could implement subsidies and attain universal health insurance coverage in the U.S. without directly changing anything about our health-care delivery system or the insurance companies themselves.  It would just be really expensive and balloon either the deficit or tax rates, which is why it shouldn't be done in isolation.

Happily there's a reform that would lower costs for everyone while actually increasing innovation:  bring back the price signals that are so essential to market efficiency.  Here's how this might be accomplished:

Firstly, repeal any state-level regulation—often called "patients bill of rights"—that require insurance companies to fully cover particular procedures or put an artificial ceiling on deductibles.  This would clear the regulatory barriers for health plans that sport low premiums and high deductibles, suitable for catastrophic coverage only.  This is how real insurance is supposed to work, like the kind we have for our cars and homes.  By contrast, the sort of thing we call "health insurance" today is actually "pre-paid health care".  Just imagine how high your car insurance payments would be if it were required to cover 80% of the cost of oil changes, tire rotation, wiper blades, new tires, regular service, etc.

Secondly, implement something like Health Savings Accounts (HSAs) for all the routine, preventative, non-catastrophic care.  Apart from trimming administrative jobs in our bloated health insurance industry, this would free consumers to shop for their own health care (Enter price signals, mission accomplished).

Of course, esteemed Nobel laureates like Paul Krugman shall protest:  "Health care is not a bowl of cherries...or a carton of milk, or a loaf of bread."

Indeed, shopping for health-care probably sounds like an odd idea to most.  But HSAs have been tried right here in America, and the data suggest they work well:

Consumer-driven health (CDH) products [i.e., high-deductible health plans relying on HSAs or Health Reimbursement Arrangements to reimburse for qualified expenses] have been marketed in various forms since the early 2000s. While emerging data is [sic] not entirely conclusive, general directional conclusions can be drawn from the studies published to date. […]

With regard to first-year cost savings, all studies showed a favorable effect on cost in the first year of a CDH plan. CDHplan trends ranged from -4 percent to -15 percent. Coupled with a control population on traditional plans that experienced trends of +8 percent to +9 percent, the total savings generated could be as much as 12 percent to 20 percent in the first year. All studies used some variation of normalization or control groups to account for selection bias.

For savings after the first year, at least two of the studies indicate trend rates lower than traditional PPO plans by approximately 3 percent to 5 percent. If these lower trends can be further validated, it will represent a substantial cost-reduction strategy for employers and employees.

Generally, all of the studies indicated that cost savings did not result from avoidance of appropriate care and that necessary care was received in equal or greater degrees relative to traditional plans. All of the studies reviewed reported a significant increase in preventive services for CDH participants. Three of the studies found that CDH plan participants received recommended care for chronic conditions at the same or higher level than traditional (non-CDH) plan participants. Two studies reported a higher incidence of physicians following evidence-based care protocols.

Bottom lines: the status quo puts health care rationing in the hands of insurance companies.  Single-payer puts rationing in the hands of bureaucrats.  A free, CDH market places it in the hands of consumers.

Which of the three do you prefer?

Contrary to popular belief, those of us on the economic right do not advocate market solutions because we have some arcane faith in mythical powers of the market.  We do so because they actually work better—even when they're politically unpopular.

(At this point someone usually pipes up to rail about how the financial crisis, like, totally discredits the idea of markets being better. Let's try not to be distracted by this different, macroeconomic topic that has more to do with a combination of poor regulation and lack of understanding the business cycle.)

The mean socially conservative Republican voter is our useful idiot. They don't understand free market economics any better than the left does, and are liable to show up at your local town halls spouting all sorts of nonsense about government conspiracies to kill more babies.  But the socons are willing to vote with us, so we often have to hold our nose and work with them.  It's called fusionism, and it's been the price to pay for an economic way of doing business that—while superior on the merits—would otherwise be too politically unpopular.  See for example the situation in contemporary Europe, which unlike the US has managed to purge socon fervor the old-fashioned way: through a long, tragic history of disastrous war.

I deplore social conservative attacks on personal freedom as much as the next freethinker, and I aim to counter them.  But I also deplore the left's attacks on economic freedom.  And I'm aware of the uncomfortable truth: unless I can convince a lot more of my fellow social liberals to cut back on their leftism and support freer markets, a chronic Faustian bargain with socons is necessary to preserve what economic freedoms we have.  Without this bargain, the U.S. economy would become more like Europe's, with the lower efficiency and lowered growth that over the long term is worse for everyone—rich and poor alike. Unless, of course, one is lucky enough to become a politician, bureaucrat, or have a personal connection to the business. Then the European political-economic landscape looks pretty rosy, and one can seek out all sorts of creative ways to gloss over the underlying economic inefficiency.

(Cross posted)

More health-care charts

From the U.S. Chamber of Commerce, what it's like now:

…and what it would look like under the House Democrats’ health care plan:

(via Cato)

"Administration's Reform Plan Misses the Mark"

I join Cato's pessimism:

The Obama Administration is presenting a misguided, ill-informed remake of our financial regulatory system that will likely increase the frequency and severity of future financial crises. While our financial system, particularly our mortgage finance system, is broken, the Obama plan ignores the real flaws in our current structure, instead focusing on convenient targets.

Shockingly, the Obama plan makes no mention of those institutions at the very heart of the mortgage market meltdown – Fannie Mae and Freddie Mac. These two entities were the single largest source of liquidity for the subprime market during its height. In all likelihood, their ultimate cost to the taxpayer will exceed that of TARP, once TARP repayments have begun. Any reform plan that leaves out Fannie and Freddie does not merit being taken seriously.

Instead of addressing our destructive federal policies aimed at extending homeownership to households that cannot sustain it, the Obama plan calls for increased “consumer protections” in the mortgage industry. Sadly, the Administration misses the basic fact that the most important mortgage characteristic that is determinate of mortgage default is the borrower’s equity. However, such recognition would also require admitting that the government’s own programs, such as the Federal Housing Administration, have been at the forefront of pushing unsustainable mortgage lending.

While the Administration plan recognizes the failure of the credit rating agencies, it appears to misunderstand the source of that failure: the rating agencies’ government-created monopoly. Additional disclosure will not solve that problem. What is needed is an end to the exclusive government privileges that have been granted to the rating agencies. In addition, financial regulators should end the outsourcing of their own due diligence to the rating agencies.

The Administration’s inability to admit the failures of government regulation will only guarantee that the next failures will be even bigger than the current ones.

Quote of the day

Via Andrew, worth repeating...

Karl Rove should have been named Man of the Year at some point by the Democratic National Committee. The political consultant/Bush adviser played a big role in expanding the burden of government, convincing Bush to saddle the nation with fiscal disasters such as the “no-bureaucrat-left-behind” education bill, the corrupt farm bills, the pork-filled transportation bills, and the horrific new entitlement for prescription drugs. He also helped ruin the GOP image with his inside-the-beltway version of “compassionate conservatism,” thus paving the way for big Democratic victories in 2006 and 2008.

I can understand why libertarians have no desire to listen to his advice, but I’m baffled why Republicans or conservatives would give him the time of day. Yet he is a constant presence on FOX News and has a weekly column in the Wall Street Journal. With no apparent irony, his latest WSJ column is entitled “How to Stop Socialized Health Care.” Too bad he didn’t follow his own advice in 2003 when pulling out all the stops to enact the biggest entitlement in four decades," —Daniel Mitchell, CATO at Liberty.

Quote of the day IV

I predict that allowing gays to serve openly [in the military] will be like allowing women on navy ships or even gay marriage. Lots of people fight it. Then it happens, it’s no big deal, and everyone forgets what they were so upset about.

—Benjamin H. Friedman

Link blag

George Will: The Obama administration's economic lawlessness.

NM: Flunking school for welfare.

Cato: Torture sucks. Don't do it.

NYT: Training the future police state.

TNR takes a peek at what health reform will look like.

NYT: How life began with RNA.

A creative solution for Social Security solvency.

Link blag

I endorse Will Wilkinson's ramblings on libertarian democraphobia.

Daily Beast looks back at the wackiest moments of Michele Bachmann, batshit crazy extraordinaire. Spoiler: She sees this as her divine calling!

Also, a manifesto for young voters.

TPM: Et tu, DeMint? Cato has more thoughts.

(video) Obama gets more respect from the press than Bush did. My guess is reporters stood for Bush during his first term. After 2005, not so much. I'll further speculate it's in part because they'd grown very accustomed to him by 2008, he seldom had anything bright to say, and at this point by any reasonable standard his presidency was a terrible failure.

Criticizing Obama shuts down conversations? I guess it's like how those of us who objected to Bush's policies when they were popular were said to hate America, etc.

WSJ: Meet Desirée Rogers, keeper of the Obama brand.

Ordinary Mark Thompson is serious about American exceptionalism, in a good way. William Brafford objects to the term.

It's official: The Obama administration loves MSNBC.

Link blag

NYT: Obama's judicial philosophy? Pragmatic, as ever.

Daily Beast: An interview with Bush's lawyers.

NYT: Interrogation Debate Sharply Divided Bush White House

Cato yawns at trusting Republicans on national security.

A chronicle of the anti-science intelligent design movement.

2006 NYT: What happens when a country outlaws all abortion? El Salvador did.

Obsidian Wings: Birth rate demographic developments are defying common wisdom. The Oklahoma GOP platform is quite hateful.

Finally, be safe, America, and finish your 9/11 coloring books.

Link blag

Jim Manzi makes the most compelling argument against torture.

1-800-[GET OTHER PEOPLE'S MONEY]... Cato's David Boaz bemoans.

Speaking of tax-and-spend, the Leftopia of Washington, D.C. is now charging residents for parking in their own driveway.

Mexican Senate passes bill decriminalizing drug possession for personal use.

Megan examines why general practitioners are underpaid.

Giving up on politics, a libertarian brainstorms new frontiers of freedom.

Hathos alert: Sarah Palin is a twitter.

An environmentally-friendly pizza box.

Masturbation has fatal consequences (Le livre sans titre, 1844)

Link blag

Why DOMA Must be repealed: Reason offers yet more reminders.

Cato: Obama promised to post bills online and wait 5 days between passing and signing them. So far, he's 1-for-11.

Why do Republicans think the public perceives them as obstructionists? Because of the media, of course.

Gays begin to marry in Iowa; world keeps spinning.

Jimmy Carter is just another clueless advocate of gun control.

The Federalist Society is now pro-torture?