Author Archives: Nuetzel

Obamacare’s Medical Road To Serfdom

03 Tuesday Feb 2015

Posted by in Government, Obamacare, Regulation, The Road To Serfdom

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The arrogance and shortsightedness of regulators and central planners is often astonishing and sometimes worthy of disgust. Here is a case of the latter, and it is one of the most damning things I have read about Obamacare, and that takes some doing.

Dr. Kristin Held is a physician who gained some notoriety last year when she live-tweeted a professional conference as ophthalmologists walked-out on a presentation about implementing and complying with Obamacare. More recently, she has written about the health care law’s perverse incentives for physicians. It is an excellent piece about a sickening effort at medical central planning by the government. Please read it!

What good can be said of a law that discourages physicians from performing procedures that would be of great benefit to most patients with a particular health issue; discourages physicians from tackling the more complex cases; encourages them to prolong an operation, having made the decision to operate. The standards by which outcomes are judged successful under Obamacare, and other rules governing remuneration to providers (Relative Value Units), represent crippling impediments to effective care and innovation in many areas of specialization. Here is part of Dr. Held’s summary:

“Consider again the perverse incentives created by government medicine. If I take a really long time operating — even though it subjects the patient to greater risk — and if I pick and choose who I will operate on, refusing the sickest, neediest patients, I am rated more highly by the government’s published “physician feedback” reports and hospital “performance scores” — and paid commensurately. If, on the other hand, I am skilled and quick and tackle the sickest, most challenging cases, subjecting me and my family to great risk, I am paid less or nothing and potentially punished. ”

HT: Dr. John Probst

Strangling By Stimulus

01 Sunday Feb 2015

Posted by in Government

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Will more government spending fix a weak economy? That is certainly a common refrain heard from economists and other pundits, including prominent members of the private business community. The historical record suggests otherwise, however, and there are practical reasons to doubt the efficacy of this sort of “fiscal stimulus.” Some of these are explored in “‘Timely, Targeted and Temporary?’ An Analysis of Government Expansions Over the Past Century“, from the Mercatus Center. In particular, countercyclical spending efforts have violated the “three Ts” often said to be required for successful demand-side policies. These efforts have been systematically late, badly targeted, and have resulted in permanent expansions in the resources absorbed by the government sector.

“Fiscal stimulus efforts going back to the 1930s consistently fail to meet the three Ts objective:

  • Improper timing. Policymakers have consistently struggled to properly time fiscal stimulus spending. In every postwar recession in the 20th century where stimulus spending was attempted, government spending peaked well after the economy was already in recovery. Policy lags—recognition, decision-making, implementation, and impact—are largely responsible for this fact.
  • Inefficient targeting. Going back to the New Deal, policymakers have targeted stimulus funds on the basis of politics rather than what delivers the most bang for the taxpayer buck. Further, individual policymakers cannot possess all the collective knowledge required to allocate and direct economic resources in the most efficient and effective manner, as markets do.
  • Permanent expansion of government. Stimulus funding has almost always led to permanent expansion in the size and scope of government. Indeed, the alleged need for immediate stimulus opens the door for expansions in government that might not have occurred under normal circumstances. On the rare occasions that the increased spending has been temporary, the costs have generally outweighed the benefits.“

As for inefficient targeting, I often hear that our nation’s infrastructural needs clinch the argument for stimulus spending. But those needs should be the focus of long-term planning and addressed on a continuing basis, not in bursts dictated by the state of the business cycle. Good projects should not be neglected in good times or bad, and there is no justification for undertaking a project if is not worthwhile on its merits. If increased spending can stabilize a weak economy, government should simply do something it does well: write checks. Who does infrastructure spending  help in those bad times? It certainly fails to address the basic human needs left unmet in a weak economic environment; it may or may not add high-paying construction jobs. (An aside: in the last recession, the stimulus program didn’t so much add construction jobs as it did accelerate certain “shovel-ready” projects.)

Proponents of government stimulus always have a culprit in mind for the economy’s ills: weak demand or under-consumption. They say government can lead the way out with more spending. This post on Sacred Cow Chips, “Keynesian Bull Chips“, disputes this point of view and provides some links on the topic, including this post by John Cochrane that is now ungated on his blog. Stimulus efforts are usually billed as temporary but rarely are. The expanded budgets always seem to remain expanded, and government absorbs an increasing share of the nation’s spending. Meanwhile, the value of government’s contribution to output is overstated, since most of the output is not subject to a market test or valuation.

The growth of government increasingly burdens private sector. Apart from tax distortions, the resources available to the private sector are gradually crowded and squeezed by the growth of public spending. Private investment is curtailed as government deficits absorb a growing share of private saving. Increasingly detailed regulation diminishes the private sector’s productivity. Robert Higgs at the Mises Institute asks: “How Much Longer Can the U.S. Economy Bear the Burdens?” That’s a very good question.

The opposite of expansionary fiscal policy is fiscal austerity: lower spending, and lower deficits. The budget sequester, originally passed in 2011, is a good example. Keynesians typically contend that austerity will weaken the economy, but the evidence often suggests the contrary. Here is a Scott Sumner post on that point. For robust economic growth, cut spending broadly, cut taxes, and deregulate.

Court Strength In The Constitution

30 Friday Jan 2015

Posted by in Judicial Branch

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An important function of the judicial branch of government is to defend the U.S. Constitution and the constitutional rights of individuals. In my view, deference on the part of courts to legislative decisions or to court precedent should be viewed with skepticism. The plain text of the Constitution should always come first. Beyond that, however, judges should not interject their personal opinions into decisions. Does this position support so-called “judicial activism”, or “judicial restraint”? Many legal thinkers reject that dichotomy because it embodies contradictions, failing to reliably categorize my position combining constitutional precedence with a rejection of political preference in jurisprudence. The pairing seems natural enough to me.

“Judicial activism” is often used as a pejorative, as Randy Barnett says at the link above, quoting a Boston Globe article that quotes him:

” ‘Most people who use the term don’t provide a coherent definition of it. It typically means judicial opinions with which they disagree,’ says Randy E. Barnett, a law professor at Boston University who considers himself a libertarian and a defender of ‘original intent’ in Constitutional matters. [He should have written ‘original meaning’ not “original intent” –RB.]”

According to Reason‘s Damon Root, Rand Paul calls himself a judicial activist. It would be interesting to hear exactly how he defines it, but he also purports to be something of a strict constitutionalist. In “Why Rand Paul’s Case for ‘Judicial Activism’ Scares Both Liberals and Conservatives“, Root discusses the interesting coincidence that contrary to Paul, both traditional conservatives and progressives seem to believe in judicial restraint. His explanation:

“What these two views share in common is that they each support what amounts to virtually unchecked majoritarian rule over certain aspects of American life. For conservatives, judicial deference means that lawmakers get the last word when it comes to banning birth control and prohibiting ‘homosexual conduct.’ For liberals, judicial deference means that lawmakers get the last word when it comes to bulldozing private property in the name of eminent domain. Each approach demands judicial passivity in the face of its preferred forms of government action.”

Of course, there are lovers of government power on both the left and the right. Rand Paul wants to distance himself from their kind, but many libertarians do not believe he will stick to principles of limited government as he campaigns for the GOP nomination.

Fifty Ways To Wreck Your Health Care

29 Thursday Jan 2015

Posted by in Obamacare

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It’s getting to be a challenge to keep track of the myriad ways in which Obamacare is screwing up the medical insurance and health care markets. This is a government initiative, after all, but was there ever a law so rife with unintended consequences, or a law implemented with such stunning incompetence? I’ve posted on the fallout from the so-called Affordable Care Act (ACA) a number of times in the past, but there’s always some new revelation at which to marvel. Here’s one you might not have heard, but it actually contains a bit of good news: some people are refusing Obamacare exchange subsidies, despite the sometimes strange fact that they qualify at all, which of course is the bad news.

“… some people who qualify for subsidies based on their income could afford to pay their own way. ‘There is no question that we are enrolling  people through these programs who would otherwise be considered middle-class or even affluent,’ says Ed Haislmaier, a senior research fellow for health policy studies at the right-leaning Heritage Foundation think tank. ‘We are seeing people with enrollment in these programs that have significant assets, but for whatever reason – usually a temporary reason – fall below the income line.’ Those reasons could range from early retirement to a midcareer job change. But whatever the case, some of those who are turning down subsidies are aware others are gaming the system, and they think it’s wrong.”

Well, apparently there is still some honor in the world, even in the face of seduction by the welfare state.

Obamacare contained provisions on electronic health records (EHRs) and was expected to leverage a separate federal initiative on EHRs in the 2009 economic stimulus bill. This too is proving disastrous. Beyond the privacy implications of making medical records accessible to the prying eyes of government bureaucrats and potential hackers, the mandate faced by providers to convert to the EHR system necessitates an extremely time-consuming and costly effort. And the penalty for failing to meet deadlines is a cut in Medicare payments to the provider. No one seems to have considered the supply-side incentive this might create:

“It would thus appear that one method for avoiding the fine would be to stop serving Medicare patients altogether. Well, that’s one way to ration care for the elderly.”

So, in the fashion typical of central planners, the bureaucrats have failed to consider the effects of their policies on real market conditions. The author quotes a recent piece in Politico on the EHR mandate:

“Rather than saving physicians and health care money, the program in effect has created a new industry — the medical scribe. About 100,000 of these glorified typists are expected to be working for doctors by 2020. ‘After five years I can’t really do anything I couldn’t do before the program started,’ says Martin O’Hara, a cardiologist who practices in northern Virginia. Computers make everything more legible, O’Hara says, but otherwise the payoff has been slim. At one hospital in the D.C. area, administrators were pulling their hair out over the huge fees charged to transmit data including routine lab and radiology tests. ‘I talk to EHR vendors all day long and many of them have these criminal-like practices of setting whatever price tag they want because they can,’ said a medical informatics officer who spoke on condition he not be named. … The slow progress of health IT has also put a drag on research.”

Finally, in a post on some basics of good (and bad) health care reform appearing in Mises Daily, Matt Battaglioli discusses the unavoidable reliance on arbitrary methods of rationing in centrally-planned health care systems. (I like that cartoon above, but it’s no joke.) That need is created by a mis-pricing of services. Subsidies prevent consumers from seeing the real cost of routine and non-catastrophic medical services as well as the ex ante, actuarial cost of catastrophic services. Then, unfortunately, the resultant excess demand tends to push costs upward without the natural restraint of a well-functioning market price mechanism. Battaglioli also bemoans the obstacles to competition in the medical field due to licensing requirements and their impact on the supply of care.

Obamacare is under threat on several fronts, including Congress, the courts, consumers, providers, and it’s own clumsy architecture. Apparently congressional Republicans will soon reveal their “one plan” (as described by John Boehner) for health care reform to replace Obamacare. We’ll see if they can do much better.

The Dire Wolf’s Collectivist Dues

24 Saturday Jan 2015

Posted by in Taxes

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Inequality does not imply poverty for anyone, and inequality is a reasonable outcome of voluntary economic interactions between individuals who vary in their ability to create value. But inequality arising from artificial advantages conferred by the force of government and cronyism is indefensible. Sheldon Richman draws this useful distinction between the market’s distribution of rewards, which is a consequence of an unequal distribution of value-creating energy, ingenuity and talent, as opposed to the unequal rewards of a system of centralized control in which subsidies flow to cronies, monopolists are protected, barriers to activity are erected and political elites enjoy the fruits of value-destroying privilege. Here’s a sample from Richman’s post:

“Unlike market inequality, political-economic inequality is unjust and should be eliminated. … How? By abolishing all direct and indirect subsidies; artificial scarcities, such as those created by so-called intellectual property; regulations, which inevitably burden smaller and yet-to-be-launched firms more than lawyered-up big businesses; eminent domain; and permit requirements, zoning, and occupational licensing, which all exclude competition. …

Instead of symbolically tweaking the tax code to appear to be addressing inequality—the politicians’ charade—political-economic inequality should be ended by repealing all privileges right now.”

And yet we get fatuous rants from Obama about the ravages of market inequality and more tweaking of the tax code. Tweaking is too kind a word. The State of the Union address last week was a collectivist’s wet dream, replete with visions of central planning and a long list of non-neutral incentives and favors for the president’s base. He did his best to stoke the flames of class division and envy. One must ask: how long can the surviving market economy and a shrinking share of actual taxpayers support the growing dependent class and the nonproductive state apparatus?

In “Uncle Sam Is Coming After Your Savings?“, Megan McArdle warns of the dire wolf waiting at the door of every hopeful saver and middle class taxpayer. She cites Obama’s proposed tax on college savings plans (529s) as one piece of evidence, and asks “How would you feel if they did this to Roth IRAs”?

“… the very fact that we are discussing taxation of educational savings — redistributing educational subsidies downward — indicates that the administration has started scraping the bottom of the barrel when seeking out money to fund new programs. Why target a tax benefit that goes to a lot of your supporters (and donors), that tickles one of the sweetest spots in American politics (subsidizing higher education), and that will hit a lot of people who make less than the $250,000 a year that has become the administration’s de facto definition of ‘rich’?”

Then there’s the proposed elimination of the stepped-up tax basis at death, covered a few days ago at this blog, and the increase in the tax rate on capital gains and already double-taxed dividends from 24% to 28%. Of this, and the more general issue of investment incentives and efficient revenue generation, McArdle says:

“… we don’t try to tax the bejesus out of capital income, much as many would like to; old capital flees, and new capital doesn’t get formed, as savers decide it’s not worth it.”

No we don’t, for now, but that lack of capital formation is a dire implication of heavier taxes for the economy. It is an achilles heal of the redistributionist policy agenda, as a lack of new capital undermines productivity, income growth and opportunity across the board. Middle-class economics? Please, no. Glenn Reynolds has some additional thoughts on McArdle’s column:

“The truth is, in our redistributionist system politicians make their careers mostly by taking money from one group of citizens that won’t vote for them and giving it to another that will. If they run short of money from traditional sources, they’ll look for new revenue wherever they can find it. And if that’s the homes and savings of the middle class, then that’s what they’ll target.

For the moment, Americans are safe. With both houses of Congress controlled by the GOP, Obama’s proposals are DOA. But over the long term, the appetite for government spending is effectively endless, while the sources of revenue are limited. Keep that in mind as you think about where to invest your money … and your votes.”

Statistics on inequality are brandished by progressives as if to prove the existence of a great market malfunction, but as Richman points out at the link given above, an extreme form of inequality is an inevitable outcome of privilege conferred by the state. On the other hand, market inequality is no tragedy for humankind. It is an artifact of the most peaceful, productive system of social coordination ever devised. Market inequality is not related in any way to the absolute welfare of the median earning family or the least fortunate, as Robert Higgs explains in this interesting essay:

“Probably no subject in the social sciences has created so much unnecessary heat. Yet, at the same time, economists actually know a great deal about it and can dispel the public’s confusion about it if they try.” [Emphasis added]

Step-Up, Pay-Up & Shut-Up

23 Friday Jan 2015

Posted by in Taxes

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Predicting support among relatively affluent leftists for President Obama’s proposed elimination of the step-up in tax basis at death is probably a simple matter of knowing whether they have a surviving parent or whether they have a bequest motive of their own. Perhaps I’m too cynical: it probably depends on age as well (as that may influence awareness of the tax provision). Still, I’ll bet my predictions would be highly accurate for “affluent leftists of a certain age”.

A technical digression: the cost basis of an asset is the price originally paid. The tax basis is the same until the owner’s death. When the asset is ultimately sold, the gain over and above the tax basis is taxed at the capital gains tax rate, now 20% (plus a 3.8% Medicare surtax for incomes greater than $200,000). However, under current law, when an asset is held until death, an heir’s tax basis is “stepped-up” from cost to the asset’s value at that time. No income tax is owed at the time of the inheritance even if the asset is sold immediately. The estate tax still applies to the asset’s value (depending on the size of the estate and whether there is a surviving spouse), but there is no capital gains tax liability until an heir sells the asset at a price greater than the stepped-up tax basis.

Our rhetorically-inclined president calls this feature of the income tax code a “loophole,” despite the fact that it is a legal feature of our ridiculously-complicated income tax and that inherited assets are still subject to the estate tax.

Obama’s proposal would eliminate the stepped-up basis at death. The increase in value would be subject to the capital gains tax at the time of inheritance (even if the asset is not sold) and subject to the estate tax (40%) if the size of the estate exceeds a threshold (about $5.4 million per individual). In addition, the President wants to increase the capital gains tax rate to 24.2% (plus 3.8% yields the oft-quoted 28%). These points are generally unaffected by whether the asset is held in trust for the full benefit of the heir. There are some exemptions in Obama’s proposal to eliminate stepped-up tax basis for small, family-owned businesses and for gains on primary residences. Also, gains would be taxed only after the first $100,000 per individual and only at the time of the second death for a couple.

The double taxation of capital gains in large estates might not evoke much sympathy, but it would ultimately have negative consequences for the economy. It would bleed capital out of productive, employment-generating private investments to feed a resource-hungry Leviathan, notwithstanding Obama’s high-minded pretensions. Perhaps worse is the impact on smaller estates held by conscientious middle-class savers who have understood the magic of compound growth. The aggrieved children of many such savers would find themselves in the grips of a significant income tax liability, which might require a fire-sale of assets in order to make payments to the IRS.

Complex features like the stepped-up basis are not hallmarks of a well-designed tax system. They tend to be promulgated as a way of offsetting other features of the tax code that would otherwise be punitive. If anything, this web of features is an impediment to efficient revenue generation. A simple tax code would minimize compliance costs and eliminate the many provisions that distort economic decisions. But complexity lends itself to political manipulation, which is the subtext for President Obama’s failure to propose any sort off meaningful tax simplification. Instead, he proposes even more complexity to be administered by that most trusted of institutions: the IRS. Fortunately, the president’s tax package stands no chance of becoming law, but it is illustrative of his statist agenda and his economic ignorance.

This post at Reason critiques this and other aspects of the President’s tax plan. This note in Forbes gives more detail about the proposal but is just a bit too optimistic about its potential to benefit the middle class. For a variety of reasons, the middle class is unlikely to benefit in the long-run. Slower economic growth will take its toll, and the sad truth is that Obama is seeking to increase middle-class dependence on the state.

Statists Make a Mess of Markets

20 Tuesday Jan 2015

Posted by in Markets, Regulation

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Government is not well suited to regulate markets in many respects. In the first place, regulation is never absent from free markets: consumers, competitors, technology and all factors of production such as labor ultimately represent a network of forces that regulate market outcomes. The power of market self-regulation, and the often destructive results of government regulation, are discussed by Howard Baejter in “There is No Such Thing as an Unregulated Market“. Beyond the efficiency with which markets direct resources, Baejter notes that markets regulate the quality and pricing of goods and services. Mark Perry reviews Baejter’s post approvingly and adds some thoughts of his own:

“… the ruthless consumer-regulators also waste no time praising, endorsing and recommending the products, restaurants, movies, services, sellers, contractors and businesses they like, both by supporting them with plenty of their regulatory certificates of approval (dollars), and by giving them positive, sometimes even glowing reviews on Amazon, Yelp, Rotten Tomatoes, eBay, Angie’s List, Uber, etc….”

Baejter’s concluding section covers some ways in which government regulation short-circuits healthy market regulation. Regulatory actions not only impose significant compliance costs, but they often have the effect of suspending market price signals and hampering voluntary adjustments to change that would otherwise lead to improved welfare. Furthermore, regulated firms are often successful in “capturing” regulators, enabling the most powerful players in an industry to manipulate and obtain regulatory treatment that blunts competition. As Baetjer says:

“… government regulation often “crowds out” regulation by market forces and consumer-regulators, and markets therefore operate less efficiently because the interests of the producers take priority over the interests of consumers…”

The Mises Daily ran a post in early January by Patrick Barron in which he elaborates on the truism that peaceful, voluntary exchange necessarily improves well-being relative to third-party interference. Such interference may take the form of forced exchanges, rules, mandates, price controls, or distortions from taxation. A recent post on Sacred Cow Chips, “The State and the Invisible Future Lost“,  emphasized the sacrifice of human well-being brought on by over-regulation. From that post:

“Our society routinely destroys economic opportunities as a matter of policy. This includes immediate discouragement of economic activity via tax disincentives and regulatory obstacles as well as lost capital investment and innovation. And it includes actions that grant protected status for monopolists, a steady by-product of the regulatory state.“

Record Hot Baloney

18 Sunday Jan 2015

Posted by in Global Warming

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It’s easy to make big headlines that serve a policy agenda when you can control the process generating “scientific” data. Here’s the latest in an ongoing fraud perpetrated by NASA, NOAA and a few other organizations. The disinformation is happily scooped up and reported by the unsuspecting news media, in this case The Wall Street Journal. The headline says that 2014 was the warmest year on record back to 1980, but there are several important respects in which the report from NASA and NOAA is misleading.

The surface temperature records maintained by NASA and NOAA (and others) utilize the same source data (despite NASA’s claim that the two series are “independent”), but they are heavily adjusted by the respective agencies. We can all probably agree that more recent temperature measurements (the raw data) are more reliable due to the availability of better and more numerous instruments (particularly for ocean surface temperatures). However, combining recent measurements with older data in a way that assures comparability is difficult over more than a few decades. Weather stations come, go, and relocate, environmental conditions around stations change with urbanization and airport expansions, and new measurement techniques are introduced.

Constructing a consistent temperature series over 130+ years at the world or regional level is therefore subject to much controversy. Here is a page with links to several good posts of the problems inherent in these efforts. Data is “infilled” and sometimes deleted, and statistical techniques are often applied in an effort to achieve consistency over time. However, it is curious that the NASA and NOAA adjustments over time seem to pivot around the levels of the 1950s and 1960s, as if to suggest that the temperatures measured in those decades are the most reliable part of the series. Take a look at the “gifs”in this post, which show temperatures before and after adjustments. An apparent consequence of the NASA / NOAA statistical techniques, which may seem even more curious to the casual observer, is that new observations can influence the entire temperature series. That is, adding 2014 temperatures to the series may lead to fresh downward adjustments to 1936 temperatures, if it suits the agencies. By the way, 1936 was a very warm year, but according to these agencies, it’s been getting less warm.

Another fascinating aspect of the report on 2014 temperatures is the obvious attempt to propagandize. This Bob Tisdale post sheds light on three serious omissions in the report and the related effort to “spin” the findings for the press:

1)  The range of uncertainty cited by NOAA in background documents indicates that the small margin (0.04 deg C for NOAA, 0.02 deg C by NASA) by which the reported 2014 global temperature exceeds the previous high is within the confidence interval around the previous high. By their own standard, it was “more unlikely than likely”that the 2014 temperature was the warmest on record, but that is not what the agencies report in their “Highlights.”

2) The report states that “This is the first time since 1990 the high temperature record was broken in the absence of El Niño conditions at any time during the year in the central and eastern equatorial Pacific Ocean….” Yet there were El Nino conditions elsewhere in the Pacific in 2014.

3) “NOAA failed to discuss the actual causes of the elevated global sea surface temperatures in 2014, while making it appear that there was a general warming of the surfaces of the global oceans.”

Tisdale notes elsewhere that the tiny margins of “record warmth” reported by NASA and NOAA contribute to a growing disparity between reported “actual temperatures” and those projected by climate warming models. The “Warmist” community will view the NASA / NOAA findings favorably, as the new “record high” supports their narrative,” providing new fodder for the agenda to end the use of fossil fuels and to regulate activities deemed “unsustainable.” Unfortunately, the misleading reports are likely to seem credible to the general public, which is largely ignorant of the agencies’ rampant manipulation of temperature data.

Hat Tip: Watts Up With That? and cartoonist Josh!

Francis’ Statist Vision Not Shared By Venezuelan Clergy

16 Friday Jan 2015

Posted by in The Road To Serfdom

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Some people lament our tolerance in the U.S. for “religious crazies.” Of course, these misgivings might reflect a certain view that religious people are crazy to begin with, as well as an outright hostility to constitutional protections of religious freedom. Do they mean that religious speech should not be protected? That one’s religious beliefs should not inform their political views? That religious freedom should not exempt anyone from rules imposed by government (the dispute in King vs. Burwell)? These possibilities cover a lot of ground, but none of them stands up to scrutiny in a free and liberal society. In fact, the apparent resentment of the Left toward “religious crazies” largely misses the point: the very expansion of government activity, in kind, degree and complexity, often brings the state into conflict with religious imperatives. And regardless of one’s stance on the taxation of religious activity, exemptions necessarily become more controversial in the sort of high-tax environment needed to fund big government.

But it is not just the secular Left that fails to recognize the inherent conflict between big government and religious liberty. Pope Francis himself seems oblivious to the dangerous implications of big government for religious freedom. His apostolic exhortation for greater reliance on the state to care for the poor simultaneously embraces socialism and condemns capitalism. I take no issue in principle with the provision of a social safety net, but the Pope should be more results-oriented in assessing different forms of social organization and their impacts on poverty. Big government typically fails to achieve the kinds of humane objectives usually espoused by the Left. The sad “road to serfdom” has played out many times in the past. In fact, in an apparent rebuff, Pope Francis’ Venezuelan Archbishops just issued a strong condemnation of socialist solutions to poverty. From Investors.com:

“The Venezuelan archbishops make the useful observation that if capitalist economies have problems, socialist alternatives are far worse for the poor and needy. Could it be the pope’s Latin American colleagues on the ground in the cesspool of communism are the ones who can get through to the holy father on economics?”

The Pope would do well to listen to his Venezuelan flock or to this great economic thinker, Thomas Sowell, who emphasizes the inability of government to craft solutions that “do no harm.”

Apart from lousy economic results, basic freedoms are seldom immune to compromise under the grip of big government. These reports from China should give the pontiff pause. The Chinese Communist Party is said to feel “threatened” by the growth of Chinese Christianity, and the government is cracking down, dismantling religious symbols and even destroying some churches. Similar outcomes have followed authoritarian governments many times in the past, and of course this isn’t the first crackdown on “religious crazies” under Chinese communism. No one should be surprised. Capitalism, with its miracle of market self-regulation, is the only economic system that is truly consistent with freedom and diversity of religion.

The EU Opts For Agro-Federalism

14 Wednesday Jan 2015

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An opinion piece by Matt Ridley in The Times (UK) alerted me to the European Union’s imminent decision to allow member states to adopt their own rules regarding the planting and cultivation of genetically modified crops. The measure was approved overwhelmingly by the EU Parliament today. The talking points released by the EU emphasize that a member country can ban a GM crop even if it has been approved by the EU’s food safety authority. And the rules state:

“While cultivation is recognised to be an issue with strong national or local dimensions, current EU legislation on GMOs offers limited possibilities to Member State to decide on GMO cultivation on their territory.”

It is likely that the additional flexibility for members to impose their own bans will lead to more flexibility in the process of authorizing new varieties at the centralized level. Contrary to much of the reporting offered by Greens, who would have us believe that GE crops are all but prohibited in Europe, there are many varieties of GE crops that are already authorized by the EU. If you don’t believe it, this database may convince you.

Ridley provides an interesting account of the politicking that led to the legislation. Among EU members, the UK and Spain are the most eager to expand cultivation of GE crops, while other nations supported the measure since it seems to enhance their own sovereignty on an important agricultural issue. Nevertheless, critics of the legislation complain that it is poorly worded. Greens are unhappy because they see it as an entry for GE crops through the “back-door.” One biotech group complained that the law allows members to ban GE crops on “non-scientific grounds.”

Ridley also emphasizes some changes in thinking among traditional opponents of GE in Europe. The Greens are aware that the use of pesticides might be curtailed by the use of GE varieties. The yield-challenged organic movement also has much to gain via adoption of GE crops, and Ridley points out the inherent fallacy at the root of their past opposition:

“Ironically, the organic movement happily uses crops whose genetic material has been modified in a much less careful way — by gamma rays or chemical mutagens — for these are categorised as ‘conventional’ crops and lightly regulated. Golden Promise barley, used by organic brewers, for example, was made in a nuclear reactor.”

Federalism is a good way to promote the union of sovereign entities with disparate views on a range of issues, such as agricultural practices. However, sustaining a federalist approach requires a determination to restrain central government bureaucrats and busy-bodies who cannot control their urges to control others. For the good of humanity, let’s hope the EU can succeed in this instance.