Category Archives: Uncategorized

Don’t Be Cowed: Shelter, But Get Outside

29 Sunday Mar 2020

Posted by in Pandemic, Uncategorized

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As the coronavirus ordeal continues, it’s astonishing to hear the refrain from government officials, celebrities, talking heads, and social media scolds to “stay inside“. President Trump did it again today at his press conference. WTF? In northern England a man was arrested for “unauthorized walking”. Orders to “shelter in place” are often interpreted to mean “don’t go outside your home” except when necessary, as if active shooters are marauding through neighborhoods. In fairness, I don’t think anyone in the U.S. has yet been arrested for taking a walk, except for this incident, which is bad enough. Still, the misplaced emphasis of such rhetoric is confusing to people. The threat to civil liberties is one thing, but the suggestion that we should all stay inside is itself a threat to public health.

If you can get out of your home without coming face-to-face with others, you SHOULD get outside whenever you can! Get out in the sun and out of the forced-air, dehumidified environment that is your dwelling unit. Get some vitamin D and breath some fresh, humid air.

Here’s a personal anecdote: My yard backs-up to an extensive wooded area of a huge corporate campus. It was built years ago, and ever since, the company has welcomed residents of our neighborhood to walk the grounds. The company even maintains an access road that connects our street to a route that is often more convenient than our main entrance. A very good neighbor. I was out walking along one of the roads through the campus yesterday. Employees have not reported to work there for three weeks due to an employee’s diagnosis with the virus, so it was very quiet. A security guard drove by and stopped to tell me that I could no longer walk the campus due to the coronavirus. “That’s corporate policy now with this thing…”, he trailed off. As if my solitary stroll through the campus would contribute to the spread of the virus! Again, WTF? Of course, it is private property and they are entitled to make their own rules. I’m okay with that, but the virus is nonsensical as a rationale.

Public parks are closed in many areas. I understand the wisdom of discouraging people from mingling and preventing the virus’s spread via surfaces like park benches and playground equipment. Nevertheless, I believe parks should remain open to individuals or families for walking, running or resting. Just keep your distance.

You are highly unlikely to catch the virus outside unless you are in close proximity to an individual with the virus. Even then it’s unlikely. Yes, it can survive in air for about three hours, carried along in fine, exhaled aerosols. That is of much greater concern indoors, where the air is still and its volume limited. It is quickly dispersed outdoors into the vast atmosphere. And again, the virus is likely to degrade quickly in warm temperatures (> 54 degrees), direct sunlight, and high absolute humidity. All three are covered in this report. So enjoy your yard, your porch, your street, or at least open your windows when you can.

High U.S. Income Drives Health Spending

05 Thursday Mar 2020

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U.S. health care spending is not out-of-line internationally, despite whatever shortfalls our health care system might embody. By that, I mean that health care spending is almost exactly what U.S. income levels would predict based on cross-country statistical evidence. Other countries are certain to spend more as their own incomes grow. Take another look at the relationship shown in the chart above: it predicts that health care spending per capita grows 1.8% for every 1% increase in household income. In fact, the share of consumption devoted to health care rises as income rises. Quite simply, the slope of that curve means that health care qualifies as a luxury good.

The chart and conclusions above come from an exhaustive analysis at the Random Critical Analysis (RCA) blog, which is also summarized nicely by Alex Tabarrok at Marginal Revolution (to whom I owe a debt of gratitude for several great topics of late). The analysis goes further in asserting that income causes health care spending.

“When real income changes, health spending responds in a manner that is consistent with cross-sectional results…. It takes 3-4 years for payers and for providers to completely respond through reimbursement policy, premiums, services offered, and so on. Still, the strength of the long-run relationship is nonetheless readily apparent in the US time series. … Comparable results are obtained in OECD data with similar household income measures.”

So we spend more on health care because we can and, in a strong sense, because we want to. And here is an interesting wrinkle: we actually consume more health care services, we don’t just pay higher prices. Health care prices do increase with income, but at a slower rate than income. This implies that higher quantities of health care are delivered in high-income countries. As the post at RCA notes, health care prices in the U.S. are not “inexplicably high”.

If you visit the post at RCA, note that it’s very easy to browse between sub-topics from the list of sub-links on the right. The analysis covers many other nuances. I’ll mention one more very important one, which is emphasized by Tabarrok: our high level of health care consumption does not involve a loss of goods consumed from other sectors. In fact, quite the opposite. The prices of most goods and services have declined relative to income over the years:

“The typical American household is much better fed today than in prior generations despite spending a much smaller share of their income on groceries and working fewer hours. I submit this is primarily a direct result of productivity. We can produce food so much more efficiently that we don’t need to prioritize it as we once did. The food productivity dividend, as it were, has been and is being spent on higher-order wants and needs like cutting edge healthcare, higher amenity education, and leisure activities. … Similar patterns have doubtless been playing out in other essential consumption categories.

… these trends indicate that the rising health share is robustly linked with a generally constant long-term of increasing in real consumption across essentially all other major consumption categories.”

The share of income dedicated to health care in the U.S. is not a dysfunction in the health care sector, nor is it reflective of any dysfunction. That doesn’t mean there are no dysfunctions, however: our health insurance system severs the economic link between consumers and providers, nullifying the price incentives that normally yield effective market outcomes. price transparency is a casualty of the system as well; flaws in the Affordable Care Act create incentives for consolidation in health care delivery, undermining competitive forces; and tax deductibility of employer-provided coverage is a subsidy to those best able to pay for medical expenses and health care coverage.

There is no doubt that these peculiarities lead to suboptimal combinations of services and outcomes. I have written about that in several posts, including “Hospital Price Insanity” in December of 2019. Certain services are vastly overpriced; utilization levels suggest that expensive technology is unnecessarily duplicated; resources are over-allocated to medical tests as well as emergency rooms; and certain markets are underserved. As for outcomes, comparisons are difficult given the lifestyle issues that feed demand for health care in the U.S., such as obesity and smoking. This point too is treated in the long post at Random Critical Analysis.

Other health care systems certainly have their own dysfunctions (see my post “Single Payer: Queue Up and Die Already“, from January). There are undoubtedly wasteful  misallocations of resources and lost opportunities for improvements in care in all these systems. But in terms of the share of resources we dedicate to health care, our system places us at a point along the same locus toward which other developed nations converge: health care spending is reliably related to income. There are problems, but that is not one of them.

 

 

Statism and Self-Harm

18 Tuesday Feb 2020

Posted by in Free markets, Government Failure, Uncategorized

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Some have a tendency to think their problems can be solved only through the intervention of some powerful, external force. That higher power might be God, but at a more temporal level, government is often presumed to be a force to fix all things that need fixing. “There oughta be a law” is a gut reaction to things we find injurious or that offend; government has the resources, or the coercive power to get the resources, to undertake big, appealing projects; and of course government has the coercive power to “rearrange the deck chairs” in ways that might satisfy anyone’s sense of justice and fairness, so long as they get their way. Whenever people perceive some need they believe to be beyond their private capacity, or mere convenience, government action is the default option, and that’s partly because many think it’s the only option.

That’s the appeal of “democratic socialism”, to use a name that unintentionally emphasizes a very real danger of democracy: the tyranny of the majority. It’s a dismal way station along the road to serfdom, to borrow a phrase from Hayek.

Government, however, repeatedly demonstrates it’s sheer incompetence and its expedience as a vehicle for graft. And it’s not as if these failures go unrecognized. Everyone knows it! This is nowhere more true than when the state interferes with private markets or attempts to steer the economy’s direction at either an aggregate or industry level. But here we have a dark irony, as told by Nick Gillespie at Reason:

“Again and again—and in countries all over the world—declines in trust of government correlate strongly with calls for more government regulation in more parts of our lives. ‘Individuals in low-trust countries want more government intervention even though they know the government is corrupt,’ explain the authors of a 2010 Quarterly Journal of Economics paper. That’s certainly the case in the United States, where the size, scope, and spending of government has vastly increased over exactly the same period in which trust and confidence in the government has cratered. In 2018, I talked with one of the paper’s authors, Andrei Shleifer, a Harvard economist who grew up in the Soviet Union before coming to America. Why do citizens ask a government they don’t believe in to bring order? ‘They want regulation,’ he said. ‘They want a dictator who will bring back order.'”

Against all historical evidence and forebodings, the wish for a benevolent dictator! As if it’ll be different this time! Are we all statists? Certainly not me, but the Left is full of them. One prominent example is columnist Tom Friedman of the New York Times, who has expressed the sometimes fashionable view that “things get done” under dictatorships:

“One-party autocracy certainly has its drawbacks. But when it is led by a reasonably enlightened group of people, as China is today, it can also have great advantages. … That one party can just impose the politically difficult but critically important policies needed to move a society forward in the 21st century.”

Tell it to the interred Kazakh and Uighur Muslims undergoing “reeducation” in China. The Right has its share of statists as well, and it is typically expressed in desires for enforced social conservatism.

People seem to have a vague idea that everyone else must either be misbehaving or in misery. And despite the well-tested fallibility and lack of trust in government, people persist in believing that the public sector can conjure magic to solve their problems. But the state gets bigger and bigger while solving few problems and exacerbating others. In fact, as government grows, it makes rent seeking a more viable alternative to productive effort. Like the giant zero-sum game that it is, the expansion of government provides the very means to pick away at the wealth of others. When faced with these incentives, people most certainly will misbehave on small and large scales!

The truth is that individuals hold the most potent regulatory force in their own hands: the voluntary nature of trade. It protects against over-pricing, under-pricing, and inferior quality along many dimensions, but it demands discipline and a willingness to walk away. It also demands a willingness to put forth productive effort, rather than coveting the property of others, and taking from others via political action. To paraphrase P.J. O’Rourke, if you think things are expensive now, wait till they’re free!

End of Snowfalls Is Greatly Exaggerated

03 Monday Feb 2020

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Snowcover Anomoly

Everyone seems to think it snowed more in their youth than in recent years, but that’s generally incorrect, at least for for late-stage baby boomers, Gen Xers, and Millenials. Gregory Wrightstone thought the same thing as he reflected on his youth in Pittsburgh, but after checking snowfall records he was surprised to find an upward trend. In “Warming and the Snows of Yesteryear“, Wrightstone says his look at the records from other areas showed similar upward trends. The chart above from NOAA shows the Northern Hemisphere has experienced mostly positive snowfall anomalies over the past 20 years. So, the truth is that snowfalls have not decreased over the last 50+ years, contrary to our fond memories of big snows in childhood. Interestingly, Thomas Jefferson thought the same thing in 1801, but I’m not sure whether he was right.

We’ve been told by climate alarmists that “snowfalls are a thing of the past” due to global warming (The Independent in March, 2000). If anything, however, snowfalls have increased, and big snowfalls still happen. As with so many climate predictions over the years, this too is a bust. Most of those predictions have relied on predictive models fitted with an inadequate historical record of data, and the models are inadequately specified to capture the complexities of global climate trends. Don’t bet the house on them, and don’t presume to bet my house on them either, please!

Bernie Sanders and the Brutal Bros

24 Friday Jan 2020

Posted by in Collectivism, Leftism, Tyranny, Uncategorized

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Some of Bernie Sanders’ most devoted fans have an unfortunate brutalitarian streak. The violent strain of so-called Bernie Bros aren’t as isolated as one might hope. First, of course, there was James Hodgkinson, the BB who attempted to assassinate Republican members of Congress at a congressional baseball game practice, seriously injuring Rep. Steve Scalise. Now, campaign field organizers for Sanders in Iowa and South Carolina have been captured on film proposing gulags, re-education camps, sentencing billionaires to hard labor, and shooting or beheading those opposed to Sanders’ policies. And much more. And they say this in all seriousness. What nice people have been assigned positions of responsibility within the Sanders campaign organization! Watch it for yourself at the link above.

Should we be surprised? No: these are advocates of forced collectivism, and if their favorable perspective on coercive power wasn’t enough of a tip-off, recent history suggests that many among them are truly ready and willing to do violence. The brutal and murderous history of collectivist regimes the world over demonstrates the tendency well enough. Stalin, Mao, Pol Pot, Castro and too many other leftist tyrants left bodies strewn in their wake as they sought to enforce their ideology. It’s no coincidence that the American Left holds the murderous Che Guevara in such high esteem. Black Lives Matter and Antifa have both perpetrated violent acts, and members of the Leftist media have openly advocated physical attacks on their political opponents. And then we have these Bernie Bros.

I feel compelled to review a bit of background on Bernie Sanders, the batty old communist who has managed to convince large numbers of poorly educated “intellectuals” that he knows the path to utopia. The nicer ones imagine that he’s a man of the people, though he hasn’t worked a day in his life at anything except agitation and rent seeking. He is an inveterate public mooch. His life history as a politician and as a person is rather unflattering.

I’ve used this Iowahawk (David Burge) quote about Sanders before:

“Who better to get America back to work than a guy who was actually fired from a Vermont hippie commune for being too lazy.”

Apparently, Barack Obama is not a Bernie Bro:

“Obama has told people in private that Sanders is both temperamentally and politically unfit to beat Trump in the 2020 general election, these people say. Among his concerns are Sanders’ strident form of politics and confrontational manners where he was known not to seek compromise during his long years in the US senate.”

And say what you will about Hillary Clinton, but her opinion of Sanders comports with much of what we know about The Bern:

“He was in Congress for years. He had one senator support him. Nobody likes him, nobody wants to work with him, he got nothing done.”

At least the Bernie Bros have taken their masks off before getting too far. Give Leftists power and they all will.

Poverty Propaganda Smears the U.S.

03 Friday Jan 2020

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Fake poverty statistics are a popular tool among America’s critics, both internal and external. Warren Meyer has a great post on these misleading metrics, which seem to be presented with the utmost sincerity by their proponents. Or are they?

A mis-step in these calculations is in taking relativism to absurd lengths: Relative median incomes are of interest across countries, of course, or at any fixed percentile. But how about comparisons of incomes relative to median income across countries? As Meyer ably explains, that kind of comparison is not only meaningless but actually misleading.  The chart at the top of this post is an example of what he means, taken from statistics published by the World Economic Forum (WEF):

“Relative child poverty is a metric based on the country’s median income — how many kids live in families with income that is X% of the median. 

If you click on the source [WEF], the headline presents this as ‘These rich countries have high levels of child poverty.’ The implication is that the US has more child poverty than Latvia or Poland or Cyprus or Korea and only slightly less child poverty than Mexico and Turkey.  But does it really mean this? No. This chart is a measure of income equality, NOT the absolute well-being of children.

Many of the countries ahead of the US are there not because their poor are well off, but because their median income is so much lower than ours. In fact, you will notice the lack of African and Asian countries in this. I will bet a lot of money that certain countries in Africa and Asia everyone knows to be dirt poor would beat out the US in this, thus making the bankruptcy of this metric obvious.

Take Denmark in the #1 spot. It looks like 20% more kids in the US live in poverty than in Denmark. But per the OECD, the US has a median income 41% higher than Denmark. So what it really means is the US has 20% more kids living under an income bar that is set 41% higher. How can this possibly have any meaning whatsoever, except to someone who wants to make the US look bad?”

So the metric seems designed to take advantage of the compression of incomes in poor countries to make them look better than they really are in terms of child poverty.

This is not an isolated example. Meyer offers other examples of distorted poverty statistics that would show 0% relative poverty if everyone earned exactly $1 per year! He also cites Census Bureau statistics showing roughly constant levels of poverty in the U.S. over 60 years while ignoring the impact of taxes and transfer payments. Correcting that “oversight” results in substantial declines in poverty.

Meyer closes with a postscript reminding us of the ongoing human progress in overcoming penury:

“Well, in 1820, 94 percent of the world’s population lived in extreme poverty (less than $1.90 per day adjusted for purchasing power). In 1990 this figure was 34.8 percent, and in 2015, just 9.6 percent. … In the last quarter century, more than 1.25 billion people escaped extreme poverty – that equates to over 138,000 people … being lifted out of poverty every day.

The credit goes to free market capitalism.

Keeping My Resolution Starts With the Bee

01 Wednesday Jan 2020

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I’m too lazy to check the archives right now, but I’m sure I’ve said this once before: I resolve to mix in more brief posts in the new year. My blogging hours (sometimes minutes) are limited on a day-to-day basis, so it’s taking too many days to wrap-up posts. My son says I should break them into parts. Maybe, but that won’t reduce the time I spend on a given topic.

Another motive for my resolution: I see so many items I’d like to share here, but I put them off in order to get back to a draft. I have to go where the whiffs of inspiration take me in a given session. But then… I either forget the short items or something else comes along to excite my long-windedness.

So, here is my first “short-form” blog share of 2020, from the Babylon Bee in early 2017:  

“Culture In Which All Truth Is Relative Suddenly Concerned About Fake News”

The piece reminded me of when poor Kellyanne Conway was castigated by the Left for using the expression “alternative facts” in reference to attendance at Trump’s inauguration. She’ll be fine, of course, but the photo comparison favored by the Left used an early pre-ceremony photo for Trump in 2017 and a peak-crowd photo for Obama in 2009. The Obama crowd was almost certainly larger than the real Trump crowd, but the whole thing was sort of a big “so what?”, especially given the well known political leanings of the local population.

Both Left and Right have been selectively reporting and distorting news (and editing photos) for a long time, the rise of so-called “fact checkers” notwithstanding. Alternative “facts” indeed! But our leftist friends are constant champions of relativism, often to the point of kookiness, while blissfully unaware that their “truths” and “facts” are severely shaded.

This was supposed to be short! Gah! More fake news! With that, here are some choice quotes from the Bee:

“One Oregon man, who rejects the idea that humanity can even be sure the universe exists in any meaningful sense, was nonetheless disturbed by the idea that websites could publish completely false information, for anyone in the world to read. …

Tech conglomerates such as Facebook and Google have vowed to meet the trend head-on, assuring the public that they are taking bold steps to filter out any news that contradicts the version of truth that they decide is acceptable.”

Inequality and Inequality Propaganda

21 Saturday Dec 2019

Posted by in Income Distribution, Inequality, Uncategorized

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I’m an “inequality skeptic”, first, with respect to its measurement and trends; and second, with respect to its consequences. Economic inequality in the U.S. has not increased over the past 60 years as often claimed. And some degree of ex post inequality, in and of itself, has no implication for real economic well-being at any point on the socioeconomic spectrum, the growls of class-warmongers aside. So I’m not just a skeptic. I’m telling you the inequality narrative is BS! The media has been far too eager to promote distorted metrics that suggest widening disparities and presumed injustice. Left-wing politicians such as Bernie Sanders, Elizabeth Warren, and Alexandra Ocasio-Cortez pounce on these reports with opportunistic zeal, fueling the flames of class warfare among their sycophants.

Measurement

Comparisons of income groups and their gains over time have been plagued by a number of shortcomings. Jeff Jacoby reviews issues underlying the myth of a widening income gap. Today, the top 1% earns about the same share of income as in the early 1960s, according to a recent study by two government economists, Gerald Auten and David Splinter.

Jacoby recounts distortions in the standard measures of income inequality:

  • The comparisons do not account for tax burdens and redistributive government transfer payments, which level incomes considerably. As for tax burdens, the top 1% paid more taxes in 2018 than the bottom 90% combined.
  • The focus of inequality metrics is typically on households, the number of which has expanded drastically with declines in marriage rates, especially at lower income levels. Incomes, however, are more equal on a per capital basis.
  • The use of pension and retirement funds like IRAs and 401(k) plans has increased substantially over the years. The share of stock market value owned by retirement funds increased from just 4% in 1960 to more than 50% now. As Jacoby says, this has “democratized” gains in asset prices.
  • A change in the tax law in 1986 led to reporting of more small business income on individual returns, which exaggerated the growth of incomes at the high-end. That income had already been there.
  • People earn less when they are young and more as they reach later stages of their careers. That means they move up through the income distribution over time, yet the usual statistics seem to suggest that the income groups are static. Jacoby says:

“Contrary to progressive belief, America is not divided into rigid economic strata. The incomes of the wealthy often decline, while many taxpayers go from being poor at one point to not-poor at another. Research shows that more than one-tenth of Americans will make it all the way to the top 1 percent for at least one year during their working lives.”

Mark Perry recently discussed America’s record middle-class earnings, emphasizing some of the same subtletles listed above. A middle income class ($35k-$100k in constant dollars) has indeed shrunk over the past 50 years, but most of that decrease was replaced by growth in the high income strata (>$100k), and the lower income class (<$35k) shrank almost as much as the middle group in percentage terms.

Causes

What drives the inequality we actually observe, after eliminating the distortions mentioned above? The reflexive answer from the Left is capitalism, but capitalism fosters great social and economic mobility relative to authoritarian or socialist regimes. That a few get fabulously rich under capitalism is often a positive attribute. A friend of mine contends that most of the great fortunes made in recent history involve jobs for which the product or service produced is highly scalable. So, for example, on-line software and networks “scale” and have produced tremendous fortunes. Another way of saying this is that the marginal cost of serving additional customers is near zero. However, those fortunes are earned because consumers extract great value from these products or services: they benefit to an extent exceeding price. So while the modern software tycoon is enriched in a way that produces inequality in measured income, his customers are enriched in ways that aren’t reflected in inequality statistics.

Mutually beneficial trade creates income for parties on only one side of a given transaction, but a surplus is harvested on both sides. For example, an estimate of the consumer surplus earned in transactions with the Uber ride-sharing service in 2015 was $1.60 for every dollar of revenue earned by Uber! That came to a total of $18 billion of consumer surplus in 2015 from Uber alone. These benefits of free exchange are difficult to measure, and are understandably ignored by official statistics. They are real nevertheless, another reason to take those statistics, and inequality metrics, with a grain of salt.

Certain less lucrative jobs can also scale. For example, the work of a systems security manager at a bank produces benefits for all customers of the bank, and at very low marginal cost for new customers. Conversely, jobs that don’t scale can produce great wealth, such as the work of a highly-skilled surgeon. While technology might make him even more productive over time, the scalability of his efforts are clearly subject to limits. Yet the demand for his services and the limited supply of surgical skills leads to high income. Here again, both parties at the operating table make gains (if all goes well), but only one party earns income from the transaction. These examples demonstrate that standard metrics of economic inequality have severe shortcomings if the real objective is to measure differences in well-being. 

Economist Robert Samuelson asserts that “workaholics drive inequality“, citing a recent study by Edward E. Leamer and J. Rodrigo Fuentes that appeals to statistics on incomes and hours worked. They find the largest income gains have accrued to earners with high educational attainment. It stands to reason that higher degrees, and the longer hours worked by those who possess them, have generated relatively large income gains. Samuelson also cites the ability of these workers to harness technology. So far, so good: smart, hard-working students turn into smart, hard workers, and they produce a disproportionate share of value in the marketplace. That seems right and just. And consumers are enriched by those efforts. But Samuelson dwells on the negative. He subscribes to the Ludditical view that the gains from technology will accrue to the few:

“The Leamer-Fuentes study adds to our understanding by illuminating how these trends are already changing the way labor markets function. … The present trends, if continued, do not bode well for the future. If the labor force splits between well-paid workaholics and everyone else, there is bound to be a backlash — there already is — among people who feel they’re working hard but can’t find the results in their paychecks.“

That conclusion is insane in view of the income trends reviewed above, and as a matter of economic logic: large income gains might accrue to the technological avant guarde, but those individuals buy things, generating additional demand and income gains for other workers. And new technology diffuses over time, allowing broader swaths of the populace to capture value both in consumption and production. Does technology displace some workers? Of course, but it also creates new, previously unimagined opportunities. The history of technological progress gives lie to Samuelson’s perspective, but there will always be pundits to say “this time it’s different”, and it probably sounds heroic to their ears.

Consequences

The usual discussions of economic inequality in media and politics revolve around an egalitarian ideal, that somehow we should all be equal in an absolute and ex post sense. That view is ignorant and dangerous. People are not equal in terms of talent and their willingness to expend effort. In a free society, the most talented and motivated individuals will produce and capture more value. Attempts to make it otherwise can only interfere with freedoms and undermine social welfare across the spectrum. This post on the Declination blog, “The Myth of Equality“, is broader in its scope but makes the point definitively. It quotes the Declaration of Independence:

“We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the Pursuit of Happiness.”

The poster, “Thales”, goes on to say:

“The context of this was within an implied legal framework of basic rights. All men have equal rights granted by God, and a government is unjust if it seeks to deprive a man of these God-given rights. … This level of equality is both the basis for a legal framework limiting the power of government, and a reference to the fact that we all have souls; that God may judge them. God, being omniscient, can be an absolute neutral arbiter of justice, having all the facts, and thus may treat us with absolute equality. No man could ever do this, though justice is often better served by man at least making a passing attempt at neutrality….”

Attempts to go beyond this concept of ex ante equality are doomed to failure. To accept that inequalities must always exist is to acknowledge reality, and it serves to protect rights and opportunities broadly. To do otherwise requires coercion, which is violent by definition. In any case, inequality is not as extreme as standard metrics would have us believe, and it has not grown more extreme.

April 22: Happy Human Achievement Day!

21 Sunday Apr 2019

Posted by in Free markets, Free Trade, Human Welfare, Uncategorized

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By way of celebrating human ingenuity, I’ll be driving 600 miles on Monday in a beautiful sedan powered by high-octane fuel. I’ll be clothed in incredibly comfortable fibers and have access to a great variety of listening amusements via satellite. The celebration will continue when I arrive home. I’ll enjoy the comfort of climate-control, electric power, modern plumbing, a refrigerator and pantry full of agricultural bounty, delicious wine, and even more incredible access to entertainment and intellectual pursuits. But it’s not just the goods and technology I’ll celebrate. I’ll also raise a glass to the fabulous, free-market institutions that have made all this possible, effectively allowing us to trade with specialized producers all around the world at low cost, and at prices that signal the true scarcities of resources… ill-considered tariffs aside.

In honor of mankind’s great achievements, I bring you additional testimony from Don Boudreaux, who provides some juicy tidbits to mark our progress. Here is more from Marion Tupy at humanprogess.org. And one more link is from Paul Driessen, who last Thanksgiving wrote of the the many developments since 1800 that have drastically improved human well being, including the ability to exploit fossil fuels that are extremely clean-burning and efficient relative to primitive energy sources.

What riches we enjoy today! Contrary to the claims of doomsayers, busybodies, and self-appointed enforcers of an austere existence, our prospects for continued improvement in human standards of living are excellent. The long arc of technological progress has made the effective abundance of resources greater and more sustainable than ever. As the many charts in Tupy’s article demonstrate, long-term trends in real incomes, poverty, literacy, longevity and the incidence of disease are quite favorable. We owe all that to the spread of human ingenuity, freedom, and voluntary exchange. That’s truly progressive!

In Defense of College Admission for Pay

20 Wednesday Mar 2019

Posted by in competition, Education, Markets, School Choice, Uncategorized

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The college admissions scandal revealed by the FBI last week exposed the willingness of some very wealthy people to lie and cheat to enhance the status of their children. It also resulted in charges against several employees of testing services and prestigious universities, who sold-out their institutions for pure financial gain. These actions may have harmed more deserving applicants to the defrauded academic institutions. Perhaps as sad, the children whose parents cheated are bound to suffer life-long consequences.

Strong prosecution of these crimes will deter other parents entertaining similarly crooked avenues in pursuit of ambitions for their kids. The schools and testing organizations should be motivated to tighten their internal governance processes. My hope, however, is that legislative bodies will refrain from passing new laws in an effort to regulate college admissions. Many schools accept a small percentage of students, legacy or otherwise, who do not meet their academic standards but whose wealthy families make substantial, above-board donations that benefit other students. Putting an abrupt end to these transactions might not be helpful to anyone.

With certain conditions, I do not object to wealthy parents wishing to pay an above-board premium to get their kids into the college of their choice, nor do I object to schools that are free to name their price. First, the school should always receive consideration in an amount adequate to benefit other students or deserving applicants. Second, the acceptance of a privileged but academically inferior student should represent an increment to the school’s freshman class, never taking a coveted slot otherwise filled by a better student. Third, an institution should never guarantee successful completion of a degree program in exchange for such an offer. Fourth, I’d like to see schools make public the number of students falling short of academic qualification whom they accept in exchange for such offers, as well as the aggregate remuneration they receive in all those cases. Fifth and finally, I see no reason why these practices should be limited to private schools. However, a public school’s remuneration must be more than sufficient to make unnecessary any taxpayer subsidies attributable to a new matriculant.

I don’t believe any of these conditions should be a matter of law. Private and public educational institutions are market participants, even if they do engage in non-price rationing. Market incentives should guide institutions to protect the integrity of their brands by awarding degrees only for real academic achievement. This bears on my third and fourth conditions above: no school can guarantee to parents that a degree will be awarded to their child without compromising its integrity. Also, a school’s academic reputation should reflect the extent to which it accepts applicants lacking the school’s minimum standards.

One of the thorniest problems with my conditions has to do with the poor academic standards that actually exist in certain degree programs. These make it possible for bad students to earn diplomas. Grade inflation is all too pervasive, and grade-point averages are notoriously high in some fields, such as education. It may be exceptionally difficult to monitor and prevent instructors from allowing poor students to skate through classes with decent grades. And too obviously and sadly, it’s often the diploma itself that matters to people as a status symbol, rather than real educational achievement. If employers are content to rely on mere signals of that kind, so much the worse.

There’s nothing to be done if that’s all that is demanded of a college education. I think that, more than anything else, is what inflames the passions of Bryan Caplan, who calls the entire system of higher education wasteful. More demanding disciplines have some immunity to this form of decay. Competitive markets might punish schools and employers having weak standards. But wherever the importance of real merit is discounted due to classist loyalties, legal impediments, professions lacking in academic rigor, or any other form of compromise, the diploma signal is paramount, and that is lamentable.

The admissions scandal has prompted howls of indignation directed not only at the cheaters ensnared by the FBI’s “Varsity Blues” operation, but more broadly at the perceived injustices of college admissions in general. The process is said to be unfair because it tolerates admissions for scions of wealthy families and even those who can pay for multiple rounds of standardized tests, multiple application fees, interview “coaches” and the like. These advantages are not unlike those endemic to any market in which ability-to-pay impinges on demand. Yet generally markets do an excellent job of facilitating the development of affordable substitutes. College education is no different, and longstanding mechanisms are in place offering means of payment for academically-qualified applicants who lack adequate resources. The conditions I listed above would enhance that support.

Nevertheless, critics say that the disadvantaged do not get adequate preparation in primary and secondary education to be competitive in college admissions. They are largely correct, but the solutions have more to do with fixing public K-12 education than the college admissions process. Primary and secondary education are almost devoid of competition and real parental choice in disadvantaged communities. There are many other social problems that aggravate the poor performance of public education in preparing students who might otherwise be candidates for higher learning. Realistically, however, the college admissions process cannot be blamed for those problems.