Tag Archives: Property Rights

The Looting Wage and Its Ultimate Victims

15 Wednesday Feb 2017

Posted by in Living Wage, Markets, Minimum Wage

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Like children asking their peers to exchange quarters for nickels, advocates of a “living wage” hope that the government and voters will agree that workers should be paid by private employers at a rate the activists deem appropriate, regardless of skills. (The “living wage” is left-speak for a very high minimum wage.) Even worse, those advocates actually believe that such a trade can be justified. Or do they? The simple economics of the claim is undermined by assertions that a living wage is simply a matter of social justice. But social justice cannot be served in this way unless one’s definition is so bound up in virtue signaling that you don’t know the difference. It’s even too charitable to say that the left’s definition of social justice is simply bound up in the present and the short-term interests of specific groups. The unfortunate truth is that the “living wage” sacrifices the very well-being of a large number of individuals in those groups, now and in the future. Here’s why:

Suppose the government mandates a “living wage” as well as a series of measures intended to neutralize all of its unintended consequences. These measures would include a complete prohibition of involuntary terminations, investments in automation, price hikes, movement of capital abroad, and immigration. The measures must also include subsidies for failing employers. Just imagine the burden of compliance costs related to these measures, and the complex task of carving out exceptions, such as the allowable price hike in the wake of an increase in the cost of raw materials. What about the additional workers who would enter the labor force to seek employment at the higher wage? Should they be prohibited from doing so, or should employers be required to hire them, or should they be subsidized to hire them? And how will taxpayers afford all of these government subsidies?

Clearly, the situation described thus far is not sustainable. Both the initial wage hike and many of the other steps, ostensibly intended to cushion the blow on various parties, represent flagrant abridgments of private property rights, or rather, property takings! Of course, the real intent is for private parties to pay for the “living wage”. Presumably, employers are to pay the costs, especially large employers and their wealthy investors, like you when the value of those shares in your IRA, pension or 401k plan begins to tank. The reality is, however, that the unintended consequences will spread the cost in a variety of unpleasant ways.

Those in the coalition for living-wage legislation have not given much thought to the reverberations of such a change. At the most basic level, some people cannot command a high wage because they lack higher-order skills. Some have not learned the importance of reliability, of making sure they arrive at work by a specific time every day. Some have not learned the importance of concentrated work effort, of demonstrating that effort and avoiding excessive slack time. Some communicate poorly, or fail to comport themselves in a manner that commands trust. Some have a sketchy work record, presenting a risk to prospective employers. Living wage advocates assert that all of this is irrelevant, but it means everything to an employer.

How would employers attempt to to survive under a living wage? One doesn’t have to think too deeply to realize that wage floors lead to a loss of jobs for several reasons. Those lacking the skills to justify the higher wage will be out the door. Some employers will fail, finding it impossible to pay the hike in their labor costs or to pass it along to their cost-conscious clientele. The living wage is likely to lead to premature automation of many tasks otherwise requiring unskilled to more moderately-skilled workers. The capital investment needed to automate any manual process may well become worthwhile given such a shock to wage rates. Moreover, while some in the living wage movement complain that U.S. employers seek-out lower wage rates abroad, the living wage itself would lead to more of this substitution. The living wage also creates opportunities for those willing to work illegally at sub-minimum wages, including many undocumented immigrants. By driving a larger wedge between the wages of other home countries and the U.S., the living wage creates an incentive migrate In pursuit of the enlarged set of black-market opportunities for labor.

So just imagine having the government mandate a wage that is nearly double the market-clearing level. The quanity of labor demanded declines and the quantity supplied increases, leaving a surplus of workers at the mandated wage. The demand for labor declines still more as the weakest firms close shop. And it declines still more over horizons long enough to enable investment in automation and relocation of production to foreign shores. Add to the mix an expanded flow of workers from abroad. Not all of these surplus workers, native and immigrant, would be willing to take “underground” work at a rate below the living wage, but some will.

So, which of the measures listed in the second paragraph would mitigate the costs imposed by the living wage? In reality, none of them would succeed without spreading the cost more widely. Prohibiting involuntary terminations? Businesses will fail and/or prices will rise. Prohibiting investment in automation? The same. Prohibiting price hikes? Business failures, terminations, and premature automation. Prohibiting movement of capital abroad? An outright revocation of property rights and a distortion of incentives for productive investment, which would also discourage the movement of capital into the country, not just out.

Are there measures that could make the “living wage” a sustainable outcome? Yes, but they cannot be accomplished immediately by decree. Indeed, doing so would thwart the achievement of the objective. In short, productivity must increase. While productivity is multi-dimensional, education, training and work experience all foster improvement in a worker’s ability to add value. Unfortunately, our system of public primary and secondary education has been unsuccessful in producing graduates who can compete in the labor market, even at today’s minimum wage. Wholesale reforms are needed, but even the best educational reforms will take time to come to fruition. In the workplace itself, apprenticeship programs could provide under-skilled workers an avenue toward greater competitiveness at higher wages. Again, apprenticeships may only make economic sense to employers at a legalized sub-minimum wage, as Australia allows.

Second, productivity is dependent on the quality and quality of the capital invested in a business. The key to improving this capital is profitability. It’s ironic that living-wage advocates fail to see that their proposal runs directly counter to steps that would contribute to  productivity and wages. Instead, they seem intent on killing the geese that lay golden eggs! Far better to allow those eggs to be transformed into new capital assets that can enhance worker productivity and justify higher wages. Some jobs will be replaced by automation, but capital and new technology tend to create new kinds of jobs and inevitably boost worker productivity. (See “Will Automation Make Us Poor?” by Aaron Bailey.) Employers will still have an interest in seeking out, if not developing, new talent. The automation should take place as part of a more natural evolution, not one prematurely hastened by unrealistically high wage mandates.

The living wage is a prescription for failure and a death-knell for the private economy. It will fail the least-skilled workers and even some semi-skilled workers who cannot compete for jobs at the living wage. It will automate jobs before the natural time dictated by the market-driven process of technical evolution. It will lead to higher prices, which drive down the real value of any wage gains that workers manage to capture. It will lead to business failures, especially among small businesses. It will offer false hope to unskilled immigrants. It will reduce capital investment among smaller firms struggling to meet the higher wage bill. It may well lead to a slew of even more destructive public policies, such as business subsidies and other price controls. And it will create dependency on the state. The living wage is a destructive policy and ultimately a prescription for the death of self-sufficiency. It  cannot foster real social justice.

Suspending the Economic Problem With Free Stuff

27 Saturday Aug 2016

Posted by in Central Planning, Socialism, Subsidies

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When things are scarce, they can’t be free. That’s an iron law of economics. It’s true of everything we ever wish for and almost everything we take for granted. Things are naturally scarce, but when we are told that things can be free, it always comes from likes of whom Jeffrey Tucker calls “scarcity deniers”. Bernie Sanders and Hillary Clinton have told America that a college education should be free, and a large number of people take that seriously. They are scarcity deniers. On one level, the Sanders/Clinton claim is like any other promise that simply cannot be met at the stated cost — a rather garden-variety phenomenon among politicians. These promises are not harmless, as such initiatives usually involve budget overruns, compromised markets, underproduction and wasted resources.

The Sanders/Clinton claim, however, is a form of scarcity-denial that comes almost exclusively from the political left. That is really the point of Tucker’s article:

“This claim seems to confirm everything I’ve ever suspected about socialism. It’s rooted in a very simple error, one so fundamental that it denies a fundamental feature of the world. It denies the existence and the persistence of scarcity itself. That is to say, it denies that producing and allocating is even a problem. If you deny that, it’s hardly surprising that you have no regard for economics as a discipline of the social sciences.“

Our socialist friends (who otherwise claim to be defenders of science) contend that free things can be offered to a broad swath of the population with little consequence. The least cynical among them (perhaps including Sanders) believe that the costs can be shouldered by the wealthy and/or big corporations and banks. Others (including Clinton) know that the cost of “free things” must be met by higher taxes on a broader share of the population. Doesn’t that mean they recognize scarcity? Only superficially, because they fail to grasp the dynamics of resource allocation, the subtle forms in which costs are imposed, and the true magnitude of those costs.

If a thing is scarce, available supplies must be balanced against demand. The reward to suppliers at the margin must match the willingness of buyers to pay. That means there is no surplus and waste, nor any loss attendant to shortage and non-price rationing. The price creates an incentive for consumers to conserve and an incentive for producers to bring additional supplies to market when they are demanded.

A crucial prerequisite for this to work is the establishment of secure property rights. Then, absent coercion, one can’t overuse what isn’t theirs. One can’t simply take a thing from those who create it without a mutually agreeable payment. Creators cannot be forced to respond on demand without compensation. No one can be required to husband resources for others to simply take. No one can be asked to pay for a thing that will be commandeered by others. The establishment of property rights serves these purposes. Incentives become meaningful because they can be internalized by all actors — those consuming and those producing. And the incentives solve the problem of scarcity by balancing the availability of things with needs and desires, and balance them against all other competing uses of resources. Then, the market-clearing price of a thing reflects its degree of scarcity relative to other goods.

The socialist bluster holds that all this is nonsense. Would-be central planners propose that more of a thing be produced because they deem it to be of high value. Furthermore, it must be made available to buyers at a price the planners deem acceptable, or quite possibly for free to their intended constituency! Property rights are violated here in several ways: first, the owner/producer’s authority over their own resources is declared void; second, the owner has no incentive to care for their resources in a responsible and sustainable way; third, a confiscation of resources from others is required to pay at least some of the costs; fourth, the beneficiaries overuse and degrade the resource.

We know a scarce thing cannot be provided for free. Here are some consequences of trying:

  • Overuse of resources. When the buffet is free, the food disappears.
  • The “free thing” will be over-allocated to those who benefit and value it the least. (Example: the education of students for whom there are better alternatives.)
  • Supplies will evaporate unless producers are fully compensated. Otherwise, quality and quantity will deteriorate. This is a form of “contrived scarcity” (HT: Don Boudreaux).
  • If supplies dwindle, new forms of rationing will be necessary. This might involve time-consuming queues, arbitrary allocations, bribes, side payments and favoritism.
  • If suppliers are compensated, someone must pay. That means taxes, public borrowing or money printing.
  • Taxes weaken productive incentives and chase resources away. The consequent deterioration in productive capacity undermines the original goal of providing  something “for free” and inflicts costs on the outcomes of all other markets. This creates more contrived scarcity.
  • So-called progressive taxes tend to hit the most productive classes with the greatest negative force.
  • Government borrowing to fund “free stuff” today inflicts costs on future taxpayers. More fundamentally, it misallocates resources toward the present and away from the future.
  • Printing money to pay for a “free thing” might well cause a general rise in prices. This is a classic, hidden inflation tax, and it may involve the distortion of interest rates, leading to an inter-temporal misallocation of resources.

Scarcity denial is a carrot, but it inevitably becomes a stick. To voters, and to naive shoppers in the marketplace of ideas, the indignant assertion that things can and should be free is powerful rhetoric. Producers, too, might happily accept “free-stuff” policies if they expect to be fully compensated by the government, and they might be pleased to have the opportunity to serve more customers if they think they can do so profitably. However, serving all takers of “free stuff” will escalate costs and is likely to compromise quality. It is also likely to create unpleasant circumstances for customers, such as long waiting times and unfulfilled orders. The stick, on the other hand, will be brandished by the state, blaming and penalizing suppliers for their failure to meet expectations that were unrealistic from the start. The fault for contrived conditions of scarcity lies with the policy itself, not with producers, except to the extent that they allowed themselves to be duped by scarcity deniers. Tucker notes the following:

“Things can be allocated by arbitrary decision backed by force, or they can be allocated through agreement, trading, and gifting. The forceful way is what socialism has always become.“

Politicians and would-be planners with the arrogance to claim that naturally scarce things should be free are dangerous to your welfare. These scarcity deniers cannot provide for human needs more effectively than the free market, and ultimately their efforts will make you subservient and poor.

Back To The Restroom

29 Friday Apr 2016

Posted by in Discrimination, Federalism, Privacy, Property Rights

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I’m following-up on “I’m a Restroom Federalist” by sharing “We Need Separation of Bathroom and State” by Roy Cordato at the Mises Institute. He makes a clean defense of the libertarian view that restrooms choices on private property must not be controlled by government. Any attempt to do so is a violation of private property rights, according to this view. I did not adequately treat the question of property rights in my first “restroom” post. Strong property rights in this context mean that you, a private businessperson, can set the rules for restroom use on your premises, or no rules at all. If you or your customers prefer gender-neutral restrooms in your place of business, so be it. If you believe your customers prefer separate restrooms based on a definition of gender, you can post appropriate signs and face any complaints privately without interference from government.

Many sincere observers hope for a way to fairly accommodate transgender individuals without unduly compromising the rights of others. In my mind, discrimination (or differences in accommodations) should not be tolerated in society if based on arbitrary distinctions. By that I mean the victim differs from the discriminator only in nonessential ways for the purposes at hand. For example, discriminating on the basis of race is wholly arbitrary in almost context. (A director casting the part of an individual of a specific race is a possible exception.) No real harm comes from tolerance and equal treatment in these contexts. I have argued that the market is self-regulating in punishing discrimination. And one can argue that certain freedoms may be violated (association, religion, expression and even property) when even arbitrary forms of discrimination are outlawed, as they are. In these situations, however, laws can work because there is little ambiguity in defining victims of discrimination and the legitimacy of their victimhood.

Is discrimination against transgenders in their restroom options just as arbitrary as it would be against other minorities? That depends upon whether “transgender” can be defined objectively. If it cannot, then denying the bearded lady’s transgender claim in the restroom is not so arbitrary, given the privacy rights of others.

Tyler Cowen discusses some of the complexities of determining whether there should be a legal definition of transgender, or a more “nuanced” definition of gender with three or more categories. That would eliminate any legitimate objections to gender-specific  restrooms. However, a legal standard cannot be based solely on “inner feelings”. Aside from genitalia, are there objective facts that can be brought to bear in defining gender? A personal physician’s assessment of “gender intent” is one possibility. An active regimen of hormone replacement therapy is another. However, transgenders themselves might object to any specific definition of gender imposed by government. Many transgenders would prefer to have it remain a matter of self-identity, but it is impossible to clearly define rights on that basis. As Cowen notes, the “most libertarian view is to refuse to offer a legal definition of transgender.” He also adds:

“If we stick with no legal definition of transgender, let’s tackle the remaining problems directly. For instance we could significantly increase the penalties for men who abuse women or young girls in or near women’s rooms, if indeed that is an ongoing problem.“

As I intimated in my earlier post, I am unconvinced that gender-neutral restrooms won’t encourage voyeurism by posers. That implies a conflict between the rights of transgenders and the fundamental right to privacy. Given that fact, Cowen’s suggestion is sensible under any restroom regime. He also cites the existence of voluntary gender registration systems in other countries. Given a clear definition, transgenders choosing to register could use the restroom consistent with their gender identity and would have documented proof if any question arose as to their right to use a particular facility.

Cordato provides a good explanation of the Charlotte anti-discrimination ordinance and North Carolina’s new law striking it down. The Charlotte ordinance stripped owners of business property of their right to set rules for their own restrooms. The state law does several things: It restores the rights of business owners to provide separate restrooms for males and females, which is fine as far as it goes. It also mandates gender separation of multi-occupancy restrooms and locker rooms in government facilities. Truly, it is hard to imagine any good coming of mixing middle-school girls and boys in the same restrooms and locker rooms. However, the state law also prohibits the promulgation of any anti-discrimination law by lower jurisdictions. That seems a bit too sweeping.

Cowan says the North Carolina law is a solution in search of a problem, or worse:

“North Carolina made a mistake in signing the new law. Not just a practical mistake, because of the backlash, but a mistake outright. I’m not aware there was a problem needing to be solved, and yet new problems have been created.“

Maybe so, but the city of Charlotte clearly took a step in violation of private property rights, and one that threatened privacy rights. I stated in my first restroom post that alternative arrangements will be tested socially, at the ballot box, and by the courts. Some object to the strong privacy ethic that exists in the U.S. as prudish, but it is a cultural given, and privacy rights are protected by the Constitution. Given a conflict over rights between two parties, the courts must decide how to balance those interests.That’s as it should be. And so we’re back to the beauty of federalism!

 

 

 

Coerced Fairness: Wronging Every Right

14 Thursday Apr 2016

Posted by in Discrimination, Liberty, Tyranny

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A nurse says, “If I can bring myself to treat a patient tattooed with a swastika, then a baker can bake a cake for a gay wedding.” Of course, the statement ignores any differences in the values held by these individuals, their right to hold different values, or at least their right to act peacefully on those values. It makes an arbitrary presumption about what is “fair” and what is “unfair”, which is seldom well-defined when two parties hold sincere but conflicting beliefs. Yes, the baker can bake the cake, but should he be forced to do so under state compulsion? Coerced behavior is the product of aggression, but declining business for personal reasons is not an act of aggression, though the “safe-space” crowd would do its best to convince us otherwise. Sorry, hurt feelings don’t count!

Imposing the machinery of the state on private decisions about how and for whom one’s art must be practiced invites even more coercive action by the state going forward. Jeffrey Tucker addresses this in “Must a Jewish Baker Make a Nazi Cake?“, using the teachings of Ludwig von Mises on the implications of voluntary and coerced behavior.

Discrimination occurs in markets in many forms. Consumers discriminate between sellers and products based on quality, price, convenience and trust. In turn,  producers or sellers discriminate between workers based on skill, effort, wages and trust. They discriminate between local markets or areas of specialization based on profitability. They discriminate between buyers based upon ability and willingness to pay. All of these forms of discrimination are rational because they result in better value for the discriminating consumer or better profitability for the discriminating producer. In other words, these forms of discrimination align with economic self-interest.

Other forms of discrimination do not align strictly with economic self-interest, but they may be preferred by the individual based on other criteria. It’s probably not possible to justify these forms of discrimination from all perspectives. Some may be abhorrent to most observers, including me. Certainly more consensus exists on some than on others. Nevertheless, these non-economically motivated forms of discrimination are always costly to the discriminator. For example, a consumer who refuses to frequent certain establishments owned by members of an out-group will forego opportunities for more varied experiences. Also, she will tend to pay higher prices due to her lack of interest in the competitive effort made by the out-group. An employer who refuses to hire certain minorities faces a more limited labor pool. He is likely to face a higher wage bill and will get a less efficient mix of skills in his workers. A seller who discriminates against certain groups by turning them away foregoes revenue, and the action may have negative reputational consequences. Obviously, other competitors can profit from another seller’s discriminatory behavior. Almost by definition, markets impose penalties on discrimination not borne out of economic self-interest.

Anyone with doubts about the effectiveness of markets and capitalism to overcome this latter type of discrimination should look no further than the broadly integrated activity that occurs within markets every day, and at the extent to which markets have become more diverse over time. Here is a choice quote of Tucker:

“Commerce has a tendency to break down barriers, not create them. In fact, this is why Jim Crow laws came into existence, to interrupt the integrationist tendencies of the marketplace. Here is the hidden history of a range of government interventions, from zoning to labor laws to even the welfare state itself. The ruling class has always resented and resisted the market’s tendency to break down entrenched status and gradually erode tribal bias.

Indeed, commerce is the greatest fighter against bigotry and hate that humankind has ever seen. And it is precisely for this reason that a movement rooted in hate must necessarily turn to politics to get its way.“

The hypertext within the quote links to an excellent piece by Andrew Berstein on “Black Innovators and Entrepreneurs Under Capitalism”, which covers the sad history of efforts to use government to undermine black commercial success.

Social justice activists argue that the state has a compelling interest in ending all discrimination, but the courts have followed a circuitous path in thrashing out whether (and what parts of) the U.S. Constitution might protect individuals or groups against private discrimination. But my interest is in what happens when the state endeavors to end discrimination in markets that are otherwise self-regulating: the state infringes on other rights that are clearly and definitively enshrined in the Constitution, and it arrigates power to itself that far exceeds the limits defined there. It may compromise the freedom of association, the freedom of religion, the right to private property, and the right to privacy. I believe the government has a compelling interest in protecting those rights, which apply to all individuals. It is also worth noting the absence of a limiting principle in defining what counts as fairness or discrimination. The Left finds it easy to denigrate and dismiss these as selfish concerns, proving how little regard they have for individual liberty. Establishing government control over the extent of those rights represents the end of our Constitutional Republic and is a prescription for tyranny.

Consider the ways in which government often attempts or is asked to create accommodations for marginalized groups, through laws on hate speech, compulsory service, hiring quotas, admission quotas, lending fairness, pricing equity, wage laws, work rules, mandatory facilities and the forced transfer of income. Tucker argues that this complex web of resource manipulation and mandatory and proscribed behaviors has several “unintended” consequences. I already mentioned the obvious abridgment of freedoms. Another negative consequence is that this approach does not promote unity; it breeds resentment and is likely to end in greater disunity. Furthermore, self-sufficiency is undermined by policies that hamper economic growth, and all of the general measures just mentioned redound to the detriment of that objective. Finally, many of these “fairness” policies run directly counter to the interests of the marginalized, such as wage floors that eliminate employment opportunities for the least-skilled, and means testing that discourages labor market effort through income “cliff” incentives.

The most menacing aspect of the effort to stamp out all forms of discrimination is a state with power to impose its own rules of legal “fair” treatment. Tucker appeals to Mises’ views on this point:

“[Mises] said that a policy that forces people against their will creates the very conditions that lead to legal discrimination. In his view, even speaking as someone victimized by invidious discrimination, it is better to retain freedom than build a bureaucracy that overrides human choice. …

Sacrificing principle for the sake of marginalized groups is short-sighted. If you accept the infringement of human rights as an acceptable political weapon, that weapon will eventually be turned on the very people you want to help. As Dan Sanchez has written, ‘Authoritarian restriction is a game much better suited for the mighty than for the marginalized.’“

Proponents of legal, compensatory  handicapping by the state in favor of those pressing any and all grievances ask us to compromise basic constitutional rights, including the rights of association, free expression, privacy and private property. A corresponding effect is to grant the state more complete coercive power in almost every aspect of life. The unavoidable focus of such policies is not unity, but group identity, a divisive result that should give us pause. The power granted to the state in this context is as arbitrary as the currently fashionable definition of “fairness”, and it cannot be rolled back easily. Furthermore, economic vitality is not easy to restore once basic institutions and freedoms have been destroyed. This is evident from the sad history of socialism throughout the world. Ultimately, the coercive power granted to the state can be used in ways that should horrify today’s proponents of social and economic redress for every real or imagined inequity.

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Addendum: Just over a year ago, I made a qualified defense of the right of a business to refuse service based on religious principles in my post “Suit Me, Or Face a Lawsuit: Adventures In Litigationland“. There, I made a distinction between “public accommodations” versus work for which a business-person must use her art, which is a form of expression, to provide customized service to a potential customer. I had the baker in mind, or the photographer asked to work a gay wedding. As I have in this post, I maintained that if a business-person finds some aspect of a request objectionable for any reason, she has the right to discriminate by refusing the business as a matter of freedom of expression.

I left a huge loose end in the argument I made in the earlier post. It had to do with the presumed requirement to serve all potential customers through the “public accommodations” of a private business. However, if the baker creates a beautiful “love cake” for sale to the general public, why can’t he refuse to sell it to a gay couple for their wedding as a matter of freedom of expression? After all, it involves the baker’s art. If a stationer has created an artful collection of cards for sale to the public, why can’t she refuse to sell them to a gay couple for their wedding invitations on account of her religious convictions? And what about the nurse? If he is in private practice, can’t he refuse to practice his art of healing on the “swastikaner” as a matter of free expression? I believe that’s a constitutional absolute, though professional oaths may dictate that care be delivered. An emergency room nurse would not have any choice but to deliver care under federal law, but it is not clear whether the law would withstand a constitutional challenge by a private hospital on these grounds. As things stand, the nurse can only refuse employment or resign if the rules are not to his liking.

 

 

Must Support For “Family Planning” Be Compelled?

05 Monday Oct 2015

Posted by in Big Government, Liberty, Presumptive rights, Property Rights

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Fund Me

Where do Libertarians stand on the issue of federal funding of Planned Parenthood? What sort of balance should be struck between the rights of conscientiously-objecting taxpayers and the rights of women to use Planned Parenthood (PP) services? The correct answer has nothing to do with abortion, an issue on which Libertarians lack unanimity. However, the existence of moral objections by any segment of society, whether considered valid by a majority or not, is an important consideration.

Do Individual Freedoms Require Taxpayer Support?

Sheldon Richman discusses the funding question on his Free Association blog in “Planned Parenthood, Social Peace and  the Libertarian approach“. He first makes a basic point: “… no one’s freedom is violated by lack of access to taxpayer money.” I agree, but this statement requires some context. For Libertarians, the baseline is a society in which individual liberty is a presumption. That cannot be the case if taxes and transfers dominate our economic lives. If we’re all busy picking each other’s pockets, then perhaps anyone can lay claim to a dollop of public funds to pay for any damn thing they want. But in a society that explicitly limits the powers of coercive government, private individuals cannot, on the public dime, lay claim to whatever they wish to compel from others. What they desire, after all, is almost always available privately. Therefore, the denial of public funding for PP does not constitute a denial of anyone’s rights.

Individual’s are free to exercise their reproductive or non-reproductive rights as they see fit, and to pay for related services themselves or by seeking a benefactor. Nothing is deprived to that individual other than an invalid claim on the belongings of others.

“Individual rights ultimately boil down to the single right to be free from aggression, that is, to self-ownership. Rights would be defined out of existence if they could be ignored whenever doing so would make someone else’s objectives easier to accomplish. Such an approach to “rights” would turn rights theory on its head by making us a mere means to other people’s ends rather than ends in ourselves.“

Consistent Application of Property Rights

Richman asserts that the right of ownership of one’s body applies equally to the right of individuals to the income they produce:

“Ironically, the right to choose abortion is defended as an application of the right of women to their bodies, that is, as a property right (self-ownership). Another implication of the right to one’s own body is the right to control the fruits of one’s labor (income). No coherent theory of rights can permit a clash of the right to one’s body with the right to the fruits of one’s labor. Thus implicit in the pro-choice case is an argument against tax funding of Planned Parenthood (and anything else), that is, against taxation itself.“

Leftist elites say that a denial of public funding for PP is tantamount to a denial of service to low-income women. Richman asks the elites to put up or shut up: if they believe the services in question are critical, they are free support PP financially, but they much prefer to extract resources from taxpayers without regard to possible moral objections.

Protection of Religious and Moral Principles

Richman adds the following thoughts on public funding of Planned Parenthood near the end of his post:

“Reasonable people of all persuasions should see that it is simply unreasonable to force people to finance an organization they find morally offensive. Thomas Jefferson famously said, ‘To compel a man to furnish contributions of money for the propagation of opinions which he disbelieves is sinful and tyrannical.’ Compelling men and women to furnish contributions for the performance of services they deem immoral (whether or not they are) is worse.“

Supporters of public PP funding have sought to deflect morality-based opposition with the contention that abortions represent only 3% of PP’s services, but Slate debunked that claim over two years ago. It was based on a count of tests and procedures performed, not on revenue. PP also claims that tax funds never pay for abortion, but as Richman points out, once available, the revenue is fungible and may be used to cover the cost of any procedure. In short, the argument is specious.

The Public Good Argument Is Weak

One more elephant in the PP funding debate concerns the appropriate functions of government. Does PP provide a truly “public” good, one having benefits that are nonexclusive to the primary user? Health services are sometimes assumed to confer public benefits; that is an easy argument in the case of infectious diseases and to some extent for medical research, but not for most health services. The benefits of individual health services are largely private, providing little justification for government funding of PP from a public finance perspective.

Collective Action Needs Strict Limits

Collective action should be confined to the provision of public goods, but even then it can be fraught with conflicts, such as the difficulty of accommodating pacifists during wartime. A truly liberal society will do all it can to accommodate diverse beliefs by allowing objectors to opt out, if possible, or avoiding the funding of private activities, especially those over which there is significant dissent. Under no circumstances should one be compelled to pay for private services that they find to be morally objectionable.

Capitalism Is The Bounce In Nature’s Rebound

04 Friday Sep 2015

Posted by in Free markets, Human Welfare, Technology

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What forces account for the great shift toward “rewilding” now taking place in our world? Is it green activism and government action? Not from the looks of the photo above, which shows a giant field of solar panels powering an airport in India. Hailed as a great accomplishment by greens, the view from above provides a clue to the absurdity of absorbing vast resources to replace cheap, traditional power sources with politically-favored solar for just a few buildings. Fry the birds, burn the taxpayers! That’s certainly not rewilding, nor will it get us there. Neither will a cluttered landscape of giant, noisy windmills that slice up avian life, provide only intermittent power, and are left to decay once taxpayer subsidies go away.

Rather, the world is returning to nature via many forms of technology, resource productivity and capitalism. How is that possible? Here is a monograph by Jesse H. Ausubel on “rewilding”, the rebound of nature taking place around the globe. It might make you feel more optimistic about prospects for human prosperity and the joint survival of mankind and planet Earth. There is no question that the changes he describes are primarily driven by powerful private incentives. However, Ausubel’s positions are largely technical, not oriented toward a particular social or economic philosophy. He presents compelling graphical evidence and references to support his technical claims. In what follows, I’ll try to summarize some of the most salient points he makes in the report. Some [bracketed comments] in the bullet points are my own thoughts:

  • Land once used in agriculture is being returned to nature as “acreage and yield [have] decoupled. Since about 1940 American farmers have quintupled corn while using the same or even less land.” The same is true in other parts of the world. “The great reversal of land use that I am describing is not only a forecast, it is a present reality in Russia and Poland as well as Pennsylvania and Michigan.” Moreover, there is no cap in sight for farm yields. He credits “precision agriculture, in which we use more bits, not more kilowatts or gallons.“
  • Even more impressive is the fact that “rising yields have not required more tons of fertilizer or other inputs. The inputs to agriculture have plateaued and then fallen, not just cropland but nitrogen, phosphates, potash, and even water.“
  • A tremendous quantity of food is wasted, but Ausubel cites new web-enabled initiatives such as Food Cowboy and CropMobster that hold great promise in rerouting wasted surplus to areas of need. “The 800 million or so hungry humans worldwide are not hungry because of inadequate production.” [Well, production might be inadequate in their vicinity. And “waste” is relative, so to speak. It is typically uneconomic to avoid all wastage, and social pockets of hunger exist for many reasons unrelated to the operation of markets in food. But improvements in technology can make it feasible to reduce wastage at little cost.]
  • “If we keep lifting average yields toward the demonstrated levels …, stop feeding corn to cars [corn ethanol – another activity subsidized by government], restrain our diets lightly, and reduce waste, then an area the size of India or the USA east of the Mississippi could be released globally from agriculture over the next 50 years or so.“
  • Land released from agriculture contributes to reforestation, a process that is underway in a number of countries. “In the USA, the forest transition began around 1900, when states such as Connecticut had almost no forest, and now encompasses dozens of states. The thick green cover of New England, Pennsylvania, and New York today would be unrecognizable to Teddy Roosevelt, who knew them as wheat fields, pastures mown by sheep, and hillsides denuded by logging.“
  • Our demand for forest products is in decline, which also contributes to reforestation. Forest plantations (accounting for about 1/3 of wood production) are much more productive than harvesting wood from natural forests. Land devoted to wood plantations can displace the harvesting of a much larger area of natural forest. 
  • Carbon dioxide (as well as nitrogen) is adding to “global greening“, which according to Ausubel is “the most important ecological trend on Earth today. The biosphere on land is getting bigger, year by year, by 2 billion tons or even more.” [Importantly, this greening provides an important offset to any tendency for human greenhouse gas emissions to warm the environment.]
  • “Dematerialization”: After the 1970s “…a surprising thing happened, even as our population kept growing. The intensity of use of the resources began to fall. For each new dollar in the economy, we used less copper and steel than we had used before.” Ausubel and some colleagues studied the use of 100 commodities in the U.S. over time. “… we found that 36 have peaked in absolute use; … Good riddance to asbestos and cadmium. … 53 commodities we consider poised to fall. These include not only cropland and nitrogen, … but even electricity and water…. Only 11 of the 100 commodities are still growing in both relative and absolute use in America.“
  • Ausubel shows that certain emissions in the U.S. have decreased in relative terms, and sometimes in absolute terms. [The latter were mostly induced by public demands for pollution control regulation, but relative declines also reflect the ability of the private economy to generate growth. However, the value of certain regulations is questionable from both a public finance and a public health perspective.]
  • He is very high on maglev technology and especially the “hyperloop”, Elon Musk’s proposed tube for high-speed maglev travel between LA and San Francisco. [I do not share his enthusiasm for some of the reasons discussed in “High-Speed Third Rail For Taxpayers“. Large-scale, publicly-subsidized infrastructure projects often fail in terms of costs vs. benefits. However, the economics of the hyperloop might prove more compelling.]
  • Fertility has been in decline throughout the world for decades. Slower population growth obviously complements technological advance in providing for material human welfare.
  • Oceans and aquatic life are an area of real concern, in Ausubel’s view. “Fish biomass in intensively exploited fisheries appears to be about one-tenth the level of the fish in those seas a few decades or hundred [of] years ago.” [This is a classic tragedy of the commons in which no property rights are defined until the catch is in.] Fish farming is a promising alternative that can reduce the strain on wild fish populations. 
  • A final section on potential changes in the human diet is provocative. Ausubel discusses the promise of hydrogen supplies in creating proteins for our diet. “A single spherical fermenter of 100 yards diameter could produce the primary food for the 30 million inhabitants of Mexico City. The foods would, of course, be formatted before arriving at the consumer. Grimacing gourmets should observe that our most sophisticated foods, such as cheese and wine, are the product of sophisticated elaboration by microorganisms of simple feedstocks such as milk and grape juice. … Globally, such a food system would allow humanity to release 90 percent of the land and sea now exploited for food.“

In concluding his monograph, Ausubel addresses whether his optimism is misplaced, having focused so much on positive trends in the developed world and relatively little on less developed countries. Here is his response:

“My view is that the patterns described are not exceptional to the US and that within a few decades, the same patterns, already evident in Europe and Japan, will be evident in many more places.“

None of this is to deny the existence of external costs and benefits to the natural environment, which private parties might ignore in cases of ill-defined property rights or difficulties in litigating damages. Regulation may be a reasonable alternative for internalizing obvious external costs and benefits, but even then, markets can play a valuable role in fashioning the most efficient regulatory approach. In fact, with advances in environmental consciousness, private parties often find it in their best interest to internalize obvious external costs.

Having achieved a sufficient level of prosperity, a society may decide to convert some of the gains into public benefits through various forms of regulation or other public initiatives. In essence, these may be characterized as “luxury public goods”. The danger lies in the mistakes government often makes in the imposition of costly measures, and in allowing excessive taxes and regulation to subvert the very market processes giving rise to prosperity. This is particularly dangerous to welfare and growth in the underdeveloped world, as illustrated by opposition from environmentalists to efficient fossil fuels. That leaves the poor no alternative but to continue to burn wood indoors for heating and cooking.

It’s worth emphasizing that the nature rebound already taking place in the developed world is largely a product of free market capitalism and the growth in wealth and technology they have made possible. A great benefit of secure property rights for society, and for the environment, is that owners have powerful incentives to husband their resources. Likewise, the profit motive gives producers strong incentives to reduce waste and improve productivity. As economic development becomes more widespread, these incentives are promoting a healthier balance between man and nature. Greenies: capitalism can be your friend!