Great Moments In Projection: Il Doofe Says His Opponents Are Anti-Democratic, Fascist

06 Tuesday Sep 2022

Posted by Nuetzel in Democracy, fascism, Uncategorized

Tags

Administrative State, Angelo M. Codaville, Babylon Bee, Benito Mussolini, Classical Liberal, Constitutional Republic, Corporatism, crony capitalism, Dan Klein, Democracy, fascism, FDR, Federalism, Friedrich Hayek, G.W.F. Hegel, Hitler, Il Duce, Joe Biden, Joseph Stalin, Majoritarianism, Nationalism, New Deal, Semi-Fascism, Sheldon Richman, Socialism

When partisans want to make sure they get their way, perhaps we shouldn’t be surprised to hear them claim their opponents are “anti-democratic”. Well, one-party rule is not democratic, just in case that’s unclear to leftists prattling about “hunting down” the opposition. We now have those forces hurling cries of “fascism” and “semi-fascism” at political adversaries for opposing their use of the state’s coercive power to get their way and to punish political enemies.

Restrained Democracy

The U.S. is not a democracy; it is a constitutional republic. The reason it’s not a democracy is that the nation’s founders were wary of the dangers of majoritarianism. There are many checks on unbridled majoritarianism built into our system of government, including the many protections and guarantees of individual rights in the Constitution, as well as federalism and three branches of government intended as coequals.

In a short essay on democracy, Dan Klein refers to a mythology that has developed around the presumed democratic ideal, quoting Friedrich Hayek on the “fantasy of consensus” that tends to afflict democratic absolutists. Broad consensus is possible on many issues, but it might have been an imperative within small bands of primitive humans, when survival of the band was of paramount concern. That’s not the case in modern societies, however. Classical liberals are often derided as “anti-democratic”, but like the founders, their distaste for pure democracy stems from a recognition of the potential for tyrannies of the majority. Klein notes that the liberal emphasis on individual rights is naturally at tension with democracy. Obviously, a majority might selfishly prefer actions that would be very much to the detriment of individuals in the minority, so certain safeguards are necessary.

However, the trepidation of classical liberals for democracy also has to do with the propensity for majorities to “governmentalize” affairs so as to codify their preferences. As Klein says, this often means regulation of many details of life and social interactions. These are encroachments to which classical liberals have a strong aversion. One might fairly say “small government” types like me are “anti-pure democracy”, and as the founders believed, democratic processes are desirable if governing power is distributed and restrained by constitutional principles and guarantees of individual rights.

Democracy has vulnerabilities beyond the danger posed by majoritarian dominance, however. Elections mean nothing if they can be manipulated, and they are easily corrupted at local levels by compromises to the administration of the election process. Indeed, today powerful national interests are seeking to influence voting for local election officials across the country, contributing substantial sums to progressive candidates. It’s therefore ironic to hear charges of racism and anti-democracy leveled at those who advocate measures to protect election integrity or institutions such as federalism.

And here we have the White House Press Secretary insisting that those in the “minority” on certain issues (dependent, of course, on how pollsters phrase the question) are “extremists”! To charge that someone or some policy is “anti-democratic” usually means you didn’t get your way or you’re otherwise motivated by political animus.

Fascism

Biden and others are throwing around the term fascism as well, though few of these partisans can define the term with any precision. Most who pretend to know its meaning imagine that fascism evokes some sort of conservative authoritarianism. Promoting that impression has been the purpose of many years of leftist efforts to redefine fascism to suit their political ends. Stalin actually promoted the view that anything to the right of the Communist Party was inherently fascist. But today, fascism is an accurate description of much of Western governance, dominated as it is by the administrative state.

I quote here from my post “The Fascist Roader” from 2016:

“A large government bureaucracy can coexist with heavily regulated, privately-owned businesses, who are rewarded by their administrative overlords for expending resources on compliance and participating in favored activities. The rewards can take the form of rich subsidies, status-enhancing revolving doors between industry and powerful government appointments, and steady profits afforded by monopoly power, as less monied and politically-adept competitors drop out of the competition for customers. We often call this “corporatism”, or “crony capitalism”, but it is classic fascism, as pioneered by Benito Mussolini’s government in Italy in the 1920s. Here is Sheldon Richman on the term’s derivation:

‘As an economic system, fascism is socialism with a capitalist veneer. The word derives from fasces, the Roman symbol of collectivism and power: a tied bundle of rods with a protruding ax.’”

Meanwhile, Hitler’s style of governing shared some of the characteristics of Mussolini’s fascism, but there were important differences: Hitler persecuted Jews, blaming them for all manner of social problems, and he ultimately had them slaughtered across much of Europe. Mussolini was often brutal with his political enemies. At the same time, he sought to unite an Italian people who were otherwise a fairly diverse lot, but once Mussolini was under Hitler’s thumb, Italian Jews were persecuted as well.

Angelo M. Codevilla provides an excellent account of Mussolini’s political career and the turns in his social philosophy over the years. He always considered himself a dedicated socialist, but the views he professed evolved as dictated by political expediency. So did his definition of fascism. As he took power in Italy with the aid of “street fighters”, fascism came to mean nationalism combined with rule by the administrative state and a corresponding preemption of legislative authority. And there were concerted efforts by Mussolini to control the media and censor critics. Sound familiar? Here’s a quote from Il Duce himself on this matter:

“Because the nature of peoples is variable, and it is easy to persuade them of things, but difficult to keep them thus persuaded. Hence one must make sure that, when they no longer believe, one may be able then to force them to believe.”

Here is Codevilla quoting Mussolini from 1919 on his philosophy of fascism:

“The fascist movement, he said, is ‘a group of people who join together for a time to accomplish certain ends.’ ‘It is about helping any proletarian groups who want to harmonize defense of their class with the national interest.’ ‘We are not, a priori, for class struggle or for class-cooperation. Either may be necessary for the nation according to circumstances.’”

This framing underlies another basic definition of fascism: a system whereby government coercion is used to extract private benefits, whether by class or individual. Codevilla states that Mussolini was focused on formal “representation of labor” in policy-making circles. Today, western labor unions seem to have an important, though indirect, influence on policy, and labor is of course the presumed beneficiary of many modern workplace regulations.

Modern corporatism is directly descended from Mussolini’s fascist state. The symbiosis that exists between large corporations and government has several dimensions, including regulatory capture, subsidies and taxes to direct flows of resources, high rates of government consumption, rich government contracts, and of course cronyism. This carries high social costs, as government dominance of economic affairs gives rise to a culture of rent seeking and diminished real productivity. Here is Codevilla’s brief description of the transition:

“Hegel, as well as the positivist and Progressive movements, had argued for the sovereignty of expert administrators. Fascist Italy was the first country in which the elected legislature gave up its essential powers to the executive, thus abandoning the principle, first enshrined in the Declaration of Independence and the U.S. Constitution, by which people are rightly governed only through laws made by elected representatives. By the outbreak of World War II, most Western countries’ legislatures—the U.S. Congress included—had granted the executive something like ‘full powers,’ each by its own path, thus establishing the modern administrative state.”

Mussolini saw Italian fascism as the forerunner to FDR’s New Deal and took great pride in that. On this point, he said:

“… the state is responsible for the people’s economic well-being, it no longer allows economic forces to run according to their own nature.”

The Babylon Bee’s take on Biden and fascism would have been more accurate had it alluded to Mussolini, but not nearly as funny! The following link (and photoshopped image) is obviously satire, but it has a whiff of eerie truth.

Biden Condemns Fascism in Speech While Also Debuting Attractive New Mustache

Conclusion

Biden’s slur that Republicans are “anti-democratic” is an obvious distortion, and it’s rather ironic at that. The nation’s support for democratic institutions has always been qualified for good reasons: strict majoritarianism tends to disenfranchise voters in the minority, and in fact it can pose real dangers to their lives and liberties. Our constitutional republic offers “relief valves”, such as “voting with your feet”, constitutional protections, and seeking recourse in court. Biden’s party, however, has a suspicious advantage via control of election supervision in many key urban areas of the country. This can be exploited in national elections to win more races as long as the rules on election administration are sufficiently lax. This is a true corruption of democracy, unlike the earnest efforts to improve election integrity now condemned by democrats.

Joe Biden hasn’t the faintest understanding of what fascism means. He uses the term mostly to suggest that Trump, and perhaps most Republicans, have authoritarian and racist sympathies. Meanwhile, he works to entrench the machinery and the breadth of our own fascist state, usurping legislative authority. He is buttressed by a treacherous security apparatus, “street fighters” under the guise of Antifa and BLM, and the private media acting as a propaganda arm of the administration. Joe Biden, you’re our fascist now.

The EPA’s Trip To the Constitutional Woodshed

07 Thursday Jul 2022

Posted by Nuetzel in Administrative State, Constitution, Supreme Court, Uncategorized

≈ 1 Comment

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Administrative Law, Administrative Procedures Act, Administrative State, Affordable Care Act, Charles Lipson, Chevron Deference, Clarence Carson, Clean Air Act, Climate Alarmism, Constitutional Law, Environmental Protection Agency, EPA, Francis Menton, Franklin D. Roosevelt, FTC, Gabriel Kolko, Great Society, Humphrey’s Executor, ICC, Jarkesy v. SEC, Jonathan Tobin, Kevin O. Leske, Lyndon B. Johnson, Major Questiins Doctrine, National Labor Relations Board, Neil Gorsuch, New Deal, Philip Hamburger, rent seeking, SEC, Sheldon Richman, Supreme Court, The Manhattan Contrarian, West Virginia v. EPA, Woodrow Wilson

The Supreme Court’s regular docket is done for the year, but one of last week’s rulings is of great interest to those concerned about the constitutional threat posed by the administrative state. In West Virginia v. EPA, the Court held that the Clean Air Act of 1970 does not authorize the EPA to regulate carbon emissions in power generation. Well, that’s getting to be a very old statute and no one thought much about carbon dioxide emissions when it became law, so of course it doesn’t! However, this decision is crucial as a check on the ever-growing, extra-legal power of the administrative bureaucracy. I say “extra-legal” because regulatory agencies are increasingly taking it upon themselves to write rules that reach well beyond their legislative mandates. Only the legislature can make law under our system of government, or at least law that settles “major questions”, a doctrine that the Court has applied in this case.

Consequential Side Issues

While many critics of the West Virginia decision might find this hard to believe, it has nothing to do with the Court’s views about the prospects for climate change. That is not the Court’s job and it knows it, or at least most of the justices know it. Even if climate change poses a real threat of global catastrophe, and it does not, that is not the Court’s job. Its primary function is to preserve constitutional law, and that is what this decision is about. (For more on the folly of climate alarmism, see here, here, and here.)

Apart from its constitutional implications, growth in the number of regulatory rules and their complexity also imposes massive costs on the economy, robbing the private sector of productive opportunities, often with little or no demonstrable public benefit. The unbridled promulgation of rules does, however, benefit special interests. That includes bureaucrats, litigators, and private parties who derive side benefits from regulation, such as protection of monopoly status, competitive advantages, and expanded professional opportunities. Leveraging government and political privilege for private benefit is rent seeking at its very heart, and it’s also at the very heart of fascistic corporatism.

A Little History

Regulation has been a channel for rent seeking going back to the earliest days of the Republic and even before. But a Great Leap Forward in federal regulatory intervention came in the late 1880s with several Supreme Court decisions involving railroad rates, and then the establishment of the Interstate Commerce Commission. The railroads practically begged to be regulated. At the last link, Sheldon Richmsn quotes historian Gabriel Kolko:

“The first regulatory effort, the Interstate Commerce Commission, had been cooperative and fruitful; indeed, the railroads themselves had been the leading advocates of extended federal regulation after 1887.”

The railroads wanted stability, of course, and less competition, and that’s what they got, though in the end they didn’t do themselves any favors. Here’s historian Clarence Carson on the ultimate result:

“Since the railroads could not effectively compete in so many ways, such opportunity for improving their situation as existed would usually be to combine roads covering the same general area so as to maintain some control over rates and get as much of the profitable business as possible within an area. This is what railroad financiers tended to do. The result, as far as the public was concerned, was a nonintegrated rail system, reduced competition, poorer service, and higher rates.”

Later, Woodrow Wilson and Franklin D. Roosevelt had strong roles in advancing the regulatory state. Wilson was smitten with the scientism inherent in centralized decision making and administrative expertise. He was also loath to concede his vision of administrative planning to democratic ideals. Justice Neil Gorsuch, in his concurrence on the EPA decision, offers some rather disturbing quotes from Wilson:

“Woodrow Wilson famously argued that ‘popular sovereignty’ ‘embarrasse[d]’ the Nation because it made it harder to achieve ‘executive expertness.’ The Study of Administration, 2 Pol. Sci. Q. 197, 207 (1887) (Administration). In Wilson’s eyes, the mass of the people were ‘selfish, ignorant, timid, stubborn, or foolish.’ Id., at 208. He expressed even greater disdain for particular groups, defending ‘[t]he white men of the South’ for ‘rid[ding] themselves, by fair means or foul, of the intolerable burden of governments sustained by the votes of ignorant [African-Americans].’ 9 W. Wilson, History of the American People 58 (1918). He likewise denounced immigrants ‘from the south of Italy and men of the meaner sort out of Hungary and Poland,’ who possessed ‘neither skill nor energy nor any initiative of quick intelligence.’ 5 id., at 212. To Wilson, our Republic ‘tr[ied] to do too much by vote.’ Administration 214.”

FDR’s New Deal was responsible for a huge expansion in the administrative apparatus, as this partial list of federal agencies created under his leadership indicates. Many of these agencies were subsequently ruled unconstitutional, but quite a few live on today with greatly expanded scope and presumed powers.

The Great Society policies of Lyndon B. Johnson also created new agencies and programs, with additional burdens on the ability of the private economy to function properly. Of course, the complexity of the administrative state has increased many-fold with more recent actions such as the Clean Air Act and the Affordable Care Act.

Major Questions

The agencies, despite any expertise they might have in-house, cannot create major rules and mandates without fairly specific statutory authorization. That is a constitutional imperative. It’s not quite clear, however, what test might distinguish a “major question” requiring enabling legislation from lesser matters. There is certainly some room for interpretation. According to Kevin O. Leske:

“Under the [major questions] doctrine, a court will not defer to an agency’s interpretation of a statutory provision in circumstances where the case involves an issue of deep economic or political significance or where the interpretive question could effectuate an enormous and transformative expansion of the agency’s regulatory authority.”

Unfortunately, this judicial deference to agency rule-making and interpretation led to further erosion of the separation of powers and due process rights. Vague legislation, aggressive special interests and rent seekers, and judicial deference have allowed agencies excessive latitude to interpret and stretch their mandates, to enforce expansive regulatory actions, and to adjudicate disputes with regulated entities in proceedings internal to the agencies themselves.

At issue in EPA v. West Virginia were the agency’s steps to radically transform the energy mix used in power generation, with potentially dramatic, negative impacts on the public. The Court said that won’t fly unless Congress gives the EPA more specific instructions along those lines. Agency expertise, by itself, is not enough to override the legitimate democratic interests of the public in such consequential matters.

But what about executive actions of the sort increasingly taken by presidents over the years? Why are those legal? Article Two of the Constitution grants discretion to the president for enforcement of laws and managing the executive branch. Furthermore, pieces of legislation can specifically grant discretionary power to the executive branch in particular areas. Nevertheless, it might be possible for even executive orders issued by the president to “go too far” in interpreting congressional intent. That is within the purview of courts in case of legal challenges.

Unaccountable Agency Power

So called “administrative expertise” was given some degree of deference by the Supreme Court as early as the 1930s. In 1947, the Court decided the application of such expertise should often take precedence over pre-established rules. There was also a recognition that legislators often lacked the expertise to formulate certain regulatory guidelines. The expanding scope and complexity of regulations gave rise to increasing legal disputes, however. This strained the judicial system for at least two reasons: the sheer limits of its capacity and the lack of technical expertise needed to settle many disputes. This ultimately led to the adjudication of many disputes within the agencies themselves. Agency tribunals of subject matter experts were formed to meet these growing demands. This was said to facilitate “cheap justice”, not to mention more rapid decisions. The passage of the Administrative Procedures Act in 1947 was a recognition that administrative law was necessary and required certain standards, though they differ from normal judicial standards, such as rules of evidence. This left very little to brake aggressive and extra-legal rule-making and enforcement by the agencies.

Another disturbing aspect of the growth in administrative power has been the advent of agencies said to be “independent” from the other branches of government, as if to intimate their existence as a fourth branch. As Francis Menton (the Manhattan Contrarian) says, agencies:

“… can create rules for your conduct free from the Congress, and … can prosecute you free from the President. In 1935, in a case called Humphrey’s Executor, the Supreme Court upheld the part of the FTC Act that made the Commissioners immune from discharge by the President other than in very limited circumstances. Humphrey’s Executor has not been overruled to this day.

The FTC was only the beginning of an explosion of creation of such ‘independent’ agencies and otherwise un-separated powers in the federal government. The Federal Reserve was created about the same time (actually 1913), and things really took off during Roosevelt’s New Deal, with agencies like the FCC, SEC, and NLRB.”

Later, the Supreme Court adopted a two-part test to determine whether courts may defer to administrative expertise in interpreting legislative intent, rather than substituting their own judgement or insisting on a clearer legislative mandate. This was the principle of so-called Chevron deference, named for the case Chevron v. Natural Resources Defense Council, in which the Court ruled for the EPA’s definition of a “stationary source” of pollution as “plantwide”. The test for Chevron deference was whether an agency’s rule was a “reasonable” statutory interpretation and whether Congress had not directly addressed the point in question.

Rolling It Back

Philip Hamburger, in his book “Is Administrative Law Unlawful?”, addressed the struggle between administrative power and “regular law” back to the days of “royal prerogative”. The advent of constitutional law was designed to prevent anything resembling the latter.

“… administrative law has returned American government and society to precisely the sort of consolidated or absolute power that the US Constitution―and constitutions in general―were designed to prevent.”

But now we have some very promising developments. Again, in the West Virginia case, the EPA’s authority to regulate carbon emissions in power generation has been denied by the Court, pending any future legislation that would specifically enable that authority. There was no mention of Chevron in this decision whatsoever! That’s a big win for constitutional principle. In another recent case before the Fifth Circuit Court in New Orleans, Jarkesy v. SEC, an administrative law judge (ALJ) at the SEC had assessed damages and fines against Jarkesy, but he challenged the SEC in court, as Menton describes:

“Jarkesy claimed that he was deprived of his Seventh Amendment right to have his case decided by a jury, and also that the SEC had unconstitutionally exercised legislative powers when deciding to try his case before an ALJ without having been given any guiding principles by Congress on how to make that decision. The Fifth Circuit ruled for Jarkesy on both points. This decision has the potential to force some significant changes on how the SEC does business. However, Mr. Jarkesy still does have to continue to run a gantlet that will likely include a request by the government for en banc review by the Fifth Circuit, and then a request for review by the Supreme Court.”

Conclusion

Here is a nice summary of the constitutional issues from an earlier post by Menton:

“… (1) the combining of powers into agencies that would enact, and also enforce, and also adjudicate regulations (directly contrary to the Constitution’s separation of powers into three branches of government); (2) agencies enacting regulations with the force of law on their own say so (contrary to the Constitution’s requirement that all laws be passed by both houses of Congress and presented to the President for signature); and (3) many agencies claiming to be “independent” of the President (contrary to the Constitution’s vesting all ‘ executive power’ in the President).

This is echoed by Jonathan Tobin, who says:

“Government by fiat of intellectuals or scientific experts may or may not be good policy. But it is alien to the U.S. Constitution, and it has nothing to do with democracy.”

One other critical point made by Charles Lipson is that the Court’s West Virginia decision, while sending an unmistakeable message to federal agencies, should also raise awareness in Congress that it is not enough to legislate vague statutes and rely on bureaucrats to make all the decisions about implementation. Instead, “major questions” must be dealt with legislatively and with full accountability to voters. Congress must address these issues, if not up-front, then whenever they arise as disputes in the courts or otherwise. Certainly, the West Virginia decision should make individuals or entities subject to regulatory action less likely to allow major questions to be settled by ALJ rulings within the agencies themselves. The Supreme Court has expressed a willingness for such cases to be reviewed in normal courts of law. That is a very positive development for liberty.

Open Borders and Club Goods

13 Saturday Jan 2018

Posted by Nuetzel in Immigration, Liberty

≈ 1 Comment

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Alex Tabarrok, Bryan Caplan, Citizenship, Club Goods, Common Resources, Congestion Costs, Contestable Goods, Don Boudreaux, Exclusivity, Immigration, James Buchanan, Patrick McNutt, Private Goods, Public goods, Rivalrousness, Safety Net, Sheldon Richman, Social Contract, ThoughtCo., Tyler Cowen

The question of open borders divides libertarians as much as any. The arguments for open borders made by the likes of Bryan Caplan, Alex Tabarrok, Don Boudreaux and Sheldon Richman are in many ways quite appealing. Fewer borders means greater opportunities for gainful trade among individuals. For the U.S., the economic gains from in-migration have been unquestionable. From a pure libertarian perspective, governments should never interfere with the non-violent actions of free individuals, including freedom of movement. These great economists contend, in effect, that there is no real moral distinction between government actions that confine individuals within borders and those that keep people out, though our conciences are less burdened by the latter because the world abroad seems so large.

There is a gnawing contradiction in this viewpoint, however. It relates to the appropriate scope of “ownership”. At the link above, Caplan says:

“The only principled libertarian objection to this is that the citizens of each country are its rightful owners, so they’re entitled to regulate migration as they see fit. … But if you believe this, there is no principled libertarian objection to any act of government. Fortunately, the belief that citizens are countries’ rightful owners is crazy. The social contract is an utter myth. Contracts require unanimous consent, and no country has ever had unanimous consent.“

The Character of a Good

I contest Caplan’s assertion that any one act of government is like all others. Yes, there is always a danger of a majoritarian tyranny in any democracy. But there is also the question of sovereignty, for which borders of some kind are necessary. If policies governing those borders are established legislatively, they should be subject to checks and balances: executive consent as well as judicial review of disputes.

I also contest Caplan’s statement that ownership implies unanimous consent. In fact, there are many forms of property over which decisions do not imply unanimous consent of joint owners. One such form is the subject of what follows, and I believe that form of “ownership” is applicable to one’s citizenship or residency status.

To keep things simple, I’ll frame this discussion only in terms of citizenship. I therefore abstract from issues like green cards, visiting worker programs, and the presence of resident aliens in general. For a nation, the essence of barriers to immigration can be addressed by considering the simpler case of citizens versus non-resident non-citizens. For purposes of this discussion, if you are allowed to arrive on a nation’s shores, you will be a citizen.

If a country’s citizenship can be considered a good worth acquiring, what is its real character? It is privately possessed and not tradable, but not all goods are tradable. An important taxonomy of goods in the public finance literature is based on two dimensions: exclusivity and rivalrousness. The former is the degree to which other parties can be excluded from enjoyment or use of the good or resource.

Most goods have at least some degree of exclusivity: you can be denied admission to a concert, the use of an appliance or furniture, and even parks and port facilities. Pure public goods like national defense and the air we breath are completely non-exclusive, however. Broadcast television is non-exclusive as well, as long as you have the equipment to watch it.

Rivalrousness is the degree to which the use or enjoyment of a good precludes another’s use or enjoyment. My friend can’t eat the steak if I eat the steak. That’s rivalrous. But my friend and I can both enjoy the concert. That’s non-rivalrous. A private good is both exclusionary and rivalrous. A public good is neither.

Citizenship as a Good

Citizenship can be viewed as a bundle of attributes much as any good, but it is an extremely complex bundle: it includes the individual rights enshrined in a nation’s constitution (if any), the personal and economic opportunities available by virtue of access to in-country markets and resources, the culture(s), and any personal risk reduction provided collectively, i.e., a safety net via public support. How, then, would one classify citizenship, or its component attributes, in terms of exclusivity and rivalrousness?

First, the entire citizenship bundle has a high degree of exclusivity. A nation can decide on closed borders, or partially open borders, if it chooses to do so, just as a theme park limits its gate. That is the political decision at hand. The degree of exclusivity of individual components of the bundle matters little if the bundle itself is highly exclusive.

At a high level, citizenship itself is non-rivalrous. My citizenship does not preclude citizenship for anyone else. Therefore, at the level of the bundle, citizenship is exclusive but non-rivalrous, so it has the character of what economists call a “club good“. Citizens are already part of the club; to that extent they are joint “owners”. Like many clubs, decisions about new membership need not be unanimous.

Classification of citizenship attributes as goods is trickier. The exclusivity of citizenship makes the non-rivalrous public goods available to citizens into club goods. Once admitted, for example, you are free to engage in speech, practice a religion of your choice, own a weapon, and receive due process and habeas corpus without interfering with any other citizen’s ability to exercise the same rights. You get national defense and a judicial system. You have equality of opportunity to the extent that your pursuit of economic gain does not interfere directly with anyone else’s opportunities. On the other hand, the freedom of assembly is rivalrous to at least some extent, as we learned last year from events in Charlottesville, VA. In fact, there may be congestion limits to some of the other freedoms mentioned above.

Access to a nation’s markets permits mutually beneficial trade to take place. An individual’s participation usually does not rule out participation by others, so it is essentially non-rivalrous. (In some markets the entry of new sellers may be limited and exclusionary.) Of course, a nation’s resources are scarce; exploiting them for gain or enjoyment necessarily prevents others from using the same resources. From the point of view of existing citizens, these resources are non-exclusive and rivalrous, and are therefore classified as “common resources”, subject to congestion effects, but they are still exclusive to those citizens. The key here is not whether there are gains from trade, but that there is some rivalrousness embedded in this citizenship attribute.

In addition to the basic rights mentioned earlier, the entire legal structure, regulatory apparatus, and the political process are complex attributes of citizenship. These bear on the limits of legal conduct: Can you buy or sell liquor on Sundays? Do businesses require licensure? Is abortion legal? And on and on. In a democracy, the ability to participate in the political process is non-rivalrous: it does not prevent others from participating. However, the range of possible outcomes of the process can also be viewed as an attribute, and these outcomes, as they are promulgated, are certainly rivalrous. If the “other” side gets extra votes, then the power of my vote is diminished. So the limits of legal conduct are exposed to political rivalry. In the case of open borders, a large number of citizens may not favor existing rules, regulations, and the allocation of public spending.

So the attributes of citizenship are mixed in terms of rivalrousness: Some are rivalrous but many are not. The citizenship bundle, at a more detailed level, is therefore a mix of club goods (exclusive but non-rvalrous) and some goods that are rivalrous. This is important, because under the classical description club goods are public goods provided privately; they are therefore under-provided from the perspective of social welfare and the Pareto criterion that a new citizens can be made better off without making any existing citizen worse off. That might not be the case in the presence of congestion effects.

Should a Club Good Be Unrestricted?

Citizenship has value at the margin to both existing citizens, who should be regarded as established club members, and non-citizens. The foregoing establishes that there are some private (exclusive and rivalrous) attributes attached to citizenship. Sometimes this is due to the impact of congestion on the provision of public goods. Patrick McNutt, in his survey of literature on “Public Goods and Club Goods“, summarizes some basic conditions under which public goods are provided by clubs:

“The public good is not a pure public good, but rather there is an element of congestion as individuals consume the good up to its capacity constraint. What arises then is some exclusion mechanism in order to charge consumers a price for the provision and use of the good. Brown and Jackson (1990, p. 80) had commented that the purpose of a club ‘is to exploit economies of scale, to share the costs of providing an indivisible commodity, to satisfy a taste for association with other individuals who have similar preference orderings’. For Buchanan and Ng the main club characteristic is membership or numbers of consumers and it is this variable that has to be optimised.“

Citizenship (or residency) is generally not price rationed, though there are certainly costs to the immigrant. I make no pretense here as to the determination of an optimal membership from a club or larger social perspective. My point is that rationing membership is a rational choice by club members, or citizens in this case.

Okay, I Like My Club

Tribal affiliations, and ultimately nation states, were a natural outgrowth of early competition for resources, especially when identifying threats from outsiders was a constant preoccupation. Territorialism was a byproduct, and with the establishment of agriculture, the peoples of these early societies probably identified strongly with their homelands.

Modern nation-states have evolved from those early patterns, and nations continue to differ in terms of language, culture, and governance. Successful nations are undoubtedly more liberal (in the classical sense) and open to trade and cross-border movement. Maybe one day all nations will be united under the principles of libertarianism… don’t count on it! For now, to one degree or another, a nation’s inhabitants have an interest in minimizing economic and political risks and retaining access to resources within their borders. I don’t believe that desire is irrational or immoral. If the inhabitants of a nation have a moral obligation to share their rights, wealth, and political process with all comers, then they must accept the possibility that their rights will be compromised, and possibly even complete upheaval. They suffer a loss of sovereignty and a loss in the expected value of their citizenship.

There is obviously no limiting principle to the open borders policy, as Tyler Cowen says. Existing citizens would be obligated to accommodate all those who land upon their shores, granting them the full rights and opportunities accorded to all other residents. Perhaps there would be economic gains in the short or long run, as most libertarians would predict. But perhaps there would be some losses along the way. Perhaps there would be political stability after a large influx of new residents, but perhaps not. And ultimately, perhaps changes in the political climate would feed back to the detriment of economic performance. One simply cannot say, a priori, how things would go. There are risks to the existing citizenry, and if they are obliged to accept those risks, those might well include having to feed, clothe and house new residents. There should be no absolute obligation to accept those risks. If the debate is about individual liberty, then surely imposing those risks via open borders would abrogate the rights of existing citizens.

Addendum: A Note on the Goods Taxonomy

Given the two dimensions of goods discussed above, exclusivity and rivalrousness, goods are classified as follows:

Private goods: exclusive and rivalrous;
Public goods: non-exclusive and non-rivalrous;
Club goods: exclusive but non-rivalrous: e.g., a concert;
Common resources: non-exclusive but rivalrous: the air we breath; an aquifer;

Another category is sometimes defined: contestable goods, which have the character of public goods or even club goods when under light use, and are common resources when under heavy use. There is a difference between an empty park and a crowded park; or an empty road and a crowded road.

See ThoughtCo. for a good exposition on the taxonomy.

“Freedom of Representation” Is a Better Name Than “Right To Work”

15 Friday Sep 2017

Posted by Nuetzel in Right to Work, Unions

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Agency Fees, Compelled Riders, Competitive Enterprise Institute, David Boaz, David Henderson, Eric Greitens, Exclusive Representation, Free Riders, Gary Chartier, Holman Jenkins, Ivan Osorio, Joe Lehman, Mackinac Center for Public Policy, Missouri Right to Work, monopoly, Monopsony, National Labor Relations Board, Right to Work, Sheldon Richman, Taft-Hartley Act, Vinnie Vernuccio, Wagner Act

Missouri’s Right-to-Work (RtW) legislation, signed into law by Governor Eric Greitens in February of 2016, essentially states that no employee or prospective employee, with certain exceptions, can be required to join a union or to pay union dues or agency fees. But before the RtW law’s effective date on August 28th, well over 300,000 signatures were collected in opposition, which is believed to meet state requirements for a referendum on the issue. As a consequence, the law was put on hold, pending a vote in November.

A casual look at a variety of statistics by state “right-to-work” status shows an impressive advantage for RtW states, though that doesn’t imply causality. One can certainly think of reasons why the causality might be operative, and I find some of them plausible, but that’s not the line of argument I want to pursue here.

The Libertarian Divide

Libertarians are of divided opinion on the desirability of RtW laws. David Boaz wrote about this division back in 2012. On one side, it’s clearly an abrogation of an individual workers’ rights to require, as a condition of employment, entry into a third-party association against their will, or to coerce payment of dues or fees for collective bargaining and ongoing representation on a variety of job-related issues. Such a requirement would violate the constitutional protections on freedom of association, freedom of speech, and freedom of contract. Boaz quotes Vinnie Vernuccio and Joe Lehman of the Mackinac Center for Public Policy:

“Right to work does not change any aspect of collective bargaining other than preventing employees from getting fired for choosing not to join or remain in a union and pay union dues or agency fees, which may go toward political causes they don’t support. Collective bargaining still exists in right-to-work states, and workers are of course free to organize.“

This may overstate the consequences for workers who would rather not join a union. Non-union workers have so-called Beck rights, which allow them to opt out of “core membership” and pay reduced dues covering only representation. An appropriate accounting for that portion of dues might not be straightforward, however, and it is still likely to represent an involuntary payment. Moreover, awareness of Beck rights is far from universal, and asserting them might not be straightforward.

Libertarians who disagree with the perspective expressed in the quote above emphasize the employers’ freedom of contract as though it takes primacy over worker autonomy in the shaping of voluntary and mutually beneficial employment relationships. The thinking is that an employer might actually prefer to host a union shop. There are presumed efficiencies of collective bargaining, standard and agreed-upon work rules, lower turnover, and perhaps even worker loyalty. Among this group of libertarians are Holman Jenkins, Sheldon Richman, and Gary Chartier:

“When a legislature interferes with voluntary employment contracts, it infringes people’s freedom to bargain with their own labor and possessions. Treating this kind of interference as acceptable means licensing arbitrary interventions into the market by politicians, who are ill-equipped to second-guess the decisions made by the real people making work agreements with one another.“

Labor Law

One could be forgiven for thinking that Chartier and the others view RtW as a form of government intervention in otherwise free labor markets. These critics acknowledge, however, that there is already intervention in labor relations via the Wagner Act (1935), which among other things prohibits any refusal “to bargain collectively with the representative of the employer’s employees.” Under the Act, the National Labor Relations Board (NLRB) is charged with:

“… overseeing the process by which employees decide whether to be represented by a labor organization and prosecuting violations. ... issue rules interpreting the labor legislation. This will generally be binding, unless a court deems it to have acted outside its authority. … prevent unfair labor practices, lead investigations, collect evidence, issue subpoenas, and require witnesses to give evidence.“

So, the NLRB is empowered to force employers, if it so chooses, to bargain collectively and even to rule on whether a vote by employees was “fair”. RtW laws are defended as a force to countervail against this federal power. The Wagner Act was later amended by the Taft-Hartley Act (1947) to curb union power and abuses. It created more balance in the relations between unions and employers and it offered some protection to non-union job seekers by prohibiting closed shops. It also allowed states to pass RtW laws to proscribe the forced payment of agency fees by non-union employees, if states so choose. Nevertheless, labor law continues to support monopoly union privileges and abusive tactics. Moreover, restrictions on unions’ use of dues and agency fees for political activities are difficult to enforce in the absence greater requirements for union financial transparency. The response from libertarian critics of RtW laws is that there are avenues for additional reform at the federal level without adding additional interventions (RtW) at the state level.

One of the clearest rebuttals to the above arguments against RtW laws comes from Ivan Osorio of the Competitive Enterprise Institute, who first quotes Chartier on prospective legislation in Indiana:

“‘If employers choose to conclude union-shop contracts with unions, what gives the Indiana legislature the right to interfere?‘”

Here is Osorio’s rejoinder:

“... there is no jurisdiction anywhere in the United States where there is no such interference at all. Simply replace “union shop” with “open shop,” and the one-sidedness of Chartier’s query … becomes clear. Why should the government forbid an employer from negotiating a voluntary membership agreement with a union?“

Exclusive Representation

Another side of the RtW debate is the contention that non-union workers receive the same benefits achieved via collective bargaining if they are employed by a firm having an otherwise unionized work force. Thus, the non-union workers are said to be “free riding” on the union’s efforts. This framing is highly misleading, however. Under the Wagner Act, a firm’s non-union workers are not entitled to pay for benefits negotiated by the union unless the union has opted for exclusive representation. In that case, those non-union workers are not so much free riders as “compelled riders“, who may be forced to accept certain terms, working conditions and particular representation in grievances against their wishes. The union’s exclusive power is thus flexed in two ways: as a monopoly seller of labor to the firm, and as a monopoly seller of agency services to the worker, extracting dues or agency fees in the process.

Balancing Rights

David Henderson’s perspective on the RtW issue is appealing, as he accounts for the tradeoff between emphasizing the rights of workers and employers:

“It’s true that [RtW] laws make it illegal for employers to do what some of them might want to do: namely hire only union workers, require everyone who works for them to join unions, or require everyone who works for them to pay dues to a union. But are there really likely to be many such employers? I don’t think so. …

Now, I don’t know that there are no such employers. Maybe there are some. If so, then it becomes a tradeoff. On the one hand, preserve the rights of many non-union workers, many union workers, and unionized employers but trample on the rights of those few unionized employers. On the other hand, trample on the rights of many union workers, non-union workers, and unionized employers but preserve the rights of those few unionized employers. I choose the first option because I think it tramples on way fewer people’s rights. And, remember, that if you say right-to-work is wrong and you get your way just on that issue, the federal government will continue to trample on many people’s rights. …

… the best solution is to abolish the law that gives government-enforced monopoly power to unions. Sheldon [Richman] and I agree on this. The issue here is whether we should just settle for saying that and pushing for that or do something else meanwhile.“

Union representation can protect workers from an imbalance of power between a large employer and individual workers. But it is not all sweetness and light for unionized workers, not to mention consumers who pay for the influence of unions on prices in general. While unions played a critical role in establishing and defending workers’ rights over the years, they have increasingly presented agency problems for their constituencies. They have also hastened declines in industries facing competitive pressures, which in turn have hastened the decline of union representation generally. (Public sector unions present a different set of problems involving conflicts of interest with taxpayers, but those are beyond the scope of this post.) In general, worker rights in the private sector are better served by allowing self-determination in the matter of union representation. To the extent that state RtW laws protect that autonomy, they are probably worthwhile at this point in the evolution of labor relations. However, if that is the primary effect, RtW is something of a misnomer.

The Fascist Roader

04 Thursday Aug 2016

Posted by Nuetzel in Central Planning, fascism

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Barack Obama, Benito Mussolini, central planning, competition, Dodd-Frank, fascism, Industrial Concentration, Industrial Policy, Innovation, Jonah Goldberg, Obamacare, rent seeking, Sheldon Richman, Socialism, Thomas Sowell

President Obama is a believer in centralized social and economic management, despite the repeated disasters that have befallen societies whose leaders have applied that philosophy in the real world. Those efforts have often taken the form of socialism, with varying degrees of government ownership of resources and productive capital. However, it is not necessary for government to own the means of production in order to attempt central planning. You can keep your capital as long as you take direction from the central authority and pay your “fair share” of the public sector burden.

A large government bureaucracy can coexist with heavily regulated, privately-owned businesses, who are rewarded by their administrative overlords for expending resources on compliance and participating in favored activities. The rewards can take the form of rich subsidies, status-enhancing revolving doors between industry and powerful government appointments, and steady profits afforded by monopoly power, as less monied and politically-adept competitors drop out of the competition for customers. We often call this “corporatism”, or “crony capitalism”, but it is classic fascism, as pioneered by Benito Mussolini’s government in Italy in the 1920s. Here is Sheldon Richman on the term’s derivation:

“As an economic system, fascism is socialism with a capitalist veneer. The word derives from fasces, the Roman symbol of collectivism and power: a tied bundle of rods with a protruding ax.“

With that in mind, here’s an extra image:

The meaning of fascism was perverted in the 1930s, as noted by Thomas Sowell:

“Back in the 1920s, however, when fascism was a new political development, it was widely — and correctly — regarded as being on the political left. Jonah Goldberg’s great book ‘Liberal Fascism’ cites overwhelming evidence of the fascists’ consistent pursuit of the goals of the left, and of the left’s embrace of the fascists as one of their own during the 1920s. …

It was in the 1930s, when ugly internal and international actions by Hitler and Mussolini repelled the world, that the left distanced themselves from fascism and its Nazi offshoot — and verbally transferred these totalitarian dictatorships to the right, saddling their opponents with these pariahs.“

The Obama Administration has essentially followed the fascist playbook by implementing policies that both regulate and reward large corporations, who are only too happy to submit. Those powerful players participate in crafting those policies, which usually end up strengthening their market position at the expense of smaller competitors. So we have transformational legislation under Obama such as Obamacare and Dodd-Frank that undermine competition and encourage concentration in the insurance, health care, pharmaceutical and banking industries. We see novel regulatory interpretations of environmental laws that destroy out-of-favor industries, while subsidies are lavished on favored players pushing economically questionable initiatives. Again, the business assets are owned by private cronies, but market forces are subjugated to a sketchy and politically-driven central plan designed jointly by cronies inside and outside of government. That is fascism, and that’s the Obama approach. He might be a socialist, and that might even be the end-game he hopes for, but he’s a fascist in practice.

As Sowell points out, Obama gains some crucial advantages from this approach. For starters, he gets a free pass on any claim that he’s a socialist. And however one might judge his success as a policymaker, the approach has allowed him to pursue many of his objectives with the benefit of handy fall-guys for failures along the way:

“… politicians get to call the shots but, when their bright ideas lead to disaster, they can always blame those who own businesses in the private sector. Politically, it is heads-I-win when things go right, and tails-you-lose when things go wrong. This is far preferable, from Obama’s point of view, since it gives him a variety of scapegoats for all his failed policies, without having to use President Bush as a scapegoat all the time.

Thus the Obama administration can arbitrarily force insurance companies to cover the children of their customers until the children are 26 years old. Obviously, this creates favorable publicity for President Obama. But if this and other government edicts cause insurance premiums to rise, then that is something that can be blamed on the “greed” of the insurance companies.The same principle, or lack of principle, applies to many other privately owned businesses. It is a very successful political ploy that can be adapted to all sorts of situations.“

Obama’s most ardent sycophants are always cooing that he’s the best president EVAH, or the coolest, or something. But the economy has limped along for much of his presidency; labor force participation is now at its lowest point since the late 1970s; and median income has fallen on his watch. He has Federal Reserve policy to thank for stock market gains that are precarious, at least for those companies not on the fascist gravy train. Obama’s budgetary accomplishments are due to a combination of Republican sequestration (though he has taken credit) and backloading program shortfalls for his successors to deal with later. Obamacare is a disaster on a number fronts, as is Dodd-Frank, as is the damage inflicted by questionable environmental and industrial policy, often invoked via executive order. (His failures in race relations and foreign policy are another subject altogether.)

Fascism is not a prescription for rapid economic growth. It is a policy of regression, and it is fundamentally anti-innovation to the extent that government policymakers create compliance burdens and are poor judges of technological evolution. Fascism is a policy of privilege and is regressive, with rewards concentrated within the political class. That’s what Obama has wrought.

But They Mean Well: Authoritarian, Anti-Gun Champs of Inefficacy

07 Wednesday Oct 2015

Posted by Nuetzel in Gun Control

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Common-Sense Gun Laws, Damon Root, FBI Uniform Crime Report, Glenn Reynolds, Gun Control, Gun violence, Individual Right to Bear Arms, Lawrence Tribe, Magical Thinking, Moms Demand Action for Gun Sense in America, Ordinary Constitutional Law, Sanford Levinson, Second Amendment, Sheldon Richman

How would “common-sense gun laws” reduce the incidence of mass shootings, total homicides or gun violence in general? Many believe it to be true, but convincing explanations are hard to come by. That’s because reasoned thinking does not produce those explanations. Nevertheless, words are cheap, and the sheer flow of weak memes and bad journalism appears to wash the brains of those with a vulnerability to gun hysteria. Sheldon Richman addresses the feeble logic of gun control proposals in the wake of last week’s tragic shootings in Oregon. He states flatly that the claims of gun control advocates rely on “magical thinking”, and that “common sense” supports other policies. (Richman is quite a guy, having been featured in two consecutive posts on this blog).

As a preface, the recent FBI Uniform Crime Report for 2014 shows another in a long series of reductions in homicides and gun violence. This has occurred despite a trend of rising gun ownership. Previous posts on Sacred Cow Chips have dealt with the evidence on gun violence and the efficacy of gun control measures, including “A Farewell To Firearms Control“, “Causal Confusion In The Gun Debate“, and “When Government Prohibits Self Defense“. Among other issues, these posts note the overwhelming evidence that defensive gun uses far outweigh gun homicides.

Advocates of stricter gun control measures assert that they would somehow reduce the frequency of mass shootings. Richman picks apart the claim that universal background checks would help. In fact, it’s clear from the circumstances that additional restrictions on the sale of guns would not have prevented any of the high-profile mass shootings in recent memory, including New Town, Charleston and Roseburg. Some of those killers passed background checks. Furthermore, more restrictions on gun sales would do nothing to prevent illegal trade in guns.

“We can have no reasonable expectation that people who intend to commit violent offenses against others will be deterred by mere restrictions on gun purchases and possession. Stubbornly ignoring that self-evident truth is the sign of a magical disposition.“

Hillary Clinton proposes universal background checks, confiscation of weapons from domestic abusers and holding gun manufacturers and dealers liable for crimes perpetrated with weapons they made or sold. Those last two proposals are an affront to liberty, and the last is likely to be counterproductive by pricing low-income buyers out of the market, who are arguably most in need of guns for self-defense.

Richman ridicules the notion that gun violence can be reduced by devoting more resources to mental health care. I don’t agree with him 100% on this — improved mental health care might have a small effect — but he argues the point effectively. It is difficult to see how any reasonable initiative in this area could have more than a minor impact on gun violence, and by that I mean an initiative that respects individual liberty. Proponents might imagine lovely rest homes and caring personal psychiatric consultations for those identified as psychotic, along with lots of nice drugs. Perhaps they’ll get the drugs, but as often articulated, the concept smacks too much of a “lock ’em up” mentality. The accuracy with which murderers can be properly diagnosed will be close to zero, and it may cost some of the eccentric among us dearly. Richman asks facetiously whether the police should form “pre-crime” units.

As an aside, I must make note of the gun control “meme-of-the-day”: for me, it was one from “Moms Demand Action for Gun Sense in America“. It suggested that guns should be regulated just as motor vehicles are regulated, including a requirement for liability insurance coverage. The comparison is laughable. The creation of public thoroughfares allows the state to assert that driving is a privilege, not a constitutional right. However, the individual right to bear arms is firmly protected by the Second Amendment and has been upheld by the Supreme Court as recently as 2008. It is not a privilege granted by the state. Moreover, how would one define an “insurable” gun death? Those would be accidents, which are quite small in number relative to motor vehicle deaths. It would not include suicides. Most gun incidents involve criminals who will not bother to arrange insurance coverage. Only the law-abiding will do so, and their insurers will have to grapple with the difficulty of handling claims against defensive gun users. Guns are much easier to hide than cars, so effective enforcement doesn’t stand a chance; nor do annual inspections. The expense and abridgment of personal liberty inherent in this proposal would be massive, with little if any effect on gun violence.

I’d be remiss if I failed to mention Damon Root’s excellent article on the Second Amendment. As noted above, it protects the individual right to bear arms, not merely our right as a collective. As Glenn Reynolds has written, the Second Amendment should be viewed as “ordinary constitutional law“. Root emphasizes the extent to which prominent legal minds on the Left have concluded the same. He quotes Sanford Levinson (among others such as Lawrence Tribe):

“The embarrassment, Levinson argued, came from the legal left’s refusal to take the Second Amendment seriously. ‘I cannot help but suspect that the best explanation for the absence of the Second Amendment from the legal consciousness of the elite bar,’ he wrote, ‘is derived from a mixture of sheer opposition to the idea of private ownership of guns and the perhaps subconscious fear that altogether plausible, and perhaps even ‘winning’ interpretations would present real hurdles to those of us supporting prohibitory regulation.’“

If the usual gun control proposals won’t work, what can be done to reduce mass shootings and gun victimhood in general? Richman discusses the elimination of “gun-free zones” and rebuts the typical objections to doing so. (He is critical of police, who surely deserve blame for certain gun deaths, but Richman may have an inadequate appreciation for the difficulty of police work.) Richman also promotes ending restrictions on concealed and open-carry of handguns. Here is part of his closing, but read the whole thing:

“Believers in gun-control magic refuse to acknowledge that one cannot effectively delegate one’s right to or responsibility for self-defense. With enough money, one might arrange for assistance in self-defense, but few will be able to afford protection 24/7. … The only defender guaranteed to be present at any attack against you is: you.

Those who believe in the right to bear arms have common sense on their side in the matter of ending mass shootings. Magic won’t do it.“

Must Support For “Family Planning” Be Compelled?

05 Monday Oct 2015

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

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Abortion, Compulsion, Federal funding, Free Association, Libertarians, Nonexclusive benefits, Planned Parenthood, Property Rights, Public goods, Reproductive rights, Sheldon Richman, Slate

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.

May No Window Be Unbroken

24 Tuesday Feb 2015

Posted by Nuetzel in Obamacare, Uncategorized

≈ 1 Comment

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ACA, Broken window fallacy, Coyote Blog, Frederick Bastiat, Government intervention, misallocation of resources, Obamacare, regulation, Sheldon Richman, third-party payments, Warren Meyer, WW II wage controls

The misallocation of resources precipitated by regulation is sometimes so thorough that proponents are apt to describe it as a feature, and not a bug! Apparently, that is how some think of new business startups and venture capital funding stimulated by Obamacare. Warren Meyer describes the situation in his post, “Worst Argument For Regulation Ever“. Providers confronting a thicket of new regulations, including a mandate for a massive reconfiguration of medical records, necessarily requires services that were heretofore unnecessary. As Meyer says:

“All this investment and activity is going into trying to get back to even from productivity losses imposed by the government, or is being spent addressing government mandates for new services that the market did not want or value. This is a diversion of resources from new value-creation to fixing things, and as such is just the broken windows fallacy re-written in a new form.”

The fallacy to which Meyer refers has a deep tradition in economic thinking, with a lineage tracing to Frederick Bastiat. A simple telling is that a broken window leads to more work for the glazier, more spending, and an apparent lift in income. Of course, someone must pay, and the broken window itself represents a loss of physical capital. But there are other consequences, since the glazier receives a payment that could have, and would have, purchased other goods and services that would have been preferred to window repairs. There are many broken windows in the case of Obamacare, including direct hits to providers, medical device manufacturers, and many of the previously insured. It was not enough for proponents to simply extend coverage to the uninsured. That simpler approach would have created plenty of challenges. But instead, Obamacare became a legal and regulatory behemoth in the hope that it would transform the health care industry… into what?

Noble intentions frequently motivate destructive actions out of sheer economic ignorance. That encompasses almost every effort to use government as an active manager of economic or social affairs. That’s the cogent message from Sheldon Richman in “The Economic Way of Thinking About Health Care“. Richman agrees that “health insurance for all” is an outcome to be hoped for, but he derides the notion that activist government can achieve it effectively. First, the redistributive element in many government intrusions is a questionable economic strategy:

“When government provides health insurance through subsidies or Medicare or Medicaid, it presides over the disposal of the fruits of other people’s labor. Government personnel decide who gets what, even though they had no hand in producing the resources they “redistribute.” In other words, they traffic in pilfered property. Hence H.L. Mencken’s immortal insight: ‘Every election is a sort of advance auction sale of stolen goods.’”

The central planners decide who gets what in ways that are more destructive than simple redistribution. By way of demonstrating this phenomenon, Richman goes on to discuss the health insurance third-party payment system encouraged by government policy. Employer-paid coverage started as an unintended consequence of WW II wage controls. It also has tax-favored status as a popular fringe benefit. Unfortunately, this led to the bastardization of the concept of insurance itself:

“That [tax-favored status] gives employer-provided insurance an appeal it would never have in a free society, where taxation would not distort decision-making. Moreover, the system creates an incentive to extend “insurance” to include noninsurable events simply to take advantage of the tax preference for noncash compensation. Today pseudo-insurance covers screening services and contraception, which of course are elective. (This does not mean they are trivial, only that they are chosen and are not happenings.)”

Excess demand, owing to a marginal cost of routine care and elective services to the consumer that appears to be zero, sets off a series of unintended consequences:

“… the real prices of medical inputs to rise … the price of insurance goes up; the government’s health care budget rises, requiring higher taxes now or later (because of the debt); and resources and labor flow into the stimulated health care industry and away from other valued purposes, raising the prices of other goods and services. Higher insurance premiums in turn prompt demand for more government subsidies, higher taxes, and more debt.”

May that circle be broken. Richman mentions several steps at the link to promote more competitive, comprehensive and affordable health care.

The Dire Wolf’s Collectivist Dues

24 Saturday Jan 2015

Posted by Nuetzel in Taxes

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529 Plans, Capital Gains Tax, Collectivism, Dire Wolf, Glenn Reynolds, Inequality, Market Inequality, Megan McArdle, Obama Tax Plan, Redistribution, Robert Higgs, Sheldon Richman, State of the Union, Statist Inequality

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]