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Free Markets Archive

Tuesday

21

January 2014

0

COMMENTS

Notable Quotations

Written by , Posted in Education, Energy and the Environment, Free Markets, Government Meddling

Anthony J. Sadar, “A libertarian’s guide to climate change hype:”

After giving some much-needed perspective on scientists, Delingpole tackles “science,” observing that political activists discovered that science could be used “as a handy excuse to advance their agenda under the guise of studied objectivity. ‘Hey, it’s not because we’re a bunch of crypto-Marxist control freaks that we’re demanding higher taxes, more regulation, and the replacement of Western industrial civilization with a Soviet-style global command economy run by leftist technocrats. It’s because the science tells us that that’s what we need to do’.”

Ira Stoll, “Tech Innovation Outstrips Government Obstructionism:”

One recurring theme in successful startups is the ability to get around the regulations created by politicians like Obama. Companies are using technology to create a free market.

The foremost example of this is Uber, with its UberX service that turns ordinary drivers in their own cars into taxi drivers. Sidecar and Lyft operate on a similar model. A Boston lawyer who represented existing taxi services challenging the new entrants, Sam Perkins, told the Boston Globe, “SideCar and UberX have targeted Boston to make the guy next door and his Prius into an unlicensed taxi driver with an uninspected taxis and no safety equipment…Their goal is to eliminate the existing taxi system and its consumer protections.”

The government-imposed licenses, medallions, inspections, minimum wages, regulated fares, and “consumer protections” turn out to be replaceable, more or less, by an Amazon-style star-rating system and the incentives of independent drivers and ride-provider networks that want repeat business.

A. Barton Hinkle, “School Choice Foes Are Wrong:”

During [Michael Bloomberg’s] term, the number of charter schools in the Big Apple soared from seven to 123.

De Blasio, a left-wing ideologue, does not approve. His “idealism,” as The New York Times explains, was shaped by his time in Nicaragua, then controlled by the Sandinista revolutionaries of whom he became an “ardent” supporter. “They gave a new definition to democracy,” de Blasio once said. That they did: Their version of it included censorship, suspending civil rights, breaking up demonstrations and imprisoning suspected political opponents without trial.

No surprise, then, that de Blasio is taking out after charter schools—an innovation that has helped poor and underprivileged students by bringing a (very) small degree of personal choice to a system controlled by the state.

Monday

13

January 2014

0

COMMENTS

Notable Quotations

Written by , Posted in Big Government, Economics & the Economy, Free Markets, The Nanny State & A Regulated Society

Simon Lester, “The Good Old Days of Global Poverty:”

Protectionism takes a lot of money from everyone, in order to give concentrated benefits to a small group of politically connected interest groups. This is the kind of policy that is usually condemned by both the left and right. In the case of the trade debate, however, some well-respected opinion leaders seem OK with such policies. Why is that? My best guess is that it taps into an emotional “us versus them” worldview. It isn’t really about economics at all. It’s about patriotism and nationalism. “They” are bad. “We” are good. So let’s punish them, even if in doing so we are really punishing us.

Jacob Sullum, “Do You Drink Too Much? Don’t Ask the CDC:”

Why does the CDC say “at least 38 million” Americans drink too much? Because it maintains that “drinking too much” includes not just so-called binge drinking but several other categories as well. If you are a man who consumes 15 or more drinks in a week or a woman who consumes eight or more, you drink too much. …If you are a woman, the CDC does not want to hear about how you limit yourself to one drink every day except Saturday, when you have two, thereby exceeding the government’s arbitrary limit. …And don’t even try to point out the lack of evidence that light to moderate drinking during pregnancy harms fetuses. The CDC has decreed that all these patterns of drinking are excessive, and its only challenge now is convincing the rest of us.

Colin Grabow, “If You Think Communism Is Bad For People, Check Out What It Did To The Environment:”

In addition to being an advocate for an ideology directly responsible for tens of millions of non-war deaths and untold human misery, Myerson has revealed himself as something of an ignoramus concerning communism’s shocking record on environmental issues. Not only a blight on the human condition, communism’s impact on the planet’s ecology has proven consistently ghastly.

 

Monday

18

November 2013

0

COMMENTS

Legal Hunting is Proven Conservation Method

Written by , Posted in Energy and the Environment, Free Markets

A national furor, marked by the typical breathless outrage of social media, has erupted over a photo showing Huntress Melissa Bachman with a lion she hunted in South Africa.

Bachman lion

The usual suspects responded with angry tirades and petulant petitions demanding an end to legal trophy hunting.

While it’s understandable that not everyone can relate to what hunters gain from such kills – indeed, I have trouble doing so myself – such reflexive emotions shouldn’t drive policy. As it turns out, legal trophy hunting is a proven solution to preserving species and ensuring their survival against the existential threat posed by poachers and human development.

Simply put, all wildlife that is hunted for economic reasons poses a tragedy of the commons problem. Poachers have strong incentive to ignore laws and hunt prohibited animals to the point of extinction when their products can fetch high prices on the black market, and are unlikely to restrain themselves from depleting the resource. The effort to combat poachers is costly, and may be a hopeless battle, and it must compete against other policy goals for public resources. Regardless of the source of the threat to a species, committing sufficient resources to conservation will always be difficult, as the public sees no direct benefit for such spending. This is especially true in poor countries with more significant social ills in need of redress.

But there are other means of attracting dollars to the quest of conservation. The most powerful of which is providing an economic value to the species in question that will attract private owners and entrepreneurs with an incentive to maintain population levels and protect them from poachers. There is a reason why chickens will never go extinct, and it’s because they are incredibly tasty. They have economic value, which when combined with private ownership provides the strongest incentives for ensuring there is always a plentiful supply. Unlike the commons, private goods don’t run out because owners have an incentive to manage them properly.

For species that we don’t eat, what often provides economic value is the desire of hunters to hunt them, and their willingness to pay for the pleasure. Melissa Bachman, for instance, must have paid five figures just to attempt to kill her lion, and a successful hunt is far from guaranteed. This provides strong incentive to manage a healthy supply of lions and other game animals. An example of this process in action is provided by the Scimitar Oryx, which have essentially gone extinct in Africa, but were saved in Texas by legal hunting. Unfortunately, anti-hunting fanatics driven by emotion have put the species back on the chopping block by successfully pushing for a law requiring costly federal permits for their hunting. This has reduced the economic value of the species and eroded the very mechanism which has protected them from the same fate as their wild, African counterparts.

The emotional outcry that can be witnessed in any comment section covering the story is somewhat understandable (though I suspect many of these same people hypocritically eat meat and thus contribute to the routine killing of far more animals than a single hunter could possibly be responsible for), but it would be a disaster for the actual animals should their knee-jerk outbursts be catered to.

Tuesday

12

November 2013

0

COMMENTS

Taxpayers Will Lose the Battle of the Energy Cronies

Written by , Posted in Big Government, Energy and the Environment, Free Markets

Senate Democrats are on a green energy blitz, reports Michael Bastasch of the Daily Caller:

Sens. Tom Udall of New Mexico and Mark Udall of Colorado introduced a bill last week that would require that 25 percent of the country’s power come from renewable energy sources by 2025.

Another bill introduced by Massachusetts Democratic Sen. Ed Markey would require the country to get 25 percent of its power from renewable sources by 2025. Like the Udall bill, the Markey legislation would allow companies to purchase renewable energy credits to comply with the mandate. Companies that don’t comply would be forced to pay a fine.

Mandates like this, which includes the individual mandate in Obamacare, are always sold as benefiting consumers. The truth, however, is that consumers only get the benefit of higher prices and fewer choices. The real winners are the politically connected producers of the goods which consumers are being forced to purchase.

However, renewable energy mandates have been criticized for raising energy costs across the country. Earlier this year, conservative state legislators in 16 states led an effort to repeal or weaken state mandates, arguing they raised energy costs.

Natural gas prices, they argue, have plummeted and can provide cheaper, more reliant energy than solar and wind.

While natural gas certainly appears to be the better choice for consumers at the moment, there’s no guarantee it will remain so. As Veronique de Rugy has pointed out, the natural gas industry has thus sought their own crony handouts to help solidify their position. The point is thus not that natural gas should be favored over so-called renewables, but that neither should receive government handouts.

Government energy mandates are a waste of taxpayers dollars and a means only to favor industries that fit the preferences of politicians. The market should be left alone so that it may instead reflect the needs and desires of consumers.

Thursday

22

August 2013

0

COMMENTS

Bono Stumbles On Truth About Poverty

Written by , Posted in Economics & the Economy, Foreign Affairs & Policy, Free Markets

I’ve always liked Bono. Not only does he make good music, but unlike so many in Hollywood he actually seems to care about his chosen causes. Rather than strut and preen for the cameras or play partisan political games, he just goes about his business trying to help in the way he judges best. That’s respectable regardless of whether I share his policy approach, and I rarely do.

But now I have even more reason to like him.

Speaking at Georgetown University about the state of economic reality in Africa, Bono had this to say about poverty:

“Aid is just a stopgap. Commerce [and] entrepreneurial capitalism take more people out of poverty than aid. Of course we know that.”

Sadly, many of the college students present likely do not know that. And while we can ask ourselves why it matters what some musician says about economics and policy, the fact that it is coming out of Bono’s mouth will do more to get them to challenge their own assumptions than it would from someone like me. Culture, even of the popular sort, matters.

Though what was most likely a shocking realization for Bono after decades of experience with impoverished peoples is rather pedestrian for those of us in the free market movement. The failure of aid  has been well covered by folks like Dambisa Moyo. She points out the perversion international aid system, whereby holding on to power in developing countries is a function of pleasing foreign aid givers, rather than their citizens. It is disincentive, in other words, for political accountability. Keeping the aid spigot open is more beneficial for those who desire power than improving that lot of the people.

Nor is how to improve the lot of the people a great mystery. Though it is hard. Essentially, it requires neoliberal institutions to provide the legal and political frameworks necessary to enforce basic rights – with property rights being among the most critical in terms of encouraging economic growth. Hernando de Soto did a great job examining the importance of property rights and access to honest and efficient legal system to encouraging wealth creation.

And let’s be clear about this point. Wealth is created. It is not the natural state of mankind. It is not something that absence of which is explained by some civilizational theft, exploitation, or the spread of capitalism, as it is fashionable to believe in certain circles. To paraphrase Tom Palmer, who delivered the most cogent argument on poverty I have yet heard, poverty does not need explanation. It is the natural state of mankind. The vast majority of humans that have ever existed have lived in grinding poverty. Wealth requires explanation. Only in very recent times in a historical sense have regular people had any wealth to speak of. And it hasn’t grown slowly, it as exploded. Explaining that is much more interesting than explaining poverty.

Wednesday

5

December 2012

0

COMMENTS

An Unconvincing Case for Protectionism

Written by , Posted in Economics & the Economy, Free Markets

A few weeks ago, Rep. Tom Rooney took to the Daily Caller to make “a conservative case for sugar tariffs.” He failed in my view, but he did succeed in proving my recent point that bringing home the bacon and handing out political “gifts” is a bipartisan disorder.

Rep.  Rooney makes the following arguments, as I understand it:

1) All countries use protectionist and interventionist policies in the sugar market – therefore we must too.
2) Brazil has captured a lot of the market and will drive out US producers with low prices if they don’t receive government assistance.
3) Jobs will be lost and prices will rise if that assistance isn’t provided.

He goes on to say that government assistance shouldn’t be too high, nor should it involve dictating business practices. That’s not enough; it shouldn’t exist at all. I agree with Milton Friedman’s view that even unilateral free trade is a better option than meeting subsidies with subsidies and tariffs with tariffs. If Brazil wants to “plow another $1 trillion into its sugar market over the next few decades,” we should let them. It’s money straight from their taxpayers pockets and into the hands of US consumers. It harms them, not us. As for the 142,000 US jobs supposedly on the line, it’s not either/or. The choice is not between subsidizing US sugar or seeing those people forced into unemployment. Their labor can be used elsewhere, and when combined with lower sugar prices than we would have otherwise seen if not for Brazilian subsidies, the net result is greater production for us. We get cheap sugar and we get whatever else those 142,000 people are able to produce. The only real loser in this equation is the Brazilian taxpayer.

Sure, the decline of US sugar producers would be disruptive to the people whose jobs were lost, but I think the social safety net (more like hammock these days) is more than big enough to handle it. And disruptions happen in all markets in a competitive system. Whether or not its because another firm has developed a more efficient business model or because of foreign subsidies doesn’t really make any difference, so long as it’s not our taxpayer doing the subsidizing. The real issue is that bad government policy has so encumbered the market that absorption of displaced workers is difficult, but more taxpayer handouts are not the solution to that problem.

Rooney repeatedly warns of a Brazilian led OPEC for sugar, presumably to explain his seemingly contradictory (amazingly, I find myself in agreement with Think Progress of all places) concern that Brazilian control over the market will mean both lower prices (to drive out American producers) and higher prices (to hurt US consumers), but OPEC strikes me as a bad comparison. An oil cartel can be effective (somewhat) at manipulating prices because oil production is necessarily concentrated in places where oil can be found, and the major national producers are few. If you have no oil deposits, it doesn’t matter how high and enticing prices get, you can’t join the market. It’s true that sugar cane cannot grow just anywhere, but the barriers to entry are not near so significant as oil. Non-Brazilian producers can simply increase production to offset any attempts by Brazil to artificially raise prices. In other words, even if US producers dwindle because Brazil is able to charge below-market prices thanks to subsidies, any later attempt to raise prices and charge above-market rates after capturing a dominant position would result in the return of US producers, or other new entrants to the market.

There is also a national defense issue with regard to oil that doesn’t exist for sugar. Interruption in the supply of sugar does not pose the same concerns as interruptions in the supply of oil.

What I think it comes down to is whether we adopt the protectionist view that within all arbitrarily designated political borders there must be complete self-sufficiency, or we instead allow ourselves to be blessed by the productive advantages brought about by global trade. Free trade is best, to be sure, but if the only available choices are between letting others foolishly distort their markets or joining them and doing the same to ours, I think it’s an easy decision which path to follow.

Sunday

2

December 2012

0

COMMENTS

Overgovernment: Limiting Libations Edition

Written by , Posted in Big Government, Free Markets, Government Meddling, The Nanny State & A Regulated Society

The US government poses a serious obstacle to the import and consumption of foreign liquors. Like a product made overseas? Too bad! As for as the government is concerned, you have no more right to purchase the liquor of your choice than you do to manage your own health care.

First off – the United States drinks its whiskey from 750ml bottles. The entire rest of the world (except for South Africa, I believe) does not. 700ml or 70cl is the global standard. The United States does not want its citizens to be confused between two different measurements, so they do not allow for 700ml bottles of booze to be sold domestically. That means that any liquor company that wants to sell its booze in the U.S. needs to put it in an entirely different bottle with a new label as well. All of their other booze can be shipped with ease to every other nation (except South Africa, I believe) around the world. Then a separate, special, time-consuming batch has to be made just for the Americans. That sounds annoying and it probably is annoying to many small companies in the whisky trade, so they say forget the Americans. It’s too much extra trouble.

The reason? You’re too bloody stupid, that’s why (Hat-tip: Overlawyered)!

Kevin Erskine of The Scotch Blog inquired with the Tax and Trade Bureau as to why the US has this regulation. In short, it’s because the agency transitioned in the late 1970s to metric measurements and 750 ml was very close in volume to the then standard “fifth” (referring to a fifth of a gallon). Allowing 750 ml and 700 ml bottles was deemed too confusing for consumers, and so we’re stuck with an aberrant standard and less access to rare spirits.

Big government, limiting your freedom one condescending rule at a time.

Saturday

24

November 2012

1

COMMENTS

Canadians Turn to Private Care as Government Fails

Written by , Posted in Big Government, Economics & the Economy, Free Markets, Health Care, Welfare & Entitlements

Private markets can be their own worst enemy. Rather than force people to deal with the consequences of bad policy choices, they provide a relief valve for ill-considered socialist schemes. Such is the case in Canada right now, as patients are increasingly forced to seek refuge from their “universal” health care debacle.

Surgery wait times for deadly ovarian, cervical and breast cancers in Quebec are three times longer than government benchmarks, leading some desperate patients to shop around for an operating room.
But that’s a waste of time, doctors say, since the problem is spread across Quebec hospitals. And doctors are refusing to accept new patients quickly because they can’t treat them, health advocates say.

…The worst cases are gynecological cancers, experts say, because usually such a cancer has already spread by the time it is detected. Instead of four weeks from diagnosis to surgery, patients are waiting as long as three months to have cancerous growths removed.

“It’s a crisis for Quebec women,” said Lucy Gilbert, director of gynecological oncology and the gynecologic cancer multi-disciplinary team at the McGill University Health Centre. Her team has had access to operating rooms only two days a week for the past year, with dozens of patients having surgeries postponed week after week.

…One worried patient, a mother of five children who waited three months for surgery for invasive breast cancer, said she is worried about the effects of such a long wait. After surgery, she paid $800 for a bone scan in a private clinic rather than wait five months for a scan at the Jewish General Hospital.

There are always costs. You cannot legislate them away. Trying to do so through price controls just forces them to manifest elsewhere. In this case, the cost is increased wait times, which when it comes to health equates to increased mortality rates. The reason is simple: when you remove the market signals generated by free floating prices, you lose the most effective means known to man for allocating resources. A bunch of government bureaucrats cannot anticipate demand and allocate the appropriate resources to meet it as well as the invisible hand.

Saturday

29

September 2012

0

COMMENTS

How Will Economic Freedom Fare in Honduras?

Written by , Posted in Free Markets

Would you want to live in a city with no income, sales or capital gains taxes? Well you can soon move to Honduras and get your chance:

Small government and free-market capitalism are about to get put to the test in Honduras, where the government has agreed to let an investment group build an experimental city with no taxes on income, capital gains or sales.

Proponents say the tiny, as-yet unnamed town will become a Central American beacon of job creation and investment, by combining secure property rights with minimal government interference.

“Once we provide a sound legal system within which to do business, the whole job creation machine – the miracle of capitalism – will get going,” Michael Strong,  CEO of the MKG Group, which will build the city and set its laws, told FoxNews.com.

Strong said that the agreement with the Honduran government states that the only tax will be on property.

“Our goal is to be the most economically free entity on Earth,” Strong said.

The only restriction is a requirement to employ a minimum proportion of native Hondurans, which seems a small price to pay for what will otherwise be yet another model example for how free markets promote prosperity.

It’s not exactly like we lack such evidence now. Hong Kong was created as a trade colony and become very prosperous under a free market system that emphasized low taxes, limited regulation and free trade. The Heritage Index of Economic Freedom, led by Hong Kong, is topped by economic success stories.

Granted, I’m not saying the Honduran city is guaranteed to be an economic success. That will depend, among other things, on how soundly they implement their legal system. But if they adhere to the principles of limited government and free markets, prosperity will likely follow. Though there’s always a risk that Honduran politicians see it starting to succeed and try to raid the cookie jar, because if there’s one thing that’s universally true about politicians, it’s that they’ll eventually try grabbing anything and everything within reach of their greedy little hands.

Monday

3

September 2012

2

COMMENTS

In Need of Capital Day

Written by , Posted in Economics & the Economy, Free Markets, Taxes

The Department of Labor cites Labor Day as “dedicated to the social and economic achievements of American workers,” adding that “it constitutes a yearly national tribute to the contributions workers have made to the strength, prosperity, and well-being of our country.” Celebrating the hard work of Americans with a yearly day off is fine with me, but there are additional forces contributing to the “strength, prosperity, and well-being of our country” also worthy of recognition. Perhaps the time as come, for instance, for a Capital Day.

Hard work is important. Americans have long considered a strong work ethic a virtuous quality, and this has been to our advantage. But hard workers are all over the world, and the US hardly leads the world in average hours worked. Yet America is consistently at or near the top in worker productivity. What accounts for this discrepancy? Simply put, capital.

Another way to look at American prosperity is this: hard work is a necessary, but insufficient, condition for achieving prosperity. Give even the hardest worker a spoon, and it will take a long time to build a ditch. Give that same worker a shovel, and it will take less time. Now give that worker an expensive digging machine and that ditch will be completed exponentially faster. That is where growth in worker productivity comes from.

The mixing of capital and labor is where the true magic happens, and American prosperity is due to our once unique devotion to an economic system – the free market – that most efficiently matches these two ingredients.  Unfortunately, America today is no longer the most devoted to economic freedom, and the trend is heading in the wrong direction. A less free economy, generally speaking, will mean more inefficient distributions of capital and labor, resulting in a less productive workforce and thus a less prosperous economy.

In order to invest capital in our workers, we first need capital to invest, and that means savings. Unfortunately, neo-Keynesian economic thought can be reasonably accurately summed up as “savings = bad; spending = good.” Just consider the examples of politicians asserting that unemployment checks or food stamps boost economic growth because the recipients are more likely to spend it.  And then there’s the many government policies which reduce or inhibit capital formations, like direct taxes on capital such as the capital gains tax or death taxes, financial regulations and laws which discourage US investment, and other costly burdens on business – such as Obamacare.

So while we celebrate the contributions of hard working Americans of all stripes, we should keep in mind the importance of capital in achieving prosperity, a fact all too often forgotten by policymakers. Perhaps a yearly reminder in the form of a Capital Day is needed to do the trick.

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About Me

profileI serve as Vice President of the Center for Freedom and Prosperity, a non-profit think tank dedicated to preserving tax competition and free markets. This site features my personal views, which are not reflective of CF&P.

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