Cans of corn

In the comments to this post, we had what I thought was a good discussion regarding fairness and how government interference usually causes unfairness rather than fixes it.

Wally asked if unfair processes exist outside government. I responded that they do but that there are better feedbacks and choice outside of government to help with that.

Don Boudreaux just wrote a fantastic column, Competitive regulation, in the Pittsburgh Tribune addressing how much better feedbacks and choices, which derive from competition, work in a free market work than the regulations from government.

I particularly love this part:

No one asserts that competitive regulation works perfectly. But perfection isn’t the appropriate standard. The claim, rather, is that competitive regulation works pretty darn well.

Want evidence? Go to the supermarket and then to the mall. You’ll find astonishingly wide offerings of high-quality and affordable goods: food and drink products, detergents, kitchenware, clothing, furniture, consumer electronics and on and on and on. You’ll also find stores manned by clerks and managers who generally would be distraught to lose their jobs.

Nearly none of what you see is the result of government regulation. No regulator ordered Safeway into business. And no regulator tells it what to offer for sale. If Safeway wished, it could — as far as the government is concerned — stock only cans of corn and nothing else. It could refuse to pay any of its workers wages higher than the legislated minimum. It could open for only 15 minutes daily. It could use pencils and paper, rather than electronic scanners or cash registers, to tally its customers’ grocery bills.

But it does none of these things. Competing with Kroger, Wal-Mart and other supermarkets, Safeway voluntarily chooses — for its shareholders’ own good — to spend tens of millions of dollars annually to keep its shelves stocked with a vast assortment of items, to pay most of its employees wages well above the legislated minimum, and to undertake all the other countless activities that it must undertake to turn a profit.

I continually find it amazing how much a part of life these feedbacks and choices are and how little people recognize it.

People simply don’t recognize that free market and competition provides them with so many choices. How often do we complain about not getting what we want with stuff that comes to us by way of generally free markets like restaurants, shoes or deodorants? How often do we complain about things from government?

Sure, there are complaints about products. As Boudreaux says, no one says the market is perfect. But, there are entire TV and radio channels dedicated to complaining about government.

The same people go to Target and to the DMV. I can’t figure out why they never seem to think “I want more of what brought me Target and less of what brought me the DMV”.

Don’t Miss the Chance to Privatize

According to this Forbes piece, President Obama proposed privatizing the Tennessee Valley Authority (TVA) in his budget, but Republicans from Tennessee are opposed using the very same arguments that democrats used to oppose privatizing the Bonneville Power Administration (BPA), when President Bush proposed privatizing it.

First, I want to point out that politics is politics. In the comments of this post from February, Wally and I discussed the BPA, an electric power provider in the Northwest structured like the TVA as a Federal government stepchild.

It isn’t a fluke that President W proposed privatizing the BPA, while Obama proposed to privatize the TVA. The BPA provides power primarily to states that tend to vote for Democrats, while the TVA does the same in states that tend to vote for Republicans. Might as well take government goodies from your opponents first.

Plus, it doesn’t hurt to get your opponents in Congress spun up on keeping their government goodies so you can claim they are not cooperating with making budget cuts.

But, if I were a Republican I’d put privatizing the TVA on a fast track and call President Obama’s bluff.

It would make a great test case that Republicans could use to demonstrate privatization can happen without calamity. Successful test cases make good sales material. If it works out well, it just might touch off the willingness for more privatizations, including things like the BPA in the Northwest and the TSA.

Open Immigration

I think the biggest problem with immigration is that government limits it.

Good legislation mirrors social norms and the social norms recognize that most illegal immigrants are hard-working people looking for opportunity through value-added work effort rather than value-draining government benefit programs. That’s win-win. We should eliminate government limits on immigration to match what we believe to be true that we generally accept immigrants.

Now, some folks make the case that immigrants attracted by government handouts are a drain on society. However, I think that should be taken as a valid case against government handouts rather than immigration.

Others worry about the cultural impact of open immigration, yet the U.S. has survived many waves of immigrants before. I’m not sure I understand why a current wave should be feared, especially if they are coming here for opportunity.

Update: Here’s a good, related post on Arnold Kling’s askblog. In response to the analogy “Illegal immigrants are to immigration what shoplifters are to shopping,” Kling wrote:

Let me continue with the analogy. We have a store that makes the process of dealing with the sales clerks very complicated, with people having to stand in line at the cash register for years. Maybe we would not have so much shoplifting if we fixed the checkout process–or at least if we offered an “express lane” to people willing to pay a fee of $5,000 or so.

One of Kling’s commenters took it a bit further and wrote:

Illegal immigrants are to immigration what front-of-the-bus riders are to Jim Crow.

What is ‘modest’?

Bob Murphy makes a good point while responding to Elizabeth Warren’s discussion of a $22 minimum wage:

We’re not talking about a “modest” change that Krugman et al. hide behind when we free-marketeers go nuts on this stuff. (Even here, I’m still waiting for someone to show me why going from $7.25 to $9/hour–which is a 24 percent increase–is “modest.” If the government cut the deficit by 24 percent in a year, I doubt Krugman would dismiss it as “modest.”)

…or cut government spending by 24%, lowered tax rates by 24% or increased tax rates on the poor by 24%.

 

Good quotes

The Pretense of Knowledge shares some good quotes on liberty and on the sequester. A couple of which I’d like to capture here for my future reference.

On liberty, from Laurence Auster:

Once the government becomes the supplier of people’s needs, there is no limit to the needs that will be claimed as a basic right.

On the sequester, from Thomas Sowell:

Back in my teaching days, many years ago, one of the things I liked to ask the class to consider was this: Imagine a government agency with only two tasks: (1) building statues of Benedict Arnold and (2) providing life-saving medications to children. If this agency’s budget were cut, what would it do? The answer, of course, is that it would cut back on the medications for children. Why? Because that would be what was most likely to get the budget cuts restored. If they cut back on building statues of Benedict Arnold, people might ask why they were building statues of Benedict Arnold in the first place.

Liberty isn’t rugged invidualism

Advocates of liberty are often wrongly characterized as ‘rugged individualists.’ I often hear our position referred to as ‘survival-of-the-fittest’ or an ’on-your-own’ society.

I think this straw man exists for a couple of reasons.

First, it’s an expedient portrait to paint of political opponents when you don’t wish voters to think too deeply about the issues. It turns out that Don’t vote for the mean guys is a compelling campaign message.

Second, and possibly more common, is that a great many people confound government and society as one in the same. They see society expressed through government, rather than government as having a specific and limited role to play in society, like the role a janitor or security guard has in cleaning and protecting a building.

To these folks “we”, government and society are interchangeable ideas. Whatever “we” think “we” should do, should be done through government.

In my The Government Subsidy Fallacy post from January, 2012, I reference a David Henderson Econlog blog post that referenced this quote from 1800s French economist, Frederic Bastiat:

When we oppose subsidies, we are charged with opposing the very thing that it was proposed to subsidize and of being the enemies of all kinds of activity, because we want these activities to be voluntary and to seek their proper reward in themselves.

This applies to all government activity. If you oppose a government program intended to help the poor, you are accused by the people who confound government and society for not wanting to help the poor at all.

And, if you prefer liberty to big government, then that can only mean that you are a rugged individualist — you believe only the fittest should survive and everyone should carry their own weight.

But, you don’t need to be a rugged individualist to respect that the next guy deserves a chance to decide what is right for him without you sticking your nose in, just as you expect the same respect from him (“golden rule of liberty”).  You earn your freedom by letting others have theirs’.

That may be individualism, but it is not rugged individualism. And definitely not ‘survival of the fittest’ or ‘on your own’ society.

Individuals are important. Individuals are the building block of society. Without them, there is no society. It’s as simple as that. I think this is something that most people in our country believe intuitively. That’s not an -ism. I don’t think we would take the effort to educate people or attempt to help others through government or otherwise if we didn’t believe individuals were important.

Respecting the liberty of others doesn’t mean that you want an ‘on-your-own’ society. Quite the contrary. It means that you recognize that the greater good is better served from the voluntary actions of individuals than through involuntary, even if well-intended, actions of government.

Voluntary actions work so well for the greater good that not only do the unfit survive, but they don’t even really exist. In a free society with lots of specialization, nearly everyone can usually find something with which they are fit.

But for those who confound government and society, they have trouble seeing the benefits that result from voluntary actions be it trading, charity or otherwise. Why?

Even as they personally benefit from so many things provided by profit-seeking trading including basics like indoor plumbing, bountiful food, shelter, climate control and amenities like fashion handbags, smartphones and a camera in just about everything, these people scoff at the idea that businesses do good by seeking profit for their owners. They view profit-seeking as a drain on society.

They don’t see that they are the very people who have rewarded the owners with profit. They also don’t understand why they rewarded the owners — because they too gained value (or profited) from the product. Even though they participate and benefit from this activity 24/7, it is such a part of their daily lives, it is invisible to them.

These people also discount the notion that charitable activities can ever be generous enough to meet all the needs of the poor or they have strange ideas about why they do not prefer private charity. I recall one conversation where I mentioned how well churches carry out charity. The person agreed, but said she didn’t want people in need to have to get a pitch on religion just to get help. There was so much wrong with that, I didn’t know where to begin.

So, with trade, charity and other voluntary actions discredited as a reliable and viable way to achieve the greater good, that leaves government. If they see one person who wasn’t served well by private actions (usually these are the people who are asked to stand at State of the Union addresses), that’s all the convincing they need for government intervention. Rarely do they ask, can I do something to help solve this problem? It’s far easier to support government doing it and then assume the moral high-ground for that. In fact, that requires no action beyond flapping lips.

So, as a supporter of liberty, when someone tries to pin you with the ‘on-your-own’, rugged individualist tag, don’t let them off so easy. Explain that one of the things that attracts you liberty is that it does a far better job of serving the greater good than government and why you think that. It may not lead to an immediate change in thinking, but it could plant a seed that could blossom later.

If tax cuts are spending, shouldn’t liberals want more tax cuts?

According to her comments, Nancy Pelosi considers tax cuts to be spending.

If Pelosi really believed this, shouldn’t she be as supportive of tax cuts as she is of real spending increases?

What’s the difference? Does she think tax cuts are irresponsible spending? If so, are there any other types of government spending she considers irresponsible?

My guess, the only stuff she finds irresponsible are changes that put more in the hands of citizens and less in the hands of government.

“Losses Encourage Prudence”

I wonder if Russ Roberts saw the opinion piece, How to Shrink the “Too-Big-to-Fail” Banks, in Monday’s Wall Street Journal from Richard Fisher and Harvey Rosenblum, who are, respectively, the CEO and Director of Research, at the Federal Reserve Bank of Dallas.

I wonder if Russ Roberts has seen it, because it appears to agree with his hypothesis that a history of government bailout of banks contributed to the financial crisis, because bankers took on more risk than they otherwise would.

Here are Fisher and Rosenblum’s first three paragraphs:

A dozen megabanks today control almost 70% of the assets in the U.S. banking industry. The concentration of assets has been in progress for years, but it intensified during the 2008–09 financial crisis, when several failing giants were absorbed by larger, presumably healthier ones. The result is a lopsided financial system.

Meanwhile, the mere 0.2% of banks deemed “too big to fail” are treated differently from the other 99.8%, and differently from other businesses. Implicit government policy has made these institutions exempt from the normal processes of bankruptcy and creative destruction. Without fear of failure, these banks and their counterparties can take excessive risks.

It also emboldens a sense of immunity from the law. As Attorney General Eric Holder admitted to the Senate on March 6, when banks are considered too big to fail it is “difficult to prosecute them . . . if we do bring a criminal charge, it will have a negative impact on the national economy.”

That last paragraph paints an image for me of the TBTF bankers holding the economy hostage for the taxpayer ransom. I wish I could draw.

Here they sum up the problem rather well:

…market discipline is still lacking for the largest dozen or so institutions, as it was during the last financial crisis. Why should a prospective purchaser of bank debt practice due diligence if in the end, regardless of new layers of regulation and oversight, the issuing institution won’t be allowed to fail?

The return of marketplace discipline and effective due diligence of banking behemoths is long overdue.

In case you are wondering, prospective purchasers of bank debt practicing due diligence is an example of market discipline, just like you practicing due diligence on your car purchase.

Credit Fisher and Rosenblum for going on to offer a solution, which involves rolling back the Federal government safety net and restructuring TBTF banks into entities that can go through speedy bankruptcies so they will be “too small to save”.

I like it. Read the whole thing.

The golden rule of liberty

In discussions about what government ought to do, rarely does one consider:

What if I’m wrong?

If there’s a chance that your policy causes more harm than good, or even any harm, shouldn’t you be more concerned? 

Good intentions and the gotta-do-something attitude are often accepted as valid justification for causing harm, but I think that’s a mistake.

If I’m walking by someone on the street who is having a heart attack, I could attempt to perform open-heart surgery. That would cause him more harm since I have no medical experience. Even though I had good intentions and a gotta-do-something attitude, most people wouldn’t give me a pass for with that reasoning.

Yet, we let so many people and politicians get by on that reasoning when it comes to public policy.

I hear proponents of the minimum wage, for example, support their position with a ‘greater good’, cost benefit analysis that sounds like this: Sure, it might make it harder for some to find a job, but it’s worth it if some people get paid more than they otherwise would.

My response: The folks who will have a harder time finding a job want to thank you for making that decision on their behalf.

They usually chuckle and say something like: Well, that’s okay. The ones who get paid more will also thank me.

What amazes me about such exchanges is how blase folks are about making decisions that might harm others, even if their cost-benefit analysis is correct, and how little they care about whether they are right or wrong. They act as if their good intentions gives them a pass for being wrong and causing harm. That’s reckless.

A key reason I appreciate liberty isn’t because I believe the costs (like those in the above example) outweigh the benefits (though I do believe that), it’s because I believe I should be very careful when I’m thinking in terms of who to harm — even if I believe the benefits exceed the costs.

I don’t like it when others decide it’s okay to harm me for what they think is the greater good, so what entitles me to inflict harm on others? Treat others as you, yourself, would like to be treated.

Few of the reckless greater-do-gooders like it when others decide it’s okay to harm them. Yet, they rarely make the connection that because they don’t like it, maybe they should refrain as much as possible from advocating harming others.

I’m not a fan of society-level cost-benefit analysis, because it separates the analyzers from the direct costs and benefits and makes it too easy to be careless and support the outcome that garners the most favorable agreement with peers.

It’s to easy to say this: I support this because I think we* have to do something. We* just can’t sit by and let these people suffer.

*Of course, by ‘we’, they usually mean others.

It’s not so easy to say: You know, it may be unfortunate, but we all have unfortunate things happen to us and need to make adjustments. Besides, if we do something to help them though government, that just means we’re causing harm to others. Maybe, if we really do believe it is worth it to help them we should open our own checkbook, volunteer our time or start an organization to help them, rather than just make empty declarations.

Elections matter

Listening to a Congressman being interviewed on the radio last week, I was reminded of this quote from the movie Braveheart, where William Wallace explains how his view of the role of a government representative differs from the rep’s view:

You think the people of this country exist to provide you with your position. I think your position exists to provide those people with freedom.

The Congressman said he was disappointed by how the talk among his colleagues in Washington DC wasn’t about doing right by the American people, but how to get more from the American people so they could continue to fund and grow government agencies.

That doesn’t surprise me, since that reflects generally who we’ve been electing.