Walter Williams makes a good case that the war on poverty was making things worse in 1985. This was a PBS documentary now available to all of us through the wonders of the Internet and Youtube. I recommend watching all 28 minutes.
Part I:
Part II:
Part III:
Here’s Walter Williams home page to see more of his work. I recommend adding his weekly column to your normal reading rotation. You will learn a lot.
Thanks to Wally & Mike for — as usual — a good and productive discussion in the comments.
In the comments of this post, commenter Wally and I discuss the business feedback of profit and government feedback of votes.
W. E. Heasley, of The Last Embassy blog, recently posted an excellent short video from Learn Liberty that helps explain why voting isn’t a very effective feedback mechanism:
Most of us make purchasing and voting decisions. Sometimes they are a little of both, like when you vote with your family on what’s for dinner.
The following are links to and excerpts from previous posts I’ve made quoting economists Thomas Sowell and Walter Williams, who do an excellent job of explaining why purchase decisions are a more effective feedback mechanism than voting.
1. From this post in 2010, I quoted from Thomas Sowell’s book, Intellectuals and Society. He explains the difference in these feedbacks well:
The fundamental difference between decision-makers in the market and decision-makers in government is that the former are subject to continuous and consequential feedback which can force them to adjust to what others prefer and are willing to pay for, while those who make decisions in the political arena face no such inescapable feedback to force them to adjust to the reality of other people’s desires and preferences.
A business with red ink on the bottom line knows that this cannot continue indefinitely, and that they have no choice but to change whatever they are doing that produces that red ink, for which there is little tolerance even in the short run, and which will be fatal to the whole enterprise in the long run. In short, financial losses are not merely informational feedback but consequential feedback which cannot be ignored, dismissed or spun rhetorically through verbal virtuosity.
In the political arena, however, only the most immediate and most attention-getting disasters — so obvious and unmistakable to the voting public that there is no problem of “connecting the dots” — are comparably consequential for the political decision-makers. But laws and policies whose consequences take time to unfold are by no means as consequential for those who created those laws and policies, especially if the consequences emerge after the next election. Moreover, there are few things in politics as unmistakable in its implications as red ink on the bottom line is in business. In politics, no matter how disastrous a policy may turn out to be, if the causes of the disaster are not understood by the voting public, those officials responsible for the disaster may escape accountability, and of course, they have every incentive to deny having made mistakes, since admitting mistakes can jeopardize a whole career.
2. In three paragraphs that I quoted from Thomas Sowell’s book, Applied Economics, he explains the differences in our buying and voting decisions. Here are those three paragraphs:
Politics and the markets are both ways of getting people to respond to other people’s desires. Consumers deciding which goods to spend their money on have often been analogized to voters deciding which candidates to elect to public office. However the two processes are profoundly different. Not only do individuals invest very different amounts of time and thought in making economic vs. political decisions, those are inherently different in themselves. Voters decide whether to vote for one candidate or another but they decide how much of what kinds of food, clothing, shelter, etc. to purchase. In short, political decisions tend to be categorical, while economic decisions tend to be incremental.
Incremental decisions can be more fine-tuned than deciding which candidate’s whole package of principles and practices comes closest to meeting your own desires. Incremental decision-making also means that not every increment of even very desirable things is likewise necessarily desirable, given that there are other things that the money could be spent on after having acquired a given amount of a particular good or service. For example, although it might be worthwhile spending considerable money to live in a nice home, buying a second home in the country may or may not be worth spending money that could be used for sending a child to college or for recreational travel overseas. One consequence of incremental decision-making is that increments of many desirable things remain unpurchased because they are almost–but not quite–worth the sacrifices required to get them.
From a political standpoint, this means that there are always numerous desirable things that government officials can offer to provide to voters who want them–either free of charge or at reduced, government-subsidized prices–even when the voters do not want these increments enough to sacrifice their own money to pay for them. The real winners in this process are politicians whose apparent generosity and compassion gain them political support.
3. In his classic column, Conflict or Cooperation, which I linked to in this post, Walter Williams explains how to pit beer drinkers against wine drinkers. Here’s a taste:
Different Americans have different and often intense preferences for all kinds of goods and services. Some of us have strong preferences for beer and distaste for wine while others have the opposite preference — strong preferences for wine and distaste for beer. Some of us hate three-piece suits and love blue jeans while others love three-piece suits and hate blue jeans. When’s the last time you heard of beer drinkers in conflict with wine drinkers, or three-piece suit lovers in conflict with lovers of blue jeans? It seldom if ever happens because beer and blue jean lovers get what they want. Wine and three-piece suit lovers get what they want and they all can live in peace with one another.
It would be easy to create conflict among these people. Instead of free choice and private decision-making, clothing and beverage decisions could be made in the political arena. In other words, have a democratic majority-rule process to decide what drinks and clothing that would be allowed. Then we would see wine lovers organized against beer lovers, and blue jean lovers organized against three-piece suit lovers. Conflict would emerge solely because the decision was made in the political arena. Why? The prime feature of political decision-making is that it’s a zero-sum game. One person’s gain is of necessity another person’s loss. That is if wine lovers won, beer lovers lose.
The differences in political and private decisions has spawned a branch of economics study called public choice economics. Here’s more.
In this election season, it’s good to remember a classic Walter Williams column from 2010, Conflict or Cooperation.
Different Americans have different and often intense preferences for all kinds of goods and services. Some of us have strong preferences for beer and distaste for wine while others have the opposite preference — strong preferences for wine and distaste for beer. Some of us hate three-piece suits and love blue jeans while others love three-piece suits and hate blue jeans. When’s the last time you heard of beer drinkers in conflict with wine drinkers, or three-piece suit lovers in conflict with lovers of blue jeans? It seldom if ever happens because beer and blue jean lovers get what they want. Wine and three-piece suit lovers get what they want and they all can live in peace with one another.
It would be easy to create conflict among these people. Instead of free choice and private decision-making, clothing and beverage decisions could be made in the political arena. In other words, have a democratic majority-rule process to decide what drinks and clothing that would be allowed. Then we would see wine lovers organized against beer lovers, and blue jean lovers organized against three-piece suit lovers. Conflict would emerge solely because the decision was made in the political arena. Why? The prime feature of political decision-making is that it’s a zero-sum game. One person’s gain is of necessity another person’s loss. That is if wine lovers won, beer lovers lose.
It seems with each election cycle we continue to shove things into the political decision-making arena that shouldn’t be there.
One such thing: what children eat for lunch at school.
I’ve been an opponent of the First Lady’s movement to control school lunches since the beginning. Recently,there has been a rash of news stories about students and parents who have become less appreciative of the First Lady’s school lunch efforts as they find their personal choices in conflict with what the government thinks best.
As the election draws closer, I encourage you to keep your eyes peeled for things that are being unnecessarily shoved into the political decision-making arena.
New York city is the innovator in this arena. They’ve placed smoking, salt and now large, sugary-drinks in the political arena. They are being placed there because the government, acting in the best interest of their taxpayers, claim these things drive up health care costs.
As Obamacare takes hold, watch for these trends to go nationwide. The rationale used by these nannies is, “If I’m paying for your health care, then I have a right to tell you not to drink Super Big Gulps.”
Watch out, if you lead what others may consider an unhealthy lifestyle. They may eventually use the above logic to seek to limit the choices you make — all for the greater good, of course — or deny you the generosity of ‘their’ funding.
What I find ironic, is how this super-nanny-ism is never compared to a free market. In a free market, you make choices and deal with the consequences.
Some find that objectionable because it appears to lack compassion. What about those who don’t have the means to handle the consequences?
But, it is rarely considered whether they could have made different choices leading up to consequences and if not having to deal with the consequences caused them to make less responsible choices.
But, once the ‘compassion’ of super-nannyism takes over, it surprises me how quickly the super-nannies lose compassion for those they judge to have not made responsible choices. Now that I’m paying for your health care, I have the right to tell you not to drink Super Big Gulps.
Peggy Noonan discovers something Walter Williams and Thomas Sowell has known for a long time. In her column in the Wall Street Journal this morning, Noonan writes about her thoughts and experiences with Andrew Breitbart. After getting the chance to speak with Breitbart in person and softening her opinion of him, she writes:
Afterward I thought again of something that has been on my mind the past five years or so. Longer, actually, but more so with time. In a way the argument between conservatives and progressives is that for the left, everything is about politics. Because they seek to harness government and the law in pursuit of what they see as just and desirable ends, everything becomes a political fight. Conservatives fought that narrow, constricted, soulless view of life: “We are not only political, we have other spheres, we are human beings.” But in their fight against liberalism and its demands, too many conservatives have unconsciously come to ape the left. They too became all politics all the time. Friendships were based on it, friendships were lost over it. “You agree with me? You’re in. You don’t? You’re out.” They became as good at ousting, excluding and anathematizing as Mensheviks and Bolsheviks, as Jacobins. As self-righteous, too, and as adept at dehumanizing the enemy.
Bingo.
I wrote about Williams’ and Sowell’s explanations of this here. And Williams’ column, Conflict and Cooperation explains why, if we put anything into political sphere, we’ll fight about it. We all have different preferences because we value things differently. What’s right for you may not be right for me.
Economists call it public choice economics. You may recognize it as you and your friends deciding where to eat for dinner or what movie to see. In the process, most people compromise to please the group, but nobody ends up getting what they really want. The difference, however, is that you don’t always have to eat with your friends. You can choose your preferred restaurant next time.
But, when we shove anything into politics (i.e. categorical decisions made by crowds) we’re stuck with what the crowd wants and we end up creating major political divides over who’s going to pay for $9 prescriptions. More on that in an upcoming post.
We are lucky enough to get a two-fer from Thomas Sowell this week:
The Progressive Legacy: Part I
Walter Williams writes about the pathology of low expectations. Here’s a snippet from his column:
How might one explain the greater civility of Philadelphia and other big-city, predominantly black schools during earlier periods compared with today? Would anyone argue that during the ’40s and ’50s, back when Williams attended Philadelphia schools, there was less racial discrimination and poverty and there were greater opportunities for blacks and that’s why academic performance was higher and there was greater civility? Or how about “in earlier periods, there was more funding for predominantly black schools”? Or how about “in earlier periods, black students had more black role models in the forms of black principals, teachers and guidance counselors”? If such arguments were to be made, it would be sheer lunacy. If white and black liberals and civil rights leaders want to make such arguments, they’d best wait until those of us who lived during the ’40s and ’50s have departed the scene.
Over the past couple of decades, I’ve attended neighborhood reunions. I’ve asked whether any of us recall classmates who couldn’t read, write or perform simple calculations, and none of us does. Back in those days, most Philadelphia school principals, teachers and counselors were white. At Stoddart-Fleisher junior high school, where I attended, I recall that only one teacher was black, and at Benjamin Franklin, there might have been two. What does that say about the role model theory? By the way, Asian-Americans are at the top of the academic ladder, and, at least historically, they rarely experience an Asian-American teacher during their K-through-12 schooling.
Speedmaster, at the Pretense of Knowledge blog posted this great quote from Walter Williams:
What’s “just” has been debated for centuries, but let me offer you my definition of social justice: I keep what I earn and you keep what you earn. Do you disagree? Well then, tell me how much of what I earn “belongs” to you — and why?
– Walter Williams
I’ll go one further. How much of what you earn belongs to me?
In his column this week, Walter Williams discusses a Ron Paul/Wolf Blitzer debate moment and NY Times columnist Paul Krugman’s reaction to it.
He [Krugman] was referring to a GOP presidential debate in which Rep. Ron Paul was asked what should be done if a 30-year-old man who chose not to purchase health insurance found himself in need of six months of intensive care. Paul correctly, but politically incorrectly, replied, “That’s what freedom is all about — taking your own risks.” CNN moderator Wolf Blitzer pressed his question further, asking whether “society should just let him die.” The crowd erupted with cheers and shouts of “Yeah!”, which led Krugman to conclude that “American politics is fundamentally about different moral visions.”
This is a good example of why I don’t care to watch election debates. This topic deserves more in depth exploration, but the debate format only allows for sound bite responses.
I agree with Williams and Ron Paul. But, I doubt those answers will do much for people who disagree with us. I’m not sure if my responses will either, but here are some other things to consider.
First, I’d like Wolf to clarify what he means by “society.” Members of society are free to do what they like for this hypothetical 30-year-old. Who’s stopping them? Why do they need to be forced through government?
Medical practitioners could donate their time for his benefit. Individuals can choose to donate their money to cover his costs. People can form organizations that raise funds to help folks like him.
But, I think what Wolf really means by “society” is “government”.
It’s a pet peeve of mine when folks use “society” in place of “government”. The underlying assumption is that there are only two options — either the 30-year-old buys insurance or the government comes to the rescue. When you say “society” and really mean “government”, just say “government.”
Second, I’d ask why the 30-year-old decided to not buy insurance? This is rarely discussed, but the answer is important.
Certainly, we could just say the 30-year-old made a bad gamble, but that doesn’t give the root cause. It’s not only a bad gamble, it’s a disastrous gamble. Why he would make such a disastrous gamble? Running red lights is a disastrous gamble also and very few people intentionally make this gamble. Why not?
What if he made his health insurance gamble because he knew government would back him up? That’s called a moral hazard and we find ourselves in a bad position when what is believed to be compassionate government policy actually causes more people to make disastrous gambles. That also drives up the cost of insurance, medical care and government for everyone, as they are left paying for those disastrous gambles (which is exactly one of the key underlying problems driving medical costs in the U.S.).
Third, I’d ask for more information about this 30-year-old. What’s his income? What kind of car does he drive? What phone plan does he have? Where does he live? How much did his TV cost? Which TV service does he have? How much would a catastrophic insurance policy cost him? Enter your zip code on this website to find out. In my zip code, a $5,000 deductible policy for a 30-year-old single male with Blue Cross Blue Shield is quoted at $53 per month.
I wonder, if “society” would have less compassion for him if it found out that he could afford the $50 / month insurance insurance policy, but chose not to buy it so he could have the best data plan for his smartphone.
Apparently, “society” didn’t think much of this woman’s efforts to raise money for her cancer treatments with yard sales, since the local government shut her down. But, it appears that individuals in society have privately and voluntarily taken it upon themselves to help her out. Good for them.
Third, I might ask why “society” should value the 30-year-old’s life more than he valued it himself, as demonstrated by his own unwillingness to insure himself?
I can’t imagine “society” having much sympathy for a driver who died in a car accident because he recklessly chose to run red lights.
This is just another example of where we let poor logic lead us to make bad decisions.
Poor logic: That guy made a disastrous gamble, let’s help him.
Better logic: Let’s encourage that guy to not make disastrous gambles and let’s, through our private actions, help the truly needy.
So, I can well imagine someone like Blitzer saying, “so what do we do when we have a 30-year-old male dying who didn’t buy insurance?”
First, “we” do like the people did for the lady having yard sales. We take private actions to help him, because we are good people.
Then, if he recovers, we take him by the ear and let him know that he should be ashamed of himself for making such poor choices that others had to come to his aid and take away resources for the truly needy.
We let him know that he will be expected to make responsible choices, because next time there are no guarantees of help. He played us for fools once.
Maybe he goes on a speaking tour or gets interviewed by the local news and sends the message to other able-bodied and able-minded folks to not take disastrous gambles because it’s selfish and not worth it.
And, maybe one day he will come across someone who took a disastrous gamble and lost and will do the same for her that others did for him.
Maybe, in the process, he picks up some dignity and reinforces it others.
Speaking about Walter Williams, his latest column, Should the Rich Be Condemned?, is worth a read.
The whole column is so good that I put it under the fold. Here’s one key paragraph:
President Barack Obama, in stoking up class warfare, said, “I do think at a certain point you’ve made enough money.” This is lunacy. Andrew Carnegie’s steel empire produced the raw materials that built the physical infrastructure of the United States. Bill Gates co-founded Microsoft and produced software products that aided the computer revolution. But Carnegie had amassed quite a fortune long before he built Carnegie Steel Co., and Gates had quite a fortune by 1990. Had they the mind of our president, we would have lost much of their contributions, because they had already “made enough money.”
Exactly! When it is reasoned that the rich have enough and we should take more from them, we don’t realize that we are really taking it from ourselves.
We say, oh well, so they’ll have one less car in their 50 car garage. That may be true. But it is equally likely that we don’t get a better a light bulb, a new vaccine or some other thing that may improve our lives. And I never hear that considered in the ‘take more from the rich’ logic.
For me, it’s the same poor logic that produces massively harmful things like the housing policy.
For example, the poor logic: “Home ownership makes people responsible, so let’s make it easier for folks to own homes by lowering the bar of responsibility.”
Better logic: “Responsible people buy homes. So, let’s encourage responsible behavior.”
With rich people, “They have a lot money and it doesn’t seem fair, especially while others are struggling. Let’s take more from them.”
Rather than, “For the most part, wealthy people earned their wealth by finding ways to add value to the lives of others. So, let’s encourage people to find ways to add value to the lives of other. Then we all come out ahead.”
Normally, the holidays bring some family discussion on politics. This weekend, those discussions were limited. The following is the extent of the political discussion I had this weekend:
Family member: Have you heard about what Howard Schulz [Starbucks founder] is doing about politics?
Me: A little. I don’t know much, but to me, it sounds like Schulz is saying “we just need to all get along and do the stuff the I (or my side) wants to do.”
Family member: No, that’s not it at all. He, and others like Ariana Huffington, want to end the gridlock in government so that government can get some things done.
Me: Do you realize you said exactly what I said, just differently? When people say they want to end the gridlock, they mean they want to do the stuff that they think should be done, but not what the other side wants to do.
Family member: I don’t think that’s true. I want to do the stuff that my side wants to do and the stuff that your side wants to do.
Me: Really? Name one thing that my side wants to do that you support?
Family member: Well, I can’t right now.
Me: Then what you said is just a platitude. It sounds good, but means nothing. It’s tough to do what one side wants to do — which ends up growing government — and what the other side wants to do — shrinking government — at the same time. That’s why there’s gridlock.
Me again (summoning Walter Williams): Here’s the thing. We need to get more of our decisions out of politics. You and I don’t have to fight over which jeans we should wear because we each get to make the choice that’s right for us. I don’t get to force you to wear the jeans that I like. But, if ‘we’ said as society that we all have to wear jeans, we’d fight over which jeans to wear and some group of people would end up forcing their preferences on everyone else.
I think Schulz has a brilliant business mind. I encouraged my family member to read his book Pour Your Heart Into It. It holds a lot of good lessons for starting, growing and running a business.
I also encouraged my family member to look into what other business leaders have to say about politics, like John Mackey, CEO of Whole Food Markets.
Can the eye on the cover see the unseen?
In his latest column, Walter Williams quotes French economist/philosopher Frederic Bastiat. Bastiat provided a great litmus test for judging the morality of a law and government action:
See if the law benefits one citizen at the expense of another by doing what the citizen himself cannot do without committing a crime.
Bastiat added in his book The Law:
When law and morality contradict each other, the citizen has the cruel alternative of either losing his moral sense or losing his respect for the law.
