I'm very troubled by the way government works to pass laws. The US health care reform was a great example of that. Forget the backroom deals, the hundreds upon hundreds of pages of legalese that nobody actually read, the reconciliation process and all the rest of the ugly mess that is democracy in action in the US Congress.
I'm annoyed to see a divided issue like this settled with growth in government. The issue of health care was fairly evenly split. There was a slight favour among people towards not passing the bill, but let's just call it even for all intents and purposes here. The Congress is made up of representatives, including the aptly named, House of Representatives. Supposedly, democratic government is all about representing "the people". But when an issue is divided as the health care issue is in the US, how do you possibly represent the people? Half want more government, half want less. The Congress cannot represent the people's will with either an increase or decrease of government intrusion, nor can the even keep it the same or balance it out.
The conventional wisdom would be to compromise. Both sides can choose their battles and both can get some benefit from compromising, so goes the theory. But even for the sensible tone and spirit of working together, compromise is ridiculous. That compromise is the solution assumes that both sides have equal legitimacy (turning issues into only two-sided affairs is a bit simplistic, but it's for simplicity's sake). Both sides aren't equally legitimate. If some people want more government, they need to impose their will on those people who do not want more government. Those wanting less government are not imposing their will on anybody to achieve that goal, they are merely deferring to private contract any additional particulars that the 'more-government' people might like to have. And what's more, even just keeping things the same, which seems like the reasonable thing to do in most cases, is in fact illegitimate versus reducing government. Once again, to keep things the same means to impose your will on those who want less government burden.
This brings up a lot of questions now about when a suitable majority is reached. If 75% of people want more government, then certainly they have a sufficiently-large majority over the rest to enact their goals, right? Well, for me that is certainly false. Nobody has the right to impose his or her will on another person, no matter how many people agree with him/her, or how few people agree with the minority. With 99% of people desiring one thing, the tiny one percent is no less entitled to be free from the majority than if it were 51-49 or even.
For the purposes of this blog, I don't need to get into this issue though. My point is that we should at the very least be discussing what a suitable majority is. For people like me, it is 100%, and though others might disagree with that, would they disagree that a representative government has to have the support of more than just 51%? 60? 70? 80? I hope most people would concede that 51% is not sufficient.
On the second point, it bothers me that the margins of success were so small in both chambers of the Congress on the health care reform. For the House, a body of 435 members, the vote was decided by less than ten votes--approximately 1.5% won the day! We may not be able to accurately determine public opinion on any given issue. Due to the fact that health care reform was high profile, multiple polls were conducted to help us get a reasonable estimate of where the people stood. On smaller issues, and other more technocratic issues on which many people will not be well-informed and which the media are uninterested in, such polling may never take place. In these cases, it's expected that the voter's have elected the right person to cast the right vote. And again, is 51% support enough to justify a law that burdens 100% of the people? I don't think so.
This also brings up a corollary with regards to repealing laws. If, for argument's sake, we determined a 75% super-majority to be necessary to pass a new law, shouldn't we similarly require only a 25% minority to vote favourably to repeal an existing law?
To sum up, shouldn't we be tweaking our government processes? Are they really working for us in the spirit of "representational government"?
Monday, March 22, 2010
Thursday, November 5, 2009
A touch of irony caught my eye
While checking out some of the day's news on Google I came across a headline, "Students at Queen's Park to protest poverty."
Reacting to the first line of the article, "Hundreds of student protesters...[forced] road closures and traffic snarls for part of the afternoon," I couldn't help but chuckle at the irony.
The way to end poverty is to get out of the way and let entrepreneurs engage in production and trade. Forcing road closures and traffic snarls not only effects commerce and trade, but also the quality of life of those whose free time was ruined, which is probably more important. Afterall, we work so that we can produce a more enjoyable standard of living, not just for the sake of production.
I could have just let it go with a chuckle over the irony had these students been addressing serious solutions to poverty (of which we in Canada really know nothing about, but I digress...). Instead, the protests were pushing predictable ideas of more government interference in the wealth-producing private sector in order to redistribute funds.
The article goes on to mention that the students were also concerned about rising unemployment and rising tuition set against the backdrop of the current recession. The students are concerned about their futures, and for good reason. If only they understood about the debt they are inheriting, they would have far more reason for concern about the future. My one-year old niece is on the hook for $15,000 of federal government debt, just waiting for her in the coming years. And due to the policies of the same government, I have trouble forming an optimistic outlook for the job market she will be participating in.
We are on the verge of discovering what real poverty is all about. Thankfully, Canada hosts a great deal of opportunity with the vast resources that could be put to good use in a free market. If only we let the private sector produce wealth, it will pull us all higher.
Reacting to the first line of the article, "Hundreds of student protesters...[forced] road closures and traffic snarls for part of the afternoon," I couldn't help but chuckle at the irony.
The way to end poverty is to get out of the way and let entrepreneurs engage in production and trade. Forcing road closures and traffic snarls not only effects commerce and trade, but also the quality of life of those whose free time was ruined, which is probably more important. Afterall, we work so that we can produce a more enjoyable standard of living, not just for the sake of production.
I could have just let it go with a chuckle over the irony had these students been addressing serious solutions to poverty (of which we in Canada really know nothing about, but I digress...). Instead, the protests were pushing predictable ideas of more government interference in the wealth-producing private sector in order to redistribute funds.
The article goes on to mention that the students were also concerned about rising unemployment and rising tuition set against the backdrop of the current recession. The students are concerned about their futures, and for good reason. If only they understood about the debt they are inheriting, they would have far more reason for concern about the future. My one-year old niece is on the hook for $15,000 of federal government debt, just waiting for her in the coming years. And due to the policies of the same government, I have trouble forming an optimistic outlook for the job market she will be participating in.
We are on the verge of discovering what real poverty is all about. Thankfully, Canada hosts a great deal of opportunity with the vast resources that could be put to good use in a free market. If only we let the private sector produce wealth, it will pull us all higher.
Wednesday, November 4, 2009
The Flames should be vaccinated
An uproar has resulted from Calgary Flames players and their families receiving preferential treatment in receiving h1N1 flu shots while many Albertans were turned away due to a shortage of the vaccine. Other stories tell of the Flames' farm team, the Heat, receiving shots at an undisclosed clinic.
No one should be surprised to hear of such things happening. But there are important points to consider here. First, there is a shortage of the vaccine. Whether it is Dion Phaneuf or John Q. Public who is turned away by the shortage is moot. In the sense that there wasn't a random selection, or some discerning criteria for selection, it is very troubling to see a group of people given the shots instead of another group, the regular Joes that stood outside public vaccination clinics only to be turned away. But in general, I feel no better or worse knowing that the limited group of people receiving the treatment were of one group or another.
What bothers me about this situation is that free market principles would have enabled the Flames to pay for vaccination according to high market prices (induced by the shortage). But instead we reject market principles because it seems unfair to allocate resources through free transactions. But I ask those who cringe at the thought of the wealthy buying up vaccines, is it any less troubling to watch a shortage affect the wealthy than the poor? At least if the market forces were at play, there would be some additional revenue to speak of which could be reinvested to produce more vaccine. And when shortages cause prices to be bid up in the market, it signals entrepreneurs to invest in the activity and provide the product so that they can get a cut of the action.
Instead the government wants to ration out the vaccine according to certain criteria and otherwise to random selection (or first come, first served). While putting a price on health care seems cold, there is no moral high ground to random selection. This is particularly so when we consider the harmful effects of government supply mismanagement and disinterest in maximizing revenues that could be reinvested into ongoing production of the vaccine.
Just think, the Flames could have been vaccinated AND there could have been a profit to encourage further production of the vaccine to counter the shortage.
No one should be surprised to hear of such things happening. But there are important points to consider here. First, there is a shortage of the vaccine. Whether it is Dion Phaneuf or John Q. Public who is turned away by the shortage is moot. In the sense that there wasn't a random selection, or some discerning criteria for selection, it is very troubling to see a group of people given the shots instead of another group, the regular Joes that stood outside public vaccination clinics only to be turned away. But in general, I feel no better or worse knowing that the limited group of people receiving the treatment were of one group or another.
What bothers me about this situation is that free market principles would have enabled the Flames to pay for vaccination according to high market prices (induced by the shortage). But instead we reject market principles because it seems unfair to allocate resources through free transactions. But I ask those who cringe at the thought of the wealthy buying up vaccines, is it any less troubling to watch a shortage affect the wealthy than the poor? At least if the market forces were at play, there would be some additional revenue to speak of which could be reinvested to produce more vaccine. And when shortages cause prices to be bid up in the market, it signals entrepreneurs to invest in the activity and provide the product so that they can get a cut of the action.
Instead the government wants to ration out the vaccine according to certain criteria and otherwise to random selection (or first come, first served). While putting a price on health care seems cold, there is no moral high ground to random selection. This is particularly so when we consider the harmful effects of government supply mismanagement and disinterest in maximizing revenues that could be reinvested into ongoing production of the vaccine.
Just think, the Flames could have been vaccinated AND there could have been a profit to encourage further production of the vaccine to counter the shortage.
Friday, October 30, 2009
Extremism in defense of liberty is no vice
The following discussion between Ron Paul and Larry King touched on one of the most intellectually bankrupt arguments employed by many who are unwilling to do serious thought. King recalled, "Lyndon Johnson once said, 'The probable answer is that a government is going to have to be half-capitalistic and half-socialistic.'" This argument can be stated in many different ways, as promoting balance, as an objection to extremism, etc. Of course, these are all just platitudes with no real thought behind them.
Such ideas as balance and moderation sound good. Humans seek to avoid conflict and controversy (most of us, anyway) and so many are willing to accept a balance, or compromise, as being desirable. Furthermore, we accept the concept of moderation in nature and biology. e.g. It's good to let your kids get dirty and build up their immune systems, but it's also good to teach them good hygiene. It's good to get some vitamin A, but not too much. etc. ad infinitum.
Around the same time Johnson was making such empty remarks, Barry Goldwater famously said, "Moderation in the pursuit of justice is no virtue, and extremism in defense of liberty is no vice." Now there is a well-reasoned statement.
Theoretical concepts like liberty and market intervention do not work the way that many other things work in biology and other sciences. There is a real provable reason why a balance of vitamin A is optimal vs. avoiding it altogether or taking it in abundance. A dietitian didn't just come up with the answer that moderation is best, nor did he just make up what constitutes moderation. Actual thinking and experimental science went into showing why it is so.
On the other hand, pursuing a balance between government and liberty confronts both philosophical and scientific problems. Those pursuing moderation have either failed to address either of these problems, or they have failed in their study of history and philosophy to understand their error.
(Ron Paul on Larry King Live [29/10/2009] following Michael Moore)
Such ideas as balance and moderation sound good. Humans seek to avoid conflict and controversy (most of us, anyway) and so many are willing to accept a balance, or compromise, as being desirable. Furthermore, we accept the concept of moderation in nature and biology. e.g. It's good to let your kids get dirty and build up their immune systems, but it's also good to teach them good hygiene. It's good to get some vitamin A, but not too much. etc. ad infinitum.
Around the same time Johnson was making such empty remarks, Barry Goldwater famously said, "Moderation in the pursuit of justice is no virtue, and extremism in defense of liberty is no vice." Now there is a well-reasoned statement.
Theoretical concepts like liberty and market intervention do not work the way that many other things work in biology and other sciences. There is a real provable reason why a balance of vitamin A is optimal vs. avoiding it altogether or taking it in abundance. A dietitian didn't just come up with the answer that moderation is best, nor did he just make up what constitutes moderation. Actual thinking and experimental science went into showing why it is so.
On the other hand, pursuing a balance between government and liberty confronts both philosophical and scientific problems. Those pursuing moderation have either failed to address either of these problems, or they have failed in their study of history and philosophy to understand their error.
(Ron Paul on Larry King Live [29/10/2009] following Michael Moore)
Saturday, October 24, 2009
Just admit the free market works!
To all those out there complaining about the rise of the Canadian dollar, or to those in the US insisting that a lower dollar is beneficial: admit that the free market works!
Monetary values are driven by a few different factors. Supply and demand, of course, being the core function. In the past, demand for the US dollar was predicated on a false notion of security; that the US was home to the freest market and the strongest economy. Something a self-fulfilling prophecy has been propping up this perception for quite some time now since the fall of the Bretton Woods agreement, and certainly since the asset bubbles of the past 15 years.
When money creation is coupled with production, the demand for a currency can be retained. In a sound money economy, production increases over time (think electronics for the simplest example) as the money supply remains constant. This means that higher quality goods are produced in higher quantities, and the prices actually drop as supply is driven up against a constant money supply. But when dollars are produced by fiat at the printing press, the incentive to produce is weakened. Afterall, the inflation of the money supply will not be immediately felt, rather prices throughout the economy will be gradually bid up by consumers with more currency in their pockets. In the meantime, with more dollars and therefore better [temporary] purchasing power to buy foreign goods, it becomes cheaper to import than to produce at home. Why work harder to grow production when you've got more dollars and a higher purchasing power on others' production?
Of course, what happens over time is that prices are bid up to the extent that any increased purchasing power is wiped out as a new equilibrium is found. Now, with the dollar no longer beign stronger, it's time to go back to work and produce. And in fact, the foreigners now hold the dollars you spent to get their goods, so they have a stronger purchasing power and can have their turn at sitting back and waiting for the fruits of your labour to arrive at their doorsteps.
This is not the way it really works in global trade. Over the past many years, the US has convinced foreigners to accept their dollars for real production, and then to not spend those dollars, but rather invest them back into the American economy. This has created the bubble we are not even close to putting behind us.
But what if there were no increase in the money supply? China still has a relatively poor population compared to the people of the US. Their labour still would have been cheaper and would have produced goods that could compete for American dollars. The reason why a weak dollar is incorrectly perceived as a good thing is because it encourages exports, i.e. it ensures more jobs in production. A weaker dollar is the same as a lower wage, when it comes to the global marketplace. If Canadians have a strong dollar, it means we have a bigger wage to spend in the global market. If Americans have a weak dollar, it means they have lower wages. The problem is that in our current economies, dollar values are set by central bankers not the market.
Canadian manufacturers who are clamoring for a weaker dollar are in fact clamoring for a lower wage, plain and simple. Instead of having each labour group bargain its own wages with each management group, we have a monolithic central bank setting the price level. Unfortunately, that is not going to be enough, the bank cannot meet everyone's demands and find a common equilibrium. Only through the market can this be achieved.
Monetary values are driven by a few different factors. Supply and demand, of course, being the core function. In the past, demand for the US dollar was predicated on a false notion of security; that the US was home to the freest market and the strongest economy. Something a self-fulfilling prophecy has been propping up this perception for quite some time now since the fall of the Bretton Woods agreement, and certainly since the asset bubbles of the past 15 years.
When money creation is coupled with production, the demand for a currency can be retained. In a sound money economy, production increases over time (think electronics for the simplest example) as the money supply remains constant. This means that higher quality goods are produced in higher quantities, and the prices actually drop as supply is driven up against a constant money supply. But when dollars are produced by fiat at the printing press, the incentive to produce is weakened. Afterall, the inflation of the money supply will not be immediately felt, rather prices throughout the economy will be gradually bid up by consumers with more currency in their pockets. In the meantime, with more dollars and therefore better [temporary] purchasing power to buy foreign goods, it becomes cheaper to import than to produce at home. Why work harder to grow production when you've got more dollars and a higher purchasing power on others' production?
Of course, what happens over time is that prices are bid up to the extent that any increased purchasing power is wiped out as a new equilibrium is found. Now, with the dollar no longer beign stronger, it's time to go back to work and produce. And in fact, the foreigners now hold the dollars you spent to get their goods, so they have a stronger purchasing power and can have their turn at sitting back and waiting for the fruits of your labour to arrive at their doorsteps.
This is not the way it really works in global trade. Over the past many years, the US has convinced foreigners to accept their dollars for real production, and then to not spend those dollars, but rather invest them back into the American economy. This has created the bubble we are not even close to putting behind us.
But what if there were no increase in the money supply? China still has a relatively poor population compared to the people of the US. Their labour still would have been cheaper and would have produced goods that could compete for American dollars. The reason why a weak dollar is incorrectly perceived as a good thing is because it encourages exports, i.e. it ensures more jobs in production. A weaker dollar is the same as a lower wage, when it comes to the global marketplace. If Canadians have a strong dollar, it means we have a bigger wage to spend in the global market. If Americans have a weak dollar, it means they have lower wages. The problem is that in our current economies, dollar values are set by central bankers not the market.
Canadian manufacturers who are clamoring for a weaker dollar are in fact clamoring for a lower wage, plain and simple. Instead of having each labour group bargain its own wages with each management group, we have a monolithic central bank setting the price level. Unfortunately, that is not going to be enough, the bank cannot meet everyone's demands and find a common equilibrium. Only through the market can this be achieved.
Wednesday, September 23, 2009
Why Freakonomics was great
The art of economics consists in looking not merely at the immediate but at the longer effects of any act or policy; it consists in tracing the consequences of that policy not merely for one group but for all groups.
--Henry Hazlitt
I got the book "Freakonomics" shortly after it came out. It was my first dose of "pop science" reading and I enjoyed the book very much. What I didn't realize until a few years later, after recently reading some newer pop science economics, was why Freakonomics was, and still is, the best of the lot.
Hazlitt ("Economics In One Lesson") condemned Keynesian economists for failing to properly connect economic policies with future consequences. The Keynesians counter: 'in the long run, we're all dead'. Now it is just expected of the Grand Poobahs of economics that they have the intelligence and resolve to fix any problem that comes along, and we generally see any care of the past or the future thrown out the window. Bernanke tells us not to worry about inflation tomorrow, because tomorrow is tomorrow and we only need to worry about today. Go shopping! They'll take care of it when it becomes an issue.
I specifically recall two studies in the book that led me to write this blog (admittedly, I did not read it recently or even scan through it--I'm going on memory alone here). First, Dr. Levitt attempted to find out what happened to crime rates, which led him back in time to an unexpected causation: legalization of abortion. And later he sought to find an answer to the nature-nurture question and parenting methods.Both of these studies called for looks into the past and a search for long-term relationships between causation and consequence. Unfortunately, applying rational principles to 'freakonomics' is insightful, applying those same principles to real economics is obscure, arcane, anachronistic, out of the question.....
Tuesday, September 22, 2009
Celebs fall for the false dichotomy
In relation to my previous post about language and manipulating ideas, I'm going to address the recent video put out by Will Ferrell and some guest celebrities.
The video (from Funny Or Die) is a satirical public service ad, in which a bunch of celebrities remind us, sarcastically, to look out for the insurance companies who stand to lose huge profits and the execs who stand to lose their large bonuses and private jets. And of course, they talk about how private insurers will refuse coverage based on contractual terms.
The obvious thing that jumped out at me from this ad was that these celebs have fallen hook, line and sinker for a false choice dichotomy--a decision between only two options. The message in the video is to promote Obama's health care reform by bashing the existing system and playing up one or two points on the reform plan. But this is an oversimplification that goes beyond oversimplification. If I were thinking of oversimplifying the health care question I could come up with no less than four options: free market, lightly regulated, highly regulated (current US system) or fully socialized. In terms of this oversimplification, the celebs in the video are actually not even for reform at all; they want to take a highly regulated system and keep it highly regulated according to the Obama plan, with some minor policy changes within the system.
I could respect these people a lot more if they did a video about the problems with the current system and then actually asked people to think of many alternatives that might help and to debate the merits of each. Dumbing the debate down into Shitty Current System vs. Reform is a false choice and of course, if such a debate is allowed to be narrowed in such a way, reform is always the most seductive option. But reform should not be synonymous with more control, more government and less freedom, particularly without an honest debate.
P.S. Will Ferrell isn't funny and hasn't been for at least 1o years....
The video (from Funny Or Die) is a satirical public service ad, in which a bunch of celebrities remind us, sarcastically, to look out for the insurance companies who stand to lose huge profits and the execs who stand to lose their large bonuses and private jets. And of course, they talk about how private insurers will refuse coverage based on contractual terms.
The obvious thing that jumped out at me from this ad was that these celebs have fallen hook, line and sinker for a false choice dichotomy--a decision between only two options. The message in the video is to promote Obama's health care reform by bashing the existing system and playing up one or two points on the reform plan. But this is an oversimplification that goes beyond oversimplification. If I were thinking of oversimplifying the health care question I could come up with no less than four options: free market, lightly regulated, highly regulated (current US system) or fully socialized. In terms of this oversimplification, the celebs in the video are actually not even for reform at all; they want to take a highly regulated system and keep it highly regulated according to the Obama plan, with some minor policy changes within the system.
I could respect these people a lot more if they did a video about the problems with the current system and then actually asked people to think of many alternatives that might help and to debate the merits of each. Dumbing the debate down into Shitty Current System vs. Reform is a false choice and of course, if such a debate is allowed to be narrowed in such a way, reform is always the most seductive option. But reform should not be synonymous with more control, more government and less freedom, particularly without an honest debate.
P.S. Will Ferrell isn't funny and hasn't been for at least 1o years....
Subscribe to:
Posts (Atom)
