Category Archives: Free Trade

Is Free Market Medicine Heartless?le

Recently I had an interesting conversation with someone who leveled the following accusation:

“You libertarians don’t care if people die from lack of medicine, or if someone can’t afford a doctor.  Libertarianism is the freedom to die from a cold while the doctor who could treat you is doing a checkup for a rich guy who has nothing wrong with him.
You guys are so wrapped up in hating the government that you don’t see the good it can do.”

This is a frequent charge leveled against those who oppose some government intervention.  The assumption contained within the accusation is that if someone opposes the state performing some task, then one is in effect opposing anybody performing that task. There are two possible ways that this accusation could be correct:

1) The task can only be done by the state.  Regardless of our desires to see the task done, it won’t happen without state action. Therefore by opposing state action we are opposing any action that could attain that goal.

2) The task could be done by others, but we believe that it shouldn’t be done at all.

While I am sure one could find the occasional libertarian who is opposed to the broad mass of the people having access to good medical care, this is not true of the vast majority of libertarians.  Unsurprisingly like non-libertarians, most libertarians are fans of good health.  So clearly the second statement is not correct and we are left with the first one as the accusation.

But, is this correct?  Is the state the only entity capable of accomplishing this goal?  It’s actually trivial to demonstrate that the state can’t assure people the highest quality of medical care.  But can it do a better job than other organizations?  The answer is that it can do a “better” job, but at a cost that will wreck the economy.

Why Involve the State?

The notion that the state is required to ensure that people have access to medical care is, itself, predicated on several assumptions:

1) It is bad when someone is allowed to die or goes unhealed when the means to save his or her life or health is available.

2) People who cannot afford to hire a doctor or purchase medicines will go untreated.

3) People are unwilling to voluntarily support others who are unable to pay for their own care.

4) Only the state can amass the funds needed to ensure that all are treated, since it can extract more money than people are willing to give up.

Can the state do it all?

Unfortunately, while these assumptions at first seem reasonable, item number 4 is problematic in ways that supporters of state provisioning ignore at their own peril.  The first is that while state action can alleviate scarcity of medical care, it cannot eliminate it entirely.  Consider Paul Newman.  Paul Newman was a wealthy man.  He had a personal doctor who was well paid.  This doctor probably had no more than 50 patients under his care.  Can state action provide a doctor for every 50 people?  In the United States alone, this would require training 1,000 doctors for every doctor practicing today.  There would be more doctors than the combined population of plumbers, farmers, factory workers and shopkeepers.  Such an action, would take millions of workers out of working in other trades, trades where they paid taxes and put them in the position of consuming taxes.

Clearly this is untenable, at some point, the administrators of any system of providing medical care have to say “no more” and to stop providing additional care that may be technically possible, but economically unfeasible.

Thus we see that even a government-administered program will have to accommodate scarce resources, permitting people to suffer who otherwise could be treated.

Is the state the one who does a better job?

Even if the state can’t treat everyone, can it still do a better job than every other conceivable organization?  To answer this question, we need to examine how medical care is provided on a free market.

Free market provisioning – simple

The simplest way that a person gets medical care in a free market is by waiting until he or she gets sick.  The sick person then goes to a store and purchases the medicines he or she needs or visits a doctor, paying for these services out of their cash balance.  Of course, if the person lacks the money to pay the doctor or the medicine owner, the illness won’t be treated.

The prices under such a scenario are set as follows.  Doctors and medicine makers charge whatever the market will bear.  If they set their prices too high, they won’t be paid at all.  Furthermore if their profits are sufficiently high, they will attract competition, more people choosing to become doctors.  These additional providers will compete for customers, charging whatever the market will bear for their services as well.  Eventually, an equilibrium will be reached where the supply of doctors is sufficient to supply all the patients who are willing to pay them sufficiently well for treatment.

Free market provisioning – Insurance

Illness is a stochastic process that visits people randomly.  The rates of illness in a large population are, however, predictable to a reasonable degree of accuracy.  This makes it quite possible for insurance companies to provide health insurance; people pay a monthly or annual fee for coverage, and the insurance company pays for their illnesses.  People who get very sick benefit because the cost of care exceeds the premiums they pay to the insurance company.  The insurance company profits because the premiums they charge exceed the costs of the treatments they pay for.  The people who don’t get sick may lose money, but should they get sick in the future, they are in a position to become benefactors.

The introduction of medical insurance, of course, results in higher prices in the short term as people who previously could not afford treatment are now able to afford treatment.  However, as in the previous simple scenario, the rise in prices would attract even more people to become providers.

Free market provisioning – Charity

Under the previous two methods, there is still a class of people who seek treatment who don’t get it: people who cannot afford insurance.  The plight of this group will not go unnoticed; some segment of their neighbors will be moved by their plight, and will want to help.  These neighbors make a gift of money, their services, or their non-money property to the needy, either by paying for services directly, giving gifts to the needy, or by giving gifts to organizations, known as charities, that distribute the gifts to the needy.

The supply of charitable gifts is dictated by how much the gift givers are willing to give in return for the psychic benefit they get for giving gifts.  These people choose how much they will give, and to whom based on what they are a) able to spend, b) how ‘deserving’ they feel the benefactor to be, c) the predicted effect of the gift.

These benefactors are thus examining the need of the beneficiaries, the resources available to donate to the problem and how effectively those resources will solve the problem in choosing how much money to give.  Again, initially the action of charities will increase the demand for medical services and bid up prices.  Again, these higher prices will attract more providers to provide services, until once again prices have stabilized at a level where the number of providers is constant.

Deviation from Free Market – Medical Licensing

The free market provisioning of medical care assumes that anyone who wishes can hang a shingle form their door and go into business as a doctor.  It provides severe downward pressure on prices: any time doctors in a particular branch of medicine start making sufficient amounts of money to make the training profitable, it attracts more people to take up the profession.

The medical industry has reacted to this downward pressure by calling for the state to restrict the pool of practicing doctors.  This eliminates downward pressure on prices. If the number of doctors is restricted, then the bidding war as patients fight for the few available slots will result in prices rising dramatically.  The more entry is restricted by these laws the more dramatic this phenomenon is.

Deviation from the Free Market – Subsidies

Earlier, we showed how charitable contributions tend to push prices higher.  This phenomenon becomes more dramatic once medical licensing is in place.  To understand this phenomenon, we must examine how prices are set at a free market.  Imagine an economy where A, B, C and D are interested in visiting a doctor.  This doctor can see 2 patients per day.

The prices they are willing to pay to see a doctor are:

Actor Willing to Pay
A $110.00
B $ 80.00
C $ 60.00
D $ 50.00

To maximize his profits, the doctor must fill up his schedule.  If he posts a price of less than or equal to $80.00 per visit, he can fill his schedule with paying patients.  Thus, we can expect that the doctor will charge $80.00.

Now let us examine what happens if some entity offers a $50.00 subsidy for patients wanting to visit the doctor but can’t afford it.  Now the demand schedule looks like this:

Actor Out of pocket + Subsidy = Payment to Doctor
A $110.00 $0.00 $110.00
B $ 80.00 $0.00 $80.00
C $ 60.00 $50.00 $110.00
D $ 50.00 $50.00 $100.00

At this point the doctor finds himself deluged with patients.  Eventually, he finds himself wanting new equipment, or to hire more staff, and so he experiments with raising his price.  He raises his prices to $90.00, then to $100.00 or more.  When his prices reach $110.00, once again he is maximizing his income.  Any higher, and he will have empty slots in his schedule and lose business.  The effect of the subsidy, in the presence of significant barriers to entry for new providers is to increase prices.  The higher the subsidy, the more people it is offered to, the more dramatic this effect is.

If one looks at all the asset bubbles in recent history, all the sectors of the economy where prices are climbing faster than the rate of inflation, one finds generous government subsidies coupled with significant barriers to entry for new providers.

Of course, patient B, having been able to afford a doctor in previous days now finds himself out in the cold.  He is not offered a subsidy, but cannot afford to see a doctor.  Unless he is very aware of economics, he will ask the subsidizer to include him in the subsidy as well.  This expansion in subsidy will result in still higher prices, creating another wave of people who no longer can hire a doctor.  The people in this wave then lobby for the expansion of the subsidy to include them.  If the cycle continues long enough, nobody will be able to afford the subsidy.

Deviation from the Free Market – Monopoly Customer

Another option is to establish a monopoly that takes over all payment to doctors.  This monopoly can avoid the phenomenon of competing consumers bidding up prices by taking over all payment decisions.  It sets a price, and a doctor who attempts to charge above the price is simply not paid.  This authority then sets prices according to its whim.   The entity can offer doctors below market wages, resulting in patients flooding the system.  Or, it can establish above market prices, leading to it having to outlay huge amounts of money.

The latter becomes a significant problem.  The monopoly must somehow acquire (or create) the money needed to pay for all these treatments.

However, unless this entity can increase the supply of doctors, it cannot expand medical care.  Unless more doctors are permitted to go into practice, the number of patients that can be treated remains the same as under the Free Market + Medical Licensing.

This problem can be easily solved, by having the monopoly guarantee all doctors above market wages, as follows:

In the scenario above, every day four patients sought medical treatment.  The single doctor was only able to treat two.  So the monopoly arranges to pay two doctors $80.00 per visit, resulting in a greater capacity than exists under Free Market + Medical Licensing.  At this point, the monopoly is obligated to pay $320.00 per day to treat all four patients.  The total number of dollars people were prepared to part with for medical care was $110 + $80 + $60 + $50 or $300.00 total.   Thus, the monopoly has to extract $20.00 from someone to pay for the extra medical care, diverting that money from other, more highly desired ends from some actor somewhere in the economy.

The State

The state is well positioned to act as such a monopoly.  It can, though taxes, extract as many resources as the economy can supply in order to maintain the monopoly payments. Just as the state could, if its officers desire, land men on the moon, something that no organization depending on making a profit or voluntary donations will be able to do in the foreseeable future, the state could ensure that everyone gets reasonably good medical care.  However, this will come at significant cost.  The resources commandeered to pay these above market wages will necessarily impoverish the public.  In our scenario above, we had the state demanding that one or more people be forced to give $20.00 more than they would have liked to to cover the medical care of all actors.  This is money that would otherwise go to satisfying other consumer demands, such as food, better housing, beer or factories.

Additionally, the use of taxation to acquire the money needed generally means that patients pay $0.00 out of pocket.  This means that there is no cost (other than the lost time and inconvenience) for visiting the doctor.  This results in a massive spike in demand as people rush to visit the doctor more often.  Again, absent the lifting of the restriction on the number of practicing doctors, such a system will be plagued by long wait times and rationing via queues.

This power is also the state’s Achilles heel.  Unlike a charity that depends on voluntary donations, the state does not have to do a good job to get money.  Even if the state spends the money in a lousy, inefficient manner, the money will continue to flow into its coffers; people are denied the choice to withhold their money from the state.  Furthermore, for a government official, challenging inefficiency or generating efficient ideas requires effort.  The worse the problem being confronted the more effort the official must exert. Such efforts are often psychically unpleasant.  Thus a significant number of officials will find the disutility associated with the effort to do better will far outweigh any possible personal benefit they accrue.  Again, we see this phenomenon demonstrated in countless government offices.  for example a significant portion of Medicare funding is consumed by fraudulent charges.  Government officials turn a blind eye to the fraud since they run no risk of being bankrupt by excessive claims.  As an aside, the proponents of state provisioning of medical services love to cite the low administrative costs of Medicare as a good thing, whereas it is precisely the skimping on administrative oversight which causes the overbillers to be able to perpetrate their fraud with impunity indefinitely.

It is not surprising that numerous studies analyzing private (dependent on payments or voluntary donations) ventures with public ones (funded by force) performing similar tasks found that, on average, the private ventures delivered the same service at only 75% of the cost.

The importance of innovation

Having found that government provisioning of medical care is no panacea in the present, we should look at what is really required to make health care better for more people.

What is the engine driving improvements in medical care?  In the end, it is the desire of doctors to do a better job, whether from professional pride or from a desire for more revenue.  In a free market, an innovation requires only a doctor and a patient agreeing to try it out.  In an environment where the state pays for medical care, the doctor or patient must convince the state to permit the test being tried.  For very innovative ideas, especially ones that are likely to trigger an episode of creative destruction, where whole branches of the field will be rendered obsolete or redundant, it is possible that the state will refuse to permit the innovation to take place.

Medical treatments that are available to the poorest among us today were not available to kings two centuries ago.  Two centuries ago no economy could have afforded to extend even the pitiful medical care that kings received to the entire population.  It is only through innovation, the discovery of new and cheaper ways of doing thing, that the care afforded by the wealthy can become available to the basic population.

Let us see how this works in a free market.  Let us consider some case where a doctor invents a new procedure that allows him to treat a condition at one-tenth the cost of the current treatment in vogue.  Of course, he starts providing this treatment, and pocketing the massive profits that accrue to him as a result.  The news of his procedure gets out.  Other doctors also adopt the practice.  Initially all who adopt the practice make unusually high profits.  These high profits attract additional providers to try to treat people with this procedure.

As the number of providers treating patients increase, the market-clearing price starts to fall.  New providers offer lower and lower prices in an attempt to fill their schedules.  This process continues until the profits to be earned by treating patients with the new treatment is too low to attract additional providers.  The result is that many more people are having their condition treated than were before.

Any regimen that slows or short circuits this process of innovation has the effect of denying the poor access to future medical care.

The important thing is that state regulation does hamper innovation.  It can do no other.  The result, present state regulation is harmful to future patients, and past regulation is harmful to patients in the present.

Must We Lean on the State?

From the above analysis we can come to several conclusions:

1) It is impossible to make high quality medical care available to the most number of people while restrictive medical licensure laws make it difficult for new people to enter the medical profession.
2) While government action can expand the amount of care available today, it does so at an expense of less medical care in the future.
3) The government will either have to ration care, or heavily tax people to accomplish the goal of expanding medical care to more people in the short term.
4) The function performed by the state can be done more cost effectively by charities funded by donations.

Thus we see that the earlier assumption 4, that only the state can amass the needed resources, is not correct.

Additionally, we can question the applicability of assumption 3, given that most governments that provide medical care or subsidize it are representative ones, where the population picks the lawmakers.  Obviously, since government provisioning on health care is voted into law by representatives selected in popular elections, it is safe to say that a sizeable portion of the population are willing to donate money to care for those who are unable to afford care.

We can clearly see that the state is neither the only organization that can provide medical care, nor is it very efficient in doing so.

Conclusions

We can see that far from being heartless, the supporter of free markets is really attempting to make medical care cheaper and more widely available, and that the advocate of government involvement is inevitably arguing for a system that is inefficient,  not innovative and that in the long term will do a poor job of extending quality care to the poor who cannot afford it today.  While in the short term, the state can commandeer impressive resources and make massive strides towards acheiving some goal, in the long term such actions can be very detrimental.

I am an anarcho-capitalist living just west of Boston Massachussetts. I am married, have two children, and am trying to start my own computer consulting company.
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The Global Financial Margin Call

Leverage:

4. the use of a small initial investment, credit, or borrowed funds to gain a very high return in relation to one’s investment, to control a much larger investment, or to reduce one’s own liability for any loss.

For an investor, margin is a blessing and a curse. When you’re trading on margin, your returns can be very high, but it only takes small losses to wipe you out completely. It’s the problem of leverage. If you invest $1000 but your brokerage is giving you 5-to-1 margin, you effectively invest $5000 instead of $1000. Thus, a 20% return nets you $1000 profit instead of $200. But it’s a problem in the opposite direction too. A 20% loss loses you $1000. You now have a $4000 loan from the brokerage, and the total position of your holdings– if liquidated to pay off your loan in a margin call– will leave your position wiped out.

Margin, for an individual brokerage and an individual investor, can be a very useful tool. Yes, it’s a big risk, but it carries big rewards. It allows the investor to play a large position with a limited exposure, and allows the brokerage to make very liquid loans when they have excess capital.

When margin requirements get very loose, though, and the practice becomes widespread, it becomes scary. Gains happen quickly, as the money moving in the market gain velocity. Losses are worse. If a brokerage has a lot of investors working on margin, a bear market may force them to initiate a margin call on a lot of investors, and their exit of the market can further reduce demand and drive down prices. Thus, each brokerage is in a race to exit the market, and the market crashes — as we saw in 1929.

Leverage is not a bad thing. Without leverage, most people couldn’t afford a house. We don’t save the full price of the house, we save a modest down payment, borrow the rest, and then watch as our 10% down payment reaps the rewards of 100% of the gains of the house price. In a down market, because houses rarely drop more than 10% or 20% in a down market, it’s rare that a price will drop enough in a short period of time to liquidate our down payment…

Enter subprime and alt-A. When lending standards decline, offering houses to people with no money down, the leverage becomes nearly infinite. If I can buy a $400K house with no down payment– only covering closing costs– I now have the ability to make a huge reward with very little risk of my own. It doesn’t take a 10% drop in housing prices for me to be underwater on my investment, but a 10% increase on that house is $40K in profit.

Leverage increases the rate of gain as well as loss. When subprime lending became widespread, everyone was buying on margin and bidding up the prices of homes to obscene levels. The market was crowded not only by homeowners, but by speculators looking to “flip” houses for a quick profit. The rapidly escalating prices was a false signal to homebuilders, who believed that demand had shot up and tried to build houses to meet the demand. The market went up with no signs of stopping — and then it stopped.

As all bubbles do, eventually the perma-bulls have nobody to sell assets to except other perma-bulls. The market can go nowhere but down. At that point, everyone who is leveraged is in big, big trouble. In this case, the market was leveraged top to bottom, and we’re looking at a financial catastrophe unlike few people today living have ever seen.

I said we were leveraged top to bottom, but so far I’ve only spoken about the homebuyers and lenders. It goes far deeper than that. Investors lending out their own money have a responsibility to ensure that they’re lending to creditworthy borrowers. Even if it’s not “their own” money, they usually have to carry those profits and losses on their own balance sheet, and thus it’s their responsibility (often with their job on the line) to ensure the money is handled responsibly. But in this case, the incentive of the lenders was to “churn” loans, because every loan was carried by someone else. The loans were packaged into CDOs– Collateralized Debt Obligations– securities grouping these toxic loans into equities sold to institutional investors who were far more liquid than the banks or the homebuyers.

Even worse, many of those institutional investors were working on their own version of margin, CDSs– Credit Default Swaps. A CDS is an insurance policy against default. If I buy $1B worth of securities, with a worry about losing my entire position in a big default, I can insure my position against default for a much smaller amount. I can then assume that my $1B investment is no longer “exposed”, and go out making another billion dollar investment as if the first billion doesn’t even exist. I’m covered — as long as my counterparty selling me the CDS can remain solvent.

So everyone’s leveraged to the max, top to bottom. How did it get this way? This post isn’t intended to assign blame, but as I’m sure many of you know, I think the government deserves quite a bit of responsibility for its easy-money policies, Fannie and Freddie, and the CRA. Then, of course, there were a lot of investors who got swept up in the “good times” thinking nothing could go wrong, and many of their technical investing brethren who assumed that the new CDO and CDS products would work to improve stability instead of just allowing the bubble to reach historic proportions before bursting. And there’s the old-fashioned greed, by lenders who want to refinance everyone they meet and homebuyers who either bought more than they could afford or treated their homes like ATMs. This one’s big enough that there’s plenty of blame to go around.

So what’s happening now? The global financial margin call. This leverage has to unwind, and the way that happens is going to cause a lot of pain no matter what happens. It would have been easier if everyone just held on through the crisis. But these financial institutions are in a prisoner’s dilemma writ large; if none of them write down the assets and try to de-leverage, they’re all able to weather the storm, but if any of them de-leverage, the firms to do it first get off the lightest. Plus, with mark-to-market rules forcing them to write down the losses, they’re hand is forced. We’re at the point where everyone’s in the process of trying to get out, and the whole system is nearly ready to come crashing down.

And why is the government stepping in? Because the credit markets are frozen. An institutional investor isn’t going to take a big risk right now if they can’t hedge that risk. They’d love to use a CDS to protect themselves, but nobody believes the counterparty selling a CDS is solvent enough to live up to its obligations. AIG is a perfect example. As the largest holder of these CDS contracts, there was no way they could effectively live up to their counterparty obligations, and allowing them to fail would unravel the whole egg in a very fast manner. Thus, the government stepped in and said that nobody has to worry, because if push comes to shove, the US Treasury will be that counterparty. And nothing’s more trustworthy than the US Dollar and the US Treasury, right?

There’s an old adage when it comes to economics: “If you owe the bank $5,000, that’s your problem. If you owe the banks $100,000,000, that’s the bank’s problem.” The problem with being “too big to fail” is that failing hurts the people you owe a lot more than it hurts you. This is where the bailout is coming from, because companies like AIG will cause so much havoc when they fail that we can barely understand the potential implications.

We can debate whether or not this bailout should or shouldn’t occur (for the record, I’m against it), but in an election year, there’s nothing that’s going to derail this monster. What’s important right now is to understand the potential implications. So here’s the possibilities:

Best Case: The whole point of the government intervention isn’t really to fix the situation. This situation can’t be “fixed” in that sense. The system is over-leveraged, and that has to work itself out. The issue is that if it occurs quickly, we’ll have a level of pain that this country is not ready for. If it occurs slowly, we might have a protracted recession and a dull nagging ache, but eventually the economy will grow its way out of the mess. We’re talking a 5-15 year process, but they may stave off double-digit unemployment and bread lines.

Worst Case: Government doesn’t solve the problem, and we still go into a depression. In order to get out of it, and to try to keep the economy moving, they inflate the dollar to try to give the appearance of growth, but America doesn’t buy it. The world abandons the dollar as a reserve currency, and we enter a hyperinflationary depression along the lines of 1920’s Germany.

Even the best case is not good, but the worst case is downright terrifying. But whether or not you support this bailout, I hope this post explains the underlying causes and issues at stake here. We’re in uncharted territory, and the Sword of Damocles is dangling just above. No politician wants to let that sword fall, but there’s a distinct chance that their intervention will destroy us first.

Welcome to the U.S.S.A.

For those of us who value the concept of life, liberty, and property, there doesn’t seem to be much reason to be optimistic for America’s future. Last week we saw one government (taxpayer) bail out after another. The price tag seems to grow a couple of hundred billion dollars each day (depending on which figures one chooses to believe); by some estimates the taxpayers will be on the hook for over $1 trillion. According to the Libertarian Party, $1 trillion could buy the following:

• To buy everybody living in Los Angeles at least one Lamborghini Gallardo.
• To buy 88,052, 394′ custom mega yachts; enough to stretch around ¼ of the world.
• To buy everyone living in Belize and Malta a Manhattan apartment.
• To get half of the Democratic Party into a fundraiser for Barack Obama at the $28,500 admission price.
• To give one out of every two men in the United States a Men’s Presidential Rolex watch.
• To buy every woman in the United States a Tiffany Diamond Starfish Pendant.
• To get two Mitsubishi 73″ HDTVs for every household in America.
• To buy four copies of The Office: Season Four on DVD, to every person on earth.
• To send everybody in America on an all-inclusive vacation to Tahiti (and some people can stay a few extra days).

Anyway you want to look at it, $1 trillion is a lot of money ($3, 278 for every man, woman, and child in America).

And how do our so-called leaders wish to ultimately “solve” this problem which they have created? More government, of course! Joe Biden is calling on “the rich” to do their “patriotic duty” to pay more taxes, not only to pay for the already bloated federal government (which grew by leaps and bounds under the so-called compassionate conservative George W. Bush) but also to pay for the government programs that he and Barack Obama wish to impose on us (programs such as fighting global poverty among others).

But it gets even worse than that. The current Secretary of Treasury Henry Paulson has proposed that he should have the absolute authority to purchase any mortgage-related assets as he sees fit (obviously with our money). Section 8* of the proposal reads as follows:

Sec. 8. Review.

Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.

Section 9 puts a time limit on this absolute power provision but even placing this much power in the hands of one person for a two-year term is a very frightening thought. Perhaps the one good thing about having power hungry politicians in congress in both parties is that they would likely not support this measure as it would take power away from them.

Welcome to the U.S.S.A. What’s left of our free market system is all but dead. While one can make a libertarian case for both John McCain and Barack Obama in certain aspects of their policy proposals, neither are what I would call champions of capitalism (to put it mildly). Personally, I don’t find the arguments for McBama to be persuasive. I will proudly support Bob Barr knowing full well that he will not win this election and knowing full well that whomever wins, we will be in for difficult times.

Is America’s best days behind her? Is there any way that we can restore our Republic to what it once was?

As always, the answer will depend on how “We, the people” will respond.

» Read more

Ron Paul’s Speech at the “Rally for the Republic”

Ron Paul spoke in front of a crowd of approximately 10,000 at the “Rally for the Republic” (AKA the “Ron Paul Convention”) across the river from the Republican National Convention.

Below are the first 3 parts of his speech, the full text of the speech can be read here.

Other speakers on the last day of the rally included Tucker Carlson, Lew Rockwell, Gov. Jesse Ventura (who hinted that he might make a presidential run in 2012), and Barry Goldwater Jr.

Libertarian presidential nominee Bob Barr was also in attendance at Ron Paul’s big show but Barr said he was not disappointed that Paul did not make an official endorsement of his campaign:

Barr, a former GOP congressman, told ABC News he respects Paul’s intent not to make an endorsement in the general election, and is “here today because there are thousands of people who believe we need to shrink the power, the size, the scope of the federal government.

“These are liberty-loving Americans, and those are my kind of people,” Barr exclaimed.

[…]

“We’re all in this together — we believe in the same things,” Barr said.

“Ron has chosen to work within the Republican Party, I’ve chosen to work through the Libertarian Party through the electoral route, but we all want the same thing,” he added.

http://www.campaignforliberty.com/

http://www.bobbarr2008.com/

Joe Biden And Liberty

Both The Club For Growth and The Cato Institute are out today with analyses of Joe Biden’s position on economic issues of importance to libertarians and, as you might suspect, it’s not good.

First from Cato on the issue of international trade:

Here are the highlights and lowlights of Biden’s voting record on trade:

On the positive side from a free trade perspective, he voted consistently to maintain normal trade relations with China, including permanent NTR in 2000; for the North American Free Trade Agreement with Canada and Mexico in 1993; for the Uruguay Round Agreements Act in 1994; for the Freedom to Farm Act in 1996; for fast-track trade promotion authority in 1998; to defund enforcement of the travel ban to Cuba; to cut sugar production subsidies; and in favor of the Morocco and Australian free trade agreements in 2004.

On the negative side for those who support the freedom to trade, Biden voted for steel import quotas in 1999; for the 2002 and 2008 protective and subsidy laden farm bills; against trade promotion authority in 2002; against the Chile, Singapore, Oman, and Dominican Republic-Central American FTAs; in favor of the Byrd amendment directing anti-dumping booty to complaining companies; in favor of imposing steep tariffs on imports from China to force changes in that country’s currency regime; and in favor of screening of 100 percent income shipping containers by 2012.

For a senator who prides himself on his foreign policy experience, Biden’s record shows great ambivalence about American participation in the global economy.

The Club for Growth, meanwhile, takes a look at Biden’s positions on a number of economic issues:

“Over his thirty-five years in Washington, Senator Biden has been a reflexive liberal on every single economic issue,” said Club for Growth President Pat Toomey. “Whether the issue is taxes, spending, regulation, or school choice, Senator Biden has voted consistently for more taxes, more spending, more government, and less freedom and choice. Taxpayers can expect more of the same from the Obama-Biden ticket—more government, less prosperity.”

A few examples:

Joe Biden on Taxes:

  • Voted for President Clinton’s tax hike (RC #247, 1993)
  • Voted against repealing the Alternative Minimum Tax (RC #261, 1999)
  • Voted against eliminating the marriage penalty (RC #79, 2001)
  • Voted against the 2001 tax cuts (RC# 170, 2001)
  • Voted against repealing the Death Tax (RC #151, 2002) (RC #109, 2007)
  • Voted against a repeal of the 1993 tax increase on Social Security benefits (RC #94, 2003)
  • Voted against the 2003 Bush tax cuts (RC #196, 2003)
  • Voted for a 50% windfall profits tax on oil profits (RC #331, 2005)
  • Voted against extending the 2001 tax cuts (RC #118, 2006) (RC #107, 2007)

Joe Biden on Spending:

  • Voted for the Farm Bill in 2002 and 2008 (RC #103, 2002) (RC #130, 2008)
  • Voted in favor of the Bridge to Nowhere (RC #262, 2005)
  • Voted against capping spending (RC #286, 2005)
  • Voted to kill a resolution stating a moral obligation to offset new spending with spending cuts (RC #140, 2007)
  • Voted for the expanded SCHIP bill (RC #307, 2007)
  • Voted against an earmark moratorium (RC #75, 2008)
  • Voted to override President Bush’s veto of the Farm Bill (RC #140, 2008)
  • Was declared Porker of the Month by Citizens Against Government Waste in January 2002

(…)

Joe Biden on Regulation:

  • Voted for the burdensome Sarbanes-Oxley legislation (RC #192, 2002)
  • Voted against exempting small businesses from Sarbanes-Oxley (RC #139, 2007)
  • Voted for a minimum wage hike (RC #257, 2005)
  • Voted for the “card check” bill—stripping workers of their right to a secret ballot when voting to form a union (RC #227, 2007)
  • Voted to kill the Davis Bacon waiver (RC #334, 2007)

Joe Biden on School Choice:

  • Voted against a vouchers program for DC schools (RC #260, 1997)
  • Voted against school choice for low-income earners (RC #179, 2001)

(…)

Joe Biden on Political Free Speech:

  • Voted for McCain-Feingold (RC #64, 2001)
  • Not surprising for a liberal Democrat, of course, but yet another indication that there really isn’t anything about an Obama/Biden Administration that libertarians should look forward to.

    Obama & McCain Call For Renewed Laws Against Witchcraft and Those Who Make Infernal Pacts With the Devil

    In barbaric cultures, when people find themselves facing unpleasant changes, like the failure of crops or natural disasters, they look for scapegoats to blame. In the Europe and early colonial America, all to often the quest for a scapegoat took the form of a persecuting old women, who were charged with having used magic to curse their neighbors crops or herds. The fact that many of these old women owned or were squatting on property that was coveted by neighbors or powerful landlords was not lost on the more enlightened thinkers of the time.

    Witches in the StocksThree centuries may have passed since the infamous Salem Witch trials, but the backwards superstition that prompted them is still with us. And Barrack Obama and John Sidney McCain have decided to publicly embrace the superstitions and to lead a modern day hunt looking for witches and sorcerers to punish. their targets are not the old defenseless women that their predecessors hung and burned alive. No, they have decided to target a new scapegoat. The speculator:

    Kill the speculators! is a cry made during every famine that has ever existed. Uttered by demagogues, who think that the speculator causes death through starvation by raising food prices, this cry is fervently supported by the masses of economic illiterates. This kind of thinking, or rather nonthinking, has allowed dictators to impose even the death penalty for traders in food who charge high prices during famines. And without the feeblest of protests from those usually concerned with civil rights and liberties.

    Yet the truth of the matter is that far from causing starvation and famines, it is the speculator who prevents them. And far from safeguarding the lives of the people, it is the dictator who
    must bear the prime responsibility for causing the famine in the first place. Thus, the popular hatred for the speculator is as great a perversion of justice as can be imagine.

    Walter Block – Defending the Undefendable

    How have these evil speculators supposed to be driving up prices? The International Herald Tribune endeavors to explain – using arguments which would be right at home in the Chewbacca Defense or in A Tryal of Witches.

    The “Enron loophole,” a 2000 measure that allowed unfettered oil trading on electronic markets, is now blamed by many for speculation in the tight energy market and is seen as responsible for the rapid increase in prices …

    The Enron loophole was “slipped into law by Senator Phil Gramm in late 2000 at the behest of Enron lobbyists to exempt some energy traders from the regulations and public protections applicable to exchange-traded commodities. As a result, the Commodity Futures Trading Commission (CFTC) is unable to fully oversee the oil futures market and investigate cases where excessive speculation may be driving up oil prices,” said an e-mail from the Obama campaign. …

    Energy trading giant Enron collapsed in a major corporate scandal in 2001 that sent executives to prison, but not before it won exemption a year earlier from federal oversight for energy commodity trading. Critics claim that measure has allowed speculators to drive up the price of oil well beyond levels dictated by current supply and demand.

    The International Herald Tribune, Obama details plan to tax excess oil company profits, end energy trading loophole

    So what have these evil speculators done? They have purchased oil today and stored it, hoping to sell it tomorrow for a much higher price. How does this raise the price? To answer this question, we must look at how a speculator acquires his oil. When a company which is pumping oil out of the ground auctions off their oil, the speculator offers more money than anyone else to purchase the oil. Let’s think about the implication of that statement for a moment. The speculator spends his own money and offers more of it to the producer than anyone else. In other words if we are being screwed by the price of oil, the speculator, who is paying more than we are, is even more screwed.

    In the short term, this does drive the price of oil up. However, in the end, the speculator must sell his oil. he must sell his oil to people who wish to consume it, and at a higher price than he paid for it. If he guesses right, he can sell every barrel he has for a price higher than he paid for it. If, on the other hand, only when the price is $30.00 a barrel lower than he paid for it, will enough people be willing to purchase his oil for him to sell off all his stock, he may take a huge loss – having made a small fortune by wasting a large fortune. Much like a witch who wastes her time cursing a neighbors sheep by dancing naked under the full moon having drunk a potion made out of fingernail clippings, the speculator who tries to purchase enough of a good to create an artificial shortage is wasting his time and money.

    This can be easily shown from the reaction of commodities traders to one of the most blatant attempts by any speculator to corner a market and drive up the costs of agricultural products permanently. This speculator hoped to double or even trebble the price of grain by creating artificial shortages. This dastardly speculator was called the United States Agriculture Department, and it was acting at the behest of many congressmen in the 1920’s to prop up food prices at the levels they had reached in World War I when under Herbert Hoover’s leadership, it tried to corner the world grain market using the American taxpayer as a source of financing.

    The FFB managed to hold up wheat prices for a time. Seeing this apparent success, wheat farmers naturally increased their acreage, thus aggravating the surplus problem by the spring of 1930. Furthermore, as America held wheat off the market, it lost its former share of the world’s wheat trade. Yet, prices continued to fall as the months wore on, and the heavy 1930 acreage aggravated the decline. The accumulating wheat surpluses in the hands of the FFB frightened the market, and caused prices to tumble still further. …

    The FFB programs had thus inadvertently encouraged greater wheat production, only to find by spring that prices were falling rapidly; greater surpluses threatened the market and spurred greater declines. It became clear, in the impeccable logic of government intervention, that the farmers would have to reduce their wheat production, if they were to raise prices effectively. The FFB was learning the lesson of every cartel-production must be reduced in order to raise prices. And the logic of the government’s farm monopoly also drove the FFB to conclude that farmers had been “overproducing.” Secretary of Agriculture Hyde accordingly lectured the farmers on the evils of “overproduction.” The Secretary and the FFB urged farmers to reduce their acreage voluntarily.

    The first group of farmers selected to bear the brunt of this sacrifice were the marginal Northwest growers of spring wheat-the original agitators for price supports. They were not very happy at the prospect. The farmers, after all, wanted subsidies from the government; having to reduce their production of the subsidized crop had not been included in their plans. A group of economists left Washington at the end of March to try to persuade the Northwest farmers that they would be better off if they shifted from wheat to some other crop. In the meanwhile, in this topsy-turvy world of interventionism, troubles piled up because the wheat crop was abundant. Surpluses continued to accumulate, and wheat prices continued to fall. Legge and Hyde toured the Middle West, urging farmers to reduce their wheat acreage. Governor Reed of Kansas reflected the common-sense view of the farmer when he wondered why the government on the one hand promoted reclamation projects to increase farm production and, on the other hand, urged farmers to cut production.[20] Since the individual farmer would lose by cutting acreage, no amount of moral exhortation could impel any substantial cut in wheat production.

    As wheat piled up in useless storage, foreign countries such as Argentina and Russia increased their production, and this increase, together with the general world depression, continued to drive down wheat prices.[21] On June 30, 1930, the GSC had accumulated over 65 million bushels of wheat held off the market. Discouraged, it did little until late 1930, and then, on November 15, the GSC was authorized to purchase as much wheat as necessary to stop any further decline in wheat prices. Bravely, the GSC bought 200 million more bushels by mid-1931, but all to no avail. The forces of world supply and demand could not be flouted so easily. Wheat prices continued to fall, and wheat production continued to rise. Finally, the FFB decided to dump wheat stocks abroad, and the result was a drastic fall in market prices. By the end of the Hoover administration, combined cotton and wheat losses by the FFB totaled over $300 million, in addition to 85 million bushels of wheat given gratis to the Red Cross.

    Murray Rothbard – America’s Great Depression

    The important lesson from Herbert Hoover’s disastrous experiences as a speculator is that a speculator cannot create an artificial shortage. Why?

    1) because consumers of the good will be aware that the speculator has a great deal of the commodity in storage waiting to go back on the market and will make their plans accordingly.

    2) because until he is selling the stuff he bought for more than he paid for it, the speculator is losing massive amounts of money.

    Thus if the speculator guesses wrong about future demand for consumption, he will go broke. If the speculator is right, and the price of oil will go up much higher, then the speculator has provided a marvelous service. For when consumers are at their most desperate, when the supply of oil is at a low point relative to demand, the speculator adds his stock to the supply. This action alleviates shortages, and thus drives prices down. Furthermore, by taking product off the market now, by bidding up prices now, the speculator encourages producers to increase production helping mitigate the future shortages that the speculator is foreseeing.

    The so-called “excessive” profits that Obama and McCain are demogouging against are as mythical as the witchcraft that the British Crown so zealously prosecuted more than a quarter millenium ago. It is ironic that as they make speeches about the downturn in the mortgage industry, a textbook case where speculators completely misread future consumer demand and were financially wiped out as a result, that these politicians turn around and accuse another class of speculator of doing the same thing. It is shameful that just as fellow Harvard alum William Stoughton promoted a superstitious theology that sent people to the gallows, Barack Obama, who really should know better, has chosen to promote a superstitious econology that will inevitably destroy many lives.

    I am an anarcho-capitalist living just west of Boston Massachussetts. I am married, have two children, and am trying to start my own computer consulting company.

    Do Government Regulators Protect Investors?

    In a thread at Reason’s hit and Run, during a discussion where Enron was cited as an example of what happens when governments fail to regulate private behavior, frequent commenter fluffy wrote an insightful comment which is well worth reading in full. The second half of her comment read:

    It is customary in the US for the Wall Street markets to be seen as the embodiment of unbridled capitalism, and they really aren’t. What they are is a complex system of federal regulation designed to foster “confidence” in publicly-traded companies, to facilitate the growth of those companies via debt and capital aggregation and intermediation. Their existence is a deliberate policy choice of the state, to attempt to use regulation to make it possible for small investors to trust people they have never met and of whom they have no knowledge – in order to allow corporations to grow larger, or to grow more quickly, than they would have in the days when trust was based on the personal or family qualities of the entrepreneur behind the corporation or the bank doing the underwriting for the corporation’s stock. The complex rules regarding accounting, corporate reporting, transparency, etc., are designed to allow corporations and investors to trust each other without actually having to do anything to establish trust beyond participating in the regulated system.

    This has two unintended consequences. First, it allows corporations to be much larger and more powerful than they would otherwise be. The social and economic effects of this are open to debate. Second, it creates a situation where the “incentive problem” MNG talks about looms pretty large. As long as a corporation can do the bare minimum necessary to keep the SEC from shutting them down, they are in a position to command broad respect from investors that they may not deserve. The highly technical nature of the regulations in question also creates a milieu where a company like Arthur Andersen can begin to see its task as ensuring technical compliance and nothing else; the exotic techniques their consultants were using to build earnings or smooth earnings in that context begin to look not like “frauds” but simply “innovation”. By trying to facilitate the operation of the market, the state has in a sense corrupted it, or at least created an environment where corruption can hide behind the wall of paper the SEC requires.

    But why has this corruption occurred? Why wouldn’t it happen in a private stock market? Well, a thought experiment will explain why the government intervention is corrupting. Imagine two stock markets. One, the Boston Stock Exchange is interested in attracting investors with assurances that their money will be safe. The other, the new York Stock Exchange does not care. The owners of the Boston Stock Exchange publish a set of accounting standards and demand that any company that trades on their stock exchange must follow those rules and publish those reports. The New York Stock exchange does not have that requirement.

    Some investors choose only to invest money in companies trading on the Boston Stock exchange. They eschew the New York exchange. In the meantime investors who are less choosy (or more foolish) continue to invest in companies on the NY exchange. As a result, the companies that invest in meeting the requirements of the Boston exchange have access to additional capital that they couldn’t get if they were limited only to getting it from the NY Stock exchange. If the additional capital is worth the expenses involved in meeting the Boston standards, a company will rationally choose to adopt the Boston standards. Companies that find the additional cost not to provide sufficient benefit will not adopt the standards. Those companies will forego being traded on the Boston exchange and will make do with the capital available in New York.

    In this scenario, the cost of adopting accounting rules is an investment in the business, much like the cost of marketing or the cost of insurance. Companies that choose to spend the money will attempt to ensure that it is well spent, that they are necessary for investor protection. There will be a negotiation between investors, the Boston Stock exchange, accountants and the companies being audited to arrive at meaningful standards that satisfy everybody. In the commercial insurance industry there instances of fraud tend to be aberrations rather than systematic because this very process is in place.

    Now let us assume that for a variety of reasons the U.S. government passes a law mandating that all companies meet the Boston standards. Immediately all the companies trading exclusively on the New York exchange are slapped with an additional cost that they don’t want. The benefit of compliance will be reduced since the capital funds available in Boston will now be spread over many more companies. These companies, having been saddled with an unwanted cost will attempt to reduce the cost. They will seek out corrupt auditors who will rubber stamp their records. In the meantime the auditors who specialized in Boston accounting rules, now assured of a captive market, have to expend less effort pleasing their customers, the stock exchanges. In fact, they merely have to satisfy government regulators to keep their licenses, so they will pay less attention to the officers of the stock exchange. Since the government regulators, unlike the Boston Stock exchange, face no losses should they certify a corrupt regulator, they have a much lower incentive to ensure that the auditors are doing a good job.

    At this point the accounting industry will not only become corrupt, it will also stagnate. The process that causes the stagnation is quite straightforward:

    Let us assume that a couple of investors think that the Boston system is flawed. So they come up with a new system, and establish a stock exchange in Chicago which insists upon these alternate standards. Let us further assume that they convince a number of investors to agree with them, to the point where a few companies are interested in adopting the new standards. Whereas before the companies would merely have to switch to the Chicago system and to abandon the Boston system, they are not allowed to do this. They must continue to spending the money required to comply with the Boston system. If they want to meet the Chicago rules, they must purchase this as an additional cost. And, if the Chicago sytem contradicts the Boston system they cannot adopt the system at all.

    This sets up a nearly insurmountable hurdle for anyone to adopt the Chicago system. And there is little chance of the Chicago system being mandated, because there will be many people with a vested interest in keeping the Boston system in place. Only in a time of crisis will the adoption of the Chicago system be considered by the legislature. And, if they should mandate it, they will be mandating an untested system. Should the system not work out as advertised, they could set back the industry dramatically as is happening as a result of the Sarbanes Oxley law.

    If people truly wish to protect investors, they would lobby for the immediate dissolution of the SEC and allow stock markets to compete again on the quality of auditing. We would see a dramatic improvement in investor satisfaction as Stock Exchanges were not limited to competing for customers using price.

    I am an anarcho-capitalist living just west of Boston Massachussetts. I am married, have two children, and am trying to start my own computer consulting company.

    Why Energy Independence Is a Futile Way to End Middle-East Terrorism

    In an earlier post, I discussed the economic damage that “energy independence” would cause to U.S. consumers. In a recent conversation in meatspace, I ran into someone who acknowledged this problem, but argued that the price is “worth it” because when we trade with people who make oil, those people use the wealth to do all sort of bad things, like funding Al Queda. This argument has some merit; I certainly wouldn’t buy bread from a guy who would use the money to fund attacks on his neighbors.

    Let’s examine this problem using the infamous Your Black Muslim Bakery in Oakland California as an example. This bakery is the cash cow for a gang that is involved in all sorts of criminal activity, ranging from auto-theft to destroying the stocks of alcohol stores since the bakers religiously disapprove of drinking.

    If we take the proponents of energy independence’s approach to this matter, we would be calling for the city of Oakland, through a web of subsidies and taxes, to encourage the development of industries providing alternatives to bread. We would demand that they subsidize spaghetti shops, encourage people to bake their own bread, and tax bread use. We would seek to make bread more expensive for all so that people will consume less bread and stop buying bread from the bakery.

    Instead of focusing on this particular bakery, instead of calling for a boycott of that particular bakery, we would seek to deprive all bakers of their livelihoods, make food more expensive for all including those who are desperately poor and have difficulty affording food. This is taking a sledgehammer to swat a fly and very immoral to boot!

    But by trying to use violence to change the behavior of their countrymen, especially in a manner so ineffective to achieving their stated goals, the politicians calling for energy independence are crossing the line. People would rightly laugh if the Mayor of Oakland tried to eliminate bread from the city of Oakland as a means of ending the Your Black Muslim Bakery’s rein of terror. People should do the same to politicians calling for “energy independence” as a means of depriving Al Queda of its operating funds.

    I am an anarcho-capitalist living just west of Boston Massachussetts. I am married, have two children, and am trying to start my own computer consulting company.

    Airlines And Outsourcing

    Airlines, a business regulated to death, when they’re not self-immolating due to mismanagement, face a lot of pressures and not a lot of answers. Like other businesses which are procured as a commodity (i.e. most travelers fly whatever airline is cheapest on Orbitz, Travelocity, etc), there is constant pricing pressure and cutthroat competition, and always a search for lower, lower costs.

    The airlines have taken advantage of some liberal FAA practices, where the FAA certifies offshore repair/maintenance/service firms to perform work on airplanes. And they’ve been saving lots of money:

    Southwest Airlines planned to begin flying planes to this small Central American nation this year — but not with passengers aboard. The carrier wanted to outsource some of its maintenance to a Salvadoran repair shop called Aeroman.

    Aeroman already services jetliners operated by U.S. carriers JetBlue and America West. The airlines fly empty planes hundreds of miles from the United States to have them refurbished, repaired and inspected. It’s like driving across town for a cheaper mechanic — except that airlines can save millions of dollars over the life of their rides.

    [Aeroman] Chief Executive Ernesto Ruiz said two U.S. carriers had contacted him about grabbing Southwest’s spot in El Salvador, where they can cut their maintenance bills by 30% or more.

    In the process, they’re actually getting a hell of a product. Much of the article goes on to applaud these service firms, who are providing quite excellent outcomes at a very decent price. The article also points out that the recent lapses in Southwest & American Airlines’ maintenance are not in any way related to these outsourced operations. In fact, the purchasers of the service are quite happy:

    He described the Salvadoran operation as “an absolutely first-class facility.” Customers agree. Mitch Sine, a maintenance representative for JetBlue, was in El Salvador recently checking one of his company’s planes. He said Aeroman beats U.S.-based maintenance contractors, not just on price but on performance and on-time delivery.

    “I can’t buy this kind of quality in the United States,” he said. “These people really have pride in their work.”

    But, predictably, some people aren’t happy. And I think it’s no surprise that one of those unhappy people just happens to have the last name Hoffa:

    “We’ve been trying for years to get the FAA to pay attention to how dangerous it is to outsource maintenance overseas,” Teamsters General President Jim Hoffa said. Unionized mechanics at United Airlines voted this month to leave the Aircraft Mechanics Fraternal Organization and join the Teamsters, largely on promises by Hoffa to try to stem outsourcing.

    I’m sure Hoffa is an objective, disinterested party, right? He’s not beholden in any way to the behavior that Milton Friedman described a long time ago?

    The justification offered is always the same: to protect the consumer. However, the reason is demonstrated by observing who lobbies at the state legislature for the imposition or strengthening of licensure. The lobbyists are invariably representatives of the occupation in question rather than of the customers. True enough, plumbers presumably know better than anyone else what their customers need to be protected against. However, it is hard to regard altruistic concern for their customers as the primary motive behind their determined efforts to get legal power to decide who may be a plumber.

    There is no reason to believe that we are less safe than we were before. In fact, we appear to be getting a safer total product at a lower cost. Anyone who argues against things being safer and better usually has their own interest, not that of the consumer, at heart.

    The Right to Discriminate Based on Genetics

    Very quietly, a bill has been working its way through Congress that bans Genetic Discrimination. The bill, the Genetic Information Nondiscrimination Act, has been passed by the House of Representatives with overwhelming support and will probably pass the Senate in the next few weeks.

    While this bill has some powerful arguments behind it, it is a bad law and should not be passed. The freedom of association, the right to chose with whom you transact business or spend time with, is a basic human right – much like the freedom of speech and the right to your life. Respecting the freedom of association alone is a sufficient reason to oppose this bill.

    The bill mandates that no medical insurer or employer may discriminate between employees based on their genetic predispostion towards disease. Dr Francis Collins explained the rationale behind the law thus:

    We stand at a critical time in the development of medicine: the mapping of the human genome has provided powerful new tools to understand the genetic basis of disease, but our ability to fully realize the promise of personalized medicine is limited by legitimate fear of how this powerful information could be abused. Many people are afraid that their genetic information will be used against them and are unwilling to participate in medical research or be tested clinically, even when they are at substantial risk for serious disease. More than ten years ago, expert advisors to the genome project concluded that federal legislation is needed to provide all Americans with protection against genetic discrimination in health insurance and employment. Without it, we may never realize the full potential of genomic research, and, more importantly, of individualized approaches to health care.

    Already, healthcare providers can test whether some of us carry DNA variants that pre-dispose us to certain diseases, and new research efforts could help to expand this capability and possibly offer better opportunities for preventive measures. If illness does occur, doctors will have more powerful tools to identify the molecular causes, and to prescribe medicines based on
    individualized genetic information. This is our chance to transform medicine from “one-size-fits-all” to a potentially personalized approach.

    [The] science of genomic medicine is rocketing forward. But fear of genetic discrimination threatens to slow both the advance of such groundbreaking biomedical research and the integration of the fruits of that research into our nation’s health care. If individuals continue to worry that they will be denied health insurance or refused employment because they have a predisposition to a particular disease, they may forego genetic testing that could help guide medical professionals to lessen their risk, simply because the test identifies them as having such a predisposition. This is about all of us, as there are no perfect specimens at the DNA level; each one of us carries numerous gene variants that increase our risk of developing one disease or another. Therefore, each one of us is at risk for genetic discrimination.

    Public concerns about the possible misuse of their genetic information by insurers or employers have been documented. A recent NIH study of families at risk for hereditary nonpolyposis colorectal cancer (HNPCC) (a particular form of colon cancer) revealed that the number one concern expressed by participants regarding genetic testing was about losing health insurance,
    should the knowledge of their genetic test result be divulged or fall into the “wrong hands.” Nearly half of individuals with a 50% chance of having the HNPCC mutation cited fear of insurance discrimination as their greatest concern surrounding their participation in this study. Similarly, a recent survey of the personal attitudes of cancer genetics specialists showed that
    68% of respondents would not bill their own insurance company for HNPCC or breast and ovarian cancer (BRCA) genetic testing due to fear of genetic discrimination, and 26% of respondents said they would use an alias when being tested.

    NHGRI remains deeply concerned about the impact of potential genetic discrimination on both research and clinical practice. Unless Americans are convinced that their genetic information will not be used against them, the era of personalized medicine may never come to pass. The result would be a continuation of the current one-size-fits-all medicine, ignoring the abundant
    scientific evidence that the genetic differences among people help explain why some of us benefit from a therapy while others do not, and why some of us suffer severe adverse effects from a medication, while others do not.

    These certainly are weighty concerns.

    However, let us examine the costs such a law would impose on employers. Currently, laws impose penalties on anyone who hires someone else as a full time employee. The laws are structured so that the decision to hire someone brings a significant risk of losses to the person doing the hiring. Furthermore, mandates concerning provision of medical coverage, and government restrictions that dramatically reduce the availability of medical care mean that a person who hires another can find themselves having to pay for medical care to an employee who is not providing them with any work.

    Imagine if laws mandated that you select a particular supermarket as your primary supplier of food. Imagine that these laws imposed a penalty if you switched stores, or forced you to pay the store a set amount of money whether or not you actually bought any food there. Wouldn’t you desperately need any information concerning the ability of a store to reliably provision you with your needs? Wouldn’t you be upset if you knew that the supermarket was purchasing its meat from an unhygienic meatpacker but were forbidden from using that information in selecting which supermarket you were going to be locked into? How could this law be enforced? What sort of evidence would the state gather to “prove” that you based your decision on an illegal set of criteria rather than a legal set?

    In reality, employers and insurance companies discriminate illegally all the time, but are usually able evade punishment; they merely cloak their illegal decisions using legally permissible criteria as a cover. On occasion people who are not breaking discrimination laws are still found guilty of committing discrimination. This law will be yet another in the long list of anti-discrimination laws that are problematic to enforce. Unenforceable laws are, in my experience, uniformly bad; they inevitably become tools for politically persecuting those who are out of favor with the powers that be.

    While it will not have a dramatic effect, I think that it will also tend make employers slightly less willing to take risks in hiring new people.

    But what of Dr Collins’ legitimate and evidence-based concerns? How can we solve this problem?

    Dr Collins has identified yet another aspect of the complete mess government intervention has made of the medical industry. People cannot afford to pay for their own medical care out of pocket, primarily because state governments unconscionably reduce the number of practicing doctors to a fraction of what would be provided in a free market, and because of federal tax laws encourage people to purchase socialized medical care from their employers, resulting in a form of the tragedy-of-the-commons where people are encouraged to over-consume medical care. We should be condemning the way the U.S. and state governments have cartelized the medical industry; it is this cartelization that causes people fear that without these nondiscrimination policies that they couldn’t afford to have their broken bones treated. Rather than calling for yet another unenforceable law, it would be better for Doctor Collins to lobby for the dismantling of Medicare and Medicaid, the repeal of tax laws that encourage employer funded health coverage, and the numerical caps placed by state licensure boards on the number of students medical schools graduate and the number of doctors who are allowed to practice medicine within each state.

    But what of employment?

    Dr Walter Block of Loyola University has written an essay on racial discrimination by employers which is very useful for tackling this subject:

    Some people might recoil in horror from turning the clock on race relations back to the pre-1964 period. They would object that if a majority were free to discriminate against a minority, the latter would be greatly disadvantaged. That is, if, for example, whites, were to refuse to buy from, sell to, hire, work for, invest with, for example, blacks, the latter would be unemployed, homeless, and starving.

    But this position is economically erroneous. All such scenarios fail to take into account the market’s fail-safe mechanism that helps those subjected to discrimination. Consider employment. If white racists rebuffed black workers, the first effect would indeed be unemployment or lower wages for the latter group. But this situation is only temporary, a mere first stage in the mental experiment we are now considering.(10) For with lower wages or greater unemployment, some whites(11) would be sorely tempted to employ these blacks, because they can earn additional profits exploiting workers who are underpaid or idled.

    But is this not unfair to blacks? Why should they have to endure the indignity of lower wages and unemployment (or higher prices for food, clothing shelter, loans, etc.), even if it is only temporary? One answer to this very reasonable challenge is to realize that the enemy is not the market, which is riding to the rescue of the downtrodden group (by first allowing it to suffer, and then, in effect, making this suffering the key to their economic salvation). Another perhaps better answer is that this scenario is a hypothetical construct, articulated in terms of two stages, separate in time, and mainly for heuristic purposes. That is, to clarify the process, we purposefully assume that there would be two stages; in the first, the position of blacks is worsened, to show that in the second they would be rescued. In actual point of fact, there are no such two stages. Any time the wages of blacks (or anyone else) dips below their productivity levels, even by a tiny amount, there are immediate profit incentives to hire them, which starts their wages up on an upward spiral back toward equality.(18)

    To return to my original objection, a person who has a genetic predisposition to an expensive illness has, statistically speaking, a lower expectation value for productivity. This is due to the fact that an employer has to take into account the risk that he is going to hire someone who then turns out to be a liability. The better path to improve the employability of people who are known to be predisposed towards genetic disease is to make it easier for employers to hire and fire employees, in part by reducing the laws that penalize discrimination rather than adding to them. Then an employer would not care so much about long-term risks. Rather than having to withhold a portion of their costs to hedge against unwanted dead-weight, they could pay wages that better approximate the marginal productivity of employees, resulting in higher take home wages. Those who are aware of their predisposition towards diseases would be then free to divert these higher wages towards preventative care.

    There is yet another point that Dr Collins is bringing up that must be addressed. Even if the U.S. and state governments were to adopt my recommendations, people might still refuse to take the tests because people would probably still be afraid that the tests might be used against them somehow.

    Unfortunately, the state can do nothing more than removing the interventions that have caused people to be reluctant to take the tests. I strongly doubt that this law will allay people’s concerns about taking these tests. Until the government stops making medical care unobtainable or prohibitively expensive for most people, people will still be reluctant to be tested, and I fear that Dr Collins’ vision of a medical care tailored to individuals will not be realized.

    I am an anarcho-capitalist living just west of Boston Massachussetts. I am married, have two children, and am trying to start my own computer consulting company.

    Gordon Brown Resists the EU’s Biofuel Targets

    The Guardian- Gordon Brown is preparing for a battle with the European Union over biofuels after one of the government’s leading scientists warned they could exacerbate climate change rather than combat it.

    In an outspoken attack on a policy which comes into force next week, Professor Bob Watson, the chief scientific adviser at the Department for Environment, Food and Rural Affairs, said it would be wrong to introduce compulsory quotas for the use of biofuels in petrol and diesel before their effects had been properly assessed.

    “If one started to use biofuels … and in reality that policy led to an increase in greenhouse gases rather than a decrease, that would obviously be insane,” Watson said. “It would certainly be a perverse outcome.”

    Under the Renewable Transport Fuels Obligation, all petrol and diesel must contain 2.5% of biofuels from April 1. This is designed to ensure that Britain complies with a 2003 EU directive that 5.75% of petrol and diesel come from renewable sources by 2010.

    But scientists have increasingly questioned the sustainability of biofuels, warning that by increasing deforestation the energy source may be contributing to global warming.

    Watson’s warning was echoed last night by Professor Sir David King, who recently retired as the government’s chief scientific adviser. He said biofuel quotas should be put on hold until the results were known of a review which has been commissioned by ministers.

    “What is absolutely desperately needed within government are people of integrity who will state what the science advice is under whatever political pressure or circumstances,” he said

    Suspending my skepticism of the man made global warming phenomenon for a moment; the scientists make a very important point in this article about how government should think first before acting. The problem is that governments don’t think; people think. If the people of the U.K., the U.S. or anywhere else for that matter believe they can depend on the government making intelligent decisions on their behalf, this biofuels boondoggle is only the latest example of why those who would outsource their thinking to the government are mistaken.

    Fortunately for the U.K., they have a prime minister in Gordon Brown who is willing to resist the knee jerk reaction to go along with the European Union and actually listen to scientists rather than seek out scientists who will tow the popular party line.

    The prime minister made clear that Britain is wary of the target when he said last November: “I take extremely seriously concerns about the impact of biofuels on deforestation, precious habitats and on food security, and the UK is working to ensure a European sustainability standard is introduced as soon as possible, and we will not support an increase in biofuels over current target levels until an effective standard is in place.”

    Unfortunately for us here on the other side of the pond, President Bush took the opposite approach: he caved. In 2007 President Bush signed legislation which would require the production of 36 billion gallons of biofuels by 2022. As Brad pointed out in his recent post on this subject, E-85 ethonal in particular wastes a tremendous amount of water.

    What the biofuels proponents fail to tell consumers is that E-85 ethanol is horribly inefficient. As George Mason University Economics Professor Walter Williams points out, this particular fuel cannot be piped (because of pipeline corrosion from leftover water) but must be shipped by trucks and trains, damages engines not specifically designed for ethanol (again because of the leftover water), and is 20 to 30 percent less efficient than petroleum. Williams goes on to explain that to produce one SUV tank worth of fuel with E-85 requires 450 pounds of corn; enough corn to feed one person for an entire year!

    Despite all of this, the politics is leading the way rather than the science and the free market. The farm subsidy lobby is very powerful in Washington in both political parties (and is apparently powerful in the EU as well).

    And that’s really the dirty little secret. But for government subsidies, E-85 ethanol would have no chance of competing in the free market. Biofuel production displaces the basic economic resources of land, labor, capital, and entrepreneurial ability which could otherwise be used to better address the energy problem. British scientists are already thinking about the possible consequences of the EU’s biofuels policies. How much pain can be avoided if only policy makers will have the courage to listen before allowing such a disastrous policy from moving forward? The only way to solve the energy problem is for governments to get out of the way, allow innovators to innovate, and let the free market pick the winners and losers.

    Hat Tip: Cato Daily Dispatch

    What Obama Says On The Economy

    Does he believe it?

    This point from the Economist doesn’t give a real verdict either way, but one must wonder whether his policies are going to match his rhetoric.

    The sad thing is that one might reasonably have expected better from Mr Obama. He wants to improve America’s international reputation yet campaigns against NAFTA. He trumpets “the audacity of hope” yet proposes more government intervention. He might have chosen to use his silver tongue to address America’s problems in imaginative ways—for example, by making the case for reforming the distorting tax code. Instead, he wants to throw money at social problems and slap more taxes on the rich, and he is using his oratorical powers to prey on people’s fears.

    Mr Obama advertises himself as something fresh, hopeful and new. But on economic matters at least he, like Mrs Clinton, has begun to look a rather ordinary old-style Democrat.

    My hope for November 2008 is that none of these charlatans win.

    Fair Tax Webinar with Neal Boortz

    Neal Boortz has a webinar on the Fair Tax for anyone who would like to learn more about the bill which would replace the income tax with a national sales tax. Boortz explains what the Fair Tax is, how it would work, and answers the common questions/criticisms of the plan.

    Anyone interested in going to the webinar can click here to attend.

    www.fairtax.org

    Tuesday Open Thread: Time To Lift The Cuba Embargo ?

    With today’s announcement that Fidel Castro is stepping down as President of Cuba, the curtain is drawn on one of the longest international rivalries of the 20th Century.

    Yes, Fidel’s brother Raul is taking his place, and, yes, Cuba remains a one-party dictatorship, but this announcement leaves me with the feeling that we are seeing the beginning of the end of Cuba’s totalitarian history.

    Which leads to a question — is it time for the United States to lift it’s near total embargo against Cuba ?

    For the past 50 years, Americans have not been able to travel to Cuba (although people do go there through Canada and Mexico), they haven’t been able to sell anything to the Cuban people, and they haven’t been able to buy anything from them. The United States doesn’t even have diplomatic relations with Cuba.

    From the beginning, the rationale for the embargo was that the United States didn’t want to strengthen the Cuban regime, but that rationale never made sense. Even during the height of the Cold War, we were trading with, and had diplomatic relations with, the USSR, China, and all of Eastern Europe behing the Iron Curtain. We’ve been trading with Vietnam for nearly two decades now and we have an ambassador there. But not Cuba.

    Politically, it’s simply been impossible to even address this issue before now. No President — Republican or Democrat — wanted to raise the opposition of the powerful anti-Castro Cuban lobby in South Florida. But now that Fidel is basically gone, isn’t it time to start treating Cuba like every other nation in the world ?

    I think the answer is yes.

    Department Of Homeland Security Claims American Public No Longer Expects Privacy

    Apparently, the right to privacy no longer exist for anyone crossing the border as the Department of Homeland Security (DHS) has claimed that they have a right to search, without warrant or probable cause, anyone who comes into this country, including citizens

    Amir Khan says he becomes frustrated and humiliated every time he enters the United States and federal agents search his computers. Khan, a Pakistani-born U.S. citizen, says it has happened five times since 2003.  He says agents with U.S. Customs and Border Protection have even forced him to give them access to password-protected, confidential information from his company and his banking records.

    And the scope of what Customs may search for is apparently both unlimited and arbitrary:

    The Customs and Border Protection defends the searches, saying the agency does not need to show probable cause to look inside suitcases or laptops.

    “We have broad search authority at the borders to determine admissibility and look for anything that may be in violation of criminal law,” says agency spokeswoman Lynn Hollinger.

    A DHS spokesman dismissed the complaints of travelers like Mr. Khan with the following statement:

    “You forgo your right to privacy when you are seeking admission into the country…This is the kind of scrutiny the American public expects.”  

    Keep in mind that Mr. Khan is not just a foreign visitor but an American citizen.  The government’s reply here is apparently not just restricted to foreign travelers with criminal records or those fitting a terrorist’s profile who come here, the government has openly said that United States citizens traveling abroad have no expectation of privacy if they’re coming back into their own country and anything you’ve got with you is fair game.  Got a risque picture from your wife that she sent you while you were on a month-long business trip?  Now you get to share it with the guard at Customs if they demand access to your cellphone or computer.  Got confidential information for a future business deal?  Now the government gets to see it too.  Got your bank account or credit card information saved and encrypted on your laptop so you can conduct transactions while traveling?  Now that information may get tossed into a government database where it’s vulnerable to identity theft.  Assuming, course, that they don’t choose to seize the offending electronic device as well:

    Situations for travelers such as Khan are at issue in a lawsuit filed last week by the Electronic Frontier Foundation and Asian Law Caucus in U.S. District Court for the Northern District of California.  The suit accuses customs agents of “lengthy questioning and intrusive searches” and seeks clarification on the law that allows such searches.  The San Francisco, California-based foundation, which works to defend people’s rights in the digital world, says it knows of more than a dozen cases in which electronic devices such as cell phones, BlackBerries, MP3 players and laptops have been searched by customs agents. In some cases, they have been confiscated and never returned. 

    There are those who would probably feel that such searches are justified.  After all, terrorists can hardly be expected to walk up to the Customs officials to announce their presence.  The problem with this line of reasoning, however, is that the overwhelming majority of people who come to this country are not terrorists, most are law-abiding people who come here for the same reasons any of us might go to their countries.  Some are travelers who wish to come and see the United States and spend their money (which they’ll be more than happy to spend elsewhere if it becomes too inconvenient), some are people who come to the United States to conduct business that contributes to economic growth (which they’ll be more than happy to conduct elsewhere if the government gets too intrusive), and some are people who come here because they wish to see what a free society is supposed to look like.  Apparently, their first impression of our free society will not include an expectation to privacy.

    Update:  Commenter KipEsquire has pointed out that DHS’ approach is in line with the Supreme Court’s decision in U.S. v. Ramsey (1977), which apparently makes the actions of Customs legal, if not necessarily just or wise.

    I Can’t Think Of A Catchy Title

    I suppose the best way to describe myself would be to say that I have a problem with authority. I’ve always disliked when people told me what to do, even as a young child, and I’ve always preferred to find my own path through life and make my own decisions, even if it occasionally went against the conventional wisdom and sometimes worked to my short-term disadvantage. My dad said I inherited it from him, but that I’ve taken it to a whole new level. When I was young I wanted to be a journalist, until I got to college and realized that journalism was less about the search for objective truth than it was about writing the stories that best suited your employer’s interests, whether they were true or not (which didn’t sit well with me at all). So I drifted aimlessly through a couple of years of college as an indifferent (often drunk) student, unsure of what to do with myself until one of my fraternity brothers gave me a copy of “The Fountainhead” and I got hooked on the ideas that success and a refusal to conform to societal standards were not mutally exclusive, and that the greatest evil in the world was society and government’s failure to recognize or accept individuality and individual freedom as a strength, not a weakness. So I threw myself into studying politics and history, worked in a few political campaigns after college, had some success, and thought about doing a career in politics until I realized that most of the people I knew who had never had a career outside of politics had no comprehension of how the real world actually worked and tended to make a lot of bad, self-absorbed decisions that rarely helped the people they claimed to be representing.

    That didn’t sit well with me either, so I decided to put any thoughts of going into politics on hold until I’d actually had a life and possibly a real career, and I spent the next couple of years drifting between a series of random yet educational jobs (debt collector, deliveryman, computer salesman, repo man, dairy worker) that taught me the value of hard work, personal responsibility and the financial benefits of dining at Taco John’s on Tuesday nights (2 tacos for a buck) when money got tight.

    After awhile, however, the desire to see the world (and the need for a more consistent and slightly larger paycheck) convinced me to join the Army, where I spent ten years traveling around the world on the government dime working as an intelligence analyst. I generally enjoyed my time in the military, despite the aforementioned problem with authority (which wasn’t as much of an issue in the military as many people might think it would be), and I got to see that the decisions our political leaders make were sometimes frivolous, often ill-informed, and always had unforeseen repercussions down the road…especially on the soldiers tasked with implementing those decisions. I was fortunate enough to spend most of my 10 years in the military doing jobs I enjoyed, traveling to countries that I always wanted to see (Scotland is the greatest place in the world to hang out, Afghanistan is very underrated) and working with people I liked and respected, until I finally decided that at 35 it was time to move into a job where I didn’t have the threat of relocation lying over my head every two or three years, where I didn’t have to worry about my friends being blown up, and where I didn’t have to work in any capacity for George W. Bush.

    I work now for a financial company in Kansas where I’m responsible for overseeing, pricing and maintaining farms, commercial and residential properties, mineral assets, insurance policies, annuities, etc. In my spare time I like to read books on economics, history, and politics (I’m preparing to tackle Murray Rothbard’s “Man, Economy & State” and Von Mises’ “Human Action”…should take me about a year at the rate I’m currently finishing books), watch movies, and destroy posers on “Halo 3″ (where I’m signed in under “UCrawford” for anyone interested in taking a shot at me some time). I used to play rugby until age, inconsistent conditioning, and a string of gradually worsening injuries finally convinced me to quit. I’m a rabid fan of the Kansas Jayhawks in general and their basketball and football programs in particular and I’m also a devoted fan of the Kansas City Chiefs and Royals. I’m also fond of going online and debating/picking fights with people on the merits of the philosophy of individual freedom…sometimes to the point of being an asshole (but hopefully a reasonably well-informed asshole). I’ve been a big fan of The Liberty Papers ever since finding it online, I respect the body of work they’ve put out, and I’m honored that Brad Warbiany invited me to join his jolly band of freedom fighters. So cheers, Brad, and to everyone else I look forward to reaching consensus or locking horns with you in the near future.

    Are The Cubans Drinking That Much Chardonnay?

    I picked up the LA Times today, to find an article in the Business section about California’s Agriculture Secretary trying to open Cuban doors and increase orders of our agriculture products. California produces a wide variety of wonderful products, such as figs, wine, artichokes, etc. But one must ask a simple question: who in Cuba is buying?

    Actually, there’s another question before all is said and done, and that’s even more important: who in Cuba is allowed to buy these products?

    Washington’s embargo prevents U.S. tourists from visiting Cuba and prohibits nearly all trade. But a 2000 law allows the Cuban government to buy U.S. food and agricultural products in cash, and America has been the island’s leading source of food and farm items since 2003.

    Typical diets on the island include foods available through the government’s ration program: rice, potatoes, beans, small amounts of meat and other basic goods. Fruits and vegetables often are luxuries. Although many Cubans receive funds sent by relatives in the U.S., few families are likely to have enough money for nuts or figs when the average monthly state salary is about $19.50.

    Now, I’m a free-trader by nature. In fact, I support ending the embargo with Cuba completely. Nothing– short of an end to socialism, of course– will help the actual people of that island more than the ability to trade freely with the United States.

    But this bothers me. If the Cuban government is the only entity who can buy these products, isn’t it likely that we’re just going to be letting Castro drink wonderfully delicious wines during his recovery? Does anyone really think that we’re doing anything other than letting the rich and politically connected of that nation become more comfortable? I realize that in years past, our CIA may have tried to take out Castro, but I doubt that cirrhosis of the liver is going to be a quickly effective method.

    There are a lot of things we can do to help Americans sell into the Cuban market, and to improve the lives of the Cuban people. First and foremost is opening up the trade channels between our nations. To do this, we need to trade with the Cuban people, not the Cuban government. This does nothing of the sort, and only improves the lives of those who have their boots on the neck of the Cuban people.

    Free Market Organs

    Last week, Doug linked a post about British Prime Minister Gordon Brown’s support for a policy that would allow hospitals to harvest organs without prior consent of the decedent or his/ her family. In essence, the organs of all deceased British citizens would belong to the government’s healthcare system except for those individuals who “opted out” prior to death.

    The policy in the U.S. is an “opt in” approach rather than “opt out.” Why is this distinction important? Answer: the presumption of ownership. If citizens have an option of opting in, this shows that individuals own their bodies; to suggest that an individual has to opt out shows that citizens’ bodies are property of the government (unless s/he makes an affirmative claim on his/her body).
    The reason for Brown’s support for this policy is quite obvious: like just about everywhere else in the world, Britain is having an organ shortage.

    So if presumed consent is not the answer to solving the organ shortage, what is? Randolph Beard, John D. Jackson, and David L. Kaserman of Auburn University published a study in the Winter 2008 issue of Cato’s Regulation Magazine. The team studied the effectiveness of current policies aimed at maximizing donor participation and organ matching. Among the policies they analyzed were: increased government funding for organ donor education, organ donor cards (such as having the words “organ donor” on driver’s licenses), required request, kidney exchange programs, and donor reimbursement. None of the policies have come close to solving the shortage. The researchers estimate that roughly half of the potentially viable cadaver organs are ever harvested. With the exception of the inefficient kidney exchange program, one feature that all of these programs have in common is that they each rely on altruism on the part of individuals to donate organs without any sort of compensation.

    The one solution which the researchers believe would be effective, monetary compensation to organ donors or their families, is illegal almost everywhere. In 1984, the National Organ Transplant Act was passed making it a crime in the U.S. for a surviving family to receive payment for their loved one’s organs. The law was passed mostly on ethical grounds without any consideration for what would happen to the supply of available organs. The researchers estimate that some 80,000 lives from 1984 to present have been lost because of the bill’s passage and other subsequent policies in the current “altruistic” system. The researchers further project that another 196,310 lives will be lost between 2005- 2015 (and this is what they consider a “conservative” estimate!).

    As controversial as compensating families organs of deceased family members is, the thought of an individual driving to a hospital, removing an organ (such as a kidney), and selling that organ to someone in need of the organ for a profit is a complete non-starter. This shouldn’t come as a shock given that in today’s lexicon; the word “profit” is a dirty word. The people who scream bloody murder whenever people decide to “scalp” tickets to sporting events or tickets for Hanna Montana concerts (what’s the big deal with Hanna Montana anyway?) will not likely be in favor of selling vital organs. Anti-capitalist objections aside, free market buying and selling of organs appears to be the most practical solution.

    Cato Institute’s Director of Bioethics Studies Sigrid Fry-Revere found that Iran is the only country that does not have an organ shortage and has not had a shortage in ten years. Why? Because Iran (of all places!) is one of the only countries where it is legal for individuals to buy and sell organs from live, voluntary, donations. Revere’s findings also revealed that even if all the viable organs were taken by force by the government from cadavers, there would still not be enough organs to provide an organ to everyone who needs one (Cato Daily Podcast dated January 15, 2008). Maybe the Iranians are on to something here?

    David Holcberg, writing for Capitalism Magazine agrees arguing in favor of a free market system for organs on both practical and moral grounds:

    If you were sick and needed a kidney transplant, you would soon find out that there is a waiting line–and that there are 70,000 people ahead of you, 4,000 of whom will die within a year. If you couldn’t find a willing and compatible donor among your friends and family, you could try to find a stranger willing to give you his kidney–but you would not be allowed to pay him. In fact, the law would not permit you to give him any value in exchange for his kidney. As far as the law is concerned, no one can profit from donating an organ–even if that policy costs you your life.

    Patients’ attempt to circumvent this deplorable state of affairs has led to the emergence of “paired” kidney donations, an arrangement whereby two individuals–who can’t donate their organs to their loves ones because of medical incompatibility–agree that each will donate a kidney to a friend or family member of the other. But this exchange of value for value is precisely what today’s law forbids. Thus, under pressure to allow this type of exchange, in December the U.S. House and Senate passed The Living Kidney Organ Donation Clarification Act, which amends the National Organ Transplant Act to exempt “paired” donations of kidneys from prosecution.

    The congress says that kidneys can be exchanged without sending anyone to jail; how thoughtful. While this is an encouraging step in the right direction, why won’t our elected officials go the rest of the way? Is it the potential risks for the donors? Holcberg points out that the risk for a healthy person dying from donating a kidney is about .03% and usually live normal lives without reducing his or her life expectancy.

    No, I suspect the objection to selling organs is more rooted in the overall distain far too many people have towards capitalism. It’s simply unethical to make a profit off of something that someone else “needs” whether its gasoline, Hanna Montana tickets, or a kidney. Only the “privileged” will be able to buy organs if such a system were adopted, they would argue.

    Even if this were true, denying a person the right to purchase an organ to save his or her own life should not be subject to a vote or someone else’s ethical hang-ups. If I want to remove a kidney and sell it to a willing buyer for $30,000 (or whatever the going market rate is) I ought to have that right. Why must we assume the government has the right to tell us what we can do with our bodies whether it’s selling our organs by our own choices or government taking them from us after we die without prior consent? Our individual rights of life, liberty, and property demand that we have the ability to make these choices for ourselves.

    Venezuela Shows Why Price Controls Fail

    In my regular Chavez-watching, I read an article about bickering between the United States, Colombia, and Venezuela over drug trafficking and interdiction efforts. As a libertarian and an opponent of the drug war, that’s little more than political theater. After all, for all the tons of cocaine stopped by the local government, tens or hundreds of times more make it out. After all, the profit in a black market is far too alluring to avoid.

    Which is what makes the end of this article such a great lesson. Chavez is destroying his economy, with inflation and the often-following wrong response to inflation: price controls. Suddenly producing goods becomes more expensive than selling those goods at the regulated price. Thus, you see what happens:

    The announcement comes after 145 tons of contraband food items headed for Colombia were found in San Cristobal, Tachira last week in an anti-smuggling operation by Venezuelan intelligence services. The items included a number of basic food products that are regulated by the government such as powdered milk, rice, sugar, cooking oil, cereal and canned fish. The government says that speculation and hoarding by private producers has contributed food shortages of basic products.

    The regional daily, Panorama, reported that every night 50 to 60 trucks load up with Venezuelan food products such as rice and milk, leave the Las Pulgas market in Maracaibo in the opposition controlled state of Zulia and cross over the Colombian border illegally where they sell the products at up to five times the regulated price in Venezuela.

    “No one says anything because the business is very big,” said an anonymous vendor in the Las Pulgas market to Panorama. “In order to not have any problems in transporting it is necessary to pay what they ask [the border guards], but in the end they earn a lot more there than here because of the regulation of prices implemented by the government,” he added.

    As part of the measures adopted to combat smuggling and crime in the frontier zone a further 500 tons of food loaded onto 18 semi-trailers that were destined for Colombia were intercepted today and a clandestine landing strip near the border, along with a camp thought to be used for narco-trafficking logistics were uncovered.

    Remember, just as in the drug trade, the numbers of tons they actually catch is an indication that the number making it through is much, much higher.

    See what happens in a command and control economy? When it becomes a money-losing operation to try to sell at the regulated price, it doesn’t mean commerce disappears, it only disappears from store shelves. The “criminals” profit and the rich eat well, while the average citizen is duped by the government’s claim of “speculation and hoarding”.

    Venezuela is like a living lesson of what happens when the government tries to break the law of supply and demand. Sadly, as I’ve said before, far too few people will understand the lesson.

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