June 26, 2010

A Conflict of Visions – Sincerity

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I just finished reading Thomas Sowell’s classic work on ideologies, A Conflict of Visions.  I enjoyed it, but much less than his more vivid and prescriptive Knowledge and Decisions.  Conflict is the most conservative book that I have read in a while, and a couple of its arguments bothered me.

Sowell’s overarching argument is that some people have an “unconstrained” vision that individual rationality can be used to solve and remove societal problems, while others hold a “constrained” view that rejects the mental capacity of any person or group to consciously reshape society.  People with the constrained view argue that we must trust neutral, systemic processes (the market, traditions, the common law, etc.), while those with these unconstrained view want to reshape these unthinking processes and substitute something more intentionally rational and forward looking.

In a short section of the book, Sowell suggests that the different views lead to different conceptions of civic virtue.  People in the unconstrained view value “sincerity”; the constrained view values “fidelity”.

Where the wise and conscientious individual is conceived to be competent to shape socially beneficial outcomes directly, then his sincerity and dedication to the common good are crucial….

What is morally central to the constrained vision is fidelity to duty in one’s role in life.  There, within the sphere of his competence, the individual can make the greatest contribution to the social good by serving the great systemic process which decides the actual outcomes. [P. 56]

Sowell argues that the importance of sincerity to unconstrained idealists makes it difficult for them to acknowledge it in their opponents.  To do so would undermine their belief that rational thought produces definitive solutions to social problems.

It is not uncommon in this tradition to find references to their adversaries’ “real” reasons, which must be “unmasked”….  Within the unconstrained vision, sincerity is a great concession to make, while those with the constrained vision can more readily make that concession, since it means so much less to them. [P. 57]

A few pages later, he scraps the obvious definition of sincerity (truthfulness) for one that seems to mean “good intentions”.

The constrained vision in particular distinguishes sincerity from fidelity to truth:  “The first thing a man will do for his ideals is lie,” according to J. A. Schumpeter….  A modern defense of judicial activism by Alexander Bickel clearly put more weight on sincerity than on fidelity, when it urged that “dissimulation” was “unavoidable” and referred to “statesmanlike deviousness” in the public interest.” [PP. 58-59]

Sowell is, of course, part of the constrained tradition.  And by shifting definitions he seems to be trying to have it both ways.  First, he accuses those in the unconstrained vision, unlike those in the constrained vision, of being unwilling to take constrained arguments at face value.  Then, he suggests that unconstrained arguments cannot necessarily be taken at face value.

Sowell’s claim is interesting, and, the last part aside, it does strike me as more than a little bit true.  The progressives I read – Matthew Yglesias, Brad DeLong, Jonathan Chait, and Andrew Sullivan – all seem more personally condescending and critical of their ideological opponents than the libertarians in my blogroll – Megan McArdle, Arnold Kling, Bryan Caplan, and Tyler Cowen.  Progressives don’t just accuse their opponents of lying, but, more often, of being idiots.  I think this fits into Sowell’s main theme.  If rationality yields definitive answers to social problems, unconstrained idealists will explain away opposition as simple irrationality.

But the contradiction in Sowell’s argument is a good reminder that we tend to see every possible flaw in our opponents.  It is difficult to draw strong conclusions from the anecdote in ones blogroll.  It is hard enough to just interpret that anecdote: confirmation bias looms large.  Is Matthew Yglesias really more condescending than Megan McArdle (Yes!), or do I enjoy Megan’s condescension more (Yes.)?  You don’t have to search Hit & Run too hard to find ridicule poured over progressives.  Ideological sketches like Sowell’s are unlikely to be drawn in anything but heavily interpreted anecdote, so they must be drawn carefully.

said Wallace Forman @ 12:32 PM. Comments (3)

Happiness and Antidepressants

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A line from an article on antidepressants that I read this morning reminded me of my longstanding objections to happiness utilitarianism.

Yet for those in search of a more holistic treatment to what can be a lifelong obstacle to wellness and quality of life, the idea of exercise as treatment for depression could be encouraging. First, there’s the issue of cost: Americans spend $10 billion on antidepressants each year, and in some cases, side effects like sleep disturbances or changes in libido and body weight can be only slightly more appealing than the depression itself.

Happiness is not the end.  It is only one end among many, ends which must be traded off against each other.  Moreover, happiness may only be our bodies’ means to other ends.  Would separating the means from those ends compromise the latter?

said Wallace Forman @ 9:25 AM. Comments (2)

June 25, 2010

Bad Taxes

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David Henderson, in a critique of Bruce Bartlett’s new book, makes a point about taxes more clearly than I have heard it made before.

On p. 177, in discussing the VAT, he writes, “consumption taxes are less burdensome because people can choose to reduce their consumption to avoid the tax.” But it’s choice that makes taxes more burdensome. In other words, the more choices people have to avoid a tax, the greater is the excess burden per dollar of revenue raised. The excess burden (deadweight loss) of a tax is proportional to the elasticity (of demand or supply), and elasticity is a measure of people’s ability to avoid. The least burdensome tax, per dollar of revenue raised, is the one that people have the least ability to avoid because that tax doesn’t distort their decisions as much.

Avoidable taxes have a hidden cost – they push people to take their less preferred options – that creates no benefit for public finances.

said Wallace Forman @ 9:33 AM. Comments (0)

June 16, 2010

The Optimum Amount of Coffee Spilled is Greater Than Zero

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said Wallace Forman @ 1:46 PM. Comments (0)

May 24, 2010

Tragicomedy of the Commons

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I had always assumed that the clutter in my parent’s kitchen was governed by a tragedy of the commons.  But I’ve decided over the last few visits that this may not be the case.  After a few whirlwind attempts to sort everything in the kitchen into some ergonomically efficient order, my parents demanded that I cease and desist, refusing to free ride off of my voluntary labor!* Sometimes clutter has an efficiency all of its own, I suppose.

*My own free riding, of course, has continued without interruption.

said Wallace Forman @ 8:43 PM. Comments (1)

May 21, 2010

Cato Public Speaking Worshop

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The Cato interns had a public speaking workshop today.  Each intern was asked to give a four minute speech on a non-frivolous topic.  I chose to speak on the difficulty of moderate health care reform:

People often accuse libertarians of being radical idealogues, of abstracting a generally appropriate principle of freedom to unacceptable extremes.  Hayek complained in the Road to Serfdom that, “Probably nothing has done so much harm to the liberal cause as the wooden insistence of some liberals on certain rules of thumb, above all the principle of laissez faire.”  Practical, reasonable people will shy away from extremes.  But often there is no middle ground between defending ones principles and abandoning them completely

This, I suggest, is what many people discover when they try to compromise in health care policy.  The Patient Protection and Affordable Care Act, otherwise known as “Obamacare” contains 5 important provisions

  • Subsidies for the poor
  • An individual mandate to buy insurance
  • Community Rating for premiums
  • Guaranteed Issue of insurance
  • The pre-existing conditions fix

To many practical, reasonable people, this program all together looks like a serious government invasion of the health care sector.  The individual mandate is an obvious affront to freedom and subsidies may seem to unjustly redistribute wealth.  But many people would like to compromise and pick the most carefully targeted of the five previous reforms.  They will likely pick the pre-existing conditions fix.

Insurers usually refuse to cover illnesses that began before a person purchased his insurance – so called pre-existing conditions.  This creates a serious problem for the uninsured sick.  Many illnesses, such as cancer, require extremely expensive treatment. Most people cannot pay for treatment on their own, and if they are not treated, the illness will kill them.  The fix, forcing insurers to cover pre-existing conditions, seems like a narrowly targeted reform that will help the neediest people without significantly infringing on the liberties of others.

But once insurers are forced to cover pre-existing conditions they will change their behavior.  Instead of selling sick people insurance only for future illnesses, they will refuse to sell them insurance at all.  So a reasonable legislator trying to pass a targeted fix must pass a second reform – Guaranteed Issue.  This reform forces insurers to “guarantee” that they will offer to sell insurance to anyone who asks for it.

This still does not fix the problem.  Insurers may simply offer sick people insurance at premiums they can’t afford – say, $10 million dollars a year.  If legislators are unwilling to allow the uninsured sick to simply remain uninsured, they must lower prices.  So they must support community rating, which forces insurers to sell insurance to all comers at the same price.

Now, legislators have passed drastic reforms that will affect all people – this is not merely targeted legislation affecting only the uninsured sick.  But they still cannot stop here.  There is a new problem that must be solved.  If the community rating is passed, healthy people know they will be able to purchase insurance at the average rate of the insurance.  They will drop out of the market, and only sick people will remain.  The price of insurance will rise.

To prevent people from “gaming the system” legislators must pass the individual mandate – which forces the healthy back into the market with everyone else.  Although each of the previous reforms limited freedom, an individual mandate does so in a much more conspicuous way.  And it isn’t the end.

If you order people to buy insurance, you must decide how to treat the poor.  It is unreasonable to order people with no income to pay premiums of thousands of dollars a year.  The health care of poor people must be paid for, either by programs like Medicaid, or by subsidies of private insurance purchases.

The reasonable person who insists on helping the uninsured sick finds himself forced to embrace the whole set of reforms.  This has been hard to understand for people as highly placed as Barack Obama, who attacked Hillary Clinton for including an individual mandate in her health care plan in the Presidential primary campaign before adopting it himself.  And it was probably hard to understand for Mitt Romney and The Heritage Foundation when they tried to craft a middle ground in Massachusetts and ended up with a nearly identical bill.  And it may still be hard for Republicans to understand, some of whom have already promised not to overturn the pre-existing conditions fix, and I predict therefore, will not – and cannot – overturn any of the legislation. Sometimes, there is no middle ground, and compromise is more harmful than a radical defense of principle in extreme circumstances.

said Wallace Forman @ 2:05 PM. Comments (0)

May 1, 2010

Ending the Federal Government

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The Cato interns had an op-ed writing competition this week.  I wrote about Puerto Rican independence and its positive implications for regulatory competition.  Congratulations to contest winners Peter Antosh, Hans Lango, and Josh Tomalin.  My op-ed submission follows:

Destroy the Fed

By Wallace Forman

“Government,” says Bastiat, “is that fiction in which everybody strives to live at the expense of everybody else.” The United States Congress is no different.  Each state sends a few representatives to Washington to brawl for taxes – collected nationally – to disburse in their home districts. The system is roughly described in game theory as the Prisoner’s Dilemma.  Puerto Ricans are now being asked whether they want to play.  Hopefully, they will vote no – twice.

H.R. 2499, the Puerto Rico Democracy Act, authorizes two non-binding plebiscites.  A first referendum polls whether the island’s inhabitants wish to remain an unincorporated territory of the United States.  If a majority votes no, a second referendum is held asking whether the island should become a state, autonomous, or fully independent.

Conservatives argue convincingly that the later vote is rigged to produce false majority support for statehood. The options for autonomy and independence may split the separatist camp. And because the second referendum includes no option for continuing the status quo, Puerto Ricans who prefer a close relationship with the US must vote for statehood. The Heritage Foundation’s Hans von Spakovsky says that the bill is “designed to create millions of new votes at a time when certain political actors [i.e. Democrats] fear their election prospects are diminishing.” [UPDATE: Reviewing the legislation, I find this not to be true.  The status quo remains an option in the second plebiscite.  This does not affect my larger argument.] Put this way, who cares?  Whether Democrats or Republicans rule Washington, Congress will continue to pass bad laws.

In the Prisoner’s Dilemma, cops convince two criminals to rat on each other by offering a lighter sentence to the one who testifies first.  Although the criminals would be better off as a pair if they kept quiet, each one knows that he personally benefits from squealing. Both talk, and both go to jail.

In Washington, legislators and lobbyists stand in for the law-breakers.  Each single congressman is powerless to stop the others from spending the tax-dollars of his constituents – all he can do is appropriate as much money to his own district as possible. Thousands of interest groups add to the chaos by lobbying for special regulations and subsidies. Each interest gains from its own special rent, but not as much as it loses from the rest of the lobbying. The more that is taken from the common pot, the smaller it shrinks.

It doesn’t have to be this way. There is a simple way out of the Prisoner’s Dilemma – not playing in the first place. If Puerto Ricans vote for full independence, they can help start an entirely different game.

When all people live together under one government, they may vote to live at the each others expense. But as the number of countries increases, the power of each shrinks. A state cannot tax foreigners, and if it regulates its own citizens too harshly, they will emigrate. As productive citizens leave, the state loses their tax revenues and has less to offer those who remain. Voters must balance the impulse to rob each other with the need to attract wealthy citizens from other nations. States will compete to offer only laws with real value – even the social safety net must look like one that voters really want beneath them.

The problem with the United States is not too much government, but too few. North America contains only three countries, all massive.  Emigrants from the US have to travel huge distances if they wish to leave.  Between the dearth of alternatives nearby and language barriers outside of the country, Congress knows its subjects will stay put. Why should we let the federal government keep a monopoly on regulatory authority, when the 48 continental states can offer it at competitive prices?

An independent Puerto Rico will not deliver regulatory competition to North America by itself.  But it has the power to remind Americans that no government is a holy and unbreakable union. Separatist movements continue to bring greater freedom worldwide – recently in the Baltic, former Yugoslavia, East Timor, and elsewhere. Other movements remain important in major countries like Canada, China, and Spain. Alaska elected a Governor from the secessionist Alaskan Independence Party Governor as recently as 1990. Legislators from Hawaii continue to push for native autonomy in that state.

There is a chance, however slim, that independence in Puerto Rico could help revive independence movements in the United States themselves. If it comes to a referendum, the island should vote for full separation.  An independent Puerto Rico is a small step toward a better world with more choices and no federal government. It is a vote for freedom – theirs and ours.

said Wallace Forman @ 1:52 PM. Comments (0)

March 25, 2010

Reasons for Pessimism

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Some of my conservative friends have suggested a couple of reasons not to be utterly depressed by the passage of health care reform:

  1. Voters will angrily sweep Republicans into power.
  2. Republicans will rally the country around repealing health care reform.
  3. We now have an actual bill that voters can evaluate, and the bill will create its own opposition.

I always have to ask my friends whether they are being sarcastic, or actually delusional.

Republican resurgence is miserably insufficient to comfort anyone who opposed health care reform on principle, so we can breeze on to the second point. Though, I am generally skeptical that Americans really oppose these reforms, or that conservatives will control government in 2014!

Republicans don’t actually oppose health care reform. They pretend to. But ask them why they dislike Obamacare, and they generally recite something incomprehensible about big government or socialism. Then they advocate something identical – like the conservative Heritage Foundation, which sponsored the same reforms in Massachusetts alongside Republican Governor Mitt Romney. Damningly, most conservatives – notice Republican Senator John Cornyn- still consider prohibitting insurers from denying coverage to already sick patients to be “uncontroversial”. Yet this “reasonable reform” inevitably leads to every major item in the Democrats’ health care legislation. More on this anon.

Which brings us to the final argument. How, exactly, are people supposed to be able to evaluate the effects of this bill? As far as I can tell, they can’t. Most people today get their health care through their employer. This cuts into their wages, but they don’t know how much it costs because their employer never tells them. The reforms will not change this. People will continue to mainly receive insurance through their employer. Insurers will now be forced to cross-subsidize and offer more strictly defined plans. This could increase price and decrease choice, but employees will never see these changes. Their employer will still make the major choices for them.

Low income individuals who will be offered subsidized insurance through pseudo-market health care “exchanges” will see a fairly large change. But why should they complain? They lose a bit of freedom by being forced to buy insurance, but likely gain from the subsidies. Do we really expect them to revolt against another quasi-welfare program? Hardly – the fact that Democrats have built a party around buying votes with entitlement programs suggests that it is a successful political strategy.

The strongest arguments for or against health care reform have always been the long run counterfactuals. Progressives argue that the reforms will “bend the curve” of health care cost increases by taxing insurance into submission (other even more mystical-sounding claims are also made). Reform opponents counter that the bill will slow innovation in medicine and delivery systems by further delinking consumers from the costs of health care. I side with the opponents, of course, but the general public can’t appraise these arguments merely by watching the legislation work its magic. That’s why the arguments are counterfactuals. There is no alternative reality that we can compare our world to.

Finally, there are the taxes. Nobody likes them. But every spending program has come with new taxes. Social Security and Medicare have much more visible taxes linked to them. Yet no major spending program, to the best of my knowledge, has ever been repealed because of taxes. Occasionally the taxes themselves have been lowered. Then they have been raised again. But the spending remains. The taxes, in this case, aren’t even that important: health care reform does most of its damage through regulations and cross-subsidies born directly by the insurance companies and their customers.

In the end, no bill ever gets a careful examination after its passage. People have too much going on in their real lives to waste their time figuring out whether any particular piece of legislation is good (or just). Even if they did, there is little or no information with which to make a “practical” judgment. Expect even the “experts” to be debating the effects of this bill a decade from now. The only people who will care are those that derive a large benefit from the program – like the senior citizens who defend Medicare tooth and nail. 2014, the earliest the bill could be repealed by Republican lawmakers, is a lifetime away for our rationally apolitical electorate. If voters still remember health care reform, even if they still dislike it, they probably just won’t care that much. But reform comes with a built in interest group – the medical profession – that stands to gain access to new, paying patients. We can expect them – doctors, insurers, and hospitals – to loudly defend this legislation with the false moral clarity of other people’s money.

said Wallace Forman @ 11:48 AM. Comments (0)

March 23, 2010

Romney Really Wants You To Vote For Him

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The day after health care reform passed, Romney was ready with a biting attack on Obama in National Review Online. Among the criticisms, Romney says:

Rather, it is an historic usurpation of the legislative process — he unleashed the nuclear option, enlisted not a single Republican vote in either chamber, bribed reluctant members of his own party, paid-off his union backers, scapegoated insurers, and justified his act with patently fraudulent accounting. [emphasis added]

I found the entire piece, and particularly the complaint I’ve bolded above, to be fairly hilarious. Romney, the former Republican governor, crafted a health care reform in Massachusetts that was a near carbon copy – and some would say the model for – the just-passed legislation. Yet Romney wants us to believe that there is something especially insidious about Obama’s bill because it was passed with no bipartisan support.

The corollary of this is that Romney must be forgiven for passing health care reform before passing health care reform was the not-so-cool thing to do. Because he’s a Republican, he automatically grant a bipartisan imprimateur to any entitlement he hands to Democratic legislatures. So there is nothing bad about the new taxes, entitlements, and coercions that he sponsored. How could there be?

And the title of the piece? “A Campaign Starts Today”? We get it. You’re running for President in 2012. But Republicans should be reminded by these timid procedural complaints that Romney is not the man who can rebrand the GOP as the party of liberty and freedom. He probably can’t even be trusted not to pass something even worse.

said Wallace Forman @ 5:07 PM. Comments (0)

November 16, 2009

Do Artists Really Fear Islamic Violence?

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Well perhaps “artists” is too strong a word.  But check out this factoid on the now-in-theaters 2012, which I am struggling not to see:

He blew up the Empire State Building and the White House in Independence Day, sent a giant monster careering through the heart of Manhattan in Godzilla and destroyed the famous Hollywood sign in The Day After Tomorrow. But it seems there are places even Roland Emmerich will not go – the German film-maker has revealed he abandoned plans to obliterate Islam‘s holiest site on the big screen for fear of attracting a fatwa.

Or was this just a calculation based on profits?  2012 does not seem to have been made with any other considerations in mind.

said Wallace Forman @ 11:32 AM. Comments (0)
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