Category: Free Markets

Optimistic about the Future of Liberty

Morgan Aldous

This morning, after a little reflection, I’m more optimistic than ever about the future of liberty. There are so many great companies, organizations, and technologies that enable us to throw off the shackles of the state and its allied institutions.

Praxis is redefining higher education and is cranking out a new generation of entrepreneurs no longer saddled with a permission mindset.

Heleum is redefining savings- beating inflationary policy at its own game.

BitPay is redefining checking, making cryptocurrencies easy to adopt and use in daily economic life.

Peer to peer lenders like Prosper.com are redefining and decentralizing loans and investment lending.

Cryptocurrencies in general are bringing sound money principles into practice and challenging the Federal Reserve banking cartel.

Detroit Threat Management Center has stood for 20 years as proof that policing communities can be a peaceful venture that doesn’t require taxation.

Cell 411 is decentralizing community safety and holding police accountable.

Surgery Center of Oklahoma is making surgery affordable by casting off Medicare, Medicaid, and insurance cartels.

Atlas Health Network is pioneering concierge family healthcare and breaking up ridiculous pharmaceutical markups.

Liberty HealthShare offers very low-cost medical insurance by actually understanding what insurance IS.

With so much subversive entrepreneurship going on, there’s a lot to be excited about!

Originally published at Facebook.com.

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Spontaneous Order is Not an Engineered Outcome

Editor's Pick

Written by Donald Boudreaux.

Commenting on this post, Lanny Ebenstein asks me:

If even the smartest professors aren’t able to engineer a society according to their, or to anyone else’s, designs, and if the belief that it is possible to do this is always futile and often fatal, why do you believe that it would be possible massively to reorganize society in a libertarian direction of vastly less government? Isn’t that a contradiction of what you have just said?

With respect, I see no contradiction.  My libertarianism (which, I think, is a quite common kind of libertarianism) is simply a call for the state to cease and desist from its own social-engineering projects – from projects small (such as protective tariffs) to projects big (such as government-run pension plans).  The patterns of human interactions that will emerge in place of the state’s interventions are unpredictable in their details, but history and theory both teach that such patterns do indeed emerge spontaneously.

To call for an end to social engineering is not itself a call for some different sort of social engineering or ‘reorganization’ of society.  (Lanny has written much about Hayek, so he is familiar with Hayek’s distinction between “order” and “organization.”  I believe that this distinction is both real and important.)

I’m convinced that the kind of laws, customs, and government that reign at any time in a society largely reflect that society’s ideologies.  If I am correct about this matter, then libertarianism – just like “Progressivism,” Nazism, Talibanism, or any other ism – cannot be imposed in a way that lasts for any length of time.  The bulk of people must prefer it to available competing isms.  So, with rare exceptions, when I make my case for a libertarian society, I aim not to change today’s policies but to do my modest part in planting seeds that in the future might, just might, cause hearts and minds to change in a direction that will make people more free.

Republished from Cafe Hayek.

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23 Ways Big Government Is Hurting the Poor

Editor's Pick

Written by Daren Bakst.

Advocates for big government often equate expanding government with concern for the poor. But reality speaks to the contrary: Expanding government often has very harmful effects on the poor.

This reality is precisely what is addressed in a forthcoming special report from The Heritage Foundation, “Big Government Policies That Hurt the Poor and How to Address Them.”

Rather than looking at welfare policy—a usual focus of analysts when discussing policies that impact the poor—the report focuses on economic policy, including regulation.

The authors identify 23 policies and provide concrete solutions that would allow those struggling financially to have more opportunities and a higher standard of living. As indicated in the report, these policies are just the tip of the iceberg.

The authors found three recurring themes that marked the policies they identified:

1. Cronyism

A significant number of the policies are classic examples of cronyism. It’s quite illuminating how government policies supposedly designed to protect allegedly vulnerable workers or consumers wind up, in reality, helping dominant producers or politically favored special interests.

2. Disproportionate Impact on the Poor Through Artificially High Prices

Many of the policies identified drive up consumer prices, such as for food and energy. This disproportionately hurts the poor because a greater share of their incomes go to meeting basic needs, as compared to households at higher income levels (see the chart below).

3. Obstacles to Opportunity

There are numerous policies that create artificial and unnecessary obstacles for the poor when it comes to obtaining jobs or starting businesses that could lift them out of poverty.

Here are four of the harmful policies detailed in the report:

1. Occupational Licensing

Laws that require official occupational licensing cost millions of jobs nationwide and raise consumer expenses by as much as $203 billion per year. These policies are often just a barrier to entry to help existing individuals in the specific field by limiting competition.

2. Federal Sugar Program

The federal government tries to limit the supply of sugar that is sold in the United States. As a result, the price of American sugar is consistently higher than world prices, sometimes even doubling world prices.

This big government policy may benefit the small number of sugar growers and harvesters in America, but it does so at the expense of sugar-using industries and consumers.

Recent studies have found that the program costs consumers as much as $3.7 billion a year. The program has a disproportionate impact on the poor because a greater share of their income goes to food purchases compared to than for individuals at higher income levels.

3. Energy Efficiency Regulations for Appliances

The Department of Energy regulates a long list of consumer and commercial appliances, including products like refrigerators, air conditioners, furnaces, televisions, shower heads, ovens, toilets, and light bulbs.

These regulations prioritize efficiency over other preferences that customers and businesses might have—such as safety, size, durability, and cost. Customers and businesses might have such preferences even at the loss of some reduced efficiency.

While there are a number of problems with the government mandating energy conservation (such as cronyism and dubious environmental benefits), appliance efficiency regulations are likely to have a bigger negative impact on middle-income and low-income families, and likely to provide more benefits to upper-income families.

4. Ride-Sharing Regulations

For years, states and municipalities have attempted to heavily regulate, and at times ban, ride-sharing companies like Uber and Lyft in an effort to prop up their principal competitors—the traditional taxicab companies.

Government policies that attempt to preserve this system against competition from ride-sharing firms, or which impose costly and burdensome regulations on said firms, do so at the expense of both consumers and drivers, with a particular impact on the poor.

As the report illustrates, government regulation and unwarranted intervention are often the primary barriers to progress for those who are poor. Just getting government out of the way could make a huge difference.

The Big 23

Here is the report’s full list of 23 big government policies currently harming poor Americans:

  1. Climate Change Regulations
  2. Energy Efficiency Regulations for Appliances
  3. Fuel Efficiency Mandates and Tier 3 Gas Regulations
  4. Ozone
  5. Renewable Fuel Standard
  6. Tennessee Valley Authority
  7. Federal Sugar Program
  8. Fruit and Vegetable Marketing Orders
  9. Department of Agriculture’s Catfish Inspection Program
  10. Soda Taxes
  11. International Monetary Fund Bailouts
  12. Import Restraints on Food and Clothing
  13. Jones Act
  14. High Minimum Wages
  15. Occupational Licensure
  16. Economic Development Takings
  17. Home-Sharing Regulations
  18. Rent Control
  19. Smart Growth
  20. Payday Lender Rules From the Consumer Financial Protection Bureau
  21. Daycare Regulations
  22. Ride-Sharing Regulations
  23. State-Sanctioned Lottery Monopolies

The Bottom Line

All levels of government—local, state, and federal—need to look honestly at how they are contributing to the poverty problem. Then, they can become part of the solution.

Originally published at FEE.org.

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Markets and Politics Are Both about Scarcity

Editor's Pick

Written by Donald Boudreaux.

People succeed in markets by reducing scarcity–that is, by easing scarcity’s grip on their fellow humans. And the more they ease scarcity’s grip, the greater their success. Profits are earned in competitive markets only by successfully making desired goods and services less scarce than they would otherwise be.

People succeed in markets by reducing scarcity. People succeed in politics by increasing scarcity. People succeed in politics by increasing scarcity–that is, by tightening scarcity’s grip on their fellow humans. And the more they tighten scarcity’s grip, the greater their success. Power and prestige in politics are gained chiefly by successfully carrying through on promises to make desired goods and services more scarce than they would otherwise be so that politically influential suppliers of those goods and services reap higher profits from the artificial increase in scarcity.

Originally published at FEE.org.

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The Tangled Web of Anti-immigration Argumentation

Robert Higgs

Written by Robert Higgs.

Probably the most often voiced objection to open immigration of all peaceful people is that “you can’t have open immigration and a welfare state.” (Even people as smart as Milton Friedman have made this objection.) But why can’t you?

Well, people claim, if you have a welfare state, the masses of the world will flood into the USA just to collect the welfare state’s “free stuff.” But why let them? Even under currently existing rules, undocumented immigrants are ineligible for nearly all welfare-state benefits. If a flood of immigrants will break the welfare-state bank, why not simply make immigrants ineligible? Case closed.

In that case, the opponents of immigration claim that making the immigrants ineligible for welfare-state benefits won’t work because they will find a way to get the stuff in one way or another. But this objection is, in effect, a declaration that the state is incompetent—which is not exactly a news flash, to be sure. So the anti-immigrationists insist that instead the government must “close the borders.”

Notice, however, that in this case the anti-immigrationists, having just insisted that the government is too incompetent to exclude ineligible immigrants from welfare-state benefits, now presume that the government is so competent that it can keep undocumented immigrants out of the country. This assumption is manifestly counter-factual, given that more than 10 million such immigrants are estimated to be living in the USA at present.

So, which is it, anti-immigrationist: is the government too incompetent to exclude ineligible recipients from getting benefits, or is it too incompetent to keep illegal immigrants out the the country—or is it both? If the government is simply incompetent at everything it does, then it doesn’t matter what immigration policy is adopted: whatever it is will fail to be implemented successfully.

At this point, of course, some anti-immigrationists will claim that the government is not too incompetent to exclude ineligible recipients from receiving benefits, but is deliberately giving them the goodies in order to flood the country with more future Democratic voters and anti-capitalist residents. But if the government is thus engaged in a conspiracy against its own stated laws and policies, what difference does it make that the government purports to be closing the borders, whether with a wall or with a string of random tactical nuclear explosions along the border? If the government cannot be trusted to carry out its own stated policy in one area, why should anyone trust it to carry out its own stated policy in another area?

Oh, what a tangled web they weave when once they turn to the government to do—well, pretty much anything.

Originally published at Independent.org.

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There’s Nothing Special about International Trade

Editor's Pick

Written by Donald Boudreaux.

In his excellent 2015 book, The Libertarian Mind, David Boaz makes the following excellent point about international trade.

This short passage is about as good a summary of the economics of international trade as there can be. Trade is trade, and there’s nothing at all about political borders that causes the nature or consequences of trade to change. The essence of the benefits from trade that arise from trading with people across town arise no less surely from trading with people across an ocean. And any problems commonly identified as reasons to restrict or to stop trading with people across an ocean arise no less surely from trading with people across town.

I especially like the way David Boaz opens this passage. International trade is simply one application of the principle of comparative advantage. Each and every individual (person or firm) enjoys a comparative advantage in producing some service or good over nearly every other individual and firm on the planet. Comparative advantage is no less an essential part of the reason why you specialize as you do and trade with some of the people in your town as it is a part of the reason why you specialize as you do and trade with some of the people in China.

The world would be a better place had there never been a specialty in economics called “international trade.”

It’s regrettable that David Ricardo introduced the principle of comparative advantage in the chapter of his Principles titled “On Foreign Trade” and used for his illustrative example two countries – England and Portugal – as the two trading parties. In fact, comparative advantage exists at the level of the individual producer – worker or firm – and not originally or in any unique way at the level of the country. Whatever comparative advantage we might sensibly speak of a country having is nothing other than the composite comparative advantages of the producers within its borders. (When I teach economic principles, the very first piece of formal economic analysis that I share with my students is the principle of comparative advantage. I use this principle to reveal an essential part of the reason why individuals specialize and trade – and, so, in my example the two specialists are individuals, not countries.)

As I’ve argued before, I suspect that the world would be a better place had there never been a specialty in economics called “international trade.” The existence of such a specialty conveys the mistaken impression that there is something unique about the essentials of international trade compared to purely domestic trade. But no such uniqueness exists.

For another example, consider that the same reciprocal demand, or “offer,” curves that every student of international trade encounters can be used with no less validity and good effect to explain trade between blue-eyed people and brown-eyed people of the same country as they can be used to explain trade between the people of the United States and the people of Guatemala.

Originally published at FEE.org.

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