Coyote Blog

Kevin Drum claims to want to really understand the Trump voter.  I will let you read it to see what you think, but here was my comment:

I am all for promoting understanding between our two great national tribes. But you ruin your attempt by whipping out a statement like this: "There are plenty of people who are simply beyond reach for liberals. They’re either racist or sexist or they love guns or maybe they’re just plain mean" Seriously? Back to the old "if you don't agree with me you must be racist?"

Further, you execute the classic tribal maneuver of choosing to take on one of the opposition's silliest niches, rather than their best. This is the equivalent of a Conservative making blanket statements about liberals and environmentalists based on a few of silly folks caught on video signing a petition to ban dihydrogen monoxide.

This does pretty much zero to promote understanding, and in fact is smug arrogance and virtue signalling masquerading as an attempt at understanding.

I think the high minimum wages in California are misguided and actually hurt the poor and unskilled, and I have written about why I think so. But you know what? I can sure as hell publish a one or two paragraph defense of minimum wages that you would never know was written by anyone but a hardcore progressive or Bernie Bro. As another example, I am pro-choice but I have really engaged with anti-abortion folks enough in social settings to infer that they really, truly think that abortion is killing human beings. We pro-choicers like to make ourselves feel better by saying that the anti-abortion folks are anti-women or religious fascists or something, because it is much easier to hate those folks. But it is much harder to hate someone who really, honestly thinks a baby is dying, even if we think they are misguided.

A lot of hate in this country would disappear if people really tried to understand their opponents in terms other than crude smears, like they are racist or sexist or fascist or snowflakes or whatever. So much so that if I were a professor, I think that every day in a class discussion at the halfway mark I would make everyone reverse positions and try to credibly argue the opposite side of the question. When I run my once a year high school economics class, I do exactly this. And I did that for years in high school debate. For a whole year, despite being an ardent free trader, in every other debate I had to argue in favor of protectionism. I think it was good for my soul.

I post this because there seems to always be a 50/50 chance that I will get banned after every comment on Mother Jones.  I never use profanity, and always try to be reasonable, but I am on my 3rd or 4th ID at Mother Jones because they keep banning me.  I still will always treasure the first time they banned me -- the comment that got me banned is below.  I am pretty sure they thought I was promoting the National Rifle Association in my comment, when in fact I was referring to the National Industrial Recovery Act and the NRA blue eagle of the New Deal.

The authors portray this (at least in the quoted material) as an anti-trust issue, but I suspect a bigger problem is the cronyist certificate of need process. In many locations, new hospitals, or hospital expansions (even things as small as buying a new cat scanner) require government permission in the form of a certificate of need. As one may imagine, entrenched incumbents are pretty good at managing this process to make sure they get no new competition. This, by the way, is a product of classic progressive thinking, which in its economic ignorance saw competition as duplicative and wasteful. We are lucky the Supreme Court shot down FDR's NRA or we would have this sort of mess in every industry.

Remember all that BS about the Obama administration only being ruled by facts and science?  This is a mythology at the core of the progressive movement, that it is possible to have a wise dictator who uses the heavy hand of government coercion only for the best interests of the country, driven only by science and not by political influence.

This is of course a crock.  It was a popular point of view in the early 20th century, and at the heart of efforts like Mussolini's fascism, which in turn was much admired by FDR and emulated in US efforts like the NRA (the blue eagle, not the gun organization).  Over time, history has demonstrated folks like Hayek right on the knowlege problem (no one can possibly be smart enough to make optimum decisions for everyone, particularly when everyone has different preferences) while we have plenty of evidence to demonstrate the incentives for politicians are skewed so badly as to make good decisions almost impossible.

But the myth persists, even in the face of obvious counter-examples, like this (emphasis added):

The economic report released last week by Health and Human Services, which indicated that President Barack Obama's health care "reform" law would actually increase the cost of health care and impose higher costs on consumers, had been submitted to the office of HHS Secretary Kathleen Sebelius more than a week before the Congressional votes on the bill, according to career HHS sources, who added that Sebelius's staff refused to review the document before the vote was taken."The reason we were given was that they did not want to influence the vote," says an HHS source. "Which is actually the point of having a review like this, you would think."

The analysis, performed by Medicare's Office of the Actuary, which in the past has been identified as a "nonpolitical" office, set off alarm bells when submitted. "We know a copy was sent to the White House via their legislative affairs staff," says the HHS staffer, "and there were a number of meetings here almost right after the analysis was submitted to the secretary's office. Everyone went into lockdown, and people here were too scared to go public with the report."

In the end, the report was released several weeks after the vote -- the review by the secretary's office reportedly took less than three days -- and bore a note that the analysis was not the official position of the Obama administration.

Wouldn't want to influence a vote with actual facts.

Kevin Drum writes a post that I would interpret as saying "I really can't dispute the Supreme Court speech decision on principles but I am going to anyway because I don't like the result.  He ends by saying

In the end, I guess I think the court missed the obvious "” and right "” decision: recognizing that while nonprofit corporations created for the purpose of political advocacy can be fairly described as "organized groups of people" and treated as such, that doesn't require us to be willfully oblivious to the fact that big public companies are far more than that and can be treated differently. Exxon is not the Audubon Society and Google is not the NRA. There's no reason we have to pretend otherwise.

This is silly.  Just because people are not organized primarily as an influence group does not mean that those folks, once they are pursuing their goals, don't find the need to try to have influence, or have somehow given up their right to try to have influence.  And whose fault is this anyway if Exxon shareholders feel the need to influence the political process?  If the Left hadn't targeted commerce with a never-ending proliferation of restrictions and wealth-confiscations, commercial enterprises probably would not see much reason to waste money on advocacy.  I can tell you that the last possible thing I want to spend money on in my company is kissing some Senator's ass or buffing up the NY Times ad budget, and would spend money to do so only under a pretty existential threat.

But why is there some mythology that members of Audubon or the NRA somehow have more control of the organization's advocacy than Exxon's shareholders?  Sure, when you join the NRA you probably have a good idea what their positions are going to be, but are you really any less able to predict Exxon's positions on most issues?  As I wrote in his comment section:

When you say "Exxon is not the Audubon society," I am not sure how? I am a stockholder of the first and a member of and contributor to the second. I have bought products from both. I have written both (well, actually I wrote Mobil once but it is the same now as Exxon) about their issue advocacy, each time with equally small effect. It is as difficult as a stockholder of Exxon to even get a disclosure of their issue advocacy and lobbying efforts as it is for Audubon (though I am smart enough to take a pretty good guess at both). Neither allows me, as a shareholder/member/contributor to vote on their advocacy/lobbying, either in terms of amount spent or direction. Each carry substantial influence in particular government realms.

So I am confused how they are different, except perhaps that you are personally sympathetic to one and not the other.

Just to remind you the existential threat that causes corporations to want to speak out in public, I will take an example from Drum himself, when he said:

It means the health insurance industry is scared that we might actually do something in 2009 and they want to be seen as something other than completely obstructionist. That means only one thing: they've shown fear, and now it's time to bore in for the kill and gut them like trouts. Let's get to it.

So I guess Exxon is indeed different from the Audubon Society - no one is trying to gut the Audubon Society like trouts.

There are two words that really separate us hard-core libertarians from small-government Republicans and civil-liberties-focused Democrats:  Chaos and Anarchy.  Libertarians love chaos and anarchy, while most Americans still cringe from these words.  For most folks, chaos is some Road Warrior-style dystopia and anarchy is Molotov cocktails sailing into passing cars.

But chaos and anarchy are in fact the hallmarks of a free society.  They imply a bottom-up society where the shape and pattern of everything is driven by the sum of individual decisions, each decision made with that person's own optimization equation of his or her best interests, constrained only by the requirement they interact with other people without use of force or fraud.   Our wealth, our technology, our modern economy are all born out of this chaos.

I have heard it said that capitalism is not a system, it is the anti-system.  This is the true beauty of capitalism -- it is the only way for human beings to interact with each other without compulsion.    Every other approach to organizing society involves some group of people using physical force to coerce other people.

This does not mean that every individual decision made, every investment choice, or every business model in a free society is mistake-free.  Society and the economy are in fact riddled with mistakes.  The HAVE to be, when one considers that the shape of this country is the sum of literally billions of individual decisions, small and large, made every day.  The key, however, is that the outcomes are generally robust  to mistakes, even large ones.  Business people, for example, who make large mistakes see their business fail and their capital disappear and their assets repurchased in bankruptcy by other business people who may well make better, smarter use of them.  Costly mistakes only persist when they are enshrined by law and enforced by government, and thereby protected from the forces that tend to act to correct them.

But despite all we owe to our capitalist system that fundamentally strives on anarchy, we attend schools run by large authoritarian institutions, like the Catholic Church or the US Government, which train us from an early age to fear chaos.  This is not surprising, because the opposite of anarchy is control, regimentation,  and top-down planning, all the things that authoritarian institutions strive to have us meekly accept.   Large investments in public education in Western countries have always been in times of rapid expansions of state power and control.  This was true in France in the early 19th century and Germany in the early 20th.  It is even true in the US.  If you doubt this, and want to claim that public education is all humanitarian, then why does the state make it so hard to opt out?  The ultimate argument of every opponent of school choice is always some gauzy notion that public schools create a "shared experience," which sounds a lot like indoctrination to me.

The current administration is dominated by technocratic planners.   For them, any process that is not being controlled top-down by "smart" people like themselves is by definition a failure.   When I say that the current administration is reminiscent of Mussolini-style fascists, I am not implying that folks are going to be rounded up soon and sent to camps.  I mean that the animating assumptions -- that any process controlled top down is more efficient than one that is allowed to operate bottom-up and chaotically -- are similar.  FDR, for example, and much of the American intelligentsia were driven by very similar assumptions, and the National Industrial Recovery Act (fortunately struck down by a non-packed Supreme Court) was pretty directly modeled on Mussolini's economic planning system.

Examples?  Well, the GM/Chrysler situation is a great one.  One can easily paint a story that Obama's work to avert bankruptcy at these companies is just a crass political handout to powerful unions who supported him.  But, just as easily, one can portray these efforts as a man who is uncomfortable letting the fate of a large sector of the economy play out beyond his control.  Obama killed school choice in Washington DC despite fairly strong evidence of its success, because, again, everyone being educated in his or her own way just cedes too much control.

Another good example is this one, from the Anti-planner:

Ron Utt, the Antiplanner's faithful ally, has uncovered the first steps of President Obama's plan to force smart growth on those parts of the country that managed to escape the housing bubble. The departments of Transportation and Housing & Urban Development have signed a joint agreement to impose smart growth on the entire nation.

Under the agreement, the departments will "have every major metropolitan area in the country conduct integrated housing, transportation, and land use planning and investment in the next four years." Of course, nearly all of the metropolitan areas that already did such integrated planning suffered housing bubbles, while most of those that did not did not have bubbles. The effect of Obama's plan will be to make the next housing bubble much worse than the one that caused the current financial crisis.

Obama first hinted about this plan in a town hall meeting in February. "The days where we're just building sprawl forever, those days are over," he told a group in Fort Myers, Florida. "I think that Republicans, Democrats, everybody recognizes that that's not a smart way to desig, n communities." Not everybody.

As a note on city planning, I will not claim a direct causality, because I am the first one to warn of the danger between directly correlating two variables in a complex system, but check out this map of job losses in the recession, noting the situation in Houston as the least planned city in the country.

I feel like it is time for one of those unpopular libertarian rants that piss everyone off.   As with the last time this issue came up, I just don't understand what we fear so much letting Iranian dictator Amadinejad speak on American soil.  I am absolutely all for letting people put themselves on the record in the clearest possible way.  McQ over at Q&O is a smart guy I often agree with, but his core assumption seems to be that an invitation from Columbia University somehow confers some legitimacy on an otherwise egregious world leader.  How?  I am not sure the Columbia name even confers much legitimacy on its faculty.  The only thing the decision communicates to me is that Columbia, the university that didn't allow presentation of the Mohammad cartoons and that allows speakers to be manhandled off the stage, is deeply confused about speech issues on campus.

Information is always useful.  Would I have allowed Hitler to speak in the US in the 1930's?  Hell yes!  I wish he had gone on a 20-city speaking tour.  Hitler couldn't help but telegraph his true intentions every time he spoke.  Hell, he wrote it all down in a book if people would have paid attention.  But what if he didn't?  What if he convinced all America he was peaceful?  Even then it would have been useful.  Intelligent media (if there are any left) could then compare and contrast what he said at home vs. what he said in the US, much like a few folks do with Muslim clerics, comparing their English and Arabic speeches.  Further, folks would have immediately seen Hitler was lying in September of 1939, and, knowing Americans, they would have been more pissed off at him for being lied to.  Further, it would be fabulous to have quotes form Mussolini, touring eastern US cities, praising the New Deal and the NRA, much of which was modeled on his program in Italy.

What about, as Roger Simon asks:

I have a question for the Columbia crowd, since Holocaust deniers are
welcome, would you allow a speaker in favor of a return to black
slavery? I hope not. Well, that's how I feel about Holocaust deniers.

Absolutely I would.  If there was a prominent person who advocated the return to black slavery, I would want that person on the record in public.  I would love to listen to see what kind of supporters he thought he had, and, perhaps more importantly, to see who reacted favorably to him.   You have to pull these guys up into the sunlight and show the world how distasteful they are.

Update:

During the 1930s, "one of the things we really lacked in this country
was sufficient contact with Nazis to realize what they are up to," said
Harvey Silverglate, a prominent civil rights attorney who has sharply
criticized higher education for failing to support free speech on
campus. The notion "that you're going to take really awful people and
not listen to them is really suicidal for any society."

By this definition of "not normal", I am not normal either.  I share with Tabarrok the strong sense that the New Deal (combined with shockingly stupid use of Wilson's Federal Reserve and of course rampant scorched-earth protectionism) extended rather than shortened the Great Depression. 

Imagine, increasing the power of
unions to strike and raise wages during a time of mass strikes and mass
unemployment. Imagine thinking that cartelizing whole industries
thereby raising prices and reducing output could improve the economy.
Not everything Roosevelt did was counterproductive - he did end
prohibition (although in order to raise taxes) - but plenty was and
worst of all was the uncertainty created by Roosevelt's vicious attacks
on business.

One of the things I think we have done historically is understate the true degree to which Roosevelt showed himself willing to take the country down the road to socialism, or more accurately, Mussolini-style fascism. Via David Gordon:

Roosevelt never had much
use for Hitler, but Mussolini was another matter. "'I don't mind
telling you in confidence,' FDR remarked to a White House
correspondent, 'that I am keeping in fairly close touch with that
admirable Italian gentleman'" (p. 31). Rexford Tugwell, a leading
adviser to the president, had difficulty containing his enthusiasm for
Mussolini's program to modernize Italy: "It's the cleanest "¦ most
efficiently operating piece of social machinery I've ever seen. It
makes me envious" (p. 32, quoting Tugwell).

Why did these
contemporaries sees an affinity between Roosevelt and the two leading
European dictators, while most people today view them as polar
opposites? People read history backwards: they project the fierce
antagonisms of World War II, when America battled the Axis, to an
earlier period. At the time, what impressed many observers, including
as we have seen the principal actors themselves, was a new style of
leadership common to America, Germany, and Italy.

Once more we must avoid a
common misconception. Because of the ruthless crimes of Hitler and his
Italian ally, it is mistakenly assumed that the dictators were for the
most part hated and feared by the people they ruled. Quite the
contrary, they were in those pre-war years the objects of considerable
adulation. A leader who embodied the spirit of the people had
superseded the old bureaucratic apparatus of government.

If you don't believe me, it is probably because you are not familiar with the National Recover Act (NRA) -- the famous "blue eagle".  This program was the very heart of Roosevelt's vision for the American economy, a vision of cartelized industries managed by government planners. (via Sheldon Richman of the Concise Encyclopedia of Economics):

The image of a strong
leader taking direct charge of an economy during hard times fascinated
observers abroad. Italy was one of the places that Franklin Roosevelt
looked to for ideas in 1933. Roosevelt's National Recovery Act (NRA)
attempted to cartelize the American economy just as Mussolini had
cartelized Italy's. Under the NRA Roosevelt established industry-wide
boards with the power to set and enforce prices, wages, and other terms
of employment, production, and distribution for all companies in an
industry. Through the Agricultural Adjustment Act the government
exercised similar control over farmers. Interestingly, Mussolini viewed
Roosevelt's New Deal as "boldly... interventionist in the field of
economics." Hitler's nazism also shared many features with Italian
fascism, including the syndicalist front. Nazism, too, featured
complete government control of industry, agriculture, finance, and
investment.

And further, from John Flynn's The Roosevelt Myth via Anthony Gregory:

[Mussolini] organized each trade or industrial group or professional
group into a state-supervised trade association. He called it a
corporative. These corporatives operated under state supervision and
could plan production, quality, prices, distribution, labor standards,
etc. The NRA provided that in America each industry should be organized
into a federally supervised trade association. It was not called a
corporative. It was called a Code Authority. But it was essentially the
same thing. These code authorities could regulate production,
quantities, qualities, prices, distribution methods, etc., under the
supervision of the NRA. This was fascism. The anti-trust laws forbade
such organizations. Roosevelt had denounced Hoover for not enforcing
these laws sufficiently. Now he suspended them and compelled men to
combine.

And read this to see the downright creepy Soviet-style propaganda Roosevelt used to promote the NRA.  One example:

A hundred thousand schoolchildren
clustered on Boston Common and were led in an oath administered by
Mayor James Michael Curley: "I promise as a good American citizen to do
my part for the NRA. I will buy only where the Blue Eagle flies."

The fact that the worst of the NRA was dumped by the Supreme Court, and eventually by FDR under pressure, cause us to forget what businessmen in the 1930's were seeing.  The unprecedented fall in asset prices in the early thirties would normally have started to attract capital, at least from the bottom-fishers.  But any reasonable observer at that time would have seen the US government on a path to controlling wages, prices, capacity, etc  -- not an environment conducive to investment.  In fact, under Roosevelt's NRA industry cartels, its not clear that private industrial investment was even legal without the approval of the Code Authority for that industry.

People look back fondly and give credit to the CCC and large public works programs for our recovery, but in fact these programs were necessary because FDR's New Deal, and particularly the NRA, made private investment dry up.

Postscript:  By the way, questioning the greatness of the New Deal is one of those issues that will get you labeled a wacko almost as fast as being a climate change skeptic.  Here is Janice Rogers Brown getting slammed for questioning the New Deal.

As a follow-up to this post, I wanted to take on the argument that people use against the US's health care system, arguing that it must be worse than other countries socialized approach because it costs so much more.  Well, I am the first to agree that reduced regulation and a better matching of who is paying the cash to who is receiving the services would result in huge cost savings.  However, it may also be true that you get what you pay for, as discussed in Cafe Hayek.  The key chart is shown below:

One thing I forgot to mention in the previous post was a bit of background of exactly why we have a model where health care is payed for by the employer.  This structure of company-paid health care was not a natural market evolution, but was in fact a direct result of several very distorting government regulations.

Company funded health care plans began in the 1930's and 1940's as a way for companies to try to get around government controls and freezes on wage rates, first instituted with the NRA and later during WWII.  In particular, during the incredibly tight domestic labor markets in WWII, employers struggled with government-mandated wage controls, and used the promise of employer-paid health care as a way to provide higher effective compensation to attract employees, since these non-cash benefits were not counted in the wage freeze calculation.  After the war, the government locked in this practice when the IRS and Congress agreed that company-paid health care was not taxable as regular income, meaning that such health plans were given a strong tax-preference over cash wages.

Finally, if you are not familiar with the appalling experiment in fascism that was the NRA, I wrote about it here.

Living for many years in Dallas, including the three-Superbowl period in the mid-eighties, it was nearly impossible not to jump on the Dallas Cowboy bandwagon.  And, part and parcel (Parcell?) of being a Cowboys fan was hating those NFL east franchises the Giants, Redskins, and the Eagles (the Cardinals were also in the division, but were such a joke that they were not even worth hating, which is ironic since they are now my team here in Phoenix).

When we were driving up to Princeton reunions from Washington DC, my old roommate Brink Lindsey pointed out to me, as we passed the new Philadelphia stadium, that the Eagles were named in the 1930's after the blue eagle of the National Recovery Administration, or NRA.

I found this hard to believe, that anyone would name a sports franchise after one of the worst pieces of legislation in American history, but it seems to be true.  Apparently, naming the team the eagles was part of a larger soviet-style propaganda program:

For a while, there was no escaping the bird. Towns all over the country got on the Blue Eagle bandwagon. A hundred thousand schoolchildren clustered on Boston Common and were led in an oath administered by Mayor James Michael Curley: "I promise as a good American citizen to do my part for the NRA. I will buy only where the Blue Eagle flies." In San Francisco, 8,000 schoolchildren were dragooned into showing their
allegiance by forming themselves into a human Blue Eagle on the outfield in Seals Stadium. In Cleveland, 35,000 enthusiasts gathered in the public square to cheer the unveiling of the Blue Eagle flag while city officials proclaimed the "end of the depression." In Memphis, 125,000 people watched another 50,000 march in the city's traditional Christmas parade; on the final float Santa Claus sat resplendent upon a big Blue Eagle, from which perch he threw candy to children. In a New
Orleans park, NRA celebrants erected an enormous pyramid on which were inscribed the names of more than 7,000 people and businesses who had taken the pledge; on top of the pyramid was a nine-foot eagle made of blue lights, while red and white bulbs spelled out "We Do Our Part." In Philadelphia, citizens were soon cheering for a new professional football team whose name was inspired by the general's icon: the Philadelphia Eagles. In Roanoke, North Carolina, "Shanghai Mickey" offered Blue Eagle tattoos for a mere 50 cents. In Atlantic City, beauty contestants had the Blue Eagle stamped on their thighs.

What's next?  Should we rename the Red Sox the Boston Alien and Sedition Acts?  How about having the Chicago Smoot-Hawley Tariffs?

By the way, for those who are not familiar, the National Industrial Recovery Act of 1933 that formed the NRA was the centerpiece of Roosevelt's New Deal, and was modeled on Mussolini's fascism in Italy (via Sheldon Richman of the Concise Encyclopedia of Economics):

The image of a strong leader taking direct charge of an economy during hard times fascinated observers abroad. Italy was one of the places that Franklin Roosevelt looked to for ideas in 1933. Roosevelt's National Recovery Act (NRA) attempted to cartelize the American economy just as Mussolini had cartelized Italy's. Under the NRA Roosevelt established industry-wide boards with the power to set and enforce prices, wages, and other terms of employment, production, and distribution for all companies in an industry. Through the Agricultural Adjustment Act the government exercised similar control over farmers. Interestingly, Mussolini viewed Roosevelt's New Deal as "boldly... interventionist in the field of economics." Hitler's nazism also shared many features with Italian fascism, including the syndicalist front. Nazism, too, featured complete government control of industry, agriculture, finance, and investment.

And further, from John Flynn's The Roosevelt Myth via Anthony Gregory:

[Mussolini] organized each trade or industrial group or professional group into a state-supervised trade association. He called it a corporative. These corporatives operated under state supervision and could plan production, quality, prices, distribution, labor standards, etc. The NRA provided that in America each industry should be organized into a federally supervised trade association. It was not called a corporative. It was called a Code Authority. But it was essentially the same thing. These code authorities could regulate production, quantities, qualities, prices, distribution methods, etc., under the supervision of the NRA. This was fascism. The anti-trust laws forbade such organizations. Roosevelt had denounced Hoover for not enforcing these laws sufficiently. Now he suspended them and compelled men to combine.

If you are not familiar with the NRA, you need to be if you are going to come to a conclusion about the New Deal and just how statist FDR's aspirations were.  Henry Hazlitt has a long evaluation here. In the end, the NRA was struck down by the Supreme Court, and never revived in large part because it was a disaster for the economy.  Many blame the NRA for strangling the recovery that began in 1933-34 and thus extending the depression. Parts of the law (collective bargaining, minimum wage) were incorporated in other later legislation, but the core concept of organizing industrial cartels with government backing to run industries and set prices, wages, and production levels died, fortunately.

By the way, the countries today that I know of that most closely adhere to the assumptions of the NRA are France and Germany, who expelled the fascists in the forties only to eventually adopt most of their corporatist economics.

I have not really had the time to do the research to form an opinion about Bush's judicial nominees, and the MSM is not very helpful in its coverage on the issue.  I wrote here that the judiciary has started to overreach of late, legislating from the bench to advance an agenda generally supported by the Democrats.  I don't know the candidates well enough to decide if these proposed judges are conservative activists who want to legislate from the bench but for conservative ends, or if they represent a first shot at reversing extra-constitutional judicial activism (which I would support).

However, I may have started to develop an favorable opinion on a couple of judges, based on what I have learned from their detractors.

Take this example, from a NY Times editorial, March 6, 2005.  In disparaging how extremist Bush judge nominees are, they use the example of:

Janice
Rogers Brown, who has disparaged the New Deal as ''our socialist
revolution.''

Woe is me, I must be an extremist.  First, the New Deal was clearly a "revolution", in that it was one of two events (the other being the Civil War) in the last 200 years that fundamentally changed the role of the federal government in what was a massive reinterpretation of the Constitution.  But was it socialist?  We can argue about whether the New Deal legacy that reaches us today is socialist or not- many quite normal non-extremist folks would argue yes and many similarly rational folks would argue no.

However, arguing the nature of the New Deal from what programs reach us today leaves out a lot of the picture.  Much of the New Deal was voided by the Supreme Court.  While some was re-passed later once FDR had a chance to remold the court with his own (for the time) extremist ideologues, some of the most socialist-statist-fascist legislation never was reinstituted.

The most dramatic of these institutions that fortunately were left on the cutting room floor was the National Industrial Recovery Act, or NRA.  Roosevelt actually modeled the NRA on Mussolini's fascism in Italy, so I guess it might be more correct to call it fascist rather than socialist but in practice, I can't ever tell those two apart.*

The image of a strong
leader taking direct charge of an economy during hard times fascinated
observers abroad. Italy was one of the places that Franklin Roosevelt
looked to for ideas in 1933. Roosevelt's National Recovery Act (NRA)
attempted to cartelize the American economy just as Mussolini had
cartelized Italy's. Under the NRA Roosevelt established industry-wide
boards with the power to set and enforce prices, wages, and other terms
of employment, production, and distribution for all companies in an
industry. Through the Agricultural Adjustment Act the government
exercised similar control over farmers. Interestingly, Mussolini viewed
Roosevelt's New Deal as "boldly... interventionist in the field of
economics." Hitler's nazism also shared many features with Italian
fascism, including the syndicalist front. Nazism, too, featured
complete government control of industry, agriculture, finance, and
investment.

If you are not familiar with the NRA, you need to be if you are going to come to a conclusion about the New Deal and just how statist FDR's aspirations were.  The actual text of the act is here.  Henry Hazlitt has a long evaluation here.  In the end, the NRA was scrapped in large part because it was a disaster for the economy.  Many blame the NRA for strangling the recovery that began in 1933-34 and thus extending the depression.  Parts of the law (collective bargaining, minimum wage) were incorporated in other later legislation, but the core concept of organizing industrial cartels with government backing to run industries and set prices, wages, and production levels died, fortunately.

Update:  More here.  Mr. Gregory quotes John Flynn's The Roosevelt Myth:

[Mussolini] organized each trade or industrial group or professional group into a state-supervised trade association. He called it a corporative. These corporatives operated under state supervision and
could plan production, quality, prices, distribution, labor standards,
etc. The NRA provided that in America each industry should be organized
into a federally supervised trade association. It was not called a
corporative. It was called a Code Authority. But it was essentially the
same thing. These code authorities could regulate production,
quantities, qualities, prices, distribution methods, etc., under the
supervision of the NRA. This was fascism. The anti-trust laws forbade
such organizations. Roosevelt had denounced Hoover for not enforcing
these laws sufficiently. Now he suspended them and compelled men to
combine.

*  I disagree with people who want to argue that socialism is freedom but without property rights while fascism is property rights without other freedoms.  Neither of these conditions are stable, and both converge to the same destination of suffocating statism, just with different starting points and different people in charge.  One of the things that drive libertarians nuts is being presented with a grade school civics book that has a linear political spectrum with fascism on one end and communism on the other.  Are those really my only two choices? 

Jane Gault at Asymmetrical Information is on a roll with a series of posts about the problems with the Medicare system.  Check out her posts on the ,  the media bias when programs are cut, and the rising cost of Medicaid.

The problem in the world of health care costs is actually very simple:  patients have the incentive to over-consume services and providers have the incentive to over-provide services.  Patients consume as many services as possible because some other entity is generally footing the bills, such that the marginal cost to the patient of extra services is generally nil (if you don't believe this, imagine a world where a 3rd party paid for your car - would you choose the same care you drive today?)  Providers tend to over-provide in part for the same reason, and in part as a defensive response to the threat of torts.  As a result, costs go through the roof, and those who pay (government, insurance companies, employers) respond by rationing, which pisses everyone off.

This disconnect between the entity paying the bills and the entity selecting the care cannot endure.  The fix in the future is guaranteed to be one where the decision maker on the selection of care is the same person who is paying for the care.  The only choice we have in designing the system is whether that entity making the decisions is the government (as preferred by statists of all stripes) or the patient. 

We need a system where people pay their own everyday medical bills, with insurance in place for catastrophic needs (which is basically how we take care of our cars).  You could probably incentivize this tomorrow by making personal medical expenses tax deductible while at the same time making employer-provided medical insurance taxable just like every other kind of compensation.  Not only would this fix the incentives problem in the system, but would also eliminate the portability issue associated with employer-provided coverage.

Unfortunately, people have a huge mental block where paying for their own medical care is concerned.  My wife is a great example.  When I became self-employed, she was shocked that I did not get dental insurance.  I tried to explain that we would just use the insurance to pay for checkups and a filling here-or-there, and it would probably cost more than just paying the expenses ourselves.  But for her, medical bills are paid by insurance, not by individuals, and it actually felt wrong for her to pay her own doctor's bill (we have a big annual deductible on our medical insurance too so it acts mainly as catastrophic coverage).  This is not an isolated attitude - it is why many people equate "not insured" today with "not getting medical care".

Postscript:  There is nothing magical about the system of employer-paid medical insurance we have today.  Many large employers implemented paid health benefits as a way to evade government wage freezes during the NRA of the 30's and later in World War II.  In the tight labor market of WWII, government mandated maximum wages could not lure enough workers, so free health benefits were thrown into the compensation mix since only cash wages were frozen.  The system is perpetuated today by a tax code that does not tax health insurance as it does all other parts of the compensation package.

UPDATE:  Or, we could just try this

UPDATE#2:  A small example of the mindset:  Carly Fiorino get $42 million as a parting gift from HP, but still insists that HP privide her medical insurance.  With $42 million, she couldn't pay for it herself? (via gongol)

As a capitalist and believer in individual rights, one of the things I notice a lot today is just how many people do not trust individual decision-making.  Now, I do not mean that they criticize other people's decisions or disagree with them -- in a free society, you can disagree with anybody about anything.  I mean that they distrust other people's free, private decision-making so much that they want the government to intervene.

Interestingly, most people don't think of themselves as advocating government interference with people's private decisions.  However, if you ask them the right questions, you will find that they tend to fall into one of several categories that all want the government to intervene in individual decision-making in some way:  nannies, moralists, technocrats, and progressive/socialists.  Though the categories tend to overlap, they are useful in thinking about some of the reasons people want to call in the government to take over parts of people's lives.

By the way, before I get started, just to avoid straw-man arguments like "well, you just want 12-year-olds to have sex with dogs", there are three philosophical limitations that apply to decisions made by individuals or between individuals:

• The decisions or agreements are made without fraud or physical coersion
• The decisions are made by adults (the very definition of adulthood is the legal ability to make decisions for oneself)
• Decisions and areements don't violate the constitutional rights of others

That being said, here are examples of the government interventionism of  nannies, moralists, technocrats, and progressive/socialists.

Continue reading ‘Respecting Individual Decision-Making’ »