"Reason" and "Division of Labour"

There is an interesting back and forth brewing between Reason and Division of Labour. Check it out here.

The Unadulterated Socialism of Warren Buffet

Read about it here.

The Welfare State (Not) At Work

1 in 5 people in the UK have no reported income other than government handouts.

Link

As If We Need Another Reason To Hate Canada

Carpe Diem has a post, inspired by this article, about the average wait times for an MRI in Canada vs the US, along with a scary story as anecdotal evidence.

. . . Lindsay McCreith, who was told in 2006 that he probably had a brain tumor. His case was an emergency and he needed an MRI fast, but the wait time for a "free" MRI was 4.5 months in Ontario, and it's illegal to purchase a private MRI in Ontario. So he was told to get to the end of the MRI line with his suspected brain tumor and wait 135 days for his free MRI.

What to do? Lindsay contacted Timely Medical in Vancouver, a three-year old private medical broker in Canada, which got him an MRI the next day across the border in Buffalo, NY. Result? As suspected, he did indeed have a brain tumor the size of a golf ball. McCreith then was able to schedule brain surgery within a week in the U.S., surgery that would have taken eight months in Canada -- if Lindsay had still been alive.

Even Socialists See the Flat Tax Revolution

The World Socialist Web Site has a column up about how eastern European countries are falling for the capitalist tricks of low taxes to attract "multinational companies and western speculators."

The government of Albania has agreed on a standard tax rate (flat tax) of 10 percent aimed at outdoing its East European rivals and attracting international investors. The government in Tirana is determined to transform the impoverished Balkan state into a haven for multinational companies and western speculators.

From the start of next year, corporate taxes will be reduced from 20 to just 10 percent. The basic rate of income tax, which amounted to 5 percent for average incomes and a maximum of 25 percent for top earners, had already been changed to a uniform rate of 10 percent for all incomes on August 1.

But even this is not enough. In August the head of government, Sali Berisha, announced that the state would make development land available to foreign investors for the symbolic price of one euro. Concessions for socially indispensable services such as health service, education, water and waste disposal, infrastructure, energy and raw material production - are also to be sold off bargain-basement style for one euro.

Should any potential investor be nevertheless deterred by any remaining tariffs, the Albanian government is also ready to step in. A law over foreign trade zones is in preparation and is due to be passed by parliament in October.

Of course, while I would consider these developments to be good things, the author disagrees.

Government representatives repeatedly emphasize that the reform of the tax system is beneficial for the country. The participation of foreign investors in Albania would increase tax revenues, increase transparency, and provide an alternative to businesses, which operate outside of the country’s legal framework and tax structure.

In fact, none of these claims are true. The halving of corporate taxes will inevitably lead to sizable deficits in the national budget, which is already chronically under-financed due to high unemployment and wide-spread tax evasion. The state has already withdrawn financial participation in almost all public services such as health care, education, or infrastructure. Any further decline in the national budget can only worsen the situation.

The main victims of this reform will be those surviving on low incomes. The increase in taxes on low-income earners from 5 to 10 percent means that these taxpayers will finance the tax cuts for companies and high income earners. At the same time those on low wages will be hit hardest by the social consequences of declining tax receipts.

Sixteen years after the introduction of capitalist free-market reforms, the country already resembles an economic and social wasteland. The country’s few profitable national industrial companies have been sold off to the highest bidder and any sort of welfare provision only exists on paper.

It is enough to make one long for the days of plenty everyone enjoyed under the USSR, isn't it?

HT Cato-at-Liberty

Collective Costs

Cafe Hayek explains why people are willing to advocate silly ideas if the cost is not borne by them, but by society and the government. In a society where feeling good is the only test of somethings merit or virtue, there is no cost too high for the thrill of "doing good."

Define Your Terms

The Liberty Papers has an interesting post regarding the definitions of mercantilism, fascism, and capitalism and the differences between the systems. Worth a read if you're interested.

The FDA and Tobacco

Multiple media outlets (USA Today, FOXNEWs, etc.) reported yesterday that a governmetn advisory panel has advised that the FDA should regulate tobacco:

"A government scientific advisory panel proposed sweeping changes Thursday to reduce the health burden of tobacco, which claims 490,000 American lives a year.

"The report from the prestigious Institute of Medicine calls on Congress to allow the Food and Drug Administration to regulate cigarettes as drugs and control the way tobacco is marketed. Authors from the IOM, a panel of independent experts who advise the government on health policy, say they aim 'to reduce smoking so substantially that it is no longer a significant public health problem.'"

The report suggested several specific steps to reduce tobacco use:

• Requiring all insurers — including the Medicare and Medicaid programs — to cover smoking-cessation programs.
• Licensing retailers that sell cigarettes, just as states issue licenses to sell alcohol.
• Raising cigarette taxes as much as $2 a pack, an effective way to reduce smoking.
• Dedicating $15 to $20 per capita annually of the proceeds from higher taxes or other resources to fund tobacco control efforts in each state.
• Banning smoking in all non-residential indoor areas.
• Limiting tobacco advertising and promotional displays to text-only, black-and-white formats.
• Launching additional efforts aimed at curbing youth interest in smoking and access to tobacco, including bans on online sales of tobacco products and direct-to-consumer shipments.
• Requiring new, large pictorial warnings on the harmful effects of smoking -- similar to those required in Canada -- on all cigarette packs and cartons.

So, the purpose of these changes would be to "reduce the health burden of tobacco." The question occurs to me: on whom is the burden? The individual or society? If the health burden of tobacco is on the individual (and assuming no one has forcibly detained the individual for a significant portion of his or her life, forcing them at gun point to smoke a pack or more a day), then it is a self-imposed burden.

One must ask, therefore, why society should try to "save" people from themselves.

{tangent}

As soon as one asks that question, however, it seems to me that they have a problem: that's no what anti-smoking activists want to do. They never say "we want to regulate this product to save people from themselves" rather, they say "we want to regulate this product to save people from the harmful effects of a product that is aggressively marketed by powerful corporations who control powerful lobbyists in Washington."

Anti-smoking campaigns seem to go to pain to gloss over the fact that people choose to smoke. Rather, they focus on everyone except the person who has actually chosen the activity (and the burden): the company that sold them the product, the government that allowed it to happen, etc.

I suspect that at least one reason for this tactic is that, generally speaking, people do not sympathize with people who get themselves into trouble (especially knowingly) and then want others to get them out.

{/tangent}

If someone has freely chosen to accept the consequences of their actions, why should others be taxed, or forced to pay higher insurance premiums, or not allowed to use their property in the way in which they wish, etc. in order to "make up for" the mistake of the individual?

If however, the health burden is on society (for example, in the form of increased health insurance costs or taxes on everyone in order to pay for the subset that smokes), then one must ask "why?" Why does society bear the burden of an individual's heath problem that was brought on by an extremely long series of decisions to smoke a cigarette? Perhaps a better way to discourage smoking (whether or not that in itself is a good end) would simply to shift the burden back to the individual by allowing insurance companies to offer people plans that do not cover smoking cessation programs nor smoking related health problems. The fact that these plans would be cheaper (and, therefore, attract a lot of eligible people away from other plans) would raise the cost of the plans that cover smoking - thus increasing the cost of smoking to the smoker.

In any event, it seems to me that this series of recommendations aimed at reducing smoking is another example (others being proposed bans on fast food and proposed bail outs for defaulting sub-prime mortgagees) of a mentality that the individual does not (or should not) bear the responsibility of their actions - rather, that responsibility is shifted to society (or the government), especially when, by "responsibility", we mean "burden".

This seems to me to be a variation on the theme of socialism (both in the economic and political senses) - mistakes are not punished, achievements are not rewarded. Everyone bears the burden of everyone else's problems (even when they are self imposed) and everyone gets to consume the fruits of everyone else's labor.

Fair Trade Coffee

Colleen E. H. Berndt has an essay up on TCSDaily about Fair Trade Coffee (FTC). It is an interesting critique of a well intentioned plan.

For instance, FTC is a designation that is "open only to co-operatives composed of farmers owning fewer than 12 acres of land and who do not employ any full-time workers. The co-operative must then pay the FLO to certify that the co-operative, not the member farms, meets specific standards for socially and environmentally sound coffee growing and accept the FLO's mandated organizational structures. No matter how well run or how benevolent a non-cooperative private organization is, no matter how well paid or well treated its employees are, that organization cannot obtain Fair Trade certification." It seems that FTC is not so much about ensuring that laborers are compensated justly for their work, but that coffee is produced in accord with a commune-like ideal.

Education Choice and Commie Toys

Two quick things:
Cato has a nice article on the rising support for education choice, specifically tax credits for education. Apparently support runs at about 3 to 1.
Also, Create-a-Commie is perhaps the greatest communism-themed toy ever.

A Logical Defense of Capitalism

I highly recommend reading this short article by Tibor R. Machan from Free Market News entitled "Defending Capitalism's Integrity" in its entirety.

The best portions of the article:

"Even after the demise of the Soviet system of socialism—the only type that ever aspired to be a fully consistent version of that kind of political economy, with full collective ownership of the means of production (including, as Heilbroner himself noted in his own book, Marxism, For and Against, human labor)—many keep criticizing the fully free market system of capitalism.~ Libertarianism, which is the broader political equivalent of it, also gets this criticism, namely, that it has no room for a safety net for those in dire straits, those who are helpless, indigent, needy, unprepared to deal with market processes, etc. This is the usual mantra of the critics. More extreme versions of them, of course, don't like anything about capitalism and want some kind of dreamlike fully egalitarian system where the wealth is nearly evenly distributed, even if this means the complete destruction of productivity in such a human community. Better we are all equal and poor than we are unequal and most of us quite well off, with some even extraordinarily wealthy.

...

"It is possible in a fully capitalist system for some to remain left out. There can be innocent hard luck cases, there is no doubt about that. What doesn't follow is that government ought to do something about this. Instead, free men and women would have to muster the resolve to lend a hand where that's needed. And it's rank cynicism to deny that they would—after all, it is precisely in semi-capitalist systems that charity and philanthropy thrive today! Furthermore, to think that such help would not be forthcoming undermines the very idea that it is used to support, namely, that democratic governments can step in and do the job. That's because such governments are a reflection of the population, if they really are democratic. Which means if the people are mean and heartless, government would be so in spades."

Ponderings Regarding Choice and Economic Systems

While pondering further some of the issues about which I have recently posted (e.g., Banning McDonald's, Choices and Wealth, Thoughts Regarding Wal-Mart in India, etc.), I began thinking about an interesting difference in the way that various socio-economic systems and schools of thought consider and treat free choice.

For instance, I am a staunch believer in the idea that free markets are the best socio-economic structure for the purpose of rewarding what I consider to be good choices on the parts of individuals. By "good choice", I mean here a choice that was beneficial not only to the individual but also to society or at least not detrimental to society in general or any other portion of it (and I would probably have to admit that this would need to be restricted to the material realm in order to hold water). I also consider it to be a very effective form of punishing bad choice (by which I mean the inverse of "good choice") insofar as, not only does a bad choice generate bad effects, but it deters similar bad choices in the future.

Inversely, I also consider various socialistic institutions, e.g., welfare, as mostly (if not completely) detrimental to society because, despite the best intentions in the world, they tend to have the opposite effect of what they intended - they create incentives for people to make bad economic choices, or, at the very least, remove the deterrents to making bad choices, including, but not limited to, not striving to lift oneself above one's current socio-economic condition. They also remove most (if not all) of the incentives for making good choices.

It struck me, then, that, as I define good and bad choices, there is a very interesting inverse proportion going on in certain economic systems: (free market) capitalism seems to be, to the extent to which it is free, a system that tends the vast majority of the time to reward good choices and punish bad ones. On the other hand, socialism (and it's various flavors), to the extent to which they are not free, tends the vast majority of the time to reward bad choices and punish good ones.

One wonders, then, about the underlying philosophical tenets of the various systems, whether consciously held or not. It would seem that capitalism, in principle, holds individuals in much higher esteem - it is their responsibility to make choices and the system trusts them to do so both because they are capable of making good choices and because the system will correct them if/when they make bad choices. Capitalism relies heavily on the decisions (choices) made by individuals (or, at least, private parties) to keep the whole system working - it's analogous to a mechanical system where each part is responsible for its own upkeep and performance, rather than a centralized mechanism handling all maintenance and performance monitoring for the system. It would also be analogous to distributed computing where each unit contributes what is best for itself to give at any one moment, thus optimizing the balance between its native tasks and its portion of the general task.

Furthermore, capitalism seems to assume the same general ideas of what constitute "good" and "bad" decisions/effects, namely beneficial not only to the individual but also to society (at least, materially speaking).

Less free systems, though, seem to hold individuals (and other private parties) in much lower esteem. They are predicated on the idea that society and individuals will benefit more from varying degrees of centralized planning and a lack of individual freedom in matters of personal property (assuming there is personal property) and the like than they will from making decisions on their own.

What I consider to be an obvious flaw in this idea is this: what is good for one person/private party or family is not necessarily what is good for another. In fact, due to circumstances, personal tastes, etc., what is good for one might be harmful for another. Furthermore, even with a very small number of people, a centralized planning official/agency/mechanism would have a very hard time easily and quickly knowing one from the other without being directly told by the parties involved. When the number of people in a society reaches any meaningful level, the task would become so enormous that the planning mechanism would have to devour so many resources simply to operate well that any benefit it might actually have to society would be more than offset by the amount of resources it requires. The other alternative, which is what seems to be the case in all historical examples of which I am aware, is that the centralized planning mechanism, because it cannot requisition the necessary resources to operate well, operates badly. People not only lack what they want, they usually lack what they need (one need think only of the bread lines in Soviet Russia or the current food shortages in Venezuela for an example of this).

More socialistic socio-economic systems also seem to presuppose that my definitions of good and bad are reversed. A choice that is good insofar as it profits the one making it is bad, according to these systems. I mean this is both a philosophical and substantive sense. Philosophically, the system holds this premise because it is predicated on the idea of a zero-sum game where transactions between individuals will always result in one party "losing." The apparent solution to this problem is simply to do away with inter-party transactions and let the central planning mechanism do it instead (although, this really doesn't change anything; to borrow a phrase from one of my favorite undergrad professors, "that just moves the problem over one," i.e., it just means that the private parties aren't the ones executing the transaction even though they is still a transaction going on and they are the ones involved).

Substantively, socialistic systems tend to punish what I would consider good economic choices because (a) those choices result (or would) in a material benefit for the party doing the choosing and (b) the systems are heavily imbibed with the idea that, when a party benefits materially, they must be exploiting other portions of society in someway. (I'll save the discussion of egalitarianism for another day).

Thus, there seem to be two things going on in my supposed inverse proportion between more and less free socio-economic systems:

1. A fundamental disagreement on what are "good" choices and what are "bad" choices. I believe this stems from a disagreement regarding whether the "game" of socio-economics in the real world is a zero-sum game (win-lose) or a positive sum game (win-win).


2. A fundamental disagreement over who/what is best equipped to make choices for individuals. I believe that this is more of a pragmatic difference: capitalistic systems tend to experience "spontaneous order" on account of all of the pieces of the machine aligning into the most efficient form possible due precisely to the fact that what is good for the part is good for the whole and vice versa. This spontaneous order has been extremely effective and one doesn't fix what isn't broken.
   
   On the other hand, socialistic systems seem to require centralized planning and administration in order to stop people from making choices since the system considers the choices private parties make to be inherently contradictory to the common good (because it is a zero-sum game, the party can be counted on to act in its own best interests, and the party can be counted on (at least enough of the time) to act effectively towards its own interests). Even if this weren't the case, socialistic economies would seem to require centralized planning and administration because they do not trust individuals to make good choices. Even if the system did trust private parties to make good decisions, it would still have to disallow it since all decisions would have to be made at the very highest level in order to ensure that it benefited as much of the society as possible - which would require vast amounts of data and resources unavailable to private parties.