Archives: November, 2013

Dallas Buyers Club Is a Terrific Libertarian Movie

Tim Lynch was right. Dallas Buyers Club is a terrific movie with a strong libertarian message about self-help, entrepreneurship, overbearing and even lethal regulation, and social tolerance. Matthew McConaughey, almost unrecognizable after losing 40 pounds, plays Ron Woodroof, a homophobic electrician in 1985 who learns he has AIDS and has 30 days to live. There’s lots of strong language in his denunciation of the kinds of people who get AIDS, which he certainly is not. But after doing some research, he asks his doctor for AZT, the only drug for HIV/AIDS then available, but he wasn’t eligible for the trials then in process. He turns to the black market, finds his way to Mexico, encounters a doctor who tells him that AZT is toxic and that there are better vitamins and drugs, and beats his original prognosis. As it occurs to him that there are plenty of other people in Dallas who could use these drugs, he sees an opportunity to make some money – if he can only learn to deal with gay people.

Soon he’s setting up a “buyers club,” in an attempt to evade FDA regulations on selling illegal or non-approved drugs. He’s got customers – oops, potential members – lining up. He’s on planes to Japan and Amsterdam to get drugs not available in the United States. And at every turn he’s impeded and harassed by the FDA, which insists that people with terminal illnesses just accept their fate. Can’t have them taking drugs that might be dangerous! You’ll be surprised to see how many armed FDA agents it takes to raid a storefront clinic operated by two dying men.

Here’s a Cato study on AIDS and the FDA from 1986. Here’s the original 1992 magazine story about the Dallas Buyers Club, published just before Ron Woodroof died.

Go see Dallas Buyers Club.

New Study Completely Undermines DOJ’s Anti-School Choice Lawsuit

It’s long past time for the U.S. Department of Justice to drop its embarrassing lawsuit which would keep black kids in failing schools.

The DOJ sued Louisiana earlier this year, claiming that its school voucher program may be negatively impacting desegregation efforts. When it became apparent that the DOJ’s evidence amounted to the thinnest of gruel, everyone from Gov. Bobby Jindal and Rep. Eric Cantor to the Washington Post called on the Obama administration to drop its frivolous lawsuit. Even after two PhD students at the University of Arkansas released a study estimating that Louisiana’s school voucher program had a positive impact on racial integration, the DOJ refused to back down. I wrote then:

If the DOJ’s case was already like a house of cards resting atop a rickety stool, then the new University of Arkansas study kicked out the stool. The study, “The Louisiana Scholarship Program,” by Anna J. Egalite and Jonathan N. Mills, finds that the transfers resulting from the LSP vouchers statewide “overwhelmingly improve integration in the public schools students leave (the sending schools), bringing the racial composition of the schools closer to that of the broader communities in which they are located.” Moreover, in the districts that are the focus of the DOJ litigation, the “LSP transfers improve integration in both the sending schools and the private schools participating students attend (receiving schools).”

Now a study sponsored by the state of Louisiana finds that the voucher program improves racial integration in 16 of the 34 districts under federal desegregation orders while having little to no impact on the remainder. Whereas the University of Arkansas study produced estimates based on publicly available data, the Louisiana study reflects the actual effect of the program during the 2012-13 school year. Politicoreports:

Louisiana hired Boston University political science Professor Christine Rossell to analyze the effect of vouchers in 34 districts in the state under desegregation orders. Rossell found that in all but four of the districts – some of which are majority white, some majority black and some more evenly split – vouchers improved or had no effect on racial imbalance. And in the districts where racial imbalance worsened, the effects were “miniscule.”

Louisiana’s voucher program allows students to transfer out of failing public schools into private schools using public funds. The majority of the students participating in the 2012-13 school year — almost 76 percent — were non-white. A total of 551 students used the vouchers.

In the 2013-14 school year, more than 85 percent of the nearly 6,800 voucher students were black. So long as the DOJ refuses to drop its lawsuit — which would have opposite of its supposedly intended effect — the Obama administration’s message to these students is: “If you don’t like your school, you can’t leave your school.”

Demand for Smaller Government Remains Strong

Whether the recent election was good news for tea party Republicans, establishment Republicans, or activist Democrats, the Washington Post notes that 

Obama’s larger project of redefining what government should do has been stymied by steady Republican opposition and public disenchantment with political leaders….While Obama has framed the question in different ways over the past five years, he has consistently sought to convince Americans that well-run government is uniquely positioned to help secure their economic prosperity. 

A sidebar graphic reminds us that

Majorities have consistently preferred a smaller government with fewer services to a larger one with more services. 

Here’s the chart accompanying the article:

Smaller Government Polls

The “smaller government” question is incomplete. It offers respondents a benefit of larger government–“more services”–but it doesn’t mention that the cost of “larger government with more services” is higher taxes. The question ought to give both the cost and the benefit for each option. A few years ago a Rasmussen poll did ask the question that way. The results were that 64 percent of voters said that they prefer smaller government with fewer services and lower taxes, while only 22 percent would rather see a more active government with more services and higher taxes. A similar poll around the same time, without the information on taxes, found a margin of 59 to 26 percent. So it’s reasonable to conclude that if you remind respondents that “more services” means higher taxes, the margin by which people prefer smaller government rises by about 9 points. With that in mind, I’ve adjusted the Post’s poll numbers by four points in each direction, to approximate what the numbers would look like if the Post included “higher taxes” in its question. The revised figure makes even more clear why presidents have difficulty persuading people to increase the size of government:

Smaller Government with Taxes

Energy Subsidies vs. Energy Progress

If we did a poll of free market economists about federal programs that are the most wasteful and ridiculous, energy subsidies would be near the top of the list. It’s not just that energy subsidies make no sense in economic theory, but also that there are so many news stories highlighting the folly that it’s hard to see why policymakers persist in wasting our money.

From the Washington Post on Friday:

The Department of Energy failed to disclose concerns about a green-technology company that won $135 million in federal funding but ended up filing for bankruptcy in September, according to a watchdog report released this week. DOE Inspector General Gregory Friedman noted that the firm, San Francisco-based Ecotality, is still due to receive $26 million from the agency for testing electric vehicles.

The Energy Department awarded the firm $100 million in 2009 Recovery Act funding for that initiative, in addition to a combined $35 million from a separate program to help pay for testing vehicles

Ecotality is among a number of failed firms that received stimulus funding through an Obama administration initiative to support green-technology companies during the recession. Solyndra, a Silicon Valley-based solar-panel maker, stands as perhaps the most high-profile example. The business collapsed after receiving more than a half-billion dollars in Recovery Act money. Other examples include Beacon Power , a Massachusetts-based company that received at least $39 million from the federal government, along with Michigan-based battery manufacturers LG Chem and A123, which landed grants worth $150 million and $249 million, respectively.

On Sunday, the Washington Post profiled the economic chaos, central planning, and wasteful lobbying generated by federal mandates for cellulosic ethanol:

Congress assumed that it could be phased in gradually, but not this gradually. This year refiners were supposed to mix about one billion gallons of it into motor fuel. So far, there has been hardly a drop. More than a dozen companies have tried and failed to find a profitable formula combining sophisticated enzymes and the mundane but costly and labor-intensive job of collecting biomass.

To reach the ethanol goals set by Congress, the government came up with a byzantine implementation plan. Each gallon of renewable fuel has its own 38-character number, called a “renewable identification number,” to track its use and monitor trading. There are different types of these RINs for different biofuels, including corn-based ethanol, cellulosic ethanol and biodiesel.

In February of each year, refiners who fail to provide enough renewable fuel to the blenders who mix ethanol and gasoline must buy extra RIN certificates. When companies have extra credits for renewable fuels, the RINs can be banked and sold in later years. If there are not enough renewable fuels overall, the price of RINs rises — and provides an incentive to produce more.

And in a related story on ethanol, the Post found:

Five years ago, about a dozen companies were racing to start up distilleries that would produce enough cellulosic ethanol to meet the congressionally mandated target of 16 billion gallons a year by 2022 … The Agriculture Department provided a $250 million loan guarantee for the Coskata plant. Today, most of the dozen contenders have gone out of business or shelved their plans.

Federal subsidies and mandates for ethanol and other energy activities are sadly causing the diversion of billions of dollars of capital to uneconomic uses. That’s the bad news.

But there is good news on the energy front, which comes from far outside of Washington. The Wall Street Journal last weekend profiled “the little guys,” the market entrepreneurs, who were behind the shale energy revolution:

The experts keep getting it wrong. And the oddballs keep getting it right. Over the past five years of business history, two events have shocked and transformed the nation. In 2007 and 2008, the housing market crumbled and the financial system collapsed, causing trillions of dollars of losses. Around the same time, a few little-known wildcatters began pumping meaningful amounts of oil and gas from U.S. shale formations. A country that once was running out of energy now is on track to become the world’s leading producer.

The resurgence in U.S. energy came from a group of brash wildcatters who discovered techniques to hydraulically fracture—or frack—and horizontally drill shale and other rock. Many of these men operated on the fringes of the oil industry, some without college degrees or much background in drilling, geology or engineering.

Thank goodness for the oddballs. And thank goodness for the market system that channels the brashness into creating growth for all of us, not just the favored few getting handouts from Washington.

Venezuela Is Spiraling out of Control

As the economic situation rapidly worsens in Venezuela, the government is growing increasingly authoritarian and is now actively undermining the foundations of the country’s already deteriorated social fabric.

On Friday night, President Nicolás Maduro ordered the military to seize the stores of a consumer electronics retail chain and confiscate all the goods in order to sell them at “a fair price.” Soon afterwards large crowds gathered outside appliance stores all over the country, leading in some instances to mass looting. The announcement came one day after the Central Bank reported that the inflation rate in October was 5 percent, leading to an annual rate of 54 percent. However, as our colleague Steve Hanke documents on his Troubled Currencies Project, Venezuela’s implied annual inflation rate is actually 320 percent.

The government claims that runaway inflation and pervasive shortages of basic goods are part of an “economic war” being waged by the United States and the local “parasitic bourgeois class.” Thus, Maduro is now mobilizing his troops against the perceived enemy. The owners of two of the retail chains have been detained under charges of “gouging” and “usury.”

Showing his economic illiteracy, Maduro said that the Central Bank should take note of operations, wondering out loud: “If we are lowering products’ prices by one hundred percent, this should impact the inflation rate, right?” Well, no. As long as the Central Bank continues to print money to finance the government, inflation will continue to rise. However, by actively encouraging outright plunder, the government is deliberately destabilizing Venezuela’s society probably as a means for taking further radical measures.

Last April when Nicolás Maduro officially assumed the presidency after a very questionable victory in the polls, many people speculated that he would be more conciliatory than his predecessor Hugo Chávez. That proved to be wishful thinking. It is clear now that under Maduro the worst has yet to come in Venezuela.

Jury Nullification Editorial

From the Washington Times:

Jury nullification is rarely discussed by lawyers at the bar, either the courtroom bar or the bar on the corner, but jury nullification has been with us since the time of the Founding Fathers. Alexander Hamilton wrote in the Federalist Papers that trial by jury is the “very palladium of free government,” serving as a check against “arbitrary methods of prosecuting pretended offenses” that are the “engines of judicial despotism.” There’s no better example than juries nullifying the effects of the Fugitive Slave Act of 1850, which required that slaves captured in free states be captured and returned in chains to their owners. Juries often preserved the freedom of these slaves by refusing to convict runaway slaves….

Jury-nullification activists in New Jersey and Florida have paid for their advocacy of jury rights. Several have been arrested and charged with “jury tampering” for distributing handbills at the courthouse that essentially publish the text of the New Hampshire law. This demonstrates clearly the responsibility of juries to serve as a check against judges and prosecutors who may think they’re the last word in all matters of the law. Respect for the law and the courts is necessary for the good of all in a free society, and sometimes, as the number of frivolous and oppressive laws multiply, a little nullification can be a tonic, and a reminder to the lawyers, including judges, of who’s really the boss.

Cato is set to republish our book, Jury Nullification: The Evolution of a Doctrine soon.

The Dallas Buyers Club

I have not yet seen the new movie, The Dallas Buyers Club, but it looks pretty darn interesting. Matthew McConaughey plays the true-life lead character, Ron Woodroof, a homophobic party boy who is diagnosed with HIV and is given just 30 days to live. 

When the government-approved drugs don’t help him, Woodroof does not go gently into the night (and to his grave). Instead, he travels abroad to buy medicine in other countries and on the black market and then he returns to sell them to others similarly situated here in the United States. The film evidently doesn’t gloss over the fact that he seeks a profit as he engages in these acts. (That’s a trait Woodroof shares with other human beings in the drug business, though the film does not dwell on that.) 

Agents with the Food and Drug Administration and others patiently explain to Woodruff that “unauthorized” drugs might be detrimental to his health—that’s why drug regulations were put on the law books! When Woodruff decides (all by himself—without any advanced degrees in medicine!) that he will keep operating outside the law in order to find life-saving drugs, federal officials lose patience and seek to have him arrested. That’ll be for his own good and for the betterment of all Americans.

The Woodroof story took place in 1986, but it is a cautionary tale about what happens when the government steps in and assumes the power to make health decisions for us—whether we like it or not.

For related Cato scholarship, go here, here, and here.

Film trailer below the jump: