Topic: General

Reagan in Leipzig

On a trip to East Germany last week I talked to a politician who had been involved in the 1989 Leipzig protests that led to the opening of the Berlin Wall. I asked him, “When Reagan said ‘Mr. Gorbachev, tear down this wall!’ in 1987, did you know that?” He said, yes, not from East German TV but from West German TV, which they could watch. And what did you think, I asked. “We thought it was good, but we thought it was impossible.” And yet just two years later, “peace prayers” in Leipzig’s Nikolaikirche turned into protests for liberalization and open borders. The Leipzig politician told me, “As it says in the Bible, we walked seven times around the inner city, and the wall came down.”

Then I went to a museum exhibit in Leipzig on the history of the German Democratic Republic. It was very impressive, with a large collection of posters, letters, newspapers, video, and more. Alas, it was all in German, so I had only a dim understanding of what it all said. I did get the impression that it wasn’t a balanced presentation of communism such as might be found in a Western museum; these curators knew that communism had been a nightmare, and they were glad to be out of it. As it happened, the only English words in the entire exhibit came in the collection of audio excerpts that greeted visitors in the entry foyer. And they were a familiar voice proclaiming “Mr. Gorbachev, open this gate!”

In Higher Education, Status Quo Is Status Quo

Yesterday, a House subcommittee working on the higher education portion of the 2007 federal budget approved a bill that would add $100 to the maximum Pell grant, bringing the ceiling to $4,150, and save numerous programs President Bush had slated for elimination. According to Inside Higher Ed, committee Democrats were on the warpath from the start, demanding more support for the nation’s college students:

After a few minutes of civility, House Democrats went on the attack, questioning their Republican counterparts’ commitment to helping working-class Americans afford college education.

“Here’s the story as I see it: Families spend more to send their children to college; their costs are not frozen,” said Rep. David Obey (D-Wis.)… “We’re not going to effectively deal with this by keeping the status quo. And this bill is worse than that. People who are supposed to be the focus wind up getting squeezed.”

Obey was right—keeping the status quo is not going to ground higher education’s skyrocketing price. But the problem is that the federal government is putting too much money into student aid, not too little! The political cycle that drives tuition is actually easy to understand: Some people complain that tuition is too high and demand that politicians make college “affordable.” Politicians, to get votes, provide student aid. Then schools, suddenly able to get more money, raise tuition. But wait, that makes college “unaffordable” again! And so it goes…

The data bear out that increases in student aid have driven tuition up. Indeed, aid has actually been increasing faster than tuition over the last ten years. According to College Board figures, between the 1995-96 and 2005-06 academic years, the average, inflation-adjusted, enrollment-weighted, cost of tuition, fees, room, and board rose 31 percent at private, four-year institutions, and 41 percent at public, four-year schools. Meanwhile, inflation-adjusted aid per full-time equivalent student – most of which came from the federal government—rose 61 percent, from $6,261 to $10,119! Tuition ballooned because politicians made sure it could… and then some!

To truly change the status quo, Congress will have to do the exact opposite of what Rep. Obey wants. It will have to cut student aid, not increase it. Unfortunately, that’s not what gets votes.

Jury Nullification and Perjury

Here’s an interesting personal account on the perils of jury nullification:

Julian Sanchez was called to jury duty in a drug case.

He was forced to decide whether to answer honestly when asked if he could convict a nonviolent drug offender (in which case he’d promptly be tossed from the jury), or to risk perjurying himself so he could nullify an immoral law once in deliberation.

Jury nullification is a right – perhaps even an obligation. Unfortunately, we’ve let prosecutors and courts effectively make it a crime.

We need a test case to move this issue before the Supreme Court. Prosecutors shouldn’t be allowed to hold the threat of perjury over potential nullifiers during voir dire.

Topics:

Holt & HSAs: Perhaps Fruitful after All

Matthew Holt writes:

The argument I want to have is a theoretical one about what would happen if we had essentially a completely personalized account-based system, as he advocates in his Large HSA proposal.

Holt raises important questions about what would happen under a system of large HSAs, where workers would get a large but limited tax break for cash that they (and/or their employer) deposit in an HSA – tax-free cash that workers could use for health savings, spending, or insurance as they wish.

Holt’s first concern is that “a significant number of people would take the money and buy no or minimal insurance coverage.” That some would choose to drop health insurance is certainly a possibility. I have two responses. First, that is already an option. People can and do choose to “go bare” and use their money for savings or other spending. The large HSA approach could marginally increase the number of people who do that, but only if the newly “bare” actually put money aside for future medical expenses. (Actually, large HSAs could even encourage today’s non-saving uninsured to start saving for their health expenses.) That brings me to my second response. If large HSAs do increase the number of people who “go bare,” the only people they would add to the ranks of the uninsured would be savers. As those “health savers” build up large balances in their large HSAs, it will occur to them, “Gee, one serious illness could wipe out all the money I’ve got stashed in my HSA.” How do people typically protect their assets from such unforseen losses? Insurance. So there’s a built-in incentive for health savers to purchase insurance.

Holt’s second concern goes like this: Were we to allow people to take all of their health benefits in the form of a cash contribution into a large HSA, and let them choose how to allocate those funds (among savings, spending, and insurance), that would begin a process known as “risk segmentation.” As I describe in my paper, some people would “go bare,” many would purchase less comprehensive health coverage, and many would migrate to the individual insurance market, where their premiums (typically) would be based on their individual health risk. What concerns Holt is that sicker people would have to pay more for health insurance, to the point where many sick people could not afford it.

My response is not that sick people should not be subsidized.  (I would prefer that they not be subsidized by government, but let’s assume that all options are open.) It is that sick people should not be subsidized through the vehicle of “insurance.” Attempting to deliver such subsidies through “insurance” destroys much of the good that insurance markets accomplish. Insurance premiums cease to deliver price signals about the costs of bad behaviors (e.g., smoking, obesity, waiting until you’re sick before you buy insurance). Many consumers drop insurance rather than pay the higher-than-necessary premiums, which increases the number of uninsured and tempts government to force people to buy insurance. Most importantly, when patients are spending someone else’s money, we lose a very important ally in the fight to curb wasteful medical expenditures: the patient. Instead of nagging providers about delivering value for the dollar, patients – especially the high-cost ones – line up with providers on the side of more spending. 

My preference is to let insurance markets do all they can do to improve efficiency, particularly by encouraging patients to pay directly more often. Some people will still require assistance, though with a more efficient health care sector their numbers should be smaller. We should subsidize those who remain directly, with cash.

I’m not sure how much of this Holt will find persuasive. Given that we agree that providers are riding the gravy train, I would think that having millions of patients nagging providers about value would hold some appeal.

He and I agree on something else. HSA supporters too often ignore these issues.

Liberaltarianism

I’ll add my two cents to the Kos post Gene Healy and Will Wilkinson address below.

I too find myself sympathizing more with the left these days than the right, but I suspect that’s merely because the right happens to be in power at the moment. I’ve always thought libertarians’ best bet is to forge alliances on an issue-by-issue basis.

Even that is proving difficult. I cover a lot of issues for which there ought to be some common ground with the left. But I can count on one hand the number of Democrats in Congress who care much about the effects of drug prohibition, for example, or how the DEA is hampering the treatment of pain. So any wholesale casting of lots with either side doesn’t seem all that productive to me.

Like Will, I’m also curious as to what issues Moulitsas might offer up for “libertarianization.” Recent events offer plenty of room for skepticism:

  • The left generally supported the Supreme Court’s decision in Raich (the five most liberal justices plus Scalia formed the majority in that case). There were a few exceptions. But by and large, the left approved. (Moulitsas himself took a more middling position). The reasoning I read from leftist pundits was that opposing it would have opened the door just a hair more for the short-lived Rehnquist federalism revolution. In other words, a ruling for Angel Raich would have put the slightest of curbs on federal power. And that was too much. In this case, the left couldn’t even bring itself to support a decision allowing sick people to get access to the medication they needed, because it might have hampered the ability of the federal government to enforce hiring quotas, or the EPA’s ability to save endangered, cave-dwelling toads in Texas (the latter argument was actually made by the Washington Post editorial board). It’s hard to take in the left’s reaction to Raich and believe modern American liberalism stands for much of anything anymore, save for raw, unfettered government power.
  • Same goes for the Kelo decision (again decided largely by the Court’s left). Some on the left at the time seemed to sympathize with the fifth-generation homeowner who loses his house to, say, Wal-Mart or General Motors, yet still couldn’t get too worked up over a decision that, after all, (1) struck a blow to demon “property rights” advocates, and (2) once again, gave more power to government.
  • How about the broader drug war? It’s true that a few of Kos’s diarists have been eloquent opponents of drug prohibition. Bully to them.

New at Cato Unbound: Robin Hanson on Creativity and Smart Machines

In his reply to Rise of the Creative Class author Richard Florida’s lead essay, George Mason economist Robin Hanson argues that creativity matters less for economic growth and the future of work than Florida thinks. According to Hanson, Florida’s emphasis on creativity distracts us from the prospect of a truly revolutionary change just over the horizon: rapidly exponential growth driven by smart machines. “An economy with intelligent machines could grow very rapidly indeed,” Hanson argues, “and induce rapidly falling human wages.” Will we be prepared if we’re busy making the Creative Class comfortable?

Show Me the Libertarianism

As Gene noted earlier, Markos “KosMoulitsas has put up an interesting big-think post over at DailyKos advancing the ideals of the “Libertarian Democrat,” about which, apparently, he is writing a book. Kos rightly points out that libertarians have very little in common with the GOP in its present incarnation. So what is to prevent libertarians from siding with the Democrats in elections? Before I delve into Kos’s answer, let me say what I think is the major barrier to a left/libertarian lovefest.

There is some evidence that personality traits predict party affiliation. For example, “openness to experience,” one of the “big five” personality traits, strongly correlates with ideological preference. According to psychologist Robert R. McCrae:

Open individuals have an affinity for liberal, progressive, left-wing political views, whereas closed individuals prefer conservative, traditional, right wing views. Indeed, a case can be made for saying that variations in experiential openness are the major psychological determinant of political polarities. [Paper abstract.]

Now, the following is far from rigorously scientific, but I think it’s pretty indicative. I have a talk on the psychology of persuasion that I’ve given to a number of libertarian groups. I’ve been giving out a short “openness to experience” quiz at the beginning (inspired by this fascinating presentation [ppt] by UVA psychologist Jonathan Haidt. ) The results? People who self-select to attend a libertarian talk about persuasion score extremely high on “openness to experience,” which predicts an audience with socially liberal preferences and largely Democratic party affiliation. But almost none of these people vote for Democrats. Why not?

Insofar as political commitment isn’t simply a matter of personality, or of reflexive adherence to what the people around you happen to believe, I think the barrier between liberals and libertarians has almost entirely to do with different answers to empirical questions about the way markets and governments function. The different syndromes of approving and disapproving sentiments about market and state characteristic of libertarians and welfare state liberals more or less follow upon these prior judgments of fact. Libertarians and liberals—classical liberals and welfare state liberals—are generally the same kind of people at the level of certain core aspects of personality that tend to influence political affiliation. The difference, then, is likely a function of the way different sets of beliefs mediate the expression of personality.

The thing that keeps me from throwing my lot in with Democrats has everything to do with their consistent underestimation of the efficacy and justice of institutions that make the most of the information carried by market prices, and their consistent overestimation of the efficacy and justice of bureaucratic political management. Love markets more, and love the state less, and libertarians may come a knockin’. A recent Pew survey reported that only 50 percent of the people they identify as libertarians either identify as or lean toward Republicans, while a healthy 43 percent identify as or already lean toward Democrats. Libertarians may be ripe for the pickin’.

Now, here’s Kos:

The problem with this form [the usual form] of libertarianism is that it assumes that only two forces can infringe on liberty – the government and other individuals.

The Libertarian Democrat understands that there is a third danger to personal liberty – the corporation. The Libertarian Dem understands that corporations, left unchecked, can be huge dangers to our personal liberties.

I think Kos underestimates just how wary of corporations libertarians generally are. Classical liberal political economy tells us that the greater the scope and power of state coercion, the stronger the incentive for economically powerful private interests, such as corporations, to use it to their own advantage, squashing competition, consolidating advantage, and channeling taxpayer dollars into corporate coffers. Libertarians have never believed in leaving corporations unchecked. The way you check corporations is by taking political power off the table.

Here is Kos’ key paragraph, which contains the real division between classical and statist liberals:

A Libertarian Dem believes that true liberty requires freedom of movement—we need roads and public transportation to give people freedom to travel wherever they might want. A Libertarian Dem believes that we should have the freedom to enjoy the outdoor without getting poisoned; that corporate polluters infringe on our rights and should be checked. A Libertarian Dem believes that people should have the freedom to make a living without being unduly exploited by employers. A Libertarian Dem understands that no one enjoys true liberty if they constantly fear for their lives, so strong crime and poverty prevention programs can create a safe environment for the pursuit of happiness. A Libertarian Dem gets that no one is truly free if they fear for their health, so social net programs are important to allow individuals to continue to live happily into their old age. Same with health care. And so on.

It’s pretty clear that Kos is pushing a program of positive liberty rather in opposition to the classical libertarian notion of liberty as non-interference. I fear that once you cash out precisely what Kos has in mind by ensuring that people aren’t “unduly exploited by employers,” whatever that means, or by “poverty prevention” and “social net programs,” we’ll discover something disappointingly like the Democratic party status quo. In which case, Kos will be simply declaring a pretty standard set of Democratic policies as “libertarian,” in defiance of the normal understanding of the term. Is this a Machiavellian attempt at the dark Lakovian arts of re-framing? Or, more hopefully, a reflection of a sincere wish to court libertarians away from a lately abusive alliance with Republicans?

If it is the latter, then simply recognizing that the 2nd Amendment is in fact part of the US Constitution and using the word ‘libertarian,’ is not going to much help Kos’ cause. As Gene did, it really is worth pointing out common ground between libertarians and the left. Nobel-winning libertarian heroes such as Friedrich Hayek and Milton Friedman have supported a tax-funded safety net, and so would I, if it was sanely designed. Now, if Democrats like Kos really meant it, and started thinking about market and government institutions in anything remotely like the way Friedman and Hayek were thinking when they proposed their minimum income policies, or started thinking about environmental policy like PERC, or threw away their silly vestigial Marxist model of agonistic employee-employer relationships — which is just to say, if Democrats actually become more recognizably libertarian— then I think the psychological evidence supports the hypothesis that personality-compatible libertarians would flock to the Democrats in droves.

But talk is cheap. So show me the libertarianism.