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My Body, Their Choice

peter.suderman@reason.org (Peter Suderman) — Wed, 18 Nov 2009 15:39:00 EST

"My body, my choice" has long been a rallying cry for abortion-rights advocates on the left, many of whom have recently been vocal supporters of the Democratic health care reform agenda. But as abortion advocates are now discovering, abortion rights aren't as easily compatible with health care reform as they might have once thought. Turns out the more government gets involved in health care, the more difficult it becomes to truly retain choices about one's body.

When House Speaker Nancy Pelosi (D-Calif.) first scheduled the vote on health care reform, it remained unclear whether she had enough support to pass the bill. Even amongst Democrats, there were still concerns, arguably the most important of which was whether or not the bill would allow federal money to fund abortions. At the last minute, Pelosi, working with Catholic bishops and pro-life Democrats, allowed a vote on an amendment sponsored by Rep. Bart Stupak (D-Mich.).

The text of the three-page amendment was straightforward: "No funds authorized or appropriated by this Act...may be used to pay for any abortion or to cover any part of the costs of any health plan that includes coverage of abortion." The amendment allowed exceptions for medical emergencies that put a woman at risk of death, and maintained that nothing in the amendment's language would prohibit a non-federal entity—whether a person or a state or local government—from purchasing supplemental coverage for abortions, provided that any such purchase isn't made using federal subsidies.

The amendment passed, and may have been the deciding factor in House passage of the bill. But now the amendment is causing trouble for Democrats in the Senate. And indeed, many liberals who support both health care reform and abortion rights now find themselves in a quandary, supporting health care reform while decrying an amendment that was likely the key to its passage.

That's because, given the scope of congressional health care reform proposals, the relatively straightforward prohibition on using federal funds to pay for abortions could have far-reaching consequences.

Most analyses of the amendment agree that the most significant effects will be in the individual insurance market. Under the reform bills now being considered, anyone who did get health insurance through his or her provider would be required to purchase it from an exchange—a government-managed marketplace of highly regulated insurers. The vast majority—an estimated 86 percent—of those who purchase their insurance this way would receive government subsidies, and thus would be barred from spending that money on any plan that covers abortion. These individuals could still purchase a separate abortion rider with their own funds, but the requirement that this be an additional (and unsubsidized) step almost certainly means that fewer individuals will end up with abortion coverage than would have otherwise.

Outside the exchange, there's some debate about whether the amendment would technically bar abortion coverage from some private, employer-provided insurance plans, though it appears less than likely. At The New Republic, Jeffrey Rosen writes that Stupak's amendment "wouldn’t immediately impinge on the roughly 60 million women ages 18-64 who presently get health insurance through their jobs or their spouses’ jobs." And Brian Buetler, a Talking Points Memo reporter who has written about the Stupak amendment, says that "the least-impacted women will be those whose employers (or whose spouses' employers) provide them insurance," but also notes that "over time, the reform packages under consideration allow ever larger employers to participate in the exchange."

Still, although it's not clear what the limits of Stupak's reach might be, some of the stronger warnings about its effects are clearly mistaken. At The American Prospect, for example, Ann Friedman wrote that "Stupak would actually prevent employer-based plans—ones that are not supported by your tax dollars—from covering abortion." But the analysis she links to argues that employer-provided plans could be affected because they are touched by federal funds used to pay for reinsurance and small-business wellness programs—in other words, that they would be barred from offering abortion coverage because they make use of those pesky taxpayer dollars.

For pro-choice, pro-reform liberals, this is exactly the problem: On the one hand, they support a massive expansion of government funding and bureaucratic control into nearly every corner of the health care system. On the other hand, they're incensed that the government would make rules about how that funding can be used.

It's grimly ironic: After spending much of the year ridiculing opponents of health care reform for insisting that reform would put government in between doctors and patients, they're now up in arms that government has gotten involved in decisions they believe should only be made by women and their doctors.

But if the history of bureaucracy teaches us anything, it's that what the government funds is what the government controls. Or, to put it another way: When the government gets involved in making everyone's health care decisions, it may be your body, but it won't be your choice.

Peter Suderman is an associate editor at Reason magazine. This column first appeared at Reason.com.

Freedom to Confuse

info@reason.org (David Harsanyi) — Wed, 11 Nov 2009 15:32:00 EST

If liberals are so disturbed by Congress' dictating whether abortion is a legitimate health care issue or not, it only makes sense that they should be equally troubled by government management of other health care decisions.

Undoubtedly, this is zealously naive thinking on my part. Reaching such a conclusion demands a modicum of consistency. And as we've seen, health care "reform" is an ideological crusade immune from logic.

Take the torrent of hypocrisy that spilled from the jilted pro-choice wing of the Democratic Party after a House amendment to the health care reform bill that would tighten a ban on federal funds for abortions passed by a vote of 240-194—a more substantial mandate against abortion funding, incidentally, than for health care reform.

Rep. Diana DeGette (D-Colo.), immediately began collecting signatures to oppose what she called "an unprecedented and unacceptable restriction on women's ability to access the full range of reproductive health services to which they are lawfully entitled."

Rep. Rosa DeLauro (D-Conn.), went further, adding that the amendment "attempts an unprecedented overreach into women's basic rights and freedoms in this country."

Overreach? Unprecedented? Basic rights? Freedoms?

Right words, wrong issue.

I have no doubt that members of the progressive wing of Congress—folks who generally support a single-payer plan that would eradicate choice and freedom in health care—believe that government's failing to give you something is indistinguishable from government's taking something away from you.

Yet even though no one would be stripped of her right to have an abortion under this legislation, the vast majority of citizens would have to deal with a cluster of new mandates and more than 100 new government bureaucracies to enforce them.

Citizens would be ordered to buy insurance or face jail time. Americans would answer to a "commissioner of health choices" and pay extra taxes for having the gall to buy top-of-the-line insurance plans. They no longer would have the right to choose health savings accounts or high-deductible plans or, in most cases, flexible spending accounts.

That's just for starters.

Accordingly, DeGette, DeLauro, and all who voted for America's Affordable Health Choices Act (sic) should refrain, for credibility's sake, from evoking "choice" or "freedom," as they voted against those principles this past week.

President Barack Obama attempted to quell this mounting problem when he told ABC News that Congress should alter the language on abortion because he had "laid out a very simple principle, which is this is a health care bill, not an abortion bill."

Candidate Obama, on the other hand, clearly stated in a speech in front of a Planned Parenthood Action Fund meeting in 2007 that "reproductive care is essential care" and "basic care, and so it is at the center and at the heart of the plan that" he proposed.

So abortion not only is essential care but also was at "the heart" of what the president had in mind for reform. (A courageous reporter might ask the president where he stands on reproductive care today. Is it essential? If not, why should federal funding be banned?)

When DeGette tells The Washington Post that 40 Democrats will vote against a final bill unless the abortion amendment is removed, she is only holding the president to his word—however rickety his word and her logic may be.

I must concede, then, that there is a bright spot within this debate. If reform were to die on DeGette's selective "choice" and "freedom," it would save, ironically enough, many genuine choices and freedoms in our health care system.

It would be a splendid irony, indeed.

David Harsanyi is a columnist at The Denver Post and the author of Nanny State. Visit his Web site at www.DavidHarsanyi.com. This column first appeared at Reason.com.

Ayn Rand on the Economic Crisis

adam.summers@reason.org (Adam Summers) — Mon, 09 Nov 2009 12:51:00 EST

Since we at Reason have been celebrating the ideas of Ayn Rand lately (see here and the related articles and videos posted at reason.org and reason.tv), I thought I would share with you some of her thoughts on the economic crisis—in 1962. Unfortunately, it seems our national economic IQ has not improved much since then.

Since "economic growth" is today's great problem, and our present Administration is promising to "stimulate" it—to achieve general prosperity by ever wider government controls, while spending an unproduced wealth—I wonder how many people know the origin of the term laissez-faire?

France, in the seventeenth century, was an absolute monarchy. Her system has been described as "absolutism limited by chaos." The king held total power over everyone's life, work, and property—and only the corruption of government officials gave people an unofficial margin of freedom.

Louis XIV was an archetypical despot: a pretentious mediocrity with grandiose ambitions. His reign is regarded as one of the brilliant periods of French history: he provided the country with a "national goal," in the form of long and successful wars; he established France as the leading power and the cultural center of Europe. But "national goals" cost money. The fiscal policies of his government led to a chronic state of crisis, solved by the immemorial expedient of draining the country through ever-increasing taxation.

Colbert, chief adviser of Louis XIV, was one of the early modern statists. He believed that government regulations can create national prosperity and that higher tax revenues can be obtained only from the country's "economic growth"; so he devoted himself to seeking "a general increase in wealth by the encouragement of industry." The encouragement consisted of imposing countless government controls and minute regulations that choked business activity; the result was dismal failure.

Colbert was not an enemy of business; no more than is our present Administration. Colbert was eager to help fatten the sacrificial victims—and on one historic occasion, he asked a group of manufacturers what he could do for industry. A manufacturer named Legendre answered: "Laissez-nous faire!" ("Let us alone!")

Apparently, the French businessmen of the seventeeth century had more courage than their American counterparts of the twentieth, and a better understanding of economics. They knew that government "help" to business is just as disastrous as government persecution, and that the only way a government can be of service to national prosperity is by keeping its hands off.

We should remember this when we hear claims that a "public option" for health insurance will somehow improve private-sector competition, improve services, or lower costs. Rand continues:

Regardless of the purpose for which one intends to use it, wealth must first be produced. As far as economics is concerned, there is no difference between the motives of Colbert and of President Johnson. Both wanted to achieve national prosperity. Whether the wealth extorted by taxation is drained for the unearned benefit of Louis XIV or for the unearned benefit of the "underprivileged" makes no difference to the economic productivity of a nation. Whether one is chained for a "noble" purpose or an ignoble one, for the benefit of the poor or the rich, for the sake of somebody's "need" or somebody's "greed"—when one is chained, one cannot produce.

There is no difference in the ultimate fate of all chained economies, regardless of any alleged justifications for the chains.

[The above excerpts are taken from Rand's essay "Let Us Alone!" based on a column in the Los Angeles Times, August 1962, and included in her book Capitalism: The Unknown Ideal.)

Sadly, nearly 50 years since Rand wrote this, the United States is still pursuing the failed policies of "economic stimulus," bailouts, and ever-increasing government control of numerous industries. The sooner we learn the economic lessons of Rand, the sooner we may return to a state of greater prosperity and freedom for ourselves and future generations.

P.S. For those interested in learning a bit more about Ayn Rand, the Cato Institute recently held an interesting book forum with the authors of two new books about the life and impact of Rand. The participants included Jennifer Burns, author of Goddess of the Market: Ayn Rand and the American Right, and Anne C. Heller, author of Ayn Rand and the World She Made. The video and podcast of the event are available here. See also the interview Ms. Burns did with Reason magazine Senior Editor Katherine Mangu-Ward here.

Re-Examining Rand

shikha.dalmia@reason.org (Shikha Dalmia) — Wed, 04 Nov 2009 15:16:00 EST

Rand has a profound effect on people, especially the youth, when they first read her. But over time she loses her appeal. This makes it very hard to build a social movement around her ideas.

Rand's adherents blame all this on the faulty philosophical principles of society--especially on issues of morality. But replacing false ideas with true ones is precisely what transformative figures do, and certainly what Rand, who firmly believed in the power of reason and truth, was hoping to do. Surely, if she had witnessed the events of last year--the government bailout of banks, the takeover of auto companies, the looming socialization of health care--she'd be wondering where she went wrong. Or, to use her lingo, she'd be "checking her premises."

So where did she go wrong?

Read my latest Forbes column here to find out.

In Honor of Ayn Rand: Alan Greenspan on the Gold Standard and Economic Freedom (1966)

adam.summers@reason.org (Adam Summers) — Mon, 02 Nov 2009 14:12:00 EST

Earlier I wrote a post on the gutting of Rep. Ron Paul's bill to audit the Federal Reserve. In honor of Reason's Radicals for Capitalism spotlight on Ayn Rand this week, allow me to expand on the topic of monetary policy by using the words of a member of Rand's social and intellectual circle: Alan Greenspan.

Ironically enough, before becoming chairman of the Fed, Greenspan was an avid proponent of a gold standard and critic of the government fiat money system (a system based on paper money rather than backed by a precious metal such as gold, in which paper money can be created "out of thin air," thus causing inflation and the erosion of the value of the dollar). Greenspan contributed to Rand's newsletter and other publications.

In a 1966 essay entitled, "Gold and Economic Freedom," reprinted in Rand's Capitalism: The Unknown Ideal, Greenspan wrote:

Gold and economic freedom are inseparable, . . . the gold standard is an instrument of laissez-faire and . . . each implies and requires the other.

What medium of exchange will be acceptable to all participants in an economy is not determined arbitrarily. Where store-of-value considerations are important, as they are in richer, more civilized societies, the medium of exchange must be a durable commodity, usually a metal. A metal is generally chosen because it is homogeneous and divisible: every unit is the same as every other and it can be blended or formed in any quantity. Precious jewels, for example, are neither homogeneous nor divisible.

More important, the commodity chosen as a medium must be a luxury. Human desires for luxuries are unlimited and, therefore, luxury goods are always in demand and will always be acceptable. . . .

The term "luxury good" implies scarcity and high unit value. Having a high unit value, such a good is easily portable; for instance, an ounce of gold is worth a half-ton of pig iron. . . .

Under the gold standard, a free banking system stands as the protector of an economy's stability and balanced growth.

In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value. If there were, the government would have to make its holding illegal, as was done in the case of gold. . . .

The financial policy of the welfare state requires that there be no way for the owners of wealth to protect themselves. This is the shabby secret of the welfare statists' tirades against gold. Deficit spending is simply a scheme for the "hidden" confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists' antagonism toward the gold standard.

One might wonder how a man who wrote so passionately in opposing a monetary scheme that allows the government to print money backed by nothing, engage in deficit spending and the expansion of government, and erode the value of the dollar through the hidden tax of inflation could effectively become the nation's economic dictator-in-chief. Rep. Paul is as confused by this as any other gold standard and free banking advocate. In a 2008 interview with The Daily Reckoning, Paul discussed this apparent enigma.

Q: You and former Fed Chairman Alan Greenspan have famously knocked heads over the years. Can you tell me a little about that? Why it is that you seemed to be at times the only person that seemed to be keeping a very close eye on the goings-on at the Federal Reserve?

Ron Paul: Alan Greenspan from '87 up to over a year ago was the Chairman of the Federal Reserve Board, the U.S. central bank. I see the central bank and the Federal Reserve System as unconstitutional in that they have this tremendous power and a monopoly control over money and credit, which is an ominous power. Greenspan, or any chairman of the Federal Reserve, is more powerful than even our president because he has so much control over the economy. But the interesting thing about Alan Greenspan was that he was a true believer in Austrian economics and in the gold standard. So in a private conversation I had with him I told him that I followed what he taught. In the 1960s he was very clear on his position on gold, that he liked gold and rejected the fiat monetary system, because if you have fiat money it leads to deficits and to the expansion of government - all of which he opposed.

So it's rather ironic that now that Dr. Greenspan accepts the paper monetary system (which is a fiat system). He literally was the participant in these deficits, and I would bring this up to him in the committee because the Federal Reserve Board's chairman always condemn deficits; it's always Congress's fault. But my point was Congress couldn't do it if they weren't complicit: If we don't want a tax and we can't borrow and then they have to print the money in order to accommodate the big spenders. If the Federal Reserve couldn't do that, interest rates would go up and there would be restrain on spending. So he literally became one who once believed in the restraints of the gold standard to one who was converted into becoming the Federal Reserve Board Chairman - the one that ran this whole system of fiat money and central economic control. I would chastise him quite frequently about how can he be for a free market when he endorses a system of central economic planning by controlling the money? And when you think about it, the monetary unit is used in every single transaction, so if you can control one half of every single transaction you have a lot of power, and a lot of control.

Q: There is a story you are asked to tell often, about having Alan Greenspan sign a copy of a book called Gold and Economic Freedom. What happened there?

Ron Paul: In the 1960s, I was studying and reading Austrian economics and I received the Objectivist newsletter that Ayn Rand put out. Alan Greenspan had a piece in the newsletter and it was a delightful article - it said all the things I believed in. One day, we had a personal meeting with Greenspan just to get our pictures taken and chat for a few minutes, and we knew that was coming up. So I dug out my original copy, and I took that with me, so when we were getting ready to get our picture, I flipped it open to his article and said, "Do you remember this?" and he said he did. Then I asked him to autograph it, so he got out his pen and he was signing it, and I said, "Do you want to write a disclaimer on this article?" He said, "No, I wouldn't do that. I just read this recently and I fully support everything I wrote." Which is interesting because you don't know exactly what he means. If he fully supports what he wrote, why was he managing a monetary system that was exactly opposite of what he wrote in 1966?

Rep. Ron Paul's Bill to Audit the Federal Reserve 'Gutted' in Committee

adam.summers@reason.org (Adam Summers) — Mon, 02 Nov 2009 14:03:00 EST

A WorldNetDaily story reports that the bill sponsored by Rep. Ron Paul (R-TX) that would call for an audit of the Federal Reserve has been "gutted" in a congressional committee. The legislation, H.R. 1207, would also close loopholes that prevent transparency of Fed actions. It currently has over 300 co-sponsors in the House.

In a telephone interview with a Bloomberg reporter, Paul said that the bill had been stripped of measures closing loopholes that protect the Fed and blamed Rep. Melvin "Mel" Watt (D-NC), chairman of the House Financial Services Committee's Subcommittee on Domestic Monetary Policy and Technology, for ripping the teeth out of the legislation. Watt has significant ties to the banking industry and received the largest share of his 2008 campaign contributions—over one-third of his total contributions for the cycle—from the finance, insurance, and real estate industry. Watt's four largest contributors were Bank of America, headquartered in Watt's district in Charlotte, Wachovia Corp., American Express, and the American Bankers Association.

Paul vowed to try to restore the gutted provisions of the bill through an amendment when it comes to the House floor for a vote.

The veil of secrecy that shrouds the Fed has only made it more mysterious, and monetary policy that much more complex and obscure, to the average American taxpayer. Political discourse over subjects like deficits and inflation tends to focus on fiscal policy, but this is only one half of the equation. It is time for more people to ask why the Fed should have a government-granted monopoly for the creation of money and what it does with its powers to alter the value of money and interest.

Below is an excerpt of the WND article quoting Rep. Paul on some of his criticisms of the Fed:

Paul long has been a critic of the secrecy of the Federal Reserve.

"Throughout its nearly 100-year history, the Federal Reserve has presided over the near-complete destruction of the United States dollar," he said earlier. "Since 1913, the dollar has lost over 95 percent of its purchasing power, aided and abetted by the Federal Reserve's loose monetary policy."

"Since its inception, the Federal Reserve has always operated in the shadows, without sufficient scrutiny or oversight of its operations," Paul said when the plan to audit the Fed was introduced. "While the conventional excuse is that this is intended to reduce the Fed's susceptibility to political pressures, the reality is that the Fed acts as a foil for the government. Whenever you question the Fed about the strength of the dollar, they will refer you to the Treasury, and vice versa. The Federal Reserve has, on the one hand, many of the privileges of government agencies, while retaining benefits of private organizations, such as being insulated from Freedom of Information Act requests."

Paul has warned, "The Federal Reserve can enter into agreements with foreign central banks and foreign governments, and the GAO is prohibited from auditing or even seeing these agreements. Why should a government-established agency, whose police force has federal law enforcement powers, and whose notes have legal tender status in this country, be allowed to enter into agreements with foreign powers and foreign banking institutions with no oversight? Particularly when hundreds of billions of dollars of currency swaps have been announced and implemented, the Fed's negotiations with the European Central Bank, the Bank of International Settlements, and other institutions should face increased scrutiny, most especially because of their significant effect on foreign policy. If the State Department were able to do this, it would be characterized as a rogue agency and brought to heel, and if a private individual did this he might face prosecution under the Logan Act, yet the Fed avoids both fates."

The Lowdown on Payday Loans

adrian.moore@reason.org (Adrian Moore) — Sat, 03 Oct 2009 20:37:00 EDT

The idea of seriously limiting payday loans seems to be gaining momentum. Katherine Mangu-Ward takes an in-depth look at the ramifications of such a move here.

Why do people here and elsewhere seek short-term, high-interest loans, using a chunk of their next paycheck as collateral? Well, what would you do if you needed $200 RIGHT NOW?

You could put it on your credit card. It's the American way! Unless, like so many Americans, you've already maxed out your cards. The average U.S. consumer carries $6,226 in plastic debt, according to the credit reporting agency TransUnion. With a potentially long financial market contraction ahead, card companies have been aggressively reducing limits and discontinuing new offers. Although the Credit Card Act of 2009 makes it harder for companies to change their terms after the fact, the availability of credit is likely to shrink further. Maybe you need that $200 to make the minimum payments on those maxed-out cards.

You could write a personal check and hope to scrounge some money for your bank account in time to cover the transaction. Such faith has a low rate of return, and dashed hopes can be awfully expensive. A bounced check from a basic Bank of America checking account, for example, costs $35, plus any fees the stiffed merchant tacks on. Many banks offer overdraft protection-they'll extract the money from you later-but charge between $10 and $35 for the favor. Repeated bounces and overdrafts have more serious consequences. American banks unilaterally closed 6.4 million checking accounts in the pre-recession year of 2005 alone.

You could borrow money from friends or relatives. Obtaining cash from intimates may get you the best interest rate on the market, but costs are extracted through other means. Family reunions can easily become awkward investors' meetings, and as fans of Judge Judy can tell you, even a small loan can be a remarkably efficient way to destroy a friendship.

You could pay a bill late. A high-risk strategy. Utility and phone providers can be quick to cut off service and charge a disconnect and/or reconnect fee. You could be looking at an extra $40 to $70 penalty every time, not to mention costs incurred in lost productivity.

Or you could get a payday loan. Like I did.

The Free Market, Not Government Net Neutrality Mandates, Will Best Serve Consumers

adam.summers@reason.org (Adam Summers) — Thu, 01 Oct 2009 19:29:00 EDT

In an editorial from earlier this week entitled "Net neutrality not so neutral," the Orange County Register quoted me from an article I wrote on the subject for The Freeman: Ideas on Liberty last year ("Net Neutrality or Government Brutality?" July/August 2008 issue).

On the issue of government regulation of the Internet versus private-sector incentives, I wrote: "In the free market, competition ensures that customers receive the services they demand. Government control, by contrast, ensures that they receive whatever services the politicians and bureaucrats in power at the time deem appropriate."

Below are some additional excerpts from the Freeman article. Read the full article here.

Net-neutrality proponents contend that they want to use regulation to increase competition and innovation, but their remedies would have the opposite effect. The growth in demand for bandwidth-intensive applications, such as streaming video, multi-player online gaming, and telemedicine, will require vast capital investments. Broadband providers will not invest in such projects, however, if there is not a good chance they will be able to recoup their costs and turn a profit. This is not unlike how cable companies currently rely on richer customers paying for premium services so that they can invest in less-profitable ventures, such as providing infrastructure for services to rural areas.

[. . .]

The costs of stifling competition and innovation through net-neutrality regulations would be significant. A May 2007 American Consumer Institute study estimated that regulation would cost consumers $69 billion over ten years. According to study author Stephen Pociask, “Despite proponents’ best intentions, net neutrality proposals would be a twofold problem for consumers. Innovations that require a guaranteed level of service won’t come to market, and consumers would have to pay more for the services they receive.”

Price discrimination is another concern of neutrality advocates. Despite the negative connotation associated with the word “discrimination,” price discrimination is a common and efficient way of allocating scarce resources and satisfying consumer demand. Children and seniors get discounted ticket prices at movie theaters; people pay different prices for different seats at concerts and sporting events; and some toll roads charge different prices depending on the time of day and the resulting levels of traffic congestion. In response to an FCC Notice of Inquiry regarding broadband practices, the Department of Justice’s Antitrust Division (of all things!) heralded the value of price discrimination in a September 2007 statement, noting the example of the U.S. Postal Service: “The U.S. Postal Service, for example, allows consumers to send packages with a variety of different delivery guarantees and speeds, from bulk mail to overnight delivery. These differentiated services respond to market demand and expand consumer choice.” The Department concluded, “Whether or not the same type of differentiated products and services will develop on the Internet should be determined by market forces, not regulatory intervention.”

In other words, the government should simply get out of the way and allow the market to work. Government should not try to pick winners and losers.

When neutrality proponents say that people have a right to “neutral” provision of information over the Internet, they are really saying that the public has some sort of right over the private property of the companies that provide the access to that information. Some have tried to justify this argument by claiming that the Internet was designed to be neutral, but it is the freedom from government restrictions that has encouraged innovation and allowed the Internet to flourish.

[. . .]

The concept of the “tiered” Internet is not something to be feared. On the contrary, it could be a means of enhancing services to broadband customers, providing revenue for ISPs to invest in accommodating increasing demand for bandwidth-intensive and delay-sensitive applications and making further improvements to data delivery, and of increasing fairness by ensuring that content providers responsible for the most Internet congestion pay the higher costs of assuring a high quality of service for Internet users. Choking off this potential revenue stream through net-neutrality mandates will only ensure that instead of an Internet with regular lanes and “fast lanes,” all consumers will be stuck in the slow lane.

Other Resources:

My colleague and Reason's telecom/IT analyst, Steven Titch, has done some great work on this issue. See his blog from Tuesday on Net neutrality and the FCC's recent proposal to mandate it, as well as policy study from earlier this year, The Internet Is Not Neutral (and No Law Can Make It So). The rest of his work can be found here.

Occupational Licensing and the Beard Trimming Turf War in Texas

adam.summers@reason.org (Adam Summers) — Thu, 24 Sep 2009 18:25:00 EDT

A recent post on the New York Times Freakonomics blog discussed the issue of occupational licensing. As author Daniel Hamermesh correctly notes, licensing benefits existing practitioners at the expense of potential competitors and, ultimately, consumers.

A headline in our local paper screams: “Barbers, Cosmetologists in Turf War Over Shaving.” The question is where sideburns end and beards begin.

In Texas, only barbers are licensed to trim beards, and they are unhappy that cosmetologists are cutting into their market.

This fight illustrates the effects of occupational licensing—legal restrictions on workers’ ability to enter certain markets.

Barbers have benefited over the years from the exclusion of cosmetologists in what was essentially a restriction on supply. Along with the high entry costs (nearly a year of required training), this has raised the equilibrium wage of barbers—and the equilibrium price of a haircut. Licensing of medical doctors, where the consumer lacks information on quality, might be sensible. But barbers and cosmetologists?

As one party to this controversy noted, “Most of the rules are so archaic and pathetic. They’re prehistoric.” True—and it’s the consumer who suffers.

The above example illustrates the arbitrary—and sometimes downright ridiculous—nature of many licensing laws. Those that offer bad beard trims, whether they be barbers or cosmetologists, are not likely to stay in business long. Consumers do not need the state to step in and regulate the scourge of bad trims. For that matter, heaven forbid getting rid of licenses for barbers and cosmetologists altogether. Why, people all across the state would be walking around with bad hair cuts and bad nail jobs!

Licensing laws are entirely about protecting a group of businesses from competition, not about "protecting the public." This is why new or stricter licensing regulations are virtually always proposed by the group to be licensed—not because of any public outcry—and why those seeking the regulations are typically "grandfathered" in so that they do not have to meet the tougher standards they impose on their future competitors. Make no mistake, occupational licensing laws are borne of special interests, not the public interest.

As a result of the licensing, competition in the licensed occupation is reduced, allowing licensed businesses to charge consumers more than they would in a free market. Furthermore, mandatory licensing may have other unintended consequences, such as giving consumers a false sense of security about those with whom they do business and leading to the creation of black markets for goods and services.

Voluntary certification is a much better model, as it allows businesses to signal their competence and quality by satisfying the requirements of an independent certification organization while offering consumers the freedom and flexibility to choose certified or uncertified practitioners, depending on their budgetary constraints, risk tolerances, or other preferences. Where there are instances of fraud or negligence, which will occur with or without mandatory licensing laws, the court system can serve as a final check to ensure that consumers are protected or awarded restitution for poor service.

Other resources:

» My previous policy study on occupational licensing, Occupational Licensing: Ranking the States and Exploring Alternatives, which includes a ranking of the 50 states by how many jobs they require licenses for.

» My column for the Los Angeles Business Journal on occupational licensing and how California tops the list in terms of the most-licensed states in the nation.

» Show-Me Institute brief on occupational licensing.

State Licensing Mandates for Movers in Illinois Increase Prices, Reduce Job Opportunities

adam.summers@reason.org (Adam Summers) — Wed, 16 Sep 2009 23:21:00 EDT

Thank you to David Stokes of the Show-Me Institute for pointing out this horrible Chicago Tribune story on unlicensed moving companies in Illinois. The ostensible "news" story about unlicensed movers in the State of Illinois is heavily slanted in favor of the state's existing compulsory licensing structure and never considers any alternatives to the current system, such as voluntary certification.

Things have been difficult for the moving industry lately, particularly with the collapse of the housing bubble--and the economy in general. This has led penny-pinching consumers to look to cheaper options, and has encouraged some people who have been laid off or are otherwise looking for some supplementary income to enter the business without getting a license. The number of licensed residential movers in the state is down to about 300 from nearly 500 in 2001, and licensed movers are complaining about competition from unlicensed movers.

The Chicago Tribune article cites a licensed moving company sales manager who claims that consumers that utilize the services of unlicensed movers have little or no recourse if there are billing disputes or damaged or missing items. As David notes in his own blog post on the topic, this ignores the fact that a business's reputation and the legal system serve as checks on negligent or criminal behavior on the part of movers. Simply put, businesses don't become successful by treating their customers poorly. Consumers can additionally minimize risk by doing some homework on businesses by asking for references and proof of insurance or looking for other consumers' reviews of businesses. Even with the current licensing system, the Tribune article cited the Web sites movingscam.com and Craigslist as places people can go to see negative reviews of moving companies. If the state licensing body did not exist, there would likely be even more such resources, but its presence may lull consumers into a false sense of security about the companies they do business with simply because they are "licensed." Furthermore, if problems do arise that cannot be resolved by the customer and business (or a third party such as the Better Business Bureau or, in the absence of a state licensing board, a voluntary certification organization), the legal system is available to settle disputes.

Occupational licensing--whether it involves movers or any other kind of business--is typically imposed or expanded for the benefit of the licensed businesses, not the public interest. Licensing requirements make it costly to enter a line of work, which means that there is less competition for the licensed businesses and those businesses can charge higher prices than they otherwise would.

Here is one problem with compulsory licensing. Some have attempted to get around Illinois's moving license requirements by merely packing and unpacking goods for people. The customer must handle the actual transportation by renting and driving the truck containing the items. Such packers/unpackers are still required by state law to have workers compensation insurance, however. According to the Tribune article,

Frank Gomez has run such an operation for two years after spending 15 years working for licensed movers. . . . He admitted being unlicensed and uninsured and said he desperately wants to become a licensed mover and have his own trucks. However, he can't swing the costs. It's $900 to get a license the first time and thousands more in insurance costs.

Here you have someone who wants to provide a legal service to people who need it--and who has quite a bit of experience doing it--but he cannot because the tribute the state licensing authority requires is too high.

In addition to pricing out qualified practitioners, mandatory licensing requirements also set a single standard that is not necessarily applicable to all consumers. People have different needs and different levels of risk tolerance, and they should be free to do business with whoever suits their preferences the best. Even without mandatory state licensing, some businesses would want to maintain certain levels of insurance or satisfy other requirements that an independent certification organization might recommend in order to signal to people that they are well qualified. Others would be content to advertise their services as just "two guys and a truck." Similarly, some consumers would want more peace of mind about those they do business with and look for the "certified by _______" seal of approval, while others, particularly those who could not afford the services of state-licensed practitioners, would be content to use the cheaper services of two guys and a truck.

In any case, the point is that eliminating state mandates and increasing the choices of both consumers and businesses leads to the greatest amount of freedom, the greatest level of commerce, and the greatest benefits for consumers. Particularly during a time of economic difficulty, Illinois and other states should be reducing licensing regulations, which only serve as barriers to work and result in higher costs to consumers.

Other resources:

» My column for the Los Angeles Business Journal on occupational licensing and how California tops the list in terms of the most-licensed states in the nation.

» A column David Stokes and I co-wrote on occupational licensing, with emphasis on regulations in Missouri.

» Show-Me Institute brief on occupational licensing.

Tear Down this Wall for Liberty

anthony.randazzo@reason.org (Anthony Randazzo) — Sat, 05 Sep 2009 14:00:00 EDT

November will be the 20th anniversary of "Mr. Gorbachev, tear down this wall!" In the spirit of this, the Atlas Economic Research Foundation, friends of Reason, has launched a fundraising campaign to support their work advancing liberty in nations around the country. If you have a moment, check out the Tearing Down the Wall website.

And if you're in a giving mood, consider donating to Reason, as we depend totally on the generous giving of others who also believe in free minds and free markets.

Let Free Markets Guide Fire Protection Services

adam.summers@reason.org (Adam Summers) — Fri, 04 Sep 2009 22:48:00 EDT

In the third and final part of our three-day series of point-counterpoint articles on the politics and policies of wildfire protection for the L.A. Times Web site, UC Berkely forestry specialist William Stewart and I tackled the issue of whether the government should restrict building in high-risk, fore-prone areas. Dr. Stewart claimed that building codes and zoning regulations help to reduce fire damage. I argued that free markets and private arrangements do a better job of assessing risk, determining and allocating costs, and helping people to decide where they want to live while leaving them free to choose the risk levels and lifestyles that are right for them. We both agreed that the subsidization of fire insurance in California has warped incentives and encouraged building in areas that would be considered too high-risk in a true free market.

See my commentary and Dr. Stewart's response here.

See here to access the "Dust-Up" exchanges from all three days, including Wednesday's columns about whether the state has enough resources to fight fires and whether the private sector should have a larger role in wildfire prevention and protection and Thursday's discussion about what the government does right about preventing and fighting wildfires, and--mostly--what it does wrong.

Below is an excerpt of my column from today.

In your Thursday post, Bill, you voiced your approval of certain building codes passed recently, but I disagree that such government mandates are the way to go. While some building requirements may be advisable, people own their private property and should be free to determine how to build their homes (or which kind of home they want to buy) and what risks they are willing to take in this regard. Furthermore, when building specifications are subject to the political process, they become open to manipulation by lobbying and special interests that would benefit from the new regulations. What if the regulators do not adopt the proper standards? And who is to say what the right standards are? Specifications adopted for some homes and in some locations may not be appropriate for other homes in other locations. These decisions are all determined and tailored to meet specific needs in the free market by builders, insurers and home-buyers.

Zoning regulations should similarly be eliminated and avoided. Growth boundaries and other zoning laws that would prohibit people from living in certain high-risk or "protected" areas are often advocated by environmentalists and anti-growth activists who see people as a scourge of the environment rather than a part of it. Their true agenda is to inhibit development in order to concentrate populations in city centers. But in a free country, people should have the freedom to live where they choose -- including less dense areas closer to nature -- and not to be forced to live in high-density urban centers that might not suit their budgets or their preferred lifestyles.

Simply put, restrictive building codes and zoning laws violate property rights. Free markets and private arrangements do a better job of assessing risk, determining and allocating costs, satisfying consumers' demands and preserving individual liberties than centralized land-use planning. The less property rights are eroded by various governmental edicts and mechanisms, the more free and prosperous we are as individuals and as a nation.

Finally, the private sector should also be instrumental in providing wildfire prevention and protection services. To this end, volunteer firefighters, who make up nearly three out of every four firefighters in the nation, and private firefighters can help to provide protection against wildfire damage. As Orange County Register senior editorial writer and columnist Steven Greenhut argued in an article about the 2003 California fires, "Far better if we had private land and private firefighters, with the costs of firefighting borne privately by those who choose to live in the canyons. But when we choose to live near lands controlled by the government, and the government does a bad job managing them, why are we supposed to feel guilty when our houses burn down?"

Government Policies Exacerbate Fire Damage

adam.summers@reason.org (Adam Summers) — Thu, 03 Sep 2009 17:49:00 EDT

In the second installment of our three-day "Dust-Up," point-counterpoint articles for the L.A. Times Web site on wildfires and government responses to them, UC Berkeley forestry specialist William Stewart and I write about what government does right in fighting and preventing fires, and what it does wrong. Not surprisingly, we both had much more to say about what it does wrong. Dr. Stewart argues that individuals and communities should take more responsibility for protecting themselves and I point out how bad government policies lead to more severe fire damage.

See Dr. Stewart's commentary and my response here.

Below is an excerpt of my column.

I agree with you about the incentives of governments to focus more on fighting wildfires after they crop up than addressing the problem through preventive measures. Focusing more on action -- or, more accurately, reaction -- than prevention is a typical bureaucratic response. The goal seems to be "fighting fires," when it should be managing government-owned land to prevent or minimize wildfire damage. Unfortunately, fighting fires is politically a sexier aspect of the job -- it is more tangible to voters, who can see the news stories of brave firefighters battling the flames to save homes, and politicians can say, "See what we're doing with your tax dollars!"

Simply put, the . . . government manages its lands poorly. It neglects to build firebreaks and conduct controlled burns before wildfires break out and allows underbrush and other tinder to build up -- in some cases, for 40 to 60 years -- which makes the fires all the more severe when they hit. For example, a Los Angeles city inspector in Tujunga related how the federal government failed to respond to requests to clean out brush on open lands. The federal agency claimed that it needed to conduct a study and prepare an environmental impact report before taking any action. Environmental policies and regulations that encourage leaving forests, canyons and woodlands in their "natural" state and prevent the clearing of trees and brush that serve as fuel for the fires only make matters worse. This red tape and bureaucratic nonsense leads to more destruction of property and lives.

Another disastrous government policy is the subsidization of fire insurance. In 1968, California created the Fair Access to Insurance Requirements (FAIR) Plan to be a fire insurance plan of last resort and required all insurers doing business in the state to participate in the insurance pool. This encourages the construction of homes in overly risky, fire-prone areas and is unfair to those who buy insurance in non-fire-prone areas, who must pay higher premiums to subsidize FAIR Plan participants, as well as to taxpayers across the state who have to pay for efforts to save these homes when fires do take place. A true free market in fire insurance would allow insurers to set premiums based on the true value of the fire risk involved and would allow homebuyers to make their purchase decisions accordingly. Some may be priced out by the high cost of insurance in extremely risky areas, and some areas may be uninsurable entirely, but those costs are high for a reason, and they should not be ignored.

Public officials seem to spend an awful lot of time holding news conferences in front of television cameras to offer each other congratulations on the efforts they all are making and too little time providing accurate, real-time information to the public to help them make decisions about how to react to the fires. With resources such as the Internet, satellite pictures and other technology at its disposal, government should be able to provide residents with up-to-date information about exactly where the fire is, and where it is headed at the moment, to help them make better preparations to flee or defend their homes. Yet communication is still lacking, and there always seems to be problems with government emergency notification systems. For example, "The county's new mass emergency notification system failed to inform residents about the status of the fire or evacuation orders," L.A. County Supervisor Mike Antonovich wrote in a resolution. "It was reported to my office that an erroneous evacuation order was announced by the mass emergency notification broadcast system to the community of La Crescenta."

On a related note, as you allude to in your discussion of Australia's approach to wildfires, government should dispose of mandatory evacuation orders. This is particularly important in more suburban areas where the threat is not so much a raging inferno running through the neighborhood as it is falling embers, which can be combated fairly easily to keep homes from going up in flames. Indeed, many homeowners that defied evacuation orders in recent fires were able to save their homes -- and even neighbors' homes -- without suffering harm or necessitating the diversion of firefighting resources to rescue them. In any case, America was founded on the principle that one has the rights to defend his life, liberty and property, and these rights should not be infringed.

In tomorrow's third and final exchange, we will be debating whether the government should do more to discourage building in wildfire-prone areas, or if there are better means of protecting homes in such areas.

Exercising Gun Rights in San Diego

adam.summers@reason.org (Adam Summers) — Mon, 24 Aug 2009 23:40:00 EDT

There was an interesting story in a recent edition of the San Diego Reader about a group of citizens who exercize their right to openly carry a gun in public. While one cannot carry a hidden ("concealed") firearm without a permit in California, which, in most cases, is nearly impossible to acquire, a gun may be carried provided that it is carried in plain view--such as in a holster--and that it is unloaded (although ammunition may be carried next to the gun). Other restrictions also apply, such as prohibitions on carrying guns within 1,000 feet of a school, or in government buildings or the "sterile area" of airports. The reporter, Rosa Jurjevics, joins several open carriers as they walk around town and get harrassed by members of the public and the police for merely exercising their rights.

Some may say that open carrying is a bit of a stunt, but if it is, it is a stunt with a purpose. That purpose is twofold: first, to assert one's right to gun ownership and the means to potentially protecting his or her own life, and second, to inform other members of the public that they have the same rights and do not need to be fearful of law-abiding citizens with guns.

Of course, restrictions on the possession and use of guns only affect people who obey the law--not the criminals! This merely makes law-abiding citizens sitting ducks while the criminals continue to ignore the laws and have less worry that they, themselves, might be shot in the act of a crime by a would-be victim or good Samaritan. (See, for example, John Lott's More Guns, Less Crime on how gun-control laws increase crime rates and make the public less safe.)

Below are some excerpts from the article:

Nate and I take off to his car, where he removes from the depths of his trunk a silver handgun with a wooden handle. This is a Ruger Single Six .22 revolver, he tells me, as he slides it into the borrowed holster I have fixed to my belt. The gun is surprisingly heavy, nestled just below my waistline.

[. . .]

First, I am given instructions on what to do if approached by the police. I brace myself as Nate explains.

“What’s going to happen is, they’re going to want to do a 12031(e) unloaded check,” he begins. “They’ll say they want to check your weapon. You say, ‘Are you requesting or demanding?’ If they say, ‘Demanding,’ you say, ‘I don’t consent to any warrantless searches. But I’m not going to resist.’ And then you stick your hands out, they check your weapon, and it’s done.”

[. . .]

“You don’t have to answer any other questions. You don’t have to give them your ID,” Sam instructs. “It’s technically an illegal search under the Fourth Amendment. The Fourth Amendment says you have protection against unreasonable search and seizure. If there’s a woman pushing a baby stroller down the boardwalk, that does not give the police the right to check if the kid is kidnapped. So if you’re in full compliance with the law, minding your own business, they technically don’t have the right to stop you to check if your weapon is unloaded or loaded.”

[. . .]

So if it’s such a hassle, why open carry?

As we walk, the trio explains.

For Sam, 39, who works from home studying “history and behavioral economics independently and try[ing] to figure out what’s going to happen next before everyone else,” it’s mostly about constitutional freedom, a cause he says he’s felt strongly about since childhood. He’s been open carrying for about seven months and heard about it through Nate and Calguns.net, a popular online meeting place for California gun owners and enthusiasts.

“I really believe, and I think that most thinking people believe, that we are slowly losing our freedoms in this country,” he says. “Everything’s become more and more restricted, and nobody seems to know what to do about it. If we would just get back to following the Constitution, America would again be the place it was intended to be, the place where everybody wanted to come. This whole open-carry movement, for me, is really about more than just guns; it’s about liberty and what it means to be a free man.”

Nate, a 22-year-old human biology student, voices another issue: the lack of CCW (concealed-carry weapon) permit issuance. A concealed-weapon license allows one to have a concealed weapon on his or her person. In California, Nate says, concealed-weapon licenses are most commonly issued to lawyers, jewelers, and traveling doctors.

“I knew I wasn’t going to get a CCW permit. I’m not important enough — I don’t make enough money, I don’t have a good enough ‘cause,’ according to California — so I said, ‘Well, I guess I’ll just start open carrying,’ ” he says. “Another reason I started doing it is that it’s a political statement. I’m not important enough for my right to self-defense, so what we do is we just take it out in the open. This is what we have to do.”

[. . .]

Tom began carrying mostly out of political reasons.

“I got alarmed at how radically guns and gun owners are being vilified across California and across the country,” he says. “The laws are being passed willy-nilly, some that don’t even make sense, and it’s time to start pushing back against unfair, unjust laws.”

He, like the others, agrees that the Second Amendment needs to apply to the states as well as at a federal level. He elaborates on a California case recently heard by a three-judge panel of the U.S. Ninth Circuit Court that tackles this issue, Nordyke v. King, in which Alameda County attempted (and succeeded) in banning guns from its fairground in order to stop a gun show.

“They started a legal action against the city. Another lawyer picked [it] up and has been pursuing it for almost ten years on his own dime, [with] no financial support. And what we’re hoping it will do [is] incorporate the Second Amendment to California.”

[. . .]

He makes the point that, in areas with stricter gun-control laws, crime is higher.

“[In] places where the laws allow the citizens to take their security into their own hands, violent crime goes down significantly,” he says. “Look at Chicago and Washington, D.C., where the citizens are essentially forbidden to own handguns, and the incidents of violent crimes are enormous.” (In June 2008, the Supreme Court struck down Washington D.C.’s ban on handguns.)

Later, he sends me a link to the FBI crime statistics from 2007 (the latest information available). They report some grim facts. In Vermont, which allows the concealed carrying of weapons without a permit, the violent crimes per 100,000 inhabitants is 124.3, while in the District of Columbia, it’s 1413.3. Alaska, like Vermont, allows concealed carrying without a permit, and their number is 661.2. In California, it’s 522.6.

[. . .]

Tom doesn’t open carry everywhere. He can’t at work, where he is a technical writer, and doesn’t feel comfortable doing so at church. . . . He will also take it off, if on private property, when asked, such as when he was stopped — and the only time he’s been approached negatively — in a supermarket.

“The whole point is to try and make people aware and comfortable that law-abiding citizens can carry guns without the world coming to an end,” he says simply, “without having to provoke a SWAT incident. We’re very meticulous in obeying the law. We’re very careful about what the law says, what we’re allowed to do [and] what we’re not allowed to do. And the police have endorsed that, verified that.”

Though Tom may be in a minority, there is a growing open-carry movement in San Diego. Tom estimates that there are between 75 and 100 active open carriers locally.

Thanks to Karen De Coster and the LRC Blog on LewRockwell.com for pointing out the story.

America's Real Immigration Problem

shikha.dalmia@reason.org (Shikha Dalmia) — Tue, 04 Aug 2009 22:10:00 EDT

I have noted in several columns that America's future immigration problem won't be too much - but too little - immigration, especially in the so-called skilled category. That's because as the major donor countries such as India and China liberalize their economies and offer more opportunities at home, these immigrants won't have to travel to America to live the American dream. They'll be able to do so right at home near their loved ones. The best evidence for this trend so far has come from Duke-Harvard researcher Vivek Wadhwa - himself a successful Silicon Valley entrepreneur - who found that emigres from these countries are returning home in virtually unprecedented numbers.

Now Business Week is reporting that international applications for MBAs are way down for the first time in five years in the country's business schools. Purdue's Krannert School of Management has experienced a 30% drop whereas Indiana University, Emory and University of Connecticut are reporting a 5% to 15% drop in international enrollment.

"Students from India and China ordinarily account for a large portion of the international applicant pool, but are increasingly deciding to study at home, where a growing number of high-quality MBA programs have emerged in the past decade," Dave Wilson, president of the Graduate Management Admissions Council (GMAC), an international association of business schools and sponsor of the GMAT, the b-school admissions exam, told Business Week.

Given that America owes its global technological edge to its ability to attract the best and the brightest from around the world, the rational response to this declining interest would be to roll out the welcome mat and liberally hand out visas to incoming foreign students. But rationality is a scarce commodity among our immigration authorities who, as it turns out, are becoming even more tight-fisted.

Reports Business Week:

Obtaining a student visa is turning out to be more of a problem this year on some business school campuses than in the past. Jay Bryant, admissions director at the Thunderbird School of Global Management (Thunderbird Full-Time MBA Profile), says he has noticed that more students this summer are running into visa roadblocks when visiting U.S. embassies in their respective countries. The school, known for its globally diverse student body, has managed to keep international enrollment at a steady level, with non-U.S. students comprising 51% of the incoming class this fall. But Bryant says he worries that the figure could decline if students can't get visas in time for the start of the school year.

But America's myopia will just make it easier for its competitors to scoop up this talent, especially since they are fast relaxing their immigration policies, as I noted in this Wall Street Journal column.

Card Check's Evil Twin -- Binding Arbitration

shikha.dalmia@reason.org (Shikha Dalmia) — Sun, 12 Jul 2009 21:23:00 EDT

Much of the attention in the misnamed Employee Free Choice Act has to date gone to the so-called card-check provision that would allow Big Labor to form unions without allowing workers to vote. But bad as that is, the bill's other provision -- binding arbitration -- is equally horrendous. How do I know? Because I live in Michigan which implemented binding arbitration for certain public sector employees nearly 40 years ago. So awful have the consequences been that, today, you have to travel pretty deep into union territory to find any supporters -- liberal or conservative -- for it. As I note in the Wall Street Journal on Saturday:

"In 1969, the Wolverine State embraced a form of compulsory arbitration nearly identical to the one proposed in EFCA to resolve disputes with its police and firefighters. Years later, Detroit mayor Coleman Young -- who had authored the original law as state senator -- rued what he had done. 'We now know that compulsory arbitration has been a failure,' he lamented to the National Journal in 1981. 'Slowly, inexorably, compulsory interest arbitration has destroyed sensible fiscal management and has caused more damage to the public service than the strikes it was designed to prevent.'"

Read the rest of the column here.

Freedom in 50 States: A New Study

shirley.ybarra@reason.org (Shirley Ybarra) — Fri, 03 Jul 2009 07:53:00 EDT

The Georgia Public Policy Foundation's Friday Facts, point out a new report from the Mercatus Center at George Mason University entitled Freedom in 50 States: An Index of Personal and Economic Freedom. The authors of the report, William Ruger (currently serving in Afganistan) and Jason Sorens present "...the first-ever comprehensive ranking of the American states on their public policies affecting individual freedoms in the economic, social, and personal spheres." All of the data used is publicly available:

"This study improves on prior attempts to score economic freedom for American states in three primary ways: (1) it includes measures of social and personal freedoms such as peaceable citizens’ rights to educate their own children, own and carry firearms, and be free from unreasonable search and seizure; (2) it includes far more variables, even on economic policies alone, than prior studies, and there are no missing data on any variable; and (3) it uses new, more accurate measurements of key variables, particularly state fiscal policies.

We find that the freest states in the country are New Hampshire, Colorado, and South Dakota, which together achieve a virtual tie for first place. All three states feature low taxes and government spending and middling levels of regulation and paternalism. New York is the least free by a considerable margin, followed by New Jersey, Rhode Island, California, and Maryland. On personal freedom alone, Alaska is the clear winner, while Maryland brings up the rear. As for freedom in the different regions of the country, the Mountain and West North Central regions are the freest overall while the Middle Atlantic lags far behind on both economic and personal freedom. Regression analysis demonstrates that states enjoying more economic and personal freedom tend to attract substantially higher rates of internal net migration."

It is well worth a read. Handy maps are presented as well as a state-by-state analysis with comments at the end of the report.

Union Against Union

shikha.dalmia@reason.org (Shikha Dalmia) — Thu, 02 Jul 2009 22:45:00 EDT

Guess who is now expressing concern that scrapping the right of workers to hold a secret ballot before forming a union - as the so-called card check bill would do -- will lead to intimidation and harassment of workers by union apparatchiks?

Evil Republicans? No. Those rapacious exploiters at the U.S. Chamber of Commerce? Nah. Reactionaries at the Reason Foundation. Wrong again.

The correct answer is: The Service Employees International Union. Yup - you heard it right. The very same union that has been at the forefront of pushing the card check bill otherwise called the Employee No Choice - oops, sorry! - Free Choice Act in Congress.

But before anyone gets too excited, bear in mind that SEIU has not formally withdrawn its support for this travesty. However, it basically ceded the case of the bill's critics recently when it challenged its rival, National Union of Healthcare Workers', attempt to represent nearly 100,000 of its members in California. SEIU claimed that the National Union's modus operandi, which involved asking workers to sign a petition, might not reflect the true feelings of the workers because they might have felt pressured to sign!

The irony isn't lost on the National Union Vice President John Borsos, who told Los Angeles Times reporter Paul Pringle: "The SEIU is advocating free choice for every employee in the United States, unless you're an SEIU member." I wouldn't call a card-check process "free choice" -- but you get the point.

Incidentally, the bill, whose prospects had been near dead in Congress, thanks to the threat of a Republican filibuster, had gotten a shot in the arm with the seating of EFCA-supporter Al Franken to the Senate last week and Sen. Arlen Specter's decision to switch his position, yet again, after he moved over to the Democratic side of the aisle.

At a recent union rally, Specter assured attendees that they should disregard his previous opposition to the bill. "I believe you will be satisfied with my vote on this issue," he said.

It remains to be seen if Specter's switch will be cancelled by the SEIU's to neutralize the bill yet again!

Film at Eleven.

Victory for Liberty and Small Business in Oregon

adrian.moore@reason.org (Adrian Moore) — Thu, 25 Jun 2009 23:20:00 EDT

On Wednesday Oregon Governor Ted Kulongoski singed a law that will finally allow small moving van companies to exist in Oregon unmolested.

The law in Oregon has been that when someone wants to start a moving van company, they would have to apply for a permit, and then face a public hearing in which all existing moving companies could raise objections to the new company and try to convince the licensing board there is no need for more moving companies. Over time the board came to accept arguments that more competition would reduce employment and wages in the industry and be harmful. So if you wanted to start a new moving van company, you were basically out of luck.

Fortunately, the Pacific Legal Foundation took up the case of 2 Brothers Moving and Delivery and challenged the law. I was an expert witness in the case. Before it went to trial, the state saw the writing on the wall and finally moved to change the law. The new rules are simple and reasonable.

Lots of information on the case here.

The Right Cure for Physician Wages

shikha.dalmia@reason.org (Shikha Dalmia) — Wed, 24 Jun 2009 17:48:00 EDT

In my last Forbes' column, I pointed out that Uncle Sam's method of controlling rising Medicare costs -- slashing reimbursement to providers - was the economic equivalent of leech therapy. It is simple, crude and completely ineffective. But does that mean that doctors in this country deserve their lavish salaries? In many specialties, physicians make well into six figures - often seven figures -- every year. Even discounting for malpractice liability insurance, administrative costs and other overheads, physicians in America on average make far better wages than folks in other professions. Will American medicine really go to hell in a hand basket if doctors' salaries drop to levels that other professionals - engineers, lawyers, MBAs - make?

That depends on how the wage cuts are achieved.

Physicians justify their incomes on grounds that not only do they make huge investments of time and money in order to become a doctor, but then, once they start practicing, they endure punishing schedules -- long hours, week-end calls - that no one in any other profession has to. If they can't expect commensurate compensation, they maintain, medicine will become less attractive to the best and the brightest, diminishing both the quantity and quality of doctors in this country. As evidence, they point to the burgeoning shortage of primary care physicians. GPs make less than their specialized peers and hence their field is becoming less attractive. "We cannot cut reimbursement to physicians since levels are already too low," declared Mark Sklar, an endocrinologist in private practice - no doubt drawing at least a high six-figure income -- in a recent Wall Street Journal column.

But the fact of the matter is that neither the ardors of the profession nor the remuneration that doctors receive are writ in stone. They are both the result of manmade distortions in the health care marketplace, the chief among them being the policies of the American Medical Association.

As Milton Friedman noted, the AMA is a government-sanctioned guild that tries to protect the wages of its members by tightly restricting the supply of doctors through onerous training and licensing requirements. What;s more, he pointed out, "the AMA has engaged in extensive litigation charging chiropractors and osteopaths with the unlicensed practice of medicine, in an attempt to restrict them to as narrow an area as possible." It has also erected extremely high obstacles to foreign doctors - forcing them not just to retake their medical exams, but also redo their residencies, a huge disincentive to their coming here. Some of these requirements might be defensible, but many are simply intended to diminish competition from foreign doctors - not protect patients, as the AMA claims.

Without a doubt, if AMA were to relax these restrictions, the supply of doctors would increase and wages would fall. But the question is what is wrong about forcing down doctors' wages through government fiat as opposed to competition?

Simply slashing physician reimbursement without loosening the barriers to entry will reduce the supply of doctors. Why would new people endure the same grueling process of becoming doctors and clocking in the long hours once they get their degrees for a smaller remuneration? What's more, existing doctors, especially those nearing retirement, might well quit. In some Canadian provinces, for instance, where annual salaries are capped, doctors work till they hit the cap and then take the rest of year off to play golf in Florida - unless they can find a way to migrate to the United States. There are only two things that the government can do when confronted with such an eventuality: either increase their wages to induce them back or ration care. Canada has chosen the latter route.

AMA was among the industry groups that recently promised President Obama that they would squeeze out $2 trillion in medical costs over the next 10 years. Obama is using that as an excuse to jam $200 billion in reimbursement cuts over the next few years down providers' throat. A far wiser strategy would be to break up the AMA guild - or at least force it to relax its strictures and throw open the doors of medicine to more practitioners.

Time to Replace Don't Ask, Don't Tell with When Asked, Do Tell

shikha.dalmia@reason.org (Shikha Dalmia) — Fri, 12 Jun 2009 10:51:00 EDT

Over at Forbes, Melik Kaylan, another columnist, and I have been engaged in a roaring debate over whether the time has come to scrap Don't Ask, Don' Tell. In his response to my original column on this issue, Kaylan worried that the Old Whig fallacy that I labor under will force the military to mirror in detail all aspects of contemporary social life.

"An ancient noble instinct urges the soldier to overcome the equally ancient impulse of fear as he engages the enemy, and we have no business making things any harder for the combatant by messing with that simple and coherent sense of duty. How do we square the inclusion of self-avowed homosexuals with that necessity? Such issues may bring up uncomfortably divisive narratives, but if you find them uncomfortable, consider the effect on the highly overstressed psychology of the soldier in and out of combat," he notes.

Beautifully put, but off base.

I point out that asking the military to scrap a policy for which support is waning within its own ranks hardly means turning it into a mirror of civilian society. One does not have to be a moral relativist to suggest, I note, that whether gays can be assimilated in the military without compromising its cohesiveness depends not on some immutable characteristic of theirs, but the acceptance of people around them. "If that's the case, then, unless Kaylan has a moral objection to homosexuality, he has to concede that the military ought to admit gays if and when attitudes toward them shift sufficiently."

Kaylan says he wants to keep DADT because he wants to make gay identity a non-issue. But that's a pretty stunning claim given that 12,000 gays have been fired since the law went into effect 16 years ago. And not because they were asking for special favors by virtue of their identity, as Kaylan insinuates, but just because they had the temerity to admit they were gay. "If Kaylan genuinely wants to make gay identity a non-issue," I note, "then he should advocate not Don't Ask, Don't Tell but something along the lines of When Asked, Do Tell!"

My whole response here.

The Supreme Court Gives Chrysler's Evil "Speculators" Some Hope

shikha.dalmia@reason.org (Shikha Dalmia) — Tue, 09 Jun 2009 09:47:00 EDT

In President Obama's auto morality tale there are good guys and there are bad guys. The good guys are those who do his bidding. And the bad guys are those who don't.

Well, one of those bad guys, whom the president took to the airwaves and condemned as "speculators" when they resisted the crummy terms they were being offered as part of Chrysler's bankruptcy, turns out to be the Indiana pension fund whose members include not some Wall Street fat cats sitting in their plush offices punching trades on their 40" computer screens -- but state troopers and teachers many of whom are at the brink of having their life's savings wiped out.

After suffering rounds of losses in the lower courts, these "speculators" finally scored a minor victory in the Supreme Court yesterday. The administration urged the court to throw out their appeal on grounds that anything less would jeopardize the June 15 sale of Chrysler to Fiat and risk turning everyone concerned into pumpkins! But Ruth Bader Ginsburg - the court's most liberal justice who had to make the initial call - didn't buy it and has stayed the sale pending further notice.

This doesn't mean yet that Ginsburg will actually hear the case or, better yet, get the full court to hear it. But it does indicate that she doesn't think that the administration's case is a slam dunk -- and is at least somewhat disturbed by the rule of law issues that the evil "speculators" are raising.

The Indiana fund is making two arguments, one weak, one strong, in my opinion, in its lawsuit.

The weak argument is that the administration does not have the statutory authority to use TARP (Troubled Asset Relief Program) funding to bankroll the bankruptcy of a non-financial company. But the law is actually quite vague and broad on what it considers to be a financial institution. It states that the TARP money can be used for "any institution, including, but not limited to, (emphasis added) any bank, savings association, credit union, security broker or dealer or insurance company...."

Their stronger argument is the rule of law argument. Standing bankruptcy law stipulates a clear hierarchy of lenders under which secured lenders - meaning those whose debt is backed by actual company assets - are supposed to be paid ahead of unsecured lenders whose claims on the company are not backed by assets. The pension and health care obligations of the company to the UAW are essentially unsecured liabilities. But the Obama administration turned this law upside down, handing the UAW, who contributed millions to his campaign war-chest, nearly 60 cents on the dollar and secured lenders such as the Indiana fund a mere 29 cents. There is a word in ordinary parlance for this kind of property transfer: Theft.

One small - exceedingly small - ray of hope that Indiana will get justice is that in 1952 the Supreme Court rejected Harry S. Truman's attempt to seize steel mills during the Korean War as unconstitutional. If a property grab was not justified when the issue was national security, it is hard to see how it could be justified as a payoff to a political constituency. But stranger things have happened.

My recent appearance on the Glen Beck show discussing this issue here.

Obama's Betrayal on Don't Ask Don't Tell

shikha.dalmia@reason.org (Shikha Dalmia) — Wed, 03 Jun 2009 17:14:00 EDT

Five months into office, and President Barack Obama already has an impressive record of broken promises. He is shuttering the successful D.C. voucher program that gave about 1,500 minority families hope every year to escape D.C.'s crime-ridden, soul-numbing, mind-killing public schools, after suggesting during the campaign that he won't do this. He has decided to continue the Bush administration's policy of "prolonged detention" under which suspected terrorists can be locked away indefinitely without a trial after pledging to end it. And in my Forbes column this morning, I point out that Obama is betraying gays by backtracking on his promise to repeal Don't Ask, Don't Tell. This, desipte the fact that the majority of the public supports its repeal and the evidence from abroad suggests that there is little military downside to letting gays openly serve in the army.

Take Israel, for instance, I note:

"Unlike the United States, it never actively barred gays, thanks to conscription--but it restricted avowed gays from serving in top positions or sensitive intelligence jobs.

Israel's military hasn't become a ragamuffin force since it lifted these restrictions in 1993. It remains among the best fighting forces in the world. Indeed, a 2001 study by Aaron Belkin and Melissa Levitt of the University of California, Santa Barbara's Palm Center, which studies sexual minorities in the military, found no evidence that allowing known gays to serve in top jobs has diminished performance. Gay rights opponents dismiss this research on grounds that the Palm Center is a front for gay advocates. But the U.S. government's own General Accounting Office took an in-depth look at four gay-tolerant countries in 1993 and found no ill-effects on their militaries either. Likewise, another 1993 study by the Rand Corp. found "no direct evidence regarding the effects of the presence of acknowledged homosexuals on unit cohesion and unit performance."

Indeed, so mainstream has the idea of an integrated force become in Israel that a 2002 film, Yossi & Jagger, depicting the travails and triumphs of a closet gay commander in love with a soldier in his unit, was not only a big hit with the public, it also received official military screenings. "Gay presence has become a total non-issue for the Israeli army," says Yossi Shain, a commentator and political scientist at the Tel Aviv University.

Similarly, England--whose military nine years ago was forced, kicking and screaming, by courts to include gays--has now seamlessly assimilated them--so much so that most younger Brits can't even understand what the big fuss was to begin with.

Repealing Don't Ask won't hand gays a license to turn the military into a hub of gay activity, as some conservatives no doubt fear. There are, after all, better ways of getting a date than going through boot camp. Its repeal will simply protect gays from being penalized for admitting that they are gay. Rules against sexual fraternization--both among homosexuals and heterosexuals--will still remain in place, meaning that troops will have plenty of reason to maintain decorum and discretion. Gay Israeli soldiers apparently don't go around flaunting their sexuality even though there isn't any official penalty for doing so.

But while both public opinion--and evidence--are lining up in favor of repealing Don't Ask, President Obama is going in the opposite direction. The White House's civil rights Web site in recent weeks has significantly watered down the strong language it was using to signal its commitment to scrapping the law. Even more troubling, Obama did nothing--not so much as utter a whisper of protest--when West Point grad Dan Choi, an Iraq veteran and an Arab linguist, was fired recently for revealing that he was gay.

President Obama is pleading for time to push this issue until after, presumably, he has averted global warming, revived the economy and implemented universal health coverage. But to backburner a major civil rights cause for which the country is ready, and that is well within his power to advance, in order to save the world first, bespeaks a profound megalomania."

Whole thing here.

Obama's Betrayal on Don't Ask Don't Tell

shikha.dalmia@reason.org (Shikha Dalmia) — Wed, 03 Jun 2009 00:00:00 EDT

Wars are riddled with all kinds of twisted ironies. During the Civil War, the Union army initially spurned blacks who it was crusading to emancipate—while the Confederate army recruited them in the final desperate hours of its fight to enslave them. In World War II, the United States sacrificed about half a million American soldiers to defeat Nazi racism. Yet the U.S. itself practiced strict racial segregation, including within its military.

Given such blatant historic contradictions, it seems like no big deal that now, while the U.S. valiantly tries to plant tolerant liberal regimes in Islamic countries, at home it harbors among the most intolerant policies toward gays in the military in the Western world. But just as with abolition and desegregation, equal rights for gays is an idea whose time is way overdue—especially the repeal of "Don't Ask Don't Tell," the policy that bars known gays from serving in the military. The question is whether President Barack Obama will lead the way to its repeal—as he promised he would during his campaign—or back-pedal to political safety, as he seems to be doing.

America's NATO allies, with the exception of Turkey and a few others, allow gays in the military. And the cause of gay rights on the whole has made major strides in the U.S., notwithstanding the California Supreme Court's recent refusal to overturn Prop 8, the ballot initiative Golden State voters approved that bars gay marriage. Five states have legalized gay marriage, including, recently, Iowa—hardly a cornucopia of radical activism. And upward of 75 percent of the general public favors the repeal of Don't Ask.

However, 1,000 retired military officials recently sent a letter to the president urging him to stand by Don't Ask. They say that the military's sole purpose is to wage and win wars, and that requires military cohesiveness. To foster that, they insist, the military needs flexibility to set its own rules even if these rules are at odds with fundamental constitutional values and social trends.

There is no constitutional right to serve in the military, they maintain—and about that, they are certainly right. But that doesn't mean that the military should simply ignore basic constitutional protections, not to mention the demands of ordinary justice, absent an actual showing of harm. So the real issue is, does the empirical evidence, from home and abroad, support the claims that allowing gays to serve openly would undermine military performance?

Although the research on this question tends to be dominated by activists, still, the answer is: No.

Even on its own terms, Don't Ask was a particularly dumb policy because it lifted the ban on gay service but barred them from officially admitting their status. This meant that the country compromised its commitment to equal protection and still exposed itself to what the military says is potential harm from the gay presence, maximizing the damage on all fronts. If there is an upside to the law, it is that 16 years hence it is apparent that in fact there is no upside to keeping gays out or relegating them to the closet.

If the presence of gay soldiers were disruptive for the military, tolerance for gays would be falling among troops. In fact, post-Don't Ask, tolerance has gone up significantly. A 2006 Zogby poll of returning Iraq and Afghanistan vets found that 72 percent were "personally comfortable" around gays. This is significant not only because it is in line with broader public opinion, but it reflects their experience with known gays among NATO troops.

Nor does the evidence from other countries suggest that the heavens will fall if Don't Ask is scrapped. Take Israel, for instance. Unlike the United States, it never actively barred gays, thanks to conscription—but it restricted avowed gays from serving in top positions or sensitive intelligence jobs.

Israel's military hasn't become a ragamuffin force since it lifted these restrictions in 1993. It remains among the best fighting forces in the world. Indeed, a 2001 study by Aaron Belkin and Melissa Levitt of the University of California, Santa Barbara's Palm Center, which studies sexual minorities in the military, found no evidence that allowing known gays to serve in top jobs has diminished performance. Gay rights opponents dismiss this research on grounds that the Palm Center is a front for gay advocates. But the U.S. government's own General Accounting Office took an in-depth look at four gay-tolerant countries in 1993 and found no ill-effects on their militaries either. Likewise, another 1993 study by the Rand Corp. found "no direct evidence regarding the effects of the presence of acknowledged homosexuals on unit cohesion and unit performance."

Indeed, so mainstream has the idea of an integrated force become in Israel that a 2002 film, Yossi & Jagger, depicting the travails and triumphs of a closet gay commander in love with a soldier in his unit, was not only a big hit with the public, it also received official military screenings. "Gay presence has become a total non-issue for the Israeli army," says Yossi Shain, a commentator and political scientist at the Tel Aviv University.

Similarly, England—whose military nine years ago was forced, kicking and screaming, by courts to include gays—has now seamlessly assimilated them—so much so that most younger Brits can't even understand what the big fuss was to begin with.

Repealing Don't Ask won't hand gays a license to turn the military into a hub of gay activity, as some conservatives no doubt fear. There are, after all, better ways of getting a date than going through boot camp. Its repeal will simply protect gays from being penalized for admitting that they are gay. Rules against sexual fraternization—both among homosexuals and heterosexuals—will still remain in place, meaning that troops will have plenty of reason to maintain decorum and discretion. Gay Israeli soldiers apparently don't go around flaunting their sexuality even though there isn't any official penalty for doing so.

But while both public opinion—and evidence—are lining up in favor of repealing Don't Ask, President Obama is going in the opposite direction. The White House's civil rights Web site in recent weeks has significantly watered down the strong language it was using to signal its commitment to scrapping the law. Even more troubling, Obama did nothing—not so much as utter a whisper of protest—when West Point grad Dan Choi, an Iraq veteran and an Arab linguist, was fired recently for revealing that he was gay.

President Obama is pleading for time to push this issue until after, presumably, he has averted global warming, revived the economy, and implemented universal health coverage. But to backburner a major civil rights cause for which the country is ready, and that is well within his power to advance, in order to save the world first, bespeaks a profound megalomania.

He ought to get his priorities straight.

Shikha Dalmia is a senior analyst at Reason Foundation and a columnist for Forbes.com, where this article originally appeared.

Wither to Conservatism?

shikha.dalmia@reason.org (Shikha Dalmia) — Wed, 27 May 2009 23:16:00 EDT

Unbeknownst to me when I wrote my last Forbes column ruminating on the mess that is the current conservative movement, over at the Becker-Posner blog, dueling libertarian U-Chicago profs -- Nobel laureate Gary Becker and Richard Posner -- were chewing on some very similar thoughts.

Becker points out that the reason that Republicans are in such a sorry state right now is that they are trying to build a political party around two contradictory sets of beliefs. "One is the support of competition and generally freer markets, and the other is the advocacy of interventionist policies on various social issues, such as gays in military, stem cell research or in international affairs," he notes. The first involves less government and the second involves more government. Taken together, they can't yield a consistent philosophy favoring expanding individual choice.

Borrowing from William Easterly, Becker maintains that modern-day conservatism has become synonymous with protecting tradition and opposing change. Respecting institutions (such as property rights) that have performed well for a long time is certainly important. "But conditions do change, sometimes in crucial ways, and a sensible conservative philosophy would recognize the necessity of changing one's views when this happens." Consider divorce, says Becker. It made sense to have tough divorce laws when women raised children and didn't work. Allowing their husbands to divorce them would have meant financial destitution. "However, anti-divorce laws make little sense when married women work to earn a living and they have few children," he observes. "Therefore, a true conservative that generally opposes government involvement in private decisions would fully support laws that made divorce quite easy by both men and women."

Curiously, however, Becker praises Reagan for having a non-interventionist foreign policy (and not having particularly strong religious convictions on gays and abortion!!!). To be sure, Reagan's foreign policy designs were not nearly as grand as George Bush's, perhaps because he inhabited a bi-polar world in which the U.S. was not the sole super-power. But this did not prevent him from invading Grenada; stationing troops in Beirut; and destabilizing Nicaragua (remember the Iran-Contra debacle?) - all of which, with the exception arguably of Grenada, did not involve any vital national interests.

Meanwhile, Posner, the resident liberaltarian, traces the decline of the conservative movement to the passing from the scene of conservative intellectual luminaries such as Hayek and Friedman (he also mentions Buckley, Bork and Jeanne Kilpatrick who, in my opinion, have neither the originality nor the intellectual heft to deserve to be mentioned on the same page as Hayek and Friedman let alone the same sentence!) leaving Republicans with few constructive ideas to control the stridency and populism within their ranks. He believes that the policies of the new (post-Bush) conservatism are powered largely by emotion and religion and have for the most part weak intellectual groundings. The major blows to conservatism, culminating in the election and programs of Obama, he maintains, have been fourfold:

"The failure of military force to achieve U.S. foreign policy objectives [right on!]; the inanity of trying to substitute will for intellect, as in the denial of global warming [right observation; wrong example]; the use of religious criteria in selection of public officials, the neglect of management and expertise in government [who can forget Tea-Totaling, Civil Liberties-Chomping AG John Ashcroft and "Heck-of-a-Job-Brownie"?]; a continued preoccupation with abortion [true!]; and fiscal incontinence in the form of massive budget deficits, the Medicare drug plan, excessive foreign borrowing, and asset price inflation [Amen!!]"

Still, Posner holds out hope for conservatives, not because they will suddenly get smart. But because power will inevitably go to Obama's head and make him stupid. "There are signs and portents of liberal excess in the policies and plans of the new administration."

So hang on to those tea bags - you'll need them.