Public/Private Goods


Look, we did something.

Look, we did something.

From Charles C. Mann’s fascinating book 1491: New Revelations of the Americas Before Columbus (p. 235, emphasis added):

Spread at its greatest extent over seven hundred miles of the coastline, Chimor was an ambitious state that grew maize and cotton by irrigating almost fifty thousand acres around the Moche River (all of modern Peru only reached that figure in 1960).  A destructive El Niño episode about 1100 A.D. made irrigation impossible for a while.  In response, the government forced gangs of captive laborers to build a fifty-three-mile, masonry-lined canal to channel water from the Chicama River, in the next valley to the north, to farmland in the Moche Valley.  The canal was a flop: some parts ran uphill, apparently because of incompetent engineering, and the rest lost nine-tenths of its water to evaporation and seepage.  Some archeologists believe that the canal was never meant to function.  It was a PR exercise, they say, a Potemkin demonstration by the Chimor government that it was actively fighting El Niño.

Whenever I hear a politician or government official say: “This may not be an ideal solution, but we must do something about [you name it].” I think of the ancient Peruvians and their up-hill canal — and about ways to hide my wallet.

Over at Mark Perry’s excellent Carpe Diem blog, Mark has an ongoing series about “markets in everything.”  As soon as I saw this, I thought of his series.

As you can see from this photo, Hurricane Sandy took out a section of Hwy 12 on North Carolina’s Outer Banks.

There is a bypass across the sand, but it requires a 4×4 vehicle. When we drove through today, there was a thriving trade of locals with 4x4s and trailers ferrying two wheel drive vehicles (sometimes with an entire family still inside) across the half-mile or so of sand. A waitress at a local restaurant told us that the going rate was a surprisingly reasonable $25.

There were orderly queues of cars waiting on the side of the road to be loaded, and the only government presence I could see was an NC DOT pickup truck who was keeping an eye on the condition of the sand road.

Edit:  I sent these pictures to Mark, and Carpe Diem is carrying the story.

We need to stand up to the special interests, bring Republicans and Democrats together, and pass the farm bill immediately.

Barak Obama

This quote has already been posted by much greater bloggers than I (here, here and here, for example), but it is just such a great example of double-speak. I couldn’t pass it up.

It beggars belief.

It’s crazy for a group of mere mortals to try to design 15 percent of the U.S. economy. It’s even crazier to do it by August.

Yet that is what some members of Congress presume to do. They intend, as the New York Times puts it, “to reinvent the nation’s health care system”.

(HT Jeremy)

George Newman has a good review of the often inconsistent arguments being put forward in favor of health care “reform.”

I was glad to see him address the “health care represents a rising proportion of our income” issue. 

That’s not only true but perfectly natural.  Quality health care is a discretionary, income-elastic expense — i.e. the richer a society, the larger proportion of income that is spent on it.  (Poor societies have to spend income gains on food and other necessities.)  Consider the alternatives.  Would we feel better about ourselves if we skimped on our family’s health care and spend the money on liquor, gambling, night clubs or a third television set?

When discussing this issue, I regularly ask people if they would rather have today’s healthcare at today’s prices or 1950’s healthcare at 1950’s prices.  No one has ever chosen the 1950s option.  (People would prefer to have today’s healthcare at 1950’s prices, and I too wish that Santa Claus was real.)

Newman, Parsing the Health Reform Arguments

(HT Andrew B.)

People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.

— Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations (Book I, Ch. 10, ¶ 82)

This Adam Smith quote is often used to emphasize the evil and collusive nature of “big business.”  Unfortunately, like so often happens in these instances, everyone forgets the rest of the quote.

People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices. It is impossible indeed to prevent such meetings, by any law which either could be executed, or would be consistent with liberty and justice. But though the law cannot hinder people of the same trade from sometimes assembling together, it ought to do nothing to facilitate such assemblies; much less to render them necessary.

Smith wasn’t advocating for anti-trust legislation; he thought such laws were unenforceable and inconsistent with liberty and justice.  Rather, Smith cautioned against government mandated collusion.

Coyote Blog illustrate how we have quite ignored Smith’s admonition.

I can add a million examples.  Hair braiders are stepped on by the government in collusion with licensed beauticians.  Taxi companies get the government to quash low-cost or innovative shuttle transportation.  Discount casket companies are banned by government in collusion with undertakers.  Take dentistry.  Why do I need to go to an expensive dentist when 99% of my dental needs could be served by a hygienist alone?  Because the government colludes with dentists to make it so.  And don’t even get me started on medicine.  My guess is a huge percentage of the conditions people come into emergency rooms with are treatable by someone without a 4 year medical degree and 6 years of internship.  Does one really need a full medical education to stitch up a kids cut knee?  Well, yes, you do today, because doctors collude with the government to make it so.  Why can’t people specialize, with less than 10 years of education, on just, say, setting bones and closing cuts?  Why can’t someone specialize in simple wills or divorces without a full law degree?

As Adam Smith clearly saw, the real danger is not collusion between business men and business men, but collusion between business men and government.  Government is so much more dangerous because it is always done “for our own good.”

Of all tyrannies, a tyranny sincerely exercised for the good of its victims may be the most oppressive. It may be better to live under robber barons than under omnipotent moral busybodies, The robber baron’s cruelty may sometimes sleep, his cupidity may at some point be satiated; but those who torment us for our own good will torment us without end, for they do so with the approval of their own conscience.

–C.S. Lewis

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