Under any institutions, there are essentially only three ways that I can get another person to help me achieve my ends: love, trade, and force.
By love I mean making my end your end. Those who love me wish me to get what I want (except for those who think I am very stupid about what is good for me). So they voluntarily, ‘unselfishly’, help me. Love is too narrow a word. You might also share my end not because it is my end but because in a particular respect we perceive the good in the same way. You might volunteer to work on my political campaign, not because you love me, but because you think that it would be good if I were elected. Of course, we might share the common ends for entirely different reasons. I might think I was just what the country needed, and you, that I was just what the country deserved.
Love—more generally, the sharing of a common end—works well, but only for a limited range of problems. It is difficult to know very many people well enough to love them. Love can provide cooperation on complicated things among very small groups of people, such as families. It also works among large numbers of people for very simple ends—ends so simple that many different people can completely agree on them. But for a complicated end involving a large number of people—producing this book, for instance—love will not work. I cannot expect all the people whose cooperation I need—typesetters, editors, bookstore owners, loggers, pulpmill workers, and a thousand more—to know and love me well enough to want to publish this book for my sake. Nor can I expect them all to agree with my political views closely enough to view the publication of this book as an end in itself. Nor can I expect them all to be people who want to read the book and who therefore are willing to help produce it. I fall back on the second method: trade.
I contribute the time and effort to produce the manuscript. I get, in exchange, a chance to spread my views, a satisfying boost to my ego, and a little money. The people who want to read the book get the book. In exchange, they give money. The publishing firm and its employees, the editors, give the time, effort, and skill necessary to coordinate the rest of us; they get money and reputation. Loggers, printers, and the like give their effort and skill and get money in return. Thousands of people, perhaps millions, cooperate in a single task, each seeking his own ends. So under private property the first method, love, is used where it is workable. Where it is not, trade is used instead.
The attack on private property as selfish contrasts the second method with the first. It implies that the alternative to ‘selfish’ trade is ‘unselfish’ love. But, under private property, love already functions where it can. Nobody is prevented from doing something for free if he wants to. Many people—parents helping their children, volunteer workers in hospitals, scoutmasters—do just that. If, for those things that people are not willing to do for free, trade is replaced by anything, it must be by force. Instead of people being selfish and doing things because they want to, they will be unselfish and do them at the point of a gun.
Is this accusation unfair? The alternative offered by those who deplore selfishness is always government. It is selfish to do something for money, so the slums should be cleaned up by a ‘youth corps’ staffed via ‘universal service’. Translated, that means the job should be done by people who will be put in jail if they do not do it.
I just highlighted this because it was a beautifully phrased argument.
One of the most effective arguments against unregulated laissez faire has been that it invariably leads to monopoly. As George Orwell put it, “The trouble with competitions is that somebody wins them.” It is thus argued that government must intervene to prevent the formation of monopolies or, once formed, to control them. This is the usual justification for antitrust laws and such regulatory agencies as the Interstate Commerce Commission and the Civil Aeronautics Board.
The best historical refutation of this thesis is in two books by socialist historian Gabriel Kolko: The Triumph of Conservatism and Railroads and Regulation
. He argues that at the end of the last century businessmen believed the future was with bigness, with conglomerates and cartels, but were wrong. The organizations they formed to control markets and reduce costs were almost invariably failures, returning lower profits than their smaller competitors, unable to fix prices, and controlling a steadily shrinking share of the market.
The regulatory commissions supposedly were formed to restrain monopolistic businessmen. Actually, Kolko argues, they were formed at the request of unsuccessful monopolists to prevent the competition which had frustrated their efforts.
So many books I need to read before I can have opinions on things.
It was in 1884 that railroad men in large numbers realized the advantages to them of federal control; it took 34 years to get the government to set their rates for them. The airline industry was born in a period more friendly to regulation. In 1938 the Civil Aeronautics Board (CAB), initially called the Civil Aeronautics Administration, was formed. It was given the power to regulate airline fares, to allocate routes among airlines, and to control the entry of new firms into the airline business. From that day until the deregulation of the industry in the late 1970s, no new trunk line— no major, scheduled, interstate passenger carrier—was started.
The CAB had one limitation: it could only regulate interstate airlines. There was one major intrastate route in the country— between San Francisco and Los Angeles. Pacific Southwest Airlines, which operated on that route, had no interstate operations and was therefore not subject to CAB rate fixing. Prior to deregulation, the fare between San Francisco and Los Angeles on PSA was about half that of any comparable interstate trip anywhere in the country. That gives us a good measure of the effect of the CAB on prices; it maintained them at about twice their competitive level.
In this complicated world it is rare that a political argument can be proved with evidence readily accessible to everyone, but until deregulation the airline industry provided one such case. If you did not believe that the effect of government regulation of transportation was to drive prices up, you could call any reliable travel agent and ask whether all interstate airline fares were the same, how PSA’s fare between San Francisco and Los Angeles compared with the fare charged by the major airlines, and how that fare compared with the fare on other major intercity routes of comparable length. If you do not believe that the ICC and the CAB are on the side of the industries they regulate, figure out why they set minimum as well as maximum fares.
Continuing to have nothing much to say except “wow”.
Defenders of [government health spending] programs argue that the poor are so poor they cannot afford vital medical care. Lurid reports to the contrary, most poor people are not on the edge of literal starvation; evidence indicates that in this country the number of calories consumed is virtually independent of income. If the poor spent more of their own money on doctors, they would not starve to death; they would merely eat worse, wear worse clothes, and live in even worse housing than they now do. If they do not spend very much money on medical care it is because that cost, which they are in an excellent position to evaluate, is too high.
Finally something where I can say something more interesting than wholehearted agreement.
The average cost of treatment for a heart attack is about $15,000. The poverty line for a single person in the US is $11,000. On the one hand, credit cards and loans can make up some of the difference; on the other, heart attacks are by no means even close to the most expensive medical condition. So if we’re talking about actually buying health care then no, the poor literally cannot afford it.
If we’re talking about buying health insurance, I understand a very cheap policy would cost about $2000, so the poor can probably literally afford that. I mean, they don’t have a whole lot of fat to trim, but they can afford it in the sense that if they choose to give up their home and car, and live on the streets, then they can have the health insurance. At least until their job fires them because they don’t have a car and can’t get there, and so they lose the money they were using to pay for it. But they won’t starve to death!
But then, why is starving to death such a uniquely interesting endpoint? Why assume that if the poor would die without health insurance we’re morally obligated to give it to them, but if they wouldn’t, we’re not? If we’re amoral or denying all obligations to help others, why care if the poor starve to death? And if we’re not amoral and feel some responsibility to the poor, why not also be concerned about them having a minimally tolerable life?
If some libertarian doesn’t think we have any obligation to help the poor, I’d rather they just say “Well, the poor might starve to death, but that’s too bad.”
Otherwise it seems sort of misleading to me. Saying “Well, the poor won’t literally starve to death” sounds like you’re saying “Well, it’s not that bad.” But if you were actually saying that, I could respond that it is that bad. It’s just bad in a non-starvation-related way. If you don’t care how bad it is, say so instead of hedging about whether starvation is occurring or not.
The best solution to this problem would be for any state instituting a voucher system to include, as part of the initial legislation, the provision that any institution can qualify as a school on the basis of the performance of its graduates on objective examinations. In New York, for instance, the law might state that any school would be recognized if the average performance of its graduating class on the Regents exam was higher than the performance of the graduating classes of the bottom third of the state’s public schools.
The best answer I’ve ever heard to the question of how to decide who gets school vouchers.
It might be possible to reform our present universities in the direction of such free-market universities. One way would be by the introduction of a ‘tuition diversion’ plan. This arrangement would allow students, while purchasing most of their education from the university, to arrange some courses taught by instructors of their own choice. A group of students would inform the university that they wished to take a course from an instructor from outside the university during the next year. The university would multiply the number of students by the average spent from each student’s tuition for the salary of one of his instructors for one quarter. The result would be the amount of their tuition the group wished to divert from paying an instructor of the university’s choice to paying an instructor of their own choice. The university would offer him that sum to teach the course or courses proposed. If he accepted, the students would be obligated to take the course.
The university would determine what credit, if any, was given for such courses. The number each student could take for credit might at first be severely limited. If the plan proved successful, it could be expanded until any such course could serve as an elective. Departments would still decide whether a given course would satisfy specific departmental requirements.
A tuition diversion plan does not appear to be a very revolutionary proposal; it can begin on a small scale as an educational experiment of the sort dear to the heart of every liberal educator. Such plans could, in time, revolutionize the universities.
At first, tuition diversion would be used to hire famous scholars on sabbatical leave, political figures of the left or right, film directors invited by college film groups, and other such notables. But it would also offer young academics an alternative to a normal career. Capable teachers would find that, by attracting many students, they could get a much larger salary than by working for a university. The large and growing pool of skilled ‘free-lance’ teachers would encourage more schools to adopt tuition diversion plans and thus simplify their own faculty recruitment problems. Universities would have to offer substantial incentives to keep their better teachers from being drawn off into free-lancing. Such incentives might take the form of effective market structures within the university, rewarding departments and professors for attracting students. Large universities would become radically decentralized, approximating free-market universities. Many courses would be taught by free-lancers, and the departments would develop independence verging on autarchy.
Under such institutions the students, although they might have the help of advisory services, would have to take the primary responsibility for the structure of their own education. Many students enter college unready for such responsibility. A competitive educational market would evolve other institutions to serve their needs. These would probably be small colleges offering a highly structured education with close personal contact for students who wished to begin their education by submitting to a plan of study designed by those who are already educated. A student could study at such a college until he felt ready to oversee his own education and then transfer to a university.
It is time to begin the subversion of the American system of higher schooling, with the objective not destruction but renaissance.
One of the better university reform proposals I’ve heard, plus an incremental strategy for achieving it!
I have solved the problem of urban mass transit. To apply rny solution to a major city requires a private company willing to invest a million dollars or so in hardware and a few million more in advertising and organization. The cost is low because my transit system is already over 99 percent built; its essence is the more efficient use of our present multibillion dollar investment in roads and automobiles. I call it jitney transit; it can most easily be thought of as something between taxicabs and hitch-hiking. Jitney stops, like present-day bus stops, would be arranged conveniently about the city. A commuter heading into town with an empty car would stop at the first jitney stop he came to and pick up any passengers going his way. He would proceed along his normal route, dropping off passengers when he passed their stops. Each passenger would pay a fee, according to an existing schedule listing the price between any pair of stops.
Holy !@#$, I think he has solved the problem of urban mass transit. There’s an obvious Uber parallel, but this system seems even better since it’s run by people going that direction anyway and each car will be packed, making the costs probably much cheaper. This is such an obviously good idea that I can only assume that it was regulation and the taxi lobby that prevented it from coming to pass. This paragraph probably did more to raise my confidence that there are extremely good libertarian solutions to important problems that we’re missing out on than anything else in the entire book.
Urban renewal uses the power of the government to prevent slums from spreading, a process sometimes referred to as ‘preventing urban blight’. For middle-class people on the border of low-income areas, this is valuable protection. But ‘urban blight’ is precisely the process by which more housing becomes available to low-income people. The supporters of urban renewal claim that they are improving the housing of the poor. In the Hyde Park area of Chicago, where I have lived much of my life, they tore down old, low-rental apartment houses and replaced them with $30,000 and $40,000 town houses. A great improvement, for those poor with $30,000. And this is the rule, not the exception, as was shown years ago by Martin Anderson in The Federal Bulldozer
I don’t know much about urban renewal programs or whether they purport to help the poor; anyone want to weigh in here?
Most conservatives now seem to have accepted, even embraced, the space program and with it the idea that the exploration of space can only be achieved by government. That idea is false. If we had not been in such a hurry, we not only could have landed a man on the moon, we could have done it at a profit.
How? Perhaps as a television spectacular. The moon landing alone had an audience of 400 million. If pay TV were legal, that huge audience could have been charged several billion dollars for the series of shows leading up to, including, and following the landing. If the average viewer watched, altogether, twenty hours of Apollo programs, that would be about 25 cents an hour for the greatest show off earth…
A greedy capitalist could have sold the moon landing in 1969 for something over $5 billion. The government spent $24 billion to get to the moon. It costs any government at least twice as much to do anything as it costs anyone else. It would have cost something under $12 billion to produce the Apollo program privately.
But Apollo was a crash program. If we had been in less of a hurry, it would have cost far less. While we were waiting, economic growth would increase the price for which the moon landing could be sold and technological progress would cut the cost of getting there. We would have arrived, at a profit, sometime in the seventies.
This is the business model of Mars One, which may be a scam. Which makes me wonder: how come, if the business model is sound, in 25 years of us having approximately the technology necessary to go to Mars, no one has come up with a non-scam version of this?
The NFL makes $10 billion a year through TV ads and sponsorship rights. I don’t know if a Mars mission would do better or worse than that – certainly the touchdown would be more exciting, but would people tune in month after month for “Yup, we’re still in this capsule, it’s really cramped in here and outside the window it just looks black”?
Robert Zubrin says he thinks a private company could reach Mars for $5 billion, which sounds promising, but he gets that because the government estimate is $50 billion and he thinks private companies can be ten times more efficient. Come on, Robert Zubrin! Even David Friedman estimates more like twice as efficient. I also note that SpaceX is estimating $1 billion to convert their existing Dragon to a crew-ready Dragon. $1 billion for a famously efficient private company to go from existing small rocket + small capsule to slightly improved small rocket + small capsule that can go to low Earth orbit – and you’re expecting another private company, right out of the gate, to be able to create ex nihilo a Mars-worthy spacecraft and the rocket that can launch it for $5 billion? Plus the astronaut training program, the production of the TV specials, the overhead for this new giant aerospace company you’re founding, the cost of the colony itself, etc, etc? Really?
And even if it’s possible in theory, think about the risk. The risk that the spacecraft explodes on the launch pad, and either you’ve just stuck your company name on a national tragedy or else you’d invested $6 billion in a TV special that’s never going to happen. Or the risk that five years later, the Mars One people come to you and say “Okay, Robert Zubrin was way too optimistic, we spent all your money to build the spacecraft’s left navigational fin, can you give us some more?” The risk that the Chinese beat you there and televising the second manned Mars landing isn’t very exciting.
Nothing I’ve seen so far convinces me that a serious version of Mars One is anywhere on the horizon. SpaceX will probably send a man to Mars someday, but they’ll do it because Elon Musk is vision-driven instead of profit-driven and he’s making enough profits somewhere else to fund his vision. And I don’t think even that would have worked without the funding and help that NASA has given SpaceX so far.
I worry that very big high-risk projects are exactly the sort of thing our current market system is really bad at.
My own conclusion—that drug companies should be free to sell, and their customers to buy, anything, subject to liability for damages caused by misrepresentation—must seem monstrous to many people. Certainly it means accepting the near certainty of a few people a year dying from unexpected side effects of new drugs.
This probably needs its own post, but no no no no no no no no, regulating drugs by liability is not a good idea, maybe even a worse idea than regulating them with regulations. Just as a quick example, here is an excerpt from Wikipedia’s article on the National Vaccine Injury Compensation Program:
“In 1988, the National Vaccine Injury Compensation Program (VICP) went into effect to compensate individuals and families of individuals who have been injured by covered childhood vaccines. The VICP was adopted in response to an earlier scare over the pertussis portion of the DPT vaccine. These claims were later generally discredited, but some U.S. lawsuits against vaccine makers won substantial awards; most makers ceased production, and the last remaining major manufacturer threatened to do so. “
In other words, people kept winning so much money by suing the makers of pertussis vaccines that all of them except one just gave up and went out of business, and the only way the government saved that last one was by promising that the public purse would pay all of its losses. If the government hadn’t stepped in, we would not have vaccines right now because lawsuits would have made it unprofitable to make them. Idiotic lawsuits, I might add – pertussis vaccine doesn’t actually hurt people in any way. This is “my kid got autism after getting a vaccine” level stuff, and the courts were just like “Sure, fine, we believe you, let’s make the vaccine companies pay you so much money they all go bankrupt.”
This is not an isolated incident. The way malpractice works these days is that patients sue for things that are completely medically impossible, the malpractice insurances know that juries are too dumb to realize this, and they settle for more money than you will ever make honestly in your life. The FDA and its regulations are actually a rare force limiting this madness – if nothing else, a doctor can say “Well, that drug was approved by the FDA, so I wasn’t negligent in prescribing it to you.”
I understand that this book’s proposals include a large package of reforms which include those to the court system. But Friedman’s worries about how any “limited government” will eventually regrow into the kind of government that says you feeding your own grain to your own pigs is interstate commerce, are matched by my worries about how any “reformed court system” will eventually regrow into the kind of court system where children must be banned from sledding because if they get hurt they can sue the city for not having banned sledding, or lots of people who come to a psych hospital have to be committed lest years later somebody sue the hospital for not committing them.
If you invite more lawyers in to help control the government, you might end up like that Irish warlord who invited the English in to help control a rival warlord; you’ll find they’re even worse and they never leave.
The argument of this chapter received striking support in 1981, when the FDA published a press release confessing to mass murder. That was not, of course, the way in which the release was worded; it was simply an announcement that the FDA had approved the use of timolol, a ß-blocker, to prevent recurrences of heart attacks. At the time timolol was approved, ß-blockers had been widely used outside the U.S. for over ten years. It was estimated that the use of timolol would save from seven thousand to ten thousand lives a year in the U.S. So the FDA, by forbidding the use of ß-blockers before l981, was responsible for something close to a hundred thousand unnecessary deaths.
If examples of times when bad FDA decisions cost tens of thousands of lives made people abolish the FDA, we would probably have like negative seventeen FDAs by now.
Special interest politics is a simple game. A hundred people sit in a circle, each with his pocket full of pennies. A politician walks around the outside of the circle, taking a penny from each person. No one minds; who cares about a penny? When he has gotten all the way around the circle, the politician throws fifty cents down in front of one person, who is overjoyed at the unexpected windfall. The process is repeated, ending with a different person. After a hundred rounds everyone is a hundred cents poorer, fifty cents richer, and happy.
Annnnd we’re back to me just highlighting passages for rhetorical brilliance.
How much would it cost workers to purchase their firms? The total value of the shares of all stocks listed on the New York Stock Exchange in 1965 was $537 billion. The total wages and salaries of all private employees that year was $288.5 billion. State and federal income taxes totalled $75.2 billion. If the workers had chosen to live at the consumption standard of hippies, saving half their after-tax incomes, they could have gotten a majority share in every firm in two and a half years and bought the capitalists out, lock, stock, and barrel, in five. That is a substantial cost, but surely it is cheaper than organizing a revolution. Also less of a gamble. And, unlike a revolution, it does not have to be done all at once. The employees of one firm can buy it this decade, then use their profits to help fellow workers buy theirs later.
When you buy stock, you pay not only for the capital assets of the firm—buildings, machines, inventory, and the like —but also for its experience, reputation, and organization. If workers really can run firms better, these are unnecessary; all they need are the physical assets. Those assets—the net working capital of all corporations in the United States in 1965—totalled $171.7 billion. The workers could buy that much and go into business for themselves with 14 months’ worth of savings.
Compare to A Future For Socialism. In the research for that post I believe I found that the ratio of capital assets to wages had been rising pretty sharply recently, so it might take more time these days. But even if it took an entire decade, that’s a lot faster than most Communists expect the Revolution to come.
It probably says something very important about human nature and politics that the Socialist movement isn’t dominated by the project of doing exactly this.