Leland Yeager, R.I.P.

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Leland B. Yeager, a distinguished economist and proponent of liberty, died on April 23, in Auburn, Alabama. He was 93 years old.

In public accounts of his life you will see it noted that he was Professor Emeritus at Auburn University and the University of Virginia and that he was a monetarist economist who believed that government should keep its hands off the money supply, except by defining a “unit of account.” He was the author of many books, including International Monetary Relations: Theory, History and Policy (1976), Experiences with Stopping Inflation (1981), The Fluttering Veil: Essays on Monetary Disequilibrium (1997), and Ethics As Social Science: The Moral Philosophy of Social Cooperation (2001).

When you read his work, you will find that his interests were as wide as the world.

Many of Leland Yeager’s shorter publications, as well as his fascinating collection of essays, Is the Market a Test of Truth and Beauty? (2011), can be found on the website of the Ludwig von Mises Institute. When you read his work, you will find that his interests were as wide as the world. Unlike other polymaths and original thinkers, however, he was always careful to stipulate where his own knowledge stopped. He believed in limited government; he believed also in responsible self-limitation. As a result, he was never a pedant, and he was never a bore.

But now I’ve started to talk about Leland Yeager the person, and as I do, I feel a sense of overwhelming loss. For three decades, Leland honored Liberty with his contributions, and I had the privilege of working with him as editor on most of them. He was a fine writer and a gracious fellow citizen of the republic of letters. His friendship inspired me. He cannot be replaced in my esteem.

Leland had many intellectual involvements, and in his last years his health was failing, so I knew I was doubly fortunate to maintain a literary relationship with him. Not that he ever indicated, as academics are wont to do, that he was tired of all the demands on his time. Oh no. There was no falsity about Leland Yeager. He did what he could, and he was interested in doing what he could.

He was a fine writer and a gracious fellow citizen of the republic of letters. His friendship inspired me. He cannot be replaced in my esteem.

If I could have published his essays, reviews, and comments every month, or every week, I would have. But I tried to be respectful of his time. Every few months I asked him whether he might be thinking about something that would be good for Liberty. Usually he’d mention some interests; I’d say that I shared them, and I was sure our readers would also; and soon his crisp, clear copy would appear in my inbox. I’d make a few editorial suggestions, of which he accepted maybe half; but whether he did or he didn’t, he would discuss the logic behind his final choice of words or syntax. I always looked forward to that.

Many authors aren’t interested in discussing words. They’re more interested in what they have to say than in how they actually say it. But Leland was in love with the way language works and with the reasoning behind our syntax, diction, and even punctuation. To an editor, he was the ideal author, a person with whom one could freely discuss the craft of writing and editing, a person from whom one could learn, even when one disagreed with him.

Leland sometimes joshed me about my “flattering” him into writing his next article for Liberty, but there was no flattery involved. I told him exactly how good he was. I looked forward to discovering what his next subject would be. Economics? Government? History? Words themselves? Leland was better at explaining economics than anyone else I ever encountered, with the possible exception of Murray Rothbard (and that’s saying something); but the same enthusiasm and authorial integrity he showed in discussing economics appeared in his treatment of ethics, linguistics, history, and every other subject. A careless word, a willful exaggeration, an improbable “fact,” a cheap piece of abuse — those were things he would never permit himself. Leland never thought that good intentions could excuse bad writing.

Leland was in love with the way language works and with the reasoning behind our syntax, diction, and even punctuation. To an editor, he was the ideal author.

Rereading Leland’s works for Liberty, I found everything as fresh as the day he wrote it — and how much journal writing can you say that about? I’ll mention a few examples:

  • Leland’s essay on alternative histories, the histories of things that never happened (Liberty, September 2009);
  • his essay on free will and determinism (February 2017);
  • his introduction to the “auxiliary language” Interlingua (February 2008);
  • his essay on national and occupational cultures (April 2011);
  • his review of “Reaganomics,” with an exposition of the reasons for separating economy and state (January 1989); and
  • his magisterial consideration of government debt (December 2000).

In 2007 I persuaded him to debate the existence of God with me. He took the unbeliever’s side, but his essay remains a favorite of mine: “Is There a God? And Does It Matter?” (October 2007).

Leland’s last contribution to Liberty was an incisive analysis of Bitcoin. The essay, which I assume to be the final publication in a long career of authorship, appeared on April 4 of this year.

But I mean the final publication during his life. Last November 20, Leland wrote me a message in his characteristic manner. He noted that he was “93 and in poor health.” “Still,” he said, “I can’t and don’t complain.” Then he filled me in on his current literary project:

For years I have been working on a book on capital and interest. It is substantially complete, although still in rough form. Now, I think, I have a coauthor, an eminent economist, who will finish the book after my death and try to get it published.

I am looking for news on this project, and as I get it, I will report it here. Meanwhile, his published work remains — large and rich and thoughtful, and ready at all times to encourage people who delight in true works of the mind.




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Making It Work

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Libertarian policy proposals are often ridiculed for being too impractical and naively idealistic. This article will put forward practical solutions for implementing libertarian policies in ways that can, and will, work in the real world. Privatization and healthcare, two areas in which libertarian policy is hotly contested, are the focus.

I’ll start with a summary of two objections to freedom and follow with a solution for overcoming that objection. I will then add details.

First Objection: infrastructure — such as roads and train lines — and utilities cannot be privatized because they are natural monopolies: two operators cannot compete along the same line at the same time.

Most people are aware that public monopolies are often mismanaged by operators who have no accountability to the public.

First Solution: if the right to operate the space, be it the road, or train line, or power line, were auctioned off for very short periods, at open competitive bidding, it stands to reason that the efficient privatization company would make enough money to place the highest bid at the next round, and would have operated in the best way possible to maximize profits and consumers (if consumers cared to listen to reason). In other words, private operators would compete along the vector of time, not space, with the most efficient one winning the highest profit and likely making the highest bid for the next slot of time.

Second Objection: under the present system, which evolved under capitalism, health insurers pay for the healthcare of the people who pay healthcare premiums, the premiums bearing no direct relation to the healthcare actually received. The system would have to work this way, because the whole idea of insurance is that you pay for the risk that you may one day need insurance, not for the actual healthcare you receive thereafter. This system causes a disconnect between the healthcare buyers and the healthcare sellers, enabling the sellers to jack up their prices. Only big government and a bunch of crusty, arrogant, elitist bureaucrats have the power to step in and force prices down to affordable levels by setting or capping prices by law.

Second Solution: to the extent that health insurance as such poses a structural tendency to sever payment from delivery of service, the problem can be solved not by leaning toward big government but by moving toward greater freedom in free-market competition. Require doctors to publish schedules of what services they offer and at what costs, as would be reasonable in any capitalist system in which sellers must be honest about what they are selling. Then drastically deregulate health insurers so that any entrepreneur can start a health insurance company and compete in any state, across state lines. In this ideal world, health insurers would compete in a marketplace — not a fake Obamacare exchange but a real capitalist free market.

What this natural monopoly thought process ignores is that there are many ways for companies to compete, if you think outside the box.

What will naturally evolve from this is a situation in which, to pass along as much cost saving to customers as possible, in order to get as much business as possible, some health insurers will develop a system for the insureds to prepay for the price services they want, from specific doctors at specific prices. Then, if they get sick and need those services, they will get what they shopped and paid for. The actual payment mechanism would still be the insurer pooling all payments and then paying after the fact for the people who got sick, but price competition would force doctors to lower their prices to competitive levels to get buyers, and this same pricing pressure would force health insurers to pass along the best deal to the buyer. Premiums would be applied after the fact, pro rata, to the healthcare that people chose to buy before the fact. A buyer will compare prices and choose a seller, and buyers and sellers will naturally converge at the equilibrium price point between supply and demand — which as (smart, sane, rational, libertarian) economists know, is the right antidote for monopolistic price gouging.

Details:

Examples of so-called natural monopolies include transit routes, bandwidth, electric utilities and power lines, cable service, garbage collection, and air space for planes or drones.

“Natural monopoly” public infrastructure can be privatized. And they should be privatized. Most people are aware that public monopolies are often mismanaged by operators who have no accountability to the public.

But it is assumed that there can be no competing alternatives, since the land or space simply isn’t there. So let there be a monopoly, but have the government regulate it so it will be forced it to sell at price points below the monopoly price. What this natural monopoly thought process ignores is that there are many ways for companies to compete, if you think outside the box.

Competition in running natural monopoly infrastructure can take place along the dimension of time, not of space, such that, when the natural monopolies are privatized, what is sold is a lease, essentially, to last two or three years, but no longer. The buyer would have every right to do whatever he likes with the land or infrastructure and monetize and run it as he pleases, but only for the term of the lease, at which point the right to buy the next period of time would be up for open bidding and awarded to the highest bidder. Economic efficiency and capitalist theory dictate that the company that can make the most money from such an enterprise will tend to be both the highest bidder and the company that can continue to run it the best. If a transit route is run badly, sales will flag, profits will drop, and the opportunity will arise for someone better to place a higher bid in the next round. Thus, even with only one owner, there will be competition in the economic sense.

If you believe instead, as smart people do, that money is made in a free society by creating high quality at an affordable price where supply meets demand, then the objection collapses.

Additions to the scheme may need to be made, such as requiring a pro rata portion of an operator’s profits to be paid back to previous owners who invested in long-term durable equipment or improvements from which the current owner benefits. But such additions are not difficult to design. As a bonus, if any contractor commits massive fraud against the consumer, this will be easy to see, because if a competing operator wins the next lease bid, when he looks at the infrastructure he will see what the previous operator did to it, and consumers will be protected better than we would be under heavy regulator scrutiny.

Today’s economy already proves that this will work. There are hundreds of huge corporations that buy some downstream service from only one seller, for the term of a lease; and there is ample price competition, even though only one seller can get the deal to be a supplier at one time. The companies that sell “back end” human resources services (outsourced services such as paychecks and benefits management) to Fortune 500 corporations are an example: a buyer can sensibly go with only one seller at a time, but there is a ton of competition. Another example: places exist where various owners own the rights to different heights above the ground of a single plot of land, so that two companies can compete by owning different floors of the same building, competing along the dimension of height, not of length.

The person who made the original objection to privatization will object again, saying that the rich will bid big to get ownership of the monopoly, charge high prices while offering crappy service, and run away after their lease ends — taking profits derived from forcing people to pay a lot for a service with no alternatives. The operators’ costs would have been low, since they didn’t give a damn about infrastructure investments. But this objection reduces merely to the general argument against free market capitalism. The Marxists and socialists think that rich people get rich by fleecing their victims. If you believe instead, as smart people do, that money is made in a free society by creating high quality at an affordable price where supply meets demand, then the objection collapses. Specifically it is wrong because an operator who does a good job will always make more, net, long term, than a con artist, hence the good operator will have more money and more motivation to outbid the crooks.

New York City as subway operator does not, and cannot, spend the money it should to maintain the subway service as it deserves and needs.

This is not to say that the system can never be abused. No system is perfect. Privatization is certainly not less perfect that a regulated natural monopoly, and it would ultimately be far better. Just ask anyone who rides the subway in New York City: in addition to being a vital means of transportation for millions of New Yorkers, it is also the location that the wonderfully brainless liberal politicians of New York have chosen as the de facto living space for the mentally ill homeless people, just to get them off the streets. The bigger picture is that the economic demand for the subway would justify a rise in fares that is politically unpopular and therefore impossible. So New York City as subway operator does not, and cannot, spend the money it should to maintain the subway service as it deserves and needs. The New York Times even ran a crusade to get more spending for the subways, noting how horrible they are and how many people use them, which crusade did not succeed, and could not succeed. The free market would do better.

I have suggested two or three years as the basic contract period for the operation of natural monopolies. It needs to be short enough to enable consumers to hold bad operators accountable so that better ones can step in. Employees may not want two- or three-year contracts, and somewhat more may need to be paid them on this account. Nevertheless, we need to get away from the labor union mentality, according to which the labor pool only works if employees are chained to their jobs and employers are chained to long-term labor contracts. The United States is becoming "the gig economy," as they say, led by the Uber and Lyft drivers. A lot of industries are moving toward hiring employees for a temporary, shorter duration and away from hiring them for permanent, full-time jobs. Employees with strong professional skills are so valuable that no one who purchased a short-term lease on a natural monopoly would want to get rid of them.

As far as planning goes, there are examples in today's economy of businesses drawing up plans for long-term operations, because that is how they can best succeed, but if their basic contracts are not renewed, they just tear up the plans. In business you need long-term plans, but you also need to face the risk that these plans may fail dramatically, at any time. If you don't get investors in your second year of operation, you just eat the third, fourth and fifth years of your business plan, no matter how great those years might have been.

Thousands of small businesses will pop up to become micro-health insurers and facilitate the trade, between doctor and patient, of treatment for money.

Now to some details about healthcare. Free market economics doesn’t work if there is a disconnect between the person who pays the money for a benefit and the person who receives the benefit. The disconnect causes prices and costs to skyrocket, because the buyer cannot force the seller down. Many libertarians already know this: one of our objections to government spending is that the government will overspend because there is a disconnect between the taxpayer and the beneficiary. Healthcare, where the health insurer pays but the patient receives the treatment, and does not directly pay the doctor, and the doctors don’t compete for each individual patient on price, is a great example of a buy-sell disconnect.

The problem with health insurance is that, originally, it was in fact insurance that a person bought to mitigate the risk of getting sick, but it has become a behemoth that pays for all medical expenses and then collects exorbitant and arbitrary amounts from the public, with no connection between payments and collections in an individual patient’s case. The problem arises because, by the time people become sick, their medical costs are typically too great for them to pay, so they must have already had insurance to get treatment, and the insurance will then end up paying all costs.

To reform healthcare, first, require doctors, as a condition of receiving their license to practice medicine, or merely by means of laws mandating truth in advertising, to create a schedule of fees and prices for each of their services, and publish it, and let individual patients receive that care if they pay that fee from the schedule of rates. Second, break up the regulations of health insurance companies so that anyone can start one and can compete in every state with a minimum of red tape. Third, require that each health insurer publish the actuarial tables that each insurer is using, showing what portion of your payment will pay for what medical treatment in the future from what doctor’s schedule of fees. Fourth, allow the consumer to “buy” his future medical treatment by choosing what portion of his premium he chooses to allocate to the doctors’ services that he could potentially get, from the competing doctors’ fee schedules, “through” his health insurance company.

The doctors who succeeded would be those who proved they could deliver successful, effective treatments, but at cheaper prices.

The health insurer would pool the buyers’ payment to make the actual payment to the doctors for the insureds who become sick, but each buyer could take the income that he has allotted for health insurance and “spend” it by choosing the slate of healthcare services he would pay for at that price, selecting his doctor from among the competitors. Doctors would compete on the price to be chosen by each buyer when he decides how to allot his healthcare premium spend.

This would combine two novel approaches: “shopping” for treatment from the doctor, not the insurer, and expanding competition among health insurers by allowing small startup health insurers, akin to what was done for poor businesses in Asia by the “micro-credit” revolution that enabled any poor woman or man to open a business on a small loan. Thousands of small businesses will pop up to become micro-health insurers and facilitate the trade, between doctor and patient, of treatment for money. This would connect the buyer to the seller and enable massive price competition among doctors, so costs would plummet, because many doctors would seek patients by offering cheaper prices at affordable levels of quality. Obviously this would not lower the quality of healthcare, because the doctors who succeeded would be those who proved they could deliver successful, effective treatments, but at cheaper prices. In today’s world, where everyone finds ratings and reviews online, the doctors with the best value propositions, defined as higher quality at cheaper price, would be readily apparent.

The micro-health insurer could also prepay, locking the buyer and seller in at that price while taking profit up front and not when the healthcare is delivered. This would keep healthcare costs locked down at the competitive price the buyer chose to pay, and complete the sale for the buyer at the time of purchase, not after the fact when the patient-buyer becomes sick and his very life depends on paying for healthcare. Right now there are maybe a handful of insurers and 20 health insurance plans that compete in any given state Obamacare Exchange, but the initiative I have outlined would open the door to thousands of health insurers, and potentially hundreds of thousands of healthcare “menus” and “menu items” available to buyers pre-paying doctors a pro rata share of the healthcare premium cost of treatments received.

A free-market system could work for the benefit of all Americans by introducing price competition into the healthcare industry.

The analogy of healthcare options to a menu at a restaurant is apropos. People need food. If you don’t have it, you die, just as a sick person who needs medical treatment gets it or dies. This does not enable the farms to jack up the price of food until it is out of sight, as doctors, hospitals, and pharmaceutical makers are doing. Instead, thousands of restaurants and grocery stores compete, buying food from farms and selling it as a selection of options on a menu. People buy what they want, within the limits of their budget. Consumers win, and have tasty meals and full bellies. Yes, poor people may have to eat at cheap fast food stores, but they don’t starve to death (and the food at Dunkin Donuts is not that bad!). If you are willing to make do with less, such as by purchasing vegetables and cooking your food at home, you can eat quite nicely. So, too, could a free-market system work for the benefit of all Americans by introducing price competition into the healthcare industry, which would create affordable options across a range of price points.

The conclusion to infer from this article is that, while the statists object that libertarian policy cannot be implemented in a practical manner, this is simply not true. Thinking outside the box, and being creative and innovative about policy solutions, will meet the challenge of making liberty work for America.




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Bettina Bien Greaves, R.I.P.

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All scholars dream of having one or more disciples who will make sure their legacy is kept alive and their works and theories prominently trumpeted before the public eye.

For the great Austrian economist Ludwig von Mises, there was quite a following, including two couples, Hans and Mary Sennholz, and Percy and Bettina Greaves. On January 22 the last of the four, Bettina Bien Greaves, died at the astounding age of 100. (Mary Sennholz also lived to be 100. Austrian economists live long!)

Bettina Greaves deserves to be honored as Mises’ most devoted student, and in July a room will be dedicated to her at the annual FreedomFest conference in Las Vegas.

From the time she first heard Mises speak in 1951 at a Freeman seminar in Washington Square in New York City, Bettina was smitten. With a background in shorthand and secretarial work during the war years, she attended Mises’ famous New York University graduate seminar, taking copious notes on every lecture from 1951 until 1969. Although she had no formal training in economics, Greaves was the queen of the Austrian school and never deviated from it. She joined the Foundation of Economic Education (FEE) staff in 1953 and worked at the FEE mansion for the rest of her career. She survived everyone, including founder Leonard Read. After retiring, she stayed on as a board member and even donated her home in New York to FEE.

Bettina Bien Greaves was an uncompromising advocate of liberty, and will always be an inspiration to aspiring Austrian economists, and scholars everywhere.

I met her a few times when I visited FEE headquarters. My favorite Bettina Greaves story came from 2001, when I became president of FEE. After my first board meeting, Bettina came up to me and said privately, "I support you in every way as the new president. But could you do me a favor? Please be more critical of Milton Friedman!"

I nodded, and she left the room. A few minutes later another board member, Muso Ayau, came over to me. He was the founder of the Universidad Francisco Marroquín in Guatemala and a former president of the Mont Pelerin Society. He whispered, "Mark, I support you in every way as the new president of FEE, but could you do me a favor? Stop being so critical of Milton Friedman!" I’ll never forget it. I told this story to Milton and he had a belly laugh.

Bettina was a true believer in Austrian economics, and always sided with Mises when it came to differences between him and Milton Friedman and the Chicago school. (I’ve written a book on the differences, entitled Vienna and Chicago, Friends or Foes? A Tale of Two Schools of Free-Market Economics [Capital Press, 2005].) She focused her career on advancing the works and ideas of the Austrian school, including the contributions by Henry Hazlitt and Hans Sennholz. She wrote many articles for The Freeman, gave lectures, and compiled anthologies about Austrian economics. She spearheaded FEE’s program to provide libertarian material for high school debaters with packets on foreign aid, government regulations, medical care, and other issues. She compiled and edited Free Market Economics: A Syllabus, and A Basic Reader, a two-volume set that was distributed to thousands of students and teachers. After her husband’s death in 1984, she kept alive Percy Greaves’ lively interest in the controversies surrounding Roosevelt and Pearl Harbor, and wrote several Freeman articles on events that led up to that day of infamy, December 7, 1941.

But her main interest was always in her mentor, Ludwig von Mises. As Margit von Mises noted, Bettina studied “line by line, word for word” her husband’s writings. Bettina and her husband traveled with Lu and Margit to Argentina, Mexico, and other foreign lands where Mises lectured. (She spoke fluent Spanish and German.) She compiled, edited, and translated many of his books after his death in 1973. She also worked with her husband Percy to make Mises’s writings more understandable to the public. It was published in 1974, called Mises Made Easier (but never easy!). With the help of Robert W. McGee, she published an exhaustive Mises: An Annotated Bibliography (FEE, 1993, 1995). When the Liberty Fund decided to publish the complete works of Mises, Bettina was asked to be the editor, writing introductions for each volume.

Bettina Bien Greaves was an uncompromising advocate of liberty, and will always be an inspiration to aspiring Austrian economists, and scholars everywhere. ¡Bien hecho!

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Editor’s note: Bettina Greaves was a loved and valued Contributing Editor of Liberty. Readers can find her articles and reviews from November 1997, “To the Dialecticians of All Parties,” to November 2008, “War from Six Sides,” by clicking here. More biographical information can be found in Jim Powell’s article, “A Salute to Bettina Bien Greaves,” July 1, 1997, on the FEE website.




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Healthcare: More Is Less

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There was a time when insurance companies focused on actuarial tables while physicians focused on diagnosis and treatment. But not any more! Now insurance companies are raking in the premiums — double what they were five years ago for many customers — while doing everything in their power to reject claims. Patients are more afraid of the insurance agent than they are of the disease.

In the past month alone, my daughters have had four hefty medical claims rejected, including a medication prescribed to control chronic seizures and a gallbladder removal that was deemed “elective” by the insurance company! What is the point of buying insurance if you can’t use it? And how can the market respond to customer dissatisfaction when government regulation gives insurance companies so much power?

Insurance companies are raking in the premiums — double what they were five years ago for many customers — while doing everything in their power to reject claims.

I raised five active, rambunctious, rough-and-tumble children across three decades, and while I worried occasionally about their health and safety, I never worried about how I would pay for their healthcare. My relationship with insurance companies was straightforward and consistent. Our copay was consistent. Our deductible was consistent. If one of the kids was injured, I could call my favorite orthopedic practice without worrying that the claim would be rejected on the grounds of some esoteric technicality. When my daughter developed epilepsy, I was proactive in finding the right doctor, the right diagnosis, and the right treatment that has kept her virtually seizure-free for 15 years — until her current insurance company decided that the medication her doctor has prescribed for those 15 years will not be covered.

In the past five years, everything has changed. Suddenly it’s the insurance agent, not the physician, who decides what the patient needs by deciding whether it will be covered. Insurance premiums are so high that few families can save enough to cover out-of-pocket expenses, yet everything is becoming an out-of-pocket expense. My daughters find themselves owing nearly $15,000 in uncovered medical expenses in a single month — and they have insurance!

In the past month alone, my daughters have had four hefty medical claims rejected, including a medication prescribed to control chronic seizures and a gallbladder removal that was deemed “elective."

American healthcare, once the best in the world, is collapsing under the weight of over-regulation and crony capitalism that favors the insurer over the healer. Rand Paul, the only actual physician in the US Senate, has been locked out of discussions about healthcare reform. Let’s hope it all collapses soon, so the free market can rebuild from the ashes.




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Customer Care

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The Green, Green Cane of Cuba

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Cuba has garnered a reputation for, and has been touted as, a model of green, organic, non-GMO sustainable production and consumption. According to the Organic Consumers Association (quoting Cultivating Havana: Urban Agriculture and Food Security in the Years of Crisis, a study), many of the foods that people eat every day in Cuba are grown without synthetic fertilizers and toxic pesticides.

Some of this is true, but because the regimen has been adopted out of necessity and not out of ideology (unless you count the Communist ideology that brought this on in the first place), it is not rigorously adhered to in the way in which, for instance, an organic farmer in the US might adhere to it. It is expediency, with ideology added after the fact to capitalize on necessity.

At one time, killing what heretofore had been your own chicken but was now state property could land a campesino in jail.

As USA Today reported in March, “Cuba once focused on capital-intensive, industrialized agriculture on large state-run farms, but was forced to change after economic support from the Soviet Union evaporated. Beginning in 1990, Cuban food production fell precipitously. The country shifted to a low-input agricultural cooperative model. Even so, it suffered serious food shortages in 1994, which prompted further changes.” It might be added that, changes or not, sugar production has fallen by 60% over the past 30 years.

Unable to import industrial fertilizers and pesticides, Cuba resorted to using horse, cow, pig, chicken, and even human waste for soil nutrition. And it tried to become self-sufficient in food production. At one time, killing what heretofore had been your own chicken but was now state property could land a campesino in jail. And woe betide the gardener who broke a shovel — sabotage!

Into the breach stepped Uncle Sam, easing the embargo restrictions on exporting food and medicine to Cuba.

On my recent bike trip across Cuba, I was accompanied by a bourgeois socialist couple — retired on government pensions, upbeat about Castro’s “reforms,” berning-for-Bernie — who wanted to see the island before it was “ruined” by McDonalds, Walmarts, discount dollar stores, and other popular tendrils of free choice that might invade once the embargo is lifted. Fair-weather vegetarians (don’t mention bacon around them!), free-range egg fans, supplement-swallowing, sugar-hating, GMO-abjuring, organic-food faddists, they were also looking forward to eating “healthy” food in Cuba.

Well, Cubans don’t do vegetarianism. Castro pushed salads — mostly cabbage — on them during the “Special Period” in the ’90s; and, at least for tourists, greens remain a dependable staple, composed mostly of cabbage, tomatoes, beets, and cukes topped with canola oil and vinegar. But Cubans much prefer meat, beans, rice, and starchy veggies — yuca, malanga, and plantains, preferably fried — plus anything with sugar: rum (and any other alcoholic drink, such as the mojito, with an added dollop of sugar), guarapo (pure sugar cane juice), raw sugar cane, churros, cucurucho (a mixture of honey, nuts, coconut, and sugar), coffee brewed with sugar (traditional), malta (a thick, extremely sweet version of non-alcoholic malt stout), coke mixed with sweetened condensed milk, ice cream, and extra sweet pastries.

Our diet-conscious couple brought boxes of “natural” granola bars so as to avoid the pork. My wife and I brought a jar of peanut butter and a bottle of sriracha sauce to spice it up.

On our visit to Cuba, my wife and I saw chickens everywhere, scrawny but free range. Every evening when arriving at our lodging, our host would offer us dinner, an always preferable alternative to eating in a government restaurant. I’d ask what was available and, knowing Cuban cuisine, would decide for the group. Initially I’d lean toward chicken out of respect for my “vegetarian” companions. Invariably, the chicken portions would consist of a giant thigh and leg with meat so white one could have mistaken it for a breast.

Aside: contrary to popular US perception, Cuba does have a fast-food restaurant chain — El Rapido, a state-run enterprise. Guidebooks and trip accounts tout it as dependable, with food quality varying from passable to good, especially the chicken — again, a thigh and leg combo. We never ate at a Rapido — but not for lack of trying. The ones we stopped at were either out of meat or not serving food because something had malfunctioned, or something else had gone wrong — but still open, with full staff just sitting around.

Riding with me in a taxi one day, Melinda, one of my progressive companions, wondered how the chickens we were served were so big when the ones we saw roaming about were so rickety. So I asked our driver. He said Cubans don’t kill their chickens, they’re for eggs. Eatin’ chickens are stamped with madinusa. Not familiar with the term, I asked him what it meant. He looked wryly at me, sideways, and then I got it: Made in USA.

When I told Melinda she gulped and said, “You mean we’ve been eating Purdue chickens? From now on let’s ask for pork; at least it’s organic.”

Pork is the ubiquitous Cuban meat. The only available roadside lunch snacks were in-season fruit stands and roast pork sandwiches consisting solely of pork and bread. (Cuba grows no wheat; it’s all imported, some of it possibly GMO.) Our diet-conscious couple brought boxes of “natural” granola bars so as to avoid the pork. My wife and I brought a jar of peanut butter and a bottle of sriracha sauce to spice up the pork sandwiches (yes, it’s a strange combination, but delicious).

Beef was the least available meat, even though we saw lots of cattle in the central provinces. Apparently it’s reserved for the nomenclatura and tourists. Though not available in government ration stores, it can be obtained by anyone at convertible currency stores — if you have the money. At one B&B where the owner was tickled pink that I was a Cuban-American, it brought out her impish side. I requested ropa vieja, a traditional brisket or flank steak dish. She thought about it for a minute and said, “We can do that. And it’ll be the best ropa vieja you’ve ever had.”

I responded, “Remember, I had a Cuban mother.”

Without skipping a beat she retorted, “It’ll be the second-best ropa vieja you’ve ever had.” We both laughed.

Fish is widely available but of varying quality. Whenever it was offered as fresh and a good species, especially pargo, Cuban Red Snapper (nothing like it!), I opted for it. Yes, Cuba hasn’t overfished its stocks. But not for eco-ideological reasons; rather for “sugar cane-curtain” reasons: to limit small boat traffic along its shores, minimizing escape and infiltration attempts. Additionally, small-enterprise fishing businesses haven’t been allowed: the state will provide the fish. However, lobster is often available, and it is to die for — huge, cheap, and delicious.

Arguably, our best meal was at a paladar (private restaurant) in Playa Giron (aka Bay of Pigs). We were the only ones there. The menu, recited, not read, included a special trio of fresh fish, shrimp, and lobster, all for $15 each, including cheap imported Chilean wine and all the trimmings. When the waiter was through I asked him about caiman (the Cuban croc), which I’d heard was available for eating in the Zapata swamp area. He answered that yes, they served it but couldn’t announce it, as it was a protected species. Though I desperately wanted to try it and cock a snook at the Castro regime, we all opted for the special.

One of the worst personal and environmental assaults in Cuba is the air pollution. It’s not the brown clouds that bedevil Beijing — the source is nostril level and in-your-face.

One B&B owner, who’d been in the tourism business all through the Special Period, both legally and illegally (and had spent time in jail), elaborated on what food was like back then. He cooked us a typical dinner (as a side dish to the marlin and lobster he was serving us): boiled cabbage. I don’t know what he did to it, but it was surprisingly tasty. He added that breakfasts in the special period consisted of sugar water followed by labor in the cane fields — a dish he didn’t serve us.

You see a lot when you ride a bike through the countryside. At least once we saw someone spraying pesticides on crops. When I mentioned it to Melinda she despondently admitted that she too had seen it. But one of the worst personal and environmental assaults in Cuba is the air pollution. It’s not the brown clouds that bedevil Beijing — Cuba’s breezes dissipate that possibility, and there’s little heavy industry. The source is nostril level and in-your-face. All those old cars that look so charming have been retrofitted with diesel engines that have zero emission controls. Clouds of black smoke spew out of nearly every vehicle, to such a degree that one of our companions got sick. Riding for any length in one of those classic cars will make you sick. Floor holes funnel the poison into the cabs, which means that all windows must be open all the time. Our B&B in Havana closed all the windows facing the street, to keep the exhaust out. Though the problem is acute in cities and towns where traffic can be dense, even out on the highways we’d hold our breath and avoid in any way we could the passage of a bus or truck, the most common vehicles on highways.

Garbage, like many things in Cuba, is full of contradictions. Cubans are a very clean people. One informant told me that trash collectors are particularly well paid. In general, the streets are quite clean. But . . . every once in a while mounds of garbage dot cities, towns, and the countryside, almost as if they’ve been warehoused in discreet piles and then forgotten, only to make a sudden reappearance.

On the way to find my grandmother’s grave, I struck up a conversation with a street sweeper, about my age. He was pushing a two-binned pushcart and sweeping with a handmade broom. He had a very photogenic face and was smoking a cigar. Intermittently picking up trash — there wasn’t much — and sitting in the shade, he caught my eye. I asked if I could photograph him. He was proud to be so noticed. After some introductory remarks and typical Cuban give-and-take, he declared, “We want capitalism to come back.” I asked him to elaborate. He said things were much better before the Revolution; there was more opportunity, more dynamism, and more wealth.

According to one person I talked to, the only municipal potable tap water in Cuba is in Baracoa, in the Sierra Maestra mountains at the far east end of the island. And it is delicious. Cool, free-flowing rivers fill Baracoa’s reservoir. Elsewhere, municipal water is a mess. In Guantanamo and in Havana, where I actually watched the process of getting tap water (and likely in other places too), it runs like this: Early in the evening, the water mains fill up. In a couple of hours the water level in the pipes gets high enough to reach the house branches. At this point, my two B&B owners turned on an electric or gasoline pump to get water from the mains into a cistern. Another couple of hours goes by; then, around 11 pm, another pump moves the water from the cistern up to a rooftop tank. Voila! Domestic water! — though not provided in the greenest way. Rural areas depend on trucked water and cisterned rainwater. Potable, government bottled water is also widely available. It is definitely not delicious. Though it has no actual repellent taste or smell, I have never tasted worse purified water. The consumer cost of both water and electricity is trivial — again, hardly an efficient or green approach to conserving resources.

Cuba’s organic farm production and the Obama administration’s trade overtures have caused concern among Florida’s organic farm growers. The March 18 issue of USA Today reports that

Florida farmers say the Obama administration’s plan to allow Cuban imports threatens their $8 billion-a-year business. Florida’s larger organic growers, already struggling to remain profitable, may be particularly hard-hit because Cuba has developed a strong organic farming sector.

Initially, Cuba most likely would export many of the same products grown by Florida organic farms, and the communist nation would enjoy the advantage of lower wages, state subsidies, cheap transportation and the novelty appeal of Cuban products.

It’s not just the subsidized competition that is worrisome. One American farmer asks, “When you buy Cuban products, are you helping the Cuban farmer — or the Cuban government?” He goes on to note that he worries about diseases, pests, and invasive species. Two-thirds of Florida farmers are against any deal. Bell peppers, tomatoes, and cucumbers are the primary products of Cuban state farms, but avocados and more exotic produce such as guanabana (soursop) are in the running.

The street sweeper declared, “We want capitalism to come back.” Things were much better, he said, before the Revolution; there was more opportunity, more dynamism, and more wealth.

USA Today adds, “Eva Worden, a Cuban-American organic grower in Punta Gorda, Fla., supports a resumption of trade between the U.S. and Cuba but wants to be sure the fruit and vegetable needs of the Cuban people are met before encouraging exports.”

Natural, organic, and even “genetically modified” terms have always been a minefield of imprecision and ideology. When politics is added to the mix, it’s anyone’s guess what government policy might turn out to be. Best to let the consumer decide . . .




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The Problem of Inequality

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Left unfettered, the capitalist system always has and always will produce a rising standard of living for the poor and the middle class, and for the people as a whole. It also produces a constant circulation of wealth among economic classes, ensuring that great capitalist enterprises will eventually be overwhelmed by competition, and great private fortunes will soon be dissipated by their heirs, who will be replaced in the economic hierarchy by nouveaux riches. Another way of putting this is that the poor will get richer and the rich will get poorer — but there will always be large differences of wealth between the people who are most successful at the moment and the people who aren’t.

If you don’t like that, you can consider what happens under the precapitalist system, which fools are always trying to revive — the system in which the state constantly tries to control economic differences by redistributing wealth, thereby destroying it. Isabel Paterson said it best: “Destitution is easily distributed. It’s the one thing political power can insure you.”

The poor will get richer and the rich will get poorer — but there will always be large differences of wealth between the people who are most successful at the moment and the people who aren’t.

Recently, after reading some of Hillary’s Clinton’s demagogic rants about “inequality,” I happened on some words that reminded me of the unfortunate fact that total ignorance of political economy is nothing new. The words are part of an essay, “The Absurd Effort to Make the World Over,” by the early sociologist William Graham Sumner. They were published in 1894, and they show how persistent economic fallacies, and their political exploitation, have been. They were chronic even in Sumner’s time, which was supposedly the great age of laissez-faire.

Sumner writes:

It is repeated until it has become a commonplace which people are afraid to question, that there is some social danger in the possession of large amounts of wealth by individuals. I ask, Why? I heard a lecture two years ago by a man who holds perhaps the first chair of political economy in the world. He said, among other things, that there was great danger in our day from great accumulations; that this danger ought to be met by taxation, and he referred to the fortune of the Rothschilds and to the great fortunes made in America to prove his point. He omitted, however, to state in what the danger consisted or to specify what harm has ever been done by the Rothschild fortunes or by the great fortunes accumulated in America. It seemed to me that the assertions he was making, and the measures he was recommending, ex-cathedra, were very serious to be thrown out so recklessly. It is hardly to be expected that novelists, popular magazinists, amateur economists, and politicians will be more responsible. It would be easy, however, to show what good is done by accumulations of capital in a few hands — that is, under close and direct management, permitting prompt and accurate application; also to tell what harm is done by loose and unfounded denunciations of any social component or any social group. In the recent debates on the income tax the assumption that great accumulations of wealth are socially harmful and ought to be broken down by taxation was treated as an axiom, and we had direct proof how dangerous it is to fit out the average politician with such unverified and unverifiable dogmas as his warrant for his modes of handling the direful tool of taxation.

Great figures are set out as to the magnitude of certain fortunes and the proportionate amount of the national wealth held by a fraction of the population, and eloquent exclamation points are set against them. If the figures were beyond criticism, what would they prove? Where is the rich man who is oppressing anybody? If there was one, the newspapers would ring with it. . . . Wealth, in itself considered, is only power, like steam, or electricity, or knowledge. The question of its good or ill turns on the question how it will be used. To prove any harm in aggregations of wealth it must be shown that great wealth is, as a rule, in the ordinary course of social affairs, put to a mischievous use. This cannot be shown beyond the very slightest degree, if at all.

I can think of only one exception to this line of argument, but the exception has become a mighty one. When people become convinced that wealth is indeed dangerous, and they create a political culture based on the fallacies Sumner reproved, they transform their fears into reality; they make wealth dangerous. Most rich people are politically harmless, but some act on the fallacies they have been taught, and try to better the country by political activism. The heirs of Ford, Rockefeller, Kennedy, and many others have done this. George Soros is doing it right now. Almost always, these people work toward constricting the capitalist system and therefore (strange, unanticipated, and unrecognized effect) toward freezing poor people in their poverty. And as government, under such influences, attains more power, it attains the power to generate fortunes directly. This, not the capitalist system, is the origin of the vast Clinton fortune, a fortune now being used, as was the fortune of Julius Caesar, the richest man in Rome, to devastate the republic in which it grew.

This, I believe, may be the great domestic political problem of our time. (We have a lot of others, I know.) How will libertarians address it?




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A Choice Not an Echo . . . Please

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I would be surprised if Donald Trump and Hillary Clinton became the nominees of the two major parties in 2016. Not shocked, mind you, but surprised. We’ve seen stranger things. Consider Jesse Ventura.

But the prospect of a “Trump v. Clinton” ballot makes me uneasy — in part, because they both seem so ideologically ambiguous. While I know they must differ ideologically, I’m not quite sure how.

It seems Trump prefers markets where he can put his thumb on the scales. Level playing fields are apparently for stupid people.

Mr. Trump, after all, has yet to release a lucid statement of his political and philosophical views. In all likelihood, he never will. We are left to infer them from his well-documented actions and inchoate utterances. Here are a few such inferences.

We know he doesn’t believe in free markets because he boasts of buying favors from politicians. It seems he prefers markets where he can put his thumb on the scales. Level playing fields are apparently for stupid people. Or perhaps to him, buying influence from politicians is simply part of a truly free market.

We know he isn’t for free trade because he brags that he will use every weapon at his disposal, including tariffs, to force America’s trading partners to their knees. While this proposal may have a certain appeal, it has the appearance of ignoring the lessons of the Smoot-Hawley Tariff. (Anyone? Anyone?) Do we really want an international trade war?

So, if Mitt Romney is a free-market capitalist who supports free trade, what is Donald Trump?

Let’s just say that it’s not so easy figuring out which school of philosophy is Mr. Trump’s alma mater.

On the other hand, Mrs. Clinton was a Goldwater Girl in high school, campaigning for the Republican presidential candidate. By the time she finished at Wellesley, she had converted to radical activism, enamored of Saul Alinsky’s grassroots Marxism. Since then, she has written and spoken many, many words about her political and philosophical beliefs, all of which assure us that she is a woman of the progressive left. But what about her actions?

To my knowledge, she is the only progressive leftist to have served on the board of the Walmart Corporation. She did so for seven years. This line of her résumé is unappreciated by many on the Left.

Without a doubt, Clinton is the only progressive leftist to have raised tens of millions of dollars from Wall Street donors in the first three months of her presidential campaign.

It is probable that she is the only progressive leftist to have turned a $1,000 stake into almost $100,000 by trading cattle futures. At the time, she was supplementing her husband’s meager $35,000 salary as governor of Arkansas. It was her version of clipping grocery coupons.

Without a doubt, she is the only progressive leftist to have raised tens of millions of dollars from Wall Street donors in the first three months of her presidential campaign. It could be that no one has told them she is a progressive leftist.

I could go on, but just ask yourself this: if Bernie Sanders is a democratic socialist, what the heck is Hillary Clinton?

Let’s face facts. Donald Trump and Hillary Clinton are both acolytes of the same philosophical school. They are opportunists. They crave money, fame, and power. If either of them became president, the only thing we know for sure is this: the office would be used to seize more power.

They would view the system of checks and balances that limits the abuse of power as nothing more than an annoying restraint on the authority of the president. These safeguards would be seen as mere obstacles, narrowing the range of means available for achieving the noble ends of “making America great again” and “moving the country forward.”

How in the world would you choose between them?

On one side we have a rich, fat, old, white, blonde-haired, blue-eyed, candidate with an unpleasant voice, an arrogant manner, and an authoritarian personality. On the other side we have Donald Trump. Apart from sex, they’re like two megalomaniacal peas in a pod.

What is a voter to do? Imagine a ballot with Benito Mussolini and Eva Perón. Choose one. Go ahead.

On the other hand, Mrs. Clinton was a Goldwater Girl in high school, campaigning for the Republican presidential candidate. By the time she finished at Wellesley, she had converted to radical activism, enamored of Saul Alinsky




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An Exceptional Economist

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When I first saw the list of “Seven Bad Ideas” by Jeff Madrick, I thought of the biblical refrain, “Woe unto them who call evil good and good evil” (Isaiah 5:20). How can he consider the Invisible Hand, Say’s law, limited government, low inflation, efficient markets, free trade, and economics as an objective science to be “bad ideas”?

Then I read the book, and came to the conclusion that Jeff Madrick is an exceptional economist. By that I mean that Madrick considers all the above ideas to be good except when they are misused by economists and government officials who engage in “dirty economics.” He is one of those economists who constantly says, “I’m all in favor of the free market, but . . .” and then lets out a litany of exceptions to the rule.

The greater the level of economic freedom, the higher the standard of living.

His first chapter sets the tone. He labels the Invisible Hand a “beautiful idea,” and waxes eloquent about Adam Smith’s “brilliant” metaphor of the market. Then he goes on the attack, criticizing laissez-faire advocates such as Milton Friedman (his favorite bête noire) for ignoring the importance of “monopolies, business power, lack of access to information, the likelihood of financial bubbles, economies of scale.” When that happens, he concludes, “The efficient Invisible Hand gets very dirty.”

Madrick protesteth too much. Adam Smith’s “system of natural liberty” consists of three elements: maximum freedom, competition, and a system of justice. If the invisible hand gets dirty, it’s only because one or more of these elements are proscribed. If all three are in place, the result is “universal opulence which extends to the lowest ranks of the people,” as Smith predicted in the early pages of The Wealth of Nations. Indeed, the Economic Freedom Indexes, produced by the Fraser Institute and the Heritage Foundation, confirm Adam Smith. They list five critical factors: size of government, legal structure, sound money, trade, and regulations. They demonstrate that the greater the level of economic freedom, the higher the standard of living.

In chapter 5, Madrick attacks the notion that “There Are No Speculative Bubbles.” Here again he begins with a positive idea, the efficient market theory (EMT), which originated from the work of Eugene Fama at the University of Chicago. Fama, who won the Nobel Prize last year, found that it’s almost impossible to beat the market and difficult to identify asset bubbles. But then Madrick spends most of the chapter highlighting the exceptions, citing Robert Shiller and other critics of EMT. “The development of the EMT is another example of how faith in the rationality of free markets was pushed too far,” Madrick says. Yet the fact remains, when the financial markets are transparent sans government interference and mismanagement, they work pretty well.

In chapter 6, Madrick attacks globalization. He begins by saying, “Opening markets to world trade can and should be beneficial.” Then comes the “but . . .”, as he cites cases of people in Asia, Europe, and Latin America who are damaged by free trade and market liberalization. He also cites Paul Krugman, for the idea that “broad swaths of the population [are] hurt by trade.” But no one says that trade doesn’t hurt some groups in the short run, and requires them to retool and change jobs. A recent study of the NAFTA free-trade agreement between Canada, Mexico, and the United States concluded that on net balance more jobs and more income were created than destroyed.

When financial markets are transparent sans government interference and mismanagement, they work pretty well.

Madrick derides the whole idea of Say’s law and the self-adjusting economy. However, he never cites directly the great French economist J.B. Say. In fact, I have the impression that he may have never read Say’s Treatise on Political Economy, published in English in 1821. Nor does he seem familiar with the work of Steve Kates, the foremost authority on Say’s law. If he had, Madrick would know that Say’s whole focus is the benefits of the supply side of the economy — technology, productive savings and investment, and entrepreneurship — which is the key to long-term growth and higher standards of living. Who could be against that?

Like Krugman, Robert Kuttner, and other Keynesians, Madrick berates “austerity” economics and the obsession with government deficits in Europe and the US. Yet he conveniently ignores examples in which austerity worked, such as Canada in the mid-1990s, when it cut government spending and laid off federal workers but managed to balance the budget in two years and then went on an 11-year supply-side run that proved a success. Today Canada is ranked no. 7 in the Economic Freedom Index, ahead of the US (no. 12).

Seven Bad Ideasshould be renamed The Anti-Friedman Book. It attacks the late Milton Friedman in virtually every chapter, blaming him and his "laissez-faire" policies for everything bad in the world. Madrick says that the establishment economics profession has bought into all things Friedman, and that Friedman has had his way in practically all policies, including those of the Clinton era. According to Madrick, Friedman is "the most influential American economist of the last quarter of the twentieth century.” If so, why hasn’t the US adopted a flat tax, a negative income tax, school choice, decriminalization of drugs, or privatization of Social Security or even the national parks, as Friedman advocated? Why hasn’t the US eliminated the Fed and replaced it with a computer that increases the money supply at a steady rate? If only Madrick were right and Friedman truly ruled!

Madrick conveniently ignores examples in which austerity worked, such as Canada in the mid-1990s, which balanced its budget in two years.

In his final chapter, one of Madrick’s chief complaints about the economics profession is its lack or misuse of empirical evidence to support its assertions. But sometimes he is guilty of the same error. One of the most egregious examples is this extreme statement: “By every measure, the economic improvement in the 1950s and 1960s was superior to the improvement from 1980 onwards when Friedman type-economics began to prevail.” Say again? He may have a point with some statistics, such as per capita GDP growth, or real wages in the United States. But there are plenty of countries in Asia, Eastern Europe, and Africa that have adopted Friedman free-market policies and have blossomed. And in the US, there are plenty of contrary data, such as life expectancy, leisure time, and especially new technology (personal computers, smartphones, the internet, etc.). When you include worker benefits, total compensation is still rising for the average employee. According to Michael Cox, an expert on consumption patterns at Southern Methodist University, ownership of cars, color televisions, and household appliances has risen dramatically at all income levels, and even in poor households, since 1980. The standard of living has advanced so far and has risen so rapidly for most Americans since 1980 that there is no comparison. Is there anyone who would prefer to live in the 1950s and 1960s rather than today, as Madrick’s statement implies?

Most of the time, Madrick loses his sense of balance. He devotes 90% of the book to the exceptions, making it a work full of tedious arguments and complaints that would interest only professional economists (what John Stossel calls “getting caught in the weeds”). He even takes on his Keynesian friends, such as Lawrence Summers, and lambastes them for falling into “Friedman’s folly.” Madrick still thinks Friedman is the Devil.


Editor's Note: Review of "Seven Bad Ideas: How Mainstream Economists Have Damaged America and the World," by Jeff Madrick. Alfred A. Knopf, 2014, 254 pages.



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Hayek, the Stones, Beckham . . . and Kotter?

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Nobel Prize winning economist Friedrich Hayek died in 1992 at the hoary age of 92. He lived long enough to have heard the Beatles and Rolling Stones, perhaps seen an episode or two of Welcome Back, Kotter, the 1970s situation comedy centered on the travails of a high school teacher and his “at-risk” students; but not long enough to experience the rise of European soccer’s invasion of the US, personified by the move of England’s David Beckham’s to the Los Angeles Galaxy team in 2007 — for a slightly exaggerated $250 million price.

Hayek recently came to mind during a spirited debate with a retired teacher friend over educational policy. She brought up that old canard about our market society having misplaced economic values because teachers are not compensated as well as rock or sports stars. Her assumption — a common one — was that monetary compensation ought to be commensurate with intrinsic worth; and if rock and sports stars are paid more than teachers, our society must value entertainment much more than education — prima facie evidence of market failure that ought to be rectified.

Whew! I didn’t know where to begin. But since the toughest part of a good discussion is clarifying terms and premises, I backpedaled to them.

First of all, the term “society,” though a useful abstraction, has been inappropriately reified and pumped up with steroids. Ayn Rand questioned its notion of “society” as a tangible entity by prosaically listing its components — the butcher, the baker, etc. That allowed her, quite fairly, to dismiss concrete conclusions from its meta-usage, much as we now dismiss the merely statistical reality of a .3 child in the typical American family of 2.3 children.

Second, “economic values” is another high-sounding but meaningless term. Hayek dismissed this inflated premise as prosaically and brilliantly as Rand. He insisted, indeed, that “there is no such thing as ‘economic values’ ”:people have values; economic markets are the most efficient means to realize them. “Economic values” makes as much sense as “biological, physical, or chemical values.”

Conservatives and libertarians often stumble over the same concepts and fall into the same trap. But instead of trying to correct the terms of debate, they go with the flow and say that it’s just fine if folks value entertainment more than education — that’s their choice in a free society. Moreover, who’s to draw the distinction between one and the other?

Cutting through the Gordian knot of highfalutin conclusions, Hayek explained that the price disparity between rock or sport stars and teachers was simply due to old-fashioned supply-and-demand: there are few of the former and lots of the latter. No overwrought conclusions about social values — no concerns about “society” respecting good teachers less than it does Beckham — are warranted.

Since Hayek’s death not much has changed on this front, except for one crucial distribution, which proves Hayek’s insight. Teachers are still a dime a dozen, and public schools lack any mechanism for recognizing or rewarding superstars, while a degree in education remains about the easiest such degree to acquire. (I know, having received a complimentary MA for neither fee nor work.) Sports stars are — mostly — still members of protected cartels that keep supply low and prices high. But the music industry has undergone some radical upheavals.

Back in the 1970’s — the heyday of the Beatles, the Rolling Stones, and the Who — rock stars were, well . . . Rock Stars. Today, the high-end popular music market has broadened to include country music, hip-hop, world music, opera, cross-over collaborations, and a variety of independent “others,” with a concomitant dilution of the take. Additionally, in this technologically sophisticated post-Napster era, recorded music is cheaper. A DJ I know, lately from WNYU, guesses that the Beatles or the Stones made more than $30 million in 1970. Accounting for inflation, that’s about $300 million in today’s dollars (see “Cash Poor” in last year’s Liberty).

Dr. Dre, a hip-hop superstar and Forbes magazine’s highest paid musician in 2012, earned a measly $110 million — followed by Roger Waters of Pink Floyd at $88 million, Elton John at $80 million, U2 at $78 million, and Take That (a British boy band) at $69 million. Justin Bieber, only 18 years old, was the tenth highest paid pop star in 2012 at $55 million. The take at the top has tanked.

But what about musicians in the trenches; how do they compare with teachers, and the general population?

The average personal gross income in 2012 for musicians was $55,561, with only $34,455 coming from their music endeavors, according to Artist Revenue Streams. The average US teacher salary (grades 1-12) was about $52,000 — according to many sources. Per capita personal income for the entire country in 2010 was $39,945, according to the Bureau of Labor Statistics.

Today, the Rolling Stones keep rolling on; David Beckham is on the cusp of retirement; the quality of US public education keeps deteriorating . . . and Frederick Hayek is probably rolling over in his grave.




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