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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O Canada!

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“Canadians are the only people who take moderation to an extreme.”

— H. L. Mencken

Cross the border into Canada circa 2005, and the convivial pleasantries of the immigration official would only be interrupted — almost apologetically — by the requisite formalities. “Are you bringing in any liquor, beer, wine, or tobacco?” An honest declaration inevitably rendered a generous individual exemption.

No longer. Today Canadian immigration agents have taken a page — the third-degree page — from US Customs and Immigration: all obdurate business without a hint of foreplay.

“Are you carrying any self-defense devices such as guns, pepper spray, or mace?” The eyes narrowed down suspiciously, homing through the response to detect revealing body language.

We were. Pepper spray.

My wife and I were embarking on a mountain bike ride across Canada along the Trans Canada Trail (TCT), a dedicated, mostly back-country route for walkers, skiers, horseback riders, and bikers that crosses the country and which, in typical Canadian all-inclusive fashion, incorporates every province and territory. Our plan was to ride from the Pacific coast to the Atlantic, camping out along the way. Instead of lugging the more traditional panniers to carry our gear, we were pulling single-wheel BOB (beast-of-burden) trailers each loaded with tent, sleeping bags, cooking kit, etc.

British Columbia, with its accordion folds of Coast Mountains, Rocky Mountains, and subsidiary ranges, is teeming with bears. And pepper spray, the provincial parks’ wardens’ (rangers in the US) preferred bear deterrent, was our only legal protection. Curiously, although capsicum aerosols are legal, they must be labeled “for bears.” Ours were not, so they were confiscated. Perhaps some bears can read; or perhaps the label inhibits its use against other predators. Who can say? We later forked out $80 for two Canadian-made capsicum bear repellents with the proper government labels.

Not one question about drugs or suspicion about illegal stowaways. Canada’s priorities are obvious: first, a mirror image of the US concern over terrorism expressed by the immigration officer as a lack of civility; then a concern about liquor and tobacco smuggling (not only are vice taxes an important source of Canadian revenue but they embody a long tradition of reformist social policy that discourages unhealthy habits); and, finally, handgun prohibition. Canadians are proud of their civil society and deathly afraid of contracting what they perceive as a US epidemic of handgun violence.

Perhaps some bears can read; or perhaps the label inhibits its use against other predators. Who can say?

But a demand for handguns persists. Jock Bigjaw, a Dogrib First Nations (not his real name or tribe) leader and self-styled warrior, wanted a .357 Magnum. Jock was a big-rig hauler, a job that allowed him plenty of time to pursue his real passion — alpinism. We’d met on the flanks of Aconcagua in Argentina and hit it off, laughing ourselves into indignity at the 14,000 foot base camp. Politically, he believed in self-reliance and the Canadian government’s duty to adhere strictly to its treaties. Jock fought many of his fellow Indians’ sense of aimlessness, despair, and alcoholism by setting an example of achievement. He dreamed of being the first Native American to summit the Vinson Massif — the highest peak in Antarctica — and toured Canada’s Indian Reserves giving inspirational presentations at schools and community conclaves. In the world of Canadian indigenous peoples, Jock was a hero.

After the climb he asked me if I’d be willing to buy him a handgun in the US, meet him in Idaho during one of his cross-border forays, and sell it to him. Though he was apprehensive about buying the gun, he was untroubled about smuggling it into Canada. I agreed.

* * *

In spite of NAFTA, “free trade” remains an elusive concept — particularly at entry levels. After completing a guidebook (see About this Author) to sea kayaking the Inside Passage (three-quarters of which traverses the BC coast), I submitted the manuscript to Rocky Mountain Books, Canada’s premier outdoor guidebook publisher. They wanted it. However, because of my US citizenship, it did not qualify for certain subsidies offered by the federal and provincial governments — in effect, a quota system for Canadian authors that makes it hard for non-Canadians to compete (which is its intention). So, in the end, they declined it.

Just before crossing into Canada to start our bike trip, my wife and I stopped at Smith Rocks State Park in Oregon to do a little rock climbing. For this sport, Smith Rocks is a world-class destination. It is the birthplace of “sport climbing”, a relatively safe technique that in the 1980s allowed standards of difficulty to be pushed way beyond what anyone ever imagined.

Though he was apprehensive about buying the gun, he was untroubled about smuggling it into Canada.

Lacking a guidebook, I approached a large group of young climbers in the campground to get “beta” — route information. They were from NOLS, the National Outdoor Leadership School, an outgrowth of Outward Bound. NOLS teaches outdoor wilderness and survival skills. These kids had signed up for a month-long rock climbing course that was to take place at Squamish Chief, BC — Canada’s Yosemite. But a Canadian immigration officer had different ideas.

When asked the purpose of their visit, the instructors responded innocently and honestly. Although tuition had been paid in the US — and was already a done deal — the martinet declared that the NOLS program would unfairly compete with Canadian guide services. He refused entry into Canada to the two trailer-hauling vans with 24 kids and instructors. Smith Rocks was their consolation destination.

* * *

In spite of the border crossing unpleasantness and the high prices, it is alwaysa pleasure to be in Canada. A leisurely civility and understated formality barely conceal an endearing earnestness — about the most trivial of life’s minor curiosities — that disarms even the most irascible visitor. Canadians are patient, tolerant, and egalitarian to the core. While the American Declaration of Independence celebrates “life, liberty and the pursuit of happiness,” Canada’s founding document promises “peace, order and good government.” As Pierre Trudeau once belligerently declared, “We are in the extreme centre, the radical middle. That is our position!”Nonetheless, to the average American, Canadian politics are an irrelevant baffle mired in minutiae.

Perhaps what makes Canadian politics so unintelligible, frustrating, and yes, even boring to Americans, is the more than usual lack of congruence between political parties and any sort of principled political philosophy. Consistency has been sacrificed to national unity, growth, and development, which — in such a geographically sprawling and climatically extreme country — all parties promote through vigorous federal intervention and subsidies to make settlement and development of its inhospitable extremities more attractive.

While the American Declaration of Independence celebrates “life, liberty and the pursuit of happiness,” Canada’s founding document promises “peace, order and good government.”

This was all the easier because, unlike the US, which attempted to design a government from scratch based on the latest Enlightenment philosophy hot topic, Canada simply continued being a part of Britain, developing the same structure of government as the mother country, and following its lead in foreign and domestic policy.

Each election seems to be contested by politicians with a big wish-list of concrete promises that expediency and the demands of a fractious confederation often reverse 180 degrees within days of victory. Canada dodged the 2008 financial crisis through fiscal health and well-capitalized banks, with the “Loonie” shooting ahead of the US dollar for the first time ever. The Economist, however, avers that the housing market is frothy and likely to pop.

But we had more practical matters to consider. We drove to a West Vancouver marina and found a safe place to park our van for the duration of the bike ride, spending the rest of the day packing camping gear, tuning up the bikes, and making the myriad arrangements requisite for our trip — with Canadian talk radio in the background.

The controversy du jour was emblematic of Canadian attitudes, politics and the rise of China. A handful of young Oriental men (some of whom couldn’t speak English) had been arrested drag racing on a Vancouver street in Maseratis, Lamborghinis, Alfa Romeos and other such jet engines on wheels. The police had released them without filing charges. Speculation focused on the idea that wealthy and influential parents had pulled strings. Besides the predictable indignity over favoritism, suspected pay-offs, and police malfeasance, callers and host alike were incredulously outraged that common standards of Canadian propriety had been so contemptuously flaunted by drag racing on a staid city street.

Canada, with British Columbia in particular, has had a huge influx of rich Chinese immigrants — crony capitalists and rent seekers who have made fortunes in a changing China that lacks a rule of law and are using every trick availableto get their money out of the country. Unsurprisingly, China has currency export controls. With its lax immigration policy, passports that are virtually given away, comparative economic freedom, and relative proximity to China as a Pacific Rim neighbor, Canada is a preferred destination for Chinese oligarchs.

Our first day out covered 70 muscle-grinding miles through Vancouver and its suburbs, followed by a torrential downpour the following day. We took a rest day. By the end of the second week, we’d hit our stride and required a rest day only every 5 or 6 days. Much of our way was on “rails-to-trails”, old railway beds reclaimed for recreation. When present, these wilderness throughways profiling no more than a 3% grade made pedaling over BC’s mountain ranges a transcendent experience.

I commented to our host that I couldn’t imagine marching into battle to the strains of “O Canada.” She smiled and retorted, “We’re all about peace — and having fun!”

One of the first small towns we passed through, Gray Creek (pop. 125), had a refreshing libertarian flavor. The welcoming sign at the town limits proudly announced, “Gray Creek, still metric free.” When I groused about the $38 one-night, one-tent camping fee and the over-priced stale groceries, the good-humored campground and store owner-manager glibly blamed it all on the government.

Canada’s metric system is a bit of a Potemkin village — but with one real cannon that occasionally lobs a ball and messes things up. For one (as in Gray Creek), revanchists stubbornly adhere to the ergonomic English system. Yet, more fundamentally, the Dominion, surveyed by the British in the 18th and 19th centuries, is stuck with the mile-based Range & Township sectional land division, which rears its head nearly every time a property survey is necessary. In agricultural areas, rural roads retain a mile-based nomenclature (“Mile 154 Road”) and are located according to the old distances.

At Castlegar, a town of nearly 8,000 people located in the Selkirk Mountains at the confluence of the Kootenay and Columbia Rivers, we decided to splurge on an extended rest at a B&B. When we inquired at the tourist office, the attendant — without a hint of irony — informed us that Castlegar had suitably good motels, two campgrounds, but no B&Bs. Since British Columbia is the most British of Canada’s provinces, and B&Bs are a British invention, and they are common in Canada, I sensed something was amiss.

According to a café owner we befriended, a few years before — during an economic development spurt — the city fathers had invited a large, upper mid-range lodging chain to open a unit in town. In the US, when towns come calling for a local franchise, the chain, knowing it has an advantage, is not beyond asking for tax breaks or demanding a location it covets through the use of eminent domain. In Castlegar the quid pro quo took more of a Canadian turn — the elimination of an entire segment of the competition. In return for a fancy motel, the city council banned B&Bs.

An American can never spend much time in Canada without bumping — one way or another — into its famed health care system, usually (at the very least) as one of the first topics of conversation after an exchange of basic pleasantries. We’d heard of doctors going on strike and actually seen nurses striking (all of them are now public sector employees). In Castlegar, signs urging the government not to close 24/7 emergency medical services at the local hospital because of budget constraints were prominently displayed. These were nearly always twinned with another sign, hung by the firefighters’ union expressing opposition to theproposed closure.

As uninvolved tourists, we were entertained to observe another country’s political minuets without directly being involved. They gave us fodder for discussion as we pedaled up the Selkirk Range — but not enough to get us up the western slopes of the Rockies into Banff, where every breath up the technical single track was so precious it precluded conversation.

The town of Banff (Canada’s Aspen, Estes Park or Crested Butte, take your pick — but better), on the BC-Alberta border, is the center of Canada’s oldest national park: Banff National Park, the anchor for a series of parks that straddle the Rocky Mountains. Typical of such quaint alpine villages, it struggles to balance demand and development with retention of the picturesque ambiance that attracts tourists.

No amount of passing grades, accolades and applause, mortar boards and robes, paper diplomas or false confidence can replace or instill competence.

According to the August 30 issue of the Rocky Mountain Outlook, “Banff’s politicians are poised to revisit the controversial issue of setting quotas to control corporate chain stores and restaurants in the national park tourist town,” not only to preserve the community’s character but also because some homegrown businesses had already gone belly-up due to competition from recently opened national chain stores. Banff is already home to Starbucks (of course), Tim Hortons the coffee-and-doughnut chain(it wouldn’t be Canada without Tim Hortons), McDonald’s (which everyone abuses but patronizes), The North Face (it wouldn’t be a mountain town without The North Face), Tony Roma’s, The Gap, and others.

As with any scheme that preferentially treats one business over another, the details of this one are devilish to draw up and subject to corruption, with arbitrary choices that are based on aesthetics but that fundamentally affect livelihoods. As the newspaper reports:

The question of what level to set the quota is a challenging one. Options include back-casting the quotas to reflect the mix that existed during the 2008-2009 period when visitor surveys were done, capping at current levels or allowing a cushion, like 10% more. Banff’s senior planner said a quota below current levels creates instant pressure on existing situations, including the creation of legal, non-conforming uses, while a quota set too high doesn’t achieve the regulatory goals and becomes a zoning “paper tiger.”

So as not to kill the goose that lays the golden egg — not completely, at least — service stations, hotels and banks are not included in the proposedquota system.

Out of seven Banff City Councilors, only one declared unequivocal support for the free market; while the Mayor — like a good politician — concurred with him, but artfully hedged her position.

* * *

We took another multi-day rest at a friend’s home in Canmore, less than 20 miles from Banff and in just as stunning a location, to attend the annual Canmore Highland Games, an event Canadians take very seriously. It is absolutely nothing like the ersatz, corn-ball, out-of-tune bagpipe-screeching “highland games” not uncommon south of the border, attended by pot-bellied old men with giant calves in tams and kilts who can talk at length about Culloden, Bonnie Prince Charlie and what Mel Gibson doesn’t know about Robert the Bruce.

Attendance in the thousands, in spite of a prohibitively expensive admission fee; way over 100 pipe bands from all over the country, with electronically tuned bagpipes played by top-notch musicians of all ages, genders and colors; full-sized telephone poles that few men could even get erect for the caber toss; endless imported tap bitters, ales and stouts; more single malt whiskeys than you ever thought existed; haggis to die for (really!) and fish-and-chips with cod, haddock, salmon, and halibut choices. Even the step dancing competitions, from schools from all over Alberta, were top-notch. All on a perfectly turfed, quadruple-size football pitch ringed by giant, blindingly white campaign tents topped by Canadian flags — the whole surrounded up close by the crenelated limestone summits of the Fairholme and Rundle Ranges.

The festivities opened with a Royal Canadian Mounted Police regiment, an infantry division, and its 50-member pipe & drum band marching to the fore under the skirling strains of Scotland the Brave. The M of C then asked the crowd to stand for an a cappella rendition of O Canada, a composition I’d read much about but never heard — so I was particularly curious. Although the young lady did her best, the anthem was underwhelming. I commented to our host that I couldn’t imagine marching into battle to the strains of O Canada. She smiled, posed as if she were step dancing, and retorted, “We’re all about peace — and having fun!”

Descending the Rockies was a roller coaster ride. Nevertheless, we were concerned that once we were on the prairies, the ride would get boring over the flat, featureless terrain buffeted by endless winds. But when one expects the worst, things can only get better. And so it turned out. Our west-to-east direction virtually guaranteed a tail wind, and the artful design and routing of the TCT avoided traffic and kept our interest at ADD levels.

The prairies are cut by water courses carved through deep declivities and bordered by sirenic glens peppered with deciduous and evergreen copses. Quaint, colorful Hutterite colonies and Mennonite and Eastern Orthodox settlements, complete with metallic onion-domed churches incongruously plopped down in the middle of nowhere, enthralled us.

Even the imported oil-boom labor — people from 127 countries speaking 69 languages — can get mired in way-more-liberal-than-the-US Canadian immigration rules.

Still, we were concerned about a couple of routing questions. The TCT — again in typical Canadian all-inclusive fashion — was designed to go through every provincial capital. Edmonton, the capital of Alberta, is halfway up the province — far from the southern alignment we’d been following. The TCT then heads east and (back) down to Regina (rhymes with vagina, source of many a snicker), capital of Saskatchewan. Additionally, urban bike riding, especially with fully loaded BOB trailers, can be very trying. No worries — the TCT tied into extensive riverside urban trails through Calgary and Edmonton that displayed the best of both cities, slicing through downtowns and suburbs with equal aplomb.

We’d taken to eating breakfasts at fast food joints and cafes where the portions — and the clientele — were gargantuan (giving the lie to the old nutritionist’s tale that eating a healthy breakfast inhibits weight gain). The ubiquitous “We reserve the right to refuse service to anyone” signs posted in US cafes were nowhere to be found — probably too confrontational for Canadians. They were replaced by “Abuse will not be tolerated” signs that seemed to serve the same function — more politically correct, I suppose. These were sometimes coupled (at one Safeway, for example) with a poster of smiling employees — a black, a Caucasian, an oriental, an Indi…er, First Nations member, a Latino, an Inuit, an Indian or Pakistani-origin Muslim (you could tell from the forehead dot or the Muslim kufi), and of course, both sexes — touting diversity in employment practices.

Every one of these establishments in the Edmonton area carried the morning’s The Edmonton Sun with daily reports on the firing of Lynden Dorval, aka “the zeros teacher.” The Ross Shepard High School (part of the Edmonton Public Schools system) physics teacher had been fired after he gave a student a zero for not handing in an assignment.

“If students don’t do the work, they don’t deserve (a grade) and I stand by that,” Dorval was quoted as saying. Students, parents, the principal and even Edmonton Schools Superintendent Edgar Schmidt sported “Real heroes give Zeros” T-shirts in his support. But it was Schmidt, caving in to demands by the school board, who made the final call, stating that the firing was for “insubordinate, unprofessional” conduct.

The Sun, quoting Dorval,claimed that the firing was “for going against school policy by assigning students with a zero, rather than using the code system the school uses to evaluate work.” Both the Alberta Teachers’ Association (the union) and the school board were conducting investigations. Unstated but suspected is that the “code system” assigns some value to all work — including its absence. Perhaps, these people must reason, there is merit to merely being present — like Forrest Gump — when homework is assigned.

Political correctness (PC) run amuck? Definitely. We mustn’t ruin the students’ self-esteem.

I once argued with a couple — both teachers, one in the Pennsylvania Public School System, the other an Outward Bound instructor — about the consequences of failing students. The public school teacher, a union member, supported her school’s policy of never failing or expelling a student. Since “bad” students were usually “at risk” kids, failing or expelling them would just make an already bad situation worse, she argued. Her husband, the OB instructor, agreed.

So I asked them to imagine applying the same logic to instructing in rappelling (a technique for descending a cliff by zipping down a rope). In other words, telling a student who hadn’t mastered the technique that he was actually proficient at it. I said, “If he went out and tried rappelling on his own, the well-intentioned lie could cost him his life.” They couldn’t muster a reply.

The core problem with PC is that it wishfully reverses the order of cause and effect. No amount of passing grades, accolades and applause, mortar boards and robes, paper diplomas or false confidence can replace or instill competence. Moreover, it is condescending and patronizing — visibly signaling that the recipient can’t handle the truth. In fact, PC functions primarily, as David Foster Wallace has so eloquently expressed, “to signal and congratulate certain virtues in the speaker — scrupulous egalitarianism, concern for the dignity of all people, sophistication about the political implications of language — and so serves the self-regarding interests of the PC far more than it serves any of the persons or groups” who are the recipients of it. It is hypocrisy legitimized.

What’s more, many ofthe“at risk” kids (previously known as JDs — juvenile delinquents) are sharp, with well-developed BS antennae that can see right through the hypocrisy of patronizing, deceptive schemes. And they learn from them, using their new insights to game the system, while losing all respect for adults that are complicit in such manipulative behavior. That’s why they supported Dorval, who, by the way, was soon hired by a private school.

We didn’t run short of conversational topics when we turned east out of Edmonton and headed for the Saskatchewan border. Although the architects’ primary reason for this route was running through each province’s capital, there was a bonus: Edmonton’s latitude approximately coincides with the limits of agriculture.

North of the line, farms and roads disappear and the great northern Canadian wilderness rules. This made for a stunning ride. In places, giant combines were harvesting wheat and rape seed, the source of canola oil (Canadian oil) on farms run by Polish and Ukrainian immigrants. In others, hills studded with evergreens alternated with picturesque lakes surrounded by deciduous trees turning red and gold in the mid-September cold.

Peppering both the fields and the glens were “nodding donkeys” (oil pump jacks) and drilling rigs, while the occasional convoy of “thumpers” (seismic prospectors) tested the road shoulders for underground paydirt. Canada has the world’s third-largest proven oil reserves — most of it in northern Alberta’s oil sands — and 3,400 trillion cubic feet of natural gas in its shale beds. BC residents who live near the border nip over to Alberta for a cheaper fill-up.

The new discoveries, advanced drilling and fracking technology, and, as one oil-industry booster puts it — referring to less politically salubrious climes — “no bribes or body bags” are driving a boom no one is able to keep up with.

Several factors are holding back the bonanza. For one, there is no easy way to transport the thick crude out of northern Alberta. The US section of the proposed Keystone XL pipeline from Hardisty, Alberta to Port Arthur, Texas has not yet been approved by the Obama administration; while the Northern Gateway pipeline, proposed from Edmonton to Kitimat, BC, on the Pacific Coast (for exports to Asia) is being held up by environmental concerns and First Nation objections. The pipeline would cross aboriginal reserves.

“The other big bottleneck,” the November 17 issue of The Economist reports, “is human capital.” Hardly anyone lives near Fort McMurray, the closest city, and fewwant to move there in spite of the high wages and attractive incentives. Even the imported labor — people from 127 countries speaking 69 languages — gets mired in way-more-liberal-than-the-US Canadian immigration rules. “An Irish worker in Fort McMurray,” The Economist continues, “complains of having to fly to Calgary to sit a test of English proficiency. It’s her native language, and the test is online.”

* * *

When our canteens began freezing overnight, we decided it was time to go home.

At St. Paul we cadged a couple of discarded cardboard bike boxes from Canadian Tire, a megastore that combines aspects of Wal-Mart, Checker Auto and Sears (and whose business model still escapes me), to pack up our bikes for the Greyhound bus trip back to our van.

Next year — in Saskatchewan.

And, perhaps, another report.




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Capitalism 2013

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Capitalism, once lauded as the proud foundation of America's success, has had a bad rap lately. Free-market capitalism has been blamed for everything from the collapse of real estate and the stock market to the widening gap between haves and have-nots and even the onslaught of terrorism. Capitalists are the bad guys in nearly every movie, every classroom, and at least half the political speeches — or so it seems.

But there is nothing free about American markets today. Government intervention has led to a Bizarro world of crony capitalism that mimics free enterprise while tying its hands. John Mackey calls it "the intellectual hijacking of capitalism." Regulations intended to protect the consumer and the employer create unintended imbalances that limit competition and inadvertently encourage unfair practices. Capitalism gets the black eye, while government goes in for the sucker punch. But it's the consumer and the employee who end up on the canvas, knocked out.

Mackey, founder of Whole Foods Markets, and Raj Sisodia have written a book, due to come out on January 12, to counter this false impression of the business person. With the subtitle "Liberating the Heroic Spirit of Business," Conscious Capitalism is a handbook of great business practices told through the anecdotes of highly successful and highly conscientious business people. Mackey and Sisodia demonstrate that business owners can be compassionate and successful. In fact, the "conscious capitalist" will be more successful by following the leadership advice outlined in this book.

What is a conscious capitalist? One who is fully aware. Conscious capitalists make deliberate decisions based on the longterm consequences of their actions. They are aware of the impact their actions have on customers, suppliers, shareholders, the community, and the environment. They recognize that when they consider the needs of others and act fairly, others will probably do the same, and everyone will benefit.

Government intervention has led to a Bizarro world of crony capitalism that mimics free enterprise while tying its hands.

Mackey is the ideal person to write a book like this, because he has himself embarked on a philosophical journey that allows him to see the problems from one perspective and the solutions from another, uniting philosophies in what he sees as a "win-win" relationship. He describes the "progressive political philosophy" he espoused in young adulthood, when he saw problems in the world and believed that "both business and capitalism were fundamentally based on greed, selfishness, and exploitation." His personal life is grounded in the kinds of causes usually embraced by anti-capitalists, including his vegan diet, his Eastern meditation techniques, and his deep concern for animals and the planet. He is a gentle man in every way. But he has also become a fierce defender of free market capitalism. Through his experience as an entrepreneur he discovered "that business isn't based on exploitation or coercion at all. Instead . . . business is based on cooperation and voluntary exchange . . . for mutual gain." Bringing the spirit of cooperation and caring to the forefront of business management is the purpose of this book.

Throughout the book, Mackey and Sisodia return to the theme that "business is not a zero-sum game with a winner and a loser. It is a win-win-win game." They demonstrate how the conscious capitalist creates a symbiotic relationship among several stakeholders, including the business owner, the workers (or "team members," as Mackey prefers to call them), the consumers, the shareholders, the suppliers, and the community. Working together for their own betterment, they make each other's lives richer as well.

One of my favorite sections of the book focuses on worker motivation. The authors identify three main principles of motivation: job, career, and calling. A "job" is a transaction: if you put in a certain number of hours, you go home with a certain amount of money. A "career" can be more satisfying: it requires a certain amount of training and skill, and it brings a greater sense of responsibility, as well as respect and money. A "calling," on the other hand, "offers value and satisfaction beyond the paycheck." Work that feels like a calling may be time-consuming and even exhausting, but there is seldom a distinction between being "at home" and being "at work," because it is simply who we are. Many people devote their lives to a calling and earn no money for it at all.

Since, on a normal day, most people spend more waking hours at their place of employment than they do at home, a sense of purpose is essential for satisfaction and happiness. One way to instill the sense of calling, according to this book, is to broaden that sense of purpose for the people who earn a paycheck. A team member at Whole Foods, for example, is not just a grocery clerk; as Mackey sees her,she is part of a team that provides nutritious and delicious food to people who live in the community. She is proud of the charitable work provided by Whole Planet (a charitable organization sponsored by Whole Foods) and enjoys the employee benefits that she herself participated in selecting, including a health plan that should be a model for the nation. She also enjoys the trust that management exhibits toward her; Whole Foods has a policy of encouraging team members to "use their best judgment" when something unusual occurs or a particular rule or practice seems not to fit a particular incident.

Conscious capitalists exhibit this attitude of partnership and respect toward the suppliers of their companies. Negotiations with suppliers can often turn into adversarial relationships whereby one side ends up with a disproportionate amount of the benefit, and the other with a disproportionate amount of resentment. Mackey and Sisodia recommend treating suppliers as one would treat consumers. Treat them fairly, pay them on time, understand their needs, and recognize that they have to make a profit while doing business with you. In so doing, you will create an atmosphere of loyalty and favored status that could be very important when supplies are limited. And it's good karma, too.

Conscious Capitalism is full of anecdotes not only about Whole Foods but also about such successful companies as The Container Store, Southwest Airlines, Walmart, POSCO (formerly Pohang Iron and Steel Company), 3M, UPS, and many others. A lot of them adhere to one or more of the four "categories of great purpose" described in the book. The great purposes include:

  • The Good: services to others that include improving health, education, communication, and quality of life
  • The True: discovery and furthering human knowledge
  • The Beautiful: excellence and the creation of beauty
  • The Heroic: courage to do what is right to change and improve the world

These stories about modern businesses that are providing goods and services that are good, true, beautiful, or heroic in a conscientious manner bring the book to life and give the reader a buoyancy of spirit. Capitalism is good. Entrepreneurship is honorable. Businesses do contribute to the overall good. Managers do not have to demean or mistrust those whom they supervise. In fact, everyone benefits when workers are trained and trusted to "use their best judgment." Conscious Capitalism is a book you will want to share with every business owner, manager, and worker you know.


Editor's Note: Review of "Conscious Capitalism: Liberating the Heroic Spirit of Business," by John Mackey and Raj Sisodia. Harvard Business Review Press, 2013, 322 pages.



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Only 14 Percent?

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Each time Barack Obama and his supporters sniff disdainfully at the 14% of his income that Mitt Romney paid in taxes, I want to shout at them to acknowledge the obvious: Romney does not have earned income.

In the private sector, companies expect their employees to come to work every day. Romney isn’t gainfully employed, because he has spent the past two years campaigning for office. Of course, Barack Obama has spent the past three years campaigning. He has missed important security briefings and delegated most of his duties to others. He does very little actual work and campaigns on the taxpayers’ dime. If you or I tried that, we would have to use up all our vacation days and then take time off without pay — assuming that our employers would be willing to keep us on the books (and the benefits) while we are off job hunting.

Romney paid a higher tax rate when he was working and earning an income. He pays plenty now on his investment income (the principal of which was already taxed at earned-income rates). More important to me than his 14% tax rate is the fact that he has chosen to give away nearly 30% of his income to charities and causes he believes in. He has created jobs throughout his career, and he has given failing companies a second chance. He is, in fact, a great example of how the private sector should function.




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